Companies: 10,652     total market cap: $140.775 T
โ‚ฌEUR๐Ÿ‡ช๐Ÿ‡บโ‚นINR๐Ÿ‡ฎ๐Ÿ‡ณยฃGBP๐Ÿ‡ฌ๐Ÿ‡ง$CAD๐Ÿ‡จ๐Ÿ‡ฆ$AUD๐Ÿ‡ฆ๐Ÿ‡บ$NZD๐Ÿ‡ณ๐Ÿ‡ฟ$HKD๐Ÿ‡ญ๐Ÿ‡ฐ$SGD๐Ÿ‡ธ๐Ÿ‡ฌ
Entergy
ETR
#570
Rank
$42.64 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$95.49
Share price
-0.42%
Change (1 day)
18.89%
Change (1 year)
๐Ÿ”‹ Electricity๐Ÿšฐ Utility companies โšก Energy
Categories
  1. Entergy
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2021 Q1

Entergy - 10-Q quarterly report FY2021 Q1


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__________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________

Commission
File Number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.

Commission
File Number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.
1-11299ENTERGY CORPORATION1-35747ENTERGY NEW ORLEANS, LLC
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
(a Texas limited liability company)
1600 Perdido Street
New Orleans, Louisiana 70112
Telephone (504) 670-3700
72-122975282-2212934
1-10764ENTERGY ARKANSAS, LLC1-34360ENTERGY TEXAS, INC.
(a Texas limited liability company)
425 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone (501) 377-4000
(a Texas corporation)
10055 Grogans Mill Road
The Woodlands, Texas 77380
Telephone (409) 981-2000
83-191866861-1435798
1-32718ENTERGY LOUISIANA, LLC1-09067SYSTEM ENERGY RESOURCES, INC.
(a Texas limited liability company)
4809 Jefferson Highway
Jefferson, Louisiana 70121
Telephone (504) 576-4000
(an Arkansas corporation)
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
47-446964672-0752777
1-31508ENTERGY MISSISSIPPI, LLC
(a Texas limited liability company)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
83-1950019
__________________________________________________________________________________________





Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of ClassTrading
Symbol		Name of Each Exchange
on Which Registered
Entergy Corporation
Common Stock, $0.01 Par Value
ETR
New York Stock Exchange
Common Stock, $0.01 Par Value
ETR
NYSE Chicago, Inc.
 
 
 
Entergy Arkansas, LLC
Mortgage Bonds, 4.875% Series due September 2066
EAI
New York Stock Exchange
 
 
 
Entergy Louisiana, LLC
Mortgage Bonds, 4.875% Series due September 2066
ELC
New York Stock Exchange
 
 
 
Entergy Mississippi, LLC
Mortgage Bonds, 4.90% Series due October 2066
EMP
New York Stock Exchange
 
 
 
Entergy New Orleans, LLC
Mortgage Bonds, 5.0% Series due December 2052
ENJ
New York Stock Exchange
Mortgage Bonds, 5.50% Series due April 2066
ENO
New York Stock Exchange
 
 
 
Entergy Texas, Inc.
5.375% Series A Preferred Stock, Cumulative, No Par Value (Liquidation Value $25 Per Share)
ETI/PR
New York Stock Exchange



Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files).  Yes ☑ No ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filerAccelerated
filer		Non-accelerated filerSmaller
reporting
company		Emerging
growth
company
Entergy Corporationü
Entergy Arkansas, LLCü
Entergy Louisiana, LLCü
Entergy Mississippi, LLCü
Entergy New Orleans, LLCü
Entergy Texas, Inc.ü
System Energy Resources, Inc.ü

If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Common Stock OutstandingOutstanding at April 30, 2021
Entergy Corporation($0.01 par value)200,659,948

Entergy Corporation, Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q.  Information contained herein relating to any individual company is filed by such company on its own behalf.  Each company reports herein only as to itself and makes no other representations whatsoever as to any other company.  This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2020, filed by the individual registrants with the SEC, and should be read in conjunction therewith.




TABLE OF CONTENTS
Page Number
iii
vi
Part I. Financial Information
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis
1
Consolidated Income Statements
16
Consolidated Statements of Comprehensive Income
17
Consolidated Statements of Cash Flows
18
Consolidated Balance Sheets
20
Consolidated Statements of Changes in Equity
22
Notes to Financial Statements
Note 1. Commitments and Contingencies
23
Note 2. Rate and Regulatory Matters
24
Note 3. Equity
33
Note 4. Revolving Credit Facilities, Lines of Credit, Short-term Borrowings, and Long-term Debt
36
Note 5. Stock-based Compensation
41
Note 6. Retirement and Other Postretirement Benefits
42
Note 7. Business Segment Information
46
Note 8. Risk Management and Fair Values
47
Note 9. Decommissioning Trust Funds
65
Note 10. Income Taxes
70
Note 11. Property, Plant, and Equipment
71
Note 12. Variable Interest Entities
71
Note 13. Revenue
72
75
75
Entergy Arkansas, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
76
Consolidated Income Statements
83
Consolidated Statements of Cash Flows
85
Consolidated Balance Sheets
86
Consolidated Statements of Changes in Member’s Equity
88
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
89
Consolidated Income Statements
99
i
TABLE OF CONTENTS
Page Number
Consolidated Statements of Comprehensive Income
100
Consolidated Statements of Cash Flows
101
Consolidated Balance Sheets
102
Consolidated Statements of Changes in Equity
104
Entergy Mississippi, LLC
Management’s Financial Discussion and Analysis
105
Income Statements
111
Statements of Cash Flows
113
Balance Sheets
114
Statements of Changes in Member’s Equity
116
Entergy New Orleans, LLC and Subsidiaries
Management’s Financial Discussion and Analysis
117
Consolidated Income Statements
123
Consolidated Statements of Cash Flows
125
Consolidated Balance Sheets
126
Consolidated Statements of Changes in Member’s Equity
128
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis
129
Consolidated Income Statements
137
Consolidated Statements of Cash Flows
139
Consolidated Balance Sheets
140
Consolidated Statements of Changes in Equity
142
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis
143
Income Statements
149
Statements of Cash Flows
151
Balance Sheets
152
Statements of Changes in Common Equity
154
Part II. Other Information
155
155
155
156
158
161
ii
FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, projections, strategies, and future events or performance.  Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements.  Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct.  Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made.  Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties.  There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K and in this report, (b) Management’s Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

•resolution of pending and future rate cases and related litigation, formula rate proceedings and related negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs, as well as delays in cost recovery resulting from these proceedings;
•continuing long-term risks and uncertainties associated with the termination of the System Agreement in 2016, including the potential absence of federal authority to resolve certain issues among the Utility operating companies and their retail regulators;
•regulatory and operating challenges and uncertainties and economic risks associated with the Utility operating companies’ participation in MISO, including the benefits of continued MISO participation, the effect of current or projected MISO market rules and market and system conditions in the MISO markets, the allocation of MISO system transmission upgrade costs, the MISO-wide base rate of return on equity allowed or any MISO-related charges and credits required by the FERC, and the effect of planning decisions that MISO makes with respect to future transmission investments by the Utility operating companies;
•changes in utility regulation, including with respect to retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent return on equity criteria, transmission reliability requirements or market power criteria by the FERC or the U.S. Department of Justice;
•changes in the regulation or regulatory oversight of Entergy’s nuclear generating facilities and nuclear materials and fuel, including with respect to the planned or actual shutdown and sale of each of the nuclear generating facilities owned or operated by Entergy Wholesale Commodities, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;
•resolution of pending or future applications, and related regulatory proceedings and litigation, for license modifications or other authorizations required of nuclear generating facilities and the effect of public and political opposition on these applications, regulatory proceedings, and litigation;
•the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at Entergy’s nuclear generating facilities;
•increases in costs and capital expenditures that could result from changing regulatory requirements, emerging operating and industry issues, and the commitment of substantial human and capital resources required for the safe and reliable operation and maintenance of Entergy’s nuclear generating facilities;


iii

FORWARD-LOOKING INFORMATION (Continued)

•Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;
•prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants, especially in light of the planned shutdown and sale of each of these nuclear plants;
•the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;
•volatility and changes in markets for electricity, natural gas, uranium, emissions allowances, and other energy-related commodities, and the effect of those changes on Entergy and its customers;
•changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;
•changes in environmental laws and regulations, agency positions or associated litigation, including requirements for reduced emissions of sulfur dioxide, nitrogen oxide, greenhouse gases, mercury, particulate matter and other regulated air emissions, heat and other regulated discharges to water, requirements for waste management and disposal and for the remediation of contaminated sites, wetlands protection and permitting, and changes in costs of compliance with environmental laws and regulations;
•changes in laws and regulations, agency positions, or associated litigation related to protected species and associated critical habitat designations;
•the effects of changes in federal, state, or local laws and regulations, and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental, trade/tariff, domestic purchase requirements, or energy policies;
•the effects of full or partial shutdowns of the federal government or delays in obtaining government or regulatory actions or decisions;
•uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal and the level of spent fuel and nuclear waste disposal fees charged by the U.S. government or other providers related to such sites;
•variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes (including from Hurricane Laura, Hurricane Delta, and Hurricane Zeta), ice storms, or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance, as well as any related unplanned outages;
•the risk that an incident at any nuclear generation facility in the U.S. could lead to the assessment of significant retrospective assessments and/or retrospective insurance premiums as a result of Entergy’s participation in a secondary financial protection system, a utility industry mutual insurance company, and industry self-insurance programs;
•effects of climate change, including the potential for increases in extreme weather events and sea levels or coastal land and wetland loss;
•changes in the quality and availability of water supplies and the related regulation of water use and diversion;
•Entergy’s ability to manage its capital projects, including completion of projects timely and within budget and to obtain the anticipated performance or other benefits, and its operation and maintenance costs;
•Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;
•the economic climate, and particularly economic conditions in Entergy’s Utility service area and the northern United States and events and circumstances that could influence economic conditions in those areas, including power prices, and the risk that anticipated load growth may not materialize;
•changes to federal income tax laws and regulations, including continued impact of the Tax Cuts and Jobs Act and its intended and unintended consequences on financial results and future cash flows;
•the effects of Entergy’s strategies to reduce tax payments;
iv

FORWARD-LOOKING INFORMATION (Concluded)

•changes in the financial markets and regulatory requirements for the issuance of securities, particularly as they affect access to capital and Entergy’s ability to refinance existing securities, execute share repurchase programs, and fund investments and acquisitions;
•actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;
•changes in inflation and interest rates;
•the effects of litigation and government investigations or proceedings;
•changes in technology, including (i) Entergy’s ability to implement new or emerging technologies, (ii) the impact of changes relating to new, developing, or alternative sources of generation such as distributed energy and energy storage, renewable energy, energy efficiency, demand side management and other measures that reduce load and government policies incentivizing development of the foregoing, and (iii) competition from other companies offering products and services to Entergy’s customers based on new or emerging technologies or alternative sources of generation;
•Entergy’s ability to effectively formulate and implement plans to reduce its carbon emission rate and aggregate carbon emissions, including its commitment to achieve net-zero carbon emissions by 2050, and the potential impact on its business of attempting to achieve such objectives;
•the effects, including increased security costs, of threatened or actual terrorism, cyber-attacks or data security breaches, natural or man-made electromagnetic pulses that affect transmission or generation infrastructure, accidents, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;
•the effects of a global event or pandemic, such as the COVID-19 global pandemic, including economic and societal disruptions; volatility in the capital markets (and any related increased cost of capital or any inability to access the capital markets or draw on available bank credit facilities); reduced demand for electricity, particularly from commercial and industrial customers; increased or unrecoverable costs; supply chain, vendor, and contractor disruptions; delays in completion of capital or other construction projects, maintenance, and other operations activities, including prolonged or delayed outages; impacts to Entergy’s workforce availability, health, or safety; increased cybersecurity risks as a result of many employees telecommuting; increased late or uncollectible customer payments; regulatory delays; executive orders affecting, or increased regulation of, Entergy’s business; changes in credit ratings or outlooks as a result of any of the foregoing; or other adverse impacts on Entergy’s ability to execute on its business strategies and initiatives or, more generally, on Entergy’s results of operations, financial condition, and liquidity;
•Entergy’s ability to attract and retain talented management, directors, and employees with specialized skills;
•Entergy’s ability to attract, retain, and manage an appropriately qualified workforce;
•changes in accounting standards and corporate governance;
•declines in the market prices of marketable securities and resulting funding requirements and the effects on benefits costs for Entergy’s defined benefit pension and other postretirement benefit plans;
•future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;
•changes in decommissioning trust fund values or earnings or in the timing of, requirements for, or cost to decommission Entergy’s nuclear plant sites and the implementation of decommissioning of such sites following shutdown;
•the decision to cease merchant power generation at all Entergy Wholesale Commodities nuclear power plants by mid-2022, including the implementation of the planned shutdowns and sales of Indian Point 2, Indian Point 3, and Palisades;
•the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;
•the potential for the factors listed herein to lead to the impairment of long-lived assets; and
•Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to complete strategic transactions that Entergy may undertake.
v
DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:
Abbreviation or AcronymTerm
ALJ
Administrative Law Judge
ANO 1 and 2
Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC
Arkansas Public Service Commission
ASU
Accounting Standards Update issued by the FASB
Board
Board of Directors of Entergy Corporation
Cajun
Cajun Electric Power Cooperative, Inc.
capacity factor
Actual plant output divided by maximum potential plant output for the period
City Council
Council of the City of New Orleans, Louisiana
COVID-19
The novel coronavirus disease declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention in March 2020
D.C. Circuit
U.S. Court of Appeals for the District of Columbia Circuit
DOE
United States Department of Energy
Entergy
Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation
Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.
Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana
Entergy Gulf States Louisiana, L.L.C., a Louisiana limited liability company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes.  The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires. Effective October 1, 2015, the business of Entergy Gulf States Louisiana was combined with Entergy Louisiana.
Entergy Louisiana
Entergy Louisiana, LLC, a Texas limited liability company formally created as part of the combination of Entergy Gulf States Louisiana and the company formerly known as Entergy Louisiana, LLC (Old Entergy Louisiana) into a single public utility company and the successor to Old Entergy Louisiana for financial reporting purposes.
Entergy Texas
Entergy Texas, Inc., a Texas corporation formally created as part of the jurisdictional separation of Entergy Gulf States, Inc.  The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale Commodities
Entergy’s non-utility business segment primarily comprised of the ownership, operation, and decommissioning of nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by its operating power plants to wholesale customers
EPA
United States Environmental Protection Agency
FASB
Financial Accounting Standards Board
FERC
Federal Energy Regulatory Commission
Form 10-K
Annual Report on Form 10-K for the calendar year ended December 31, 2020 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf
Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh
Gigawatt-hour(s), which equals one million kilowatt-hours
Independence
Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power, LLC
vi
DEFINITIONS (Continued)
Abbreviation or AcronymTerm
Indian Point 2
Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in April 2020
Indian Point 3
Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in
the Entergy Wholesale Commodities business segment, which ceased power production in April 2021
IRS
Internal Revenue Service
ISO
Independent System Operator
kW
Kilowatt, which equals one thousand watts
kWh
Kilowatt-hour(s)
LPSC
Louisiana Public Service Commission
MISO
Midcontinent Independent System Operator, Inc., a regional transmission organization
MMBtu
One million British Thermal Units
MPSC
Mississippi Public Service Commission
MW
Megawatt(s), which equals one thousand kilowatts
MWh
Megawatt-hour(s)
Nelson Unit 6
Unit No. 6 (coal) of the Nelson Steam Electric Generating Station, 70% of which is co-owned by Entergy Louisiana (57.5%) and Entergy Texas (42.5%) and 10.9% of which is owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Net debt to net capital ratio
Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents
Net MW in operation
Installed capacity owned and operated
NRC
Nuclear Regulatory Commission
Palisades
Palisades Nuclear Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Parent & Other
The portions of Entergy not included in the Utility or Entergy Wholesale Commodities segments, primarily consisting of the activities of the parent company, Entergy Corporation
Pilgrim
Pilgrim Nuclear Power Station (nuclear), previously owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in May 2019 and was sold in August 2019
PPA
Purchased power agreement or power purchase agreement
PUCT
Public Utility Commission of Texas
Registrant Subsidiaries
Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend
River Bend Station (nuclear), owned by Entergy Louisiana
SEC
Securities and Exchange Commission
System Agreement
Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources. The agreement terminated effective August 2016.
System Energy
System Energy Resources, Inc.
TWh
Terawatt-hour(s), which equals one billion kilowatt-hours
vii
DEFINITIONS (Concluded)
Abbreviation or AcronymTerm
Unit Power Sales Agreement
Agreement, dated as of June 10, 1982, as amended and approved by the FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf
Utility
Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Waterford 3
Unit No. 3 (nuclear) of the Waterford Steam Electric Station, owned by Entergy Louisiana
weather-adjusted usage
Electric usage excluding the effects of deviations from normal weather
White Bluff
White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas
viii
ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

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

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

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

The COVID-19 Pandemic

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

Hurricane Laura, Hurricane Delta, and Hurricane Zeta

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

Winter Storm Uri

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





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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

Results of Operations

First Quarter 2021 Compared to First Quarter 2020

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the first quarter 2021 to the first quarter 2020 showing how much the line item increased or (decreased) in comparison to the prior period:

Utility
Entergy
Wholesale
Commodities

Parent &
Other (a)

Entergy
(In Thousands)
2020 Net Income (Loss) Attributable to Entergy Corporation$319,816 ($110,975)($90,127)$118,714 
Operating revenues501,987 (84,330)2 417,659 
Fuel, fuel-related expenses, and gas purchased for resale102,680 1,094 (10)103,764 
Purchased power155,967 7,143 10 163,120 
Other regulatory charges (credits) - net39,958 — — 39,958 
Other operation and maintenance36,589 (32,049)162 4,702 
Asset write-offs, impairments, and related charges— (1,822)— (1,822)
Taxes other than income taxes(255)(13,641)304 (13,592)
Depreciation and amortization37,052 (22,148)(95)14,809 
Other income (deductions)30,046 218,171 6,257 254,474 
Interest expense13,847 (1,106)(3,013)9,728 
Other expenses(3,239)1,718 — (1,521)
Income taxes112,683 46,100 (21,647)137,136 
2021 Net Income (Loss) Attributable to Entergy Corporation$356,567 $37,577 ($59,579)$334,565 

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

First quarter 2020 results of operations include losses of $211 million (pre-tax) on Entergy Wholesale Commodities’ nuclear decommissioning trust fund investments reflecting the equity market decline in March 2020 associated with the COVID-19 pandemic. See Notes 8 and 9 to the financial statements herein for a discussion of decommissioning trust fund investments.
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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis
Operating Revenues

Utility

Following is an analysis of the change in operating revenues comparing the first quarter 2021 to the first quarter 2020:
Amount
(In Millions)
2020 operating revenues$2,095 
Fuel, rider, and other revenues that do not significantly affect net income323 
Volume/weather97 
Retail electric price96 
Return of unprotected excess accumulated deferred income taxes to customers(14)
2021 operating revenues$2,597 

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

The volume/weather variance is primarily due to an increase of 990 GWh, or 4%, in billed electricity usage, including the effect of more favorable weather on residential sales, partially offset by a decrease in industrial usage and decreased demand from mid to small customers. The decrease in industrial usage is primarily due to decreased demand from existing customers in the chemicals and petroleum refining industries as a result of the COVID-19 pandemic and plant shutdowns and operational issues. The decrease in industrial usage is partially offset by an increase in demand from expansion projects, primarily in the transportation, metals, and chemicals industries. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

The retail electric price variance is primarily due to:

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

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

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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis

The return of unprotected excess accumulated deferred income taxes to customers resulted from activity at the Utility operating companies in response to the enactment of the Tax Cuts and Jobs Act. The return of unprotected excess accumulated deferred income taxes began in second quarter 2018. In first quarter 2021, $41 million was returned to customers through reductions in operating revenues as compared to $27 million in first quarter 2020. There is no effect on net income as the reductions in operating revenues were offset by reductions in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.     

Billed electric energy sales for Utility for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential9,599 8,126 18 
Commercial6,134 6,244 (2)
Industrial11,458 11,815 (3)
Governmental579 595 (3)
Total retail27,770 26,780 4 
Sales for resale4,299 3,117 38 
Total32,069 29,897 7 

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

Entergy Wholesale Commodities

Operating revenues for Entergy Wholesale Commodities decreased from $332 million for the first quarter 2020 to $248 million for the first quarter 2021 primarily due to the shutdown of the Indian Point 2 plant in April 2020.

Following are key performance measures for Entergy Wholesale Commodities for the first quarters 2021 and 2020:
20212020
Owned capacity (MW) (a)2,2463,274
GWh billed4,4136,757
Entergy Wholesale Commodities Nuclear Fleet
Capacity factor99%99%
GWh billed3,9886,259
Average energy price ($/MWh)$51.86$47.42
Average capacity price ($/kW-month)$0.23$1.07

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

(a)The reduction in owned capacity is due to the shutdown of the 1,028 MW Indian Point 2 plant in April 2020.
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Management's Financial Discussion and Analysis

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $566 million for the first quarter 2020 to $602 million for the first quarter 2021 primarily due to:

•lower nuclear insurance refunds of $13 million;
•an increase of $7 million in non-nuclear generation expenses due to higher expenses associated with plants placed in service, including the Lake Charles Power Station, which began commercial operation in March 2020, the New Orleans Power Station which began commercial operation in May 2020, the Washington Parish Energy Center purchased in November 2020, and the Montgomery County Power Station which began commercial operation in January 2021;
•an increase of $7 million in vegetation maintenance costs; and
•an increase of $5 million in nuclear generation expenses primarily due to spending on sanitation and social distancing protocols as a result of COVID-19.

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

Other regulatory charges (credits) - net includes the reversal in 2021 of the remaining $39 million regulatory liability for Entergy Arkansas’s 2019 historical year netting adjustment as part of its 2020 formula rate plan proceeding and $29 million recorded in first quarter 2020, at Entergy Louisiana, due to a settlement with the IRS related to the uncertain tax position regarding the Hurricane Isaac Louisiana Act 55 financing because the savings will be shared with customers. See Note 2 to the financial statements herein and in the Form 10-K for discussion of Entergy Arkansas’s 2020 formula rate plan filing. See Note 3 to the financial statements in the Form 10-K for further discussion of the settlement and savings obligation.

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

Interest expense increased primarily due to:

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

The increase was partially offset by the repayments by Entergy Louisiana of $200 million of 5.25% Series mortgage bonds and $100 million of 4.70% Series mortgage bonds, each in December 2020.
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Entergy Corporation and Subsidiaries
Management's Financial Discussion and Analysis


Entergy Wholesale Commodities

Other operation and maintenance expenses decreased from $131 million for the first quarter 2020 to $99 million for the first quarter 2021 primarily due to:

•a decrease of $28 million primarily resulting from the absence of expenses from the Indian Point 2 plant after it was shut down in April 2020; and
•a decrease of $6 million in severance and retention expenses. Severance and retention expenses were incurred in 2021 and 2020 due to management’s strategy to exit the Entergy Wholesale Commodities merchant power business.

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

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

Depreciation and amortization expenses decreased primarily due to:

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

Other income increased primarily due to losses on decommissioning trust fund investments in the first quarter 2020. These losses reflected the equity market decline in March 2020 associated with the COVID-19 pandemic. See Notes 8 and 9 to the financial statements herein for a discussion of decommissioning trust fund investments.

Income Taxes

The effective income tax rate was 16.3% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items, offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (136.6%) for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to the settlement with the IRS on the treatment of funds received in conjunction with the Louisiana Act 55 financing of Hurricane Isaac storm costs, permanent differences related to income tax deductions for stock-based compensation, amortization of excess accumulated deferred income taxes, certain book and tax differences related to utility plant items, and tax differences related to the allowance for equity funds used during construction, partially offset by state income taxes. See Note 3 to the financial statements in the Form 10-K for discussion of the IRS settlement and the income tax deductions for stock-based compensation. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.
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Management's Financial Discussion and Analysis
Entergy Wholesale Commodities Exit from the Merchant Power Business

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

Planned Shutdown and Sale of Indian Point 2 and Indian Point 3

As discussed in the Form 10-K, in April 2019, Entergy entered into an agreement to sell, directly or indirectly, 100% of the equity interests in the subsidiaries that own Indian Point 1, Indian Point 2, and Indian Point 3, after Indian Point 3 has been shut down and defueled, to a Holtec subsidiary for decommissioning the plants. The sale will include the transfer of the licenses, spent fuel, decommissioning liabilities, and nuclear decommissioning trusts for the three units.

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

In November 2019, Entergy and Holtec also submitted a petition to the New York State Public Service Commission (NYPSC) seeking an order from the NYPSC disclaiming jurisdiction or abstaining from review of the transaction or, alternatively, approving the transaction. Closing is also conditioned on obtaining from the New York State Department of Environmental Conservation an agreement related to Holtec’s decommissioning plan as being consistent with applicable standards. In April 2021, Entergy and Holtec filed a joint settlement proposal with the NYPSC that resolves all issues among all parties. These issues include financial assurance, site restoration, financial reporting, continued funding for state and local emergency management and response activities, a memorandum of understanding with local taxing jurisdictions, and the dismissal of the federal appeals described in the preceding paragraph. The NYPSC is expected to take action on the joint settlement proposal at its May 13, 2021 meeting.

Indian Point 2 permanently ceased operations on April 30, 2020 and Indian Point 3 permanently ceased operations on April 30, 2021. The transaction is targeted to close in May 2021, following the defueling of Indian Point 3. The Indian Point transaction is expected to result in a $285 million net loss based on the difference between Entergy’s adjusted net investment in the subsidiaries at closing and the sale price net of agreed adjustments. The primary variables in the ultimate loss that Entergy will incur are the values of the nuclear decommissioning trusts and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing.

Planned Shutdown and Sale of Palisades

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


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

Subject to the conditions discussed in the Form 10-K, the transaction is expected to close by the end of 2022. As of March 31, 2021, Entergy’s adjusted net investment in Palisades was $30 million. The primary variables in the ultimate loss or gain that Entergy will incur on the transaction are the values of the nuclear decommissioning trust and the asset retirement obligations at closing, the financial results from plant operations until the closing, and the level of any unrealized deferred tax balances at closing.

Costs Associated with Entergy Wholesale Commodities Strategic Transactions

Entergy expects to incur employee retention and severance expenses associated with management’s strategy to exit the Entergy Wholesale Commodities merchant power business of approximately $40 million in 2021, of which $13 million has been incurred as of March 31, 2021, and a total of approximately $15 million in 2022. In addition, Entergy Wholesale Commodities incurred impairment charges of $3 million primarily related to expenditures for capital assets for the three months ended March 31, 2021. These costs were charged to expense as incurred as a result of the impaired value of certain of the Entergy Wholesale Commodities nuclear plants’ long-lived assets due to the significantly reduced remaining estimated operating lives associated with management’s strategy to exit the Entergy Wholesale Commodities merchant power business.

Liquidity and Capital Resources

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

Capital Structure and Resources

Entergy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy as of March 31, 2021 is primarily due to the net issuance of debt in 2021.
March 31, 2021December 31,
2020
Debt to capital69.6 %68.3 %
Effect of excluding securitization bonds(0.1 %)(0.2 %)
Debt to capital, excluding securitization bonds (a)69.5 %68.1 %
Effect of subtracting cash(1.5 %)(1.7 %)
Net debt to net capital, excluding securitization bonds (a)68.0 %66.4 %

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

As of March 31, 2021, 22.2% of the debt outstanding is at the parent company, Entergy Corporation, 77.3% is at the
Utility, and 0.5% is at Entergy Wholesale Commodities. Net debt consists of debt less cash and cash equivalents.  Debt consists of notes payable and commercial paper, finance lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt, common shareholders’ equity, and subsidiaries’ preferred stock without sinking fund.  Net capital consists of capital less cash and cash equivalents.  Entergy uses
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the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements in the Form 10-K.  Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in September 2024.  The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility.  The commitment fee is currently 0.225% of the undrawn commitment amount.  Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation.  The weighted average interest rate for the three months ended March 31, 2021 was 1.63% on the drawn portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2021:
Capacity BorrowingsLetters
of Credit		Capacity
Available
(In Millions)
$3,500$55$6$3,439
A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization.  The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. One such difference is that it excludes the effects, among other things, of certain impairments related to the Entergy Wholesale Commodities nuclear generation assets.  Entergy is currently in compliance with the covenant and expects to remain in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy or one of the Registrant Subsidiaries (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility’s maturity date may occur.  See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $2 billion. As of March 31, 2021, Entergy Corporation had approximately $1,028 million of commercial paper outstanding. The weighted-average interest rate for the three months ended March 31, 2021 was 0.34%.

Certain of the Utility operating companies have a total of $72 million in storm reserve escrow accounts at March 31, 2021.

Equity Distribution Program

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

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Management's Financial Discussion and Analysis

Capital Expenditure Plans and Other Uses of Capital

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

Liberty County Solar Facility

In September 2020, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to acquire the 100 MW Liberty County Solar Facility and a determination that Entergy Texas’s acquisition of the facility through a tax equity partnership is in the public interest. In its preliminary order, the PUCT determined that, in considering Entergy Texas’s application, it would not specifically address whether Entergy Texas’s use of a tax equity partnership is in the public interest. In March 2021 intervenors and PUCT staff filed testimony, and Entergy Texas filed rebuttal testimony in April 2021. A hearing on the merits was held in April 2021. Post-hearing briefs and reply briefs are due in May 2021. Closing is expected to occur in 2023.

Hardin County Peaking Facility

In April 2020, Entergy Texas and East Texas Electric Cooperative, Inc. filed a joint report and application seeking PUCT approvals related to two transactions: (1) Entergy Texas’s acquisition of the Hardin County Peaking Facility from East Texas Electric Cooperative, Inc.; and (2) Entergy Texas’s sale of a 7.56% partial interest in the Montgomery County Power Station to East Texas Electric Cooperative, Inc. The two transactions, currently expected to close in June 2021, are interdependent. In October 2020, Entergy Texas filed an unopposed settlement agreement supporting approval of the transactions. Key provisions of the settlement include: Entergy Texas will propose to depreciate its investment in Hardin County Peaking Facility through the end of 2041; Entergy Texas’s recovery of its investment in Hardin County Peaking Facility will be capped at approximately $36 million; and Entergy Texas will not seek recovery of an acquisition adjustment, if any, or transaction costs for either transaction. The settlement was approved by the PUCT in April 2021.

Dividends

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

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Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Millions)
Cash and cash equivalents at beginning of period$1,759 $426 
Cash flow provided by (used in):  
Operating activities(49)659 
Investing activities(1,513)(1,045)
Financing activities1,546 1,424 
Net increase (decrease) in cash and cash equivalents(16)1,038 
Cash and cash equivalents at end of period$1,743 $1,464 

Operating Activities

Entergy’s operating activities used $49 million of cash for the three months ended March 31, 2021 compared to providing $659 million of cash for the three months ended March 31, 2020 primarily due to the following activity:

•increased fuel costs as a result of Winter Storm Uri. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery;
•an increase of approximately $200 million in storm spending;
•an increase of $92 million in pension contributions in 2021 as compared to the same period in 2020. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding;
•income tax payments of $9 million in 2021 compared to income tax refunds of $23 million in 2020. Entergy had net income tax payments in 2021 as a result of amended Mississippi state tax returns filed, offset by federal income tax refunds received associated with the completion of the 2014-2015 IRS audit. Entergy had income tax refunds in 2020 as a result of an overpayment on a prior year state income tax return;
•a decrease of $18 million of nuclear insurance refunds; and
•the effect of more favorable weather on billed Utility sales in 2021.

Investing Activities

Net cash flow used in investing activities increased $468 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•an increase of $524 million in distribution construction expenditures primarily due to storm spending in 2021. See “Hurricane Laura, Hurricane Delta, and Hurricane Zeta” above for discussion of storm restoration efforts;
•an increase of $138 million in transmission construction expenditures primarily due to storm spending in 2021, partially offset by a lower scope of work on projects performed in 2021 as compared to 2020. See “Hurricane Laura, Hurricane Delta, and Hurricane Zeta” above for discussion of storm restoration efforts; and
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Management's Financial Discussion and Analysis

•a decrease of $46 million in proceeds received from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 1 to the financial statements herein and Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation.

The increase was partially offset by:

•a decrease of $84 million of non-nuclear generation construction expenditures primarily due to higher spending in 2020 on the Montgomery County Power Station and Lake Charles Power Station projects;
•a decrease of $41 million in nuclear construction expenditures primarily due to decreased spending on various projects in 2021;
•a decrease of $37 million in nuclear fuel purchases due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle;
•a decrease of $32 million in decommissioning trust fund investment activity;
•a decrease of $26 million in information technology expenditures primarily due to decreased spending on various technology projects; and
•$25 million in plant upgrades for the Choctaw Generating Station in March 2020. See Note 14 to the financial statements in the Form 10-K for further discussion of the Choctaw Generating Station purchase.

Financing Activities

Net cash flow provided by financing activities increased $122 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to long-term debt activity providing approximately $2,330 million of cash in 2021 compared to providing approximately $1,581 million of cash in 2020.

The increase was partially offset by:

•an increase of $595 million in net repayments of commercial paper in 2021 compared to 2020; and
•a decrease of $39 million in treasury stock issuances in 2021 due to a larger amount of previously repurchased Entergy Corporation common stock issued in 2020 to satisfy stock option exercises.

For details of Entergy’s commercial paper program and long-term debt, see Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K.

Rate, Cost-recovery, and Other Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation” in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

Federal Regulation

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding federal regulatory proceedings.

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Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As a wholesale generator, Entergy Wholesale Commodities’ core business is selling energy, measured in MWh, to its customers.  Entergy Wholesale Commodities enters into forward contracts with its customers and also sells energy in the day ahead or spot markets.  Entergy Wholesale Commodities also sells unforced capacity, which allows load-serving entities to meet specified reserve and related requirements placed on them by the ISOs in their respective areas.  Entergy Wholesale Commodities’ forward physical power contracts consist of contracts to sell energy only, contracts to sell capacity only, and bundled contracts in which it sells both capacity and energy.  While the terminology and payment mechanics vary in these contracts, each of these types of contracts requires Entergy Wholesale Commodities to deliver MWh of energy, make capacity available, or both. In addition to its forward physical power contracts, Entergy Wholesale Commodities may also use a combination of financial contracts, including swaps, collars, and options, to manage forward commodity price risk. The sensitivities may not reflect the total maximum upside potential from higher market prices. The information contained in the following table represents projections at a point in time and will vary over time based on numerous factors, such as future market prices, contracting activities, and generation. Following is a summary of Entergy Wholesale Commodities’ current forward capacity and generation contracts as well as total revenue projections based on market prices as of March 31, 2021 (2021 represents the remainder of the year):

Entergy Wholesale Commodities Nuclear Portfolio
20212022
Energy
Percent of planned generation under contract (a):
Unit-contingent (b)98%99%
Planned generation (TWh) (c) (d)5.82.8
Average revenue per MWh on contracted volumes:
Expected based on market prices as of March 31, 2021$56.4$47.1
Capacity
Percent of capacity sold forward (e):
Bundled capacity and energy contracts (f)86%98%
Capacity contracts (g)13%—%
Total99%98%
Planned net MW in operation (average) (d)1,158338
Average revenue under contract per kW per month (applies to capacity contracts only)$0.1$—
Total Energy and Capacity Revenues (h)
Expected sold and market total revenue per MWh$55.8$46.8
Sensitivity: -/+ $10 per MWh market price change$55.7-$56.0$46.7-$47.0

(a)Percent of planned generation output sold under contracts.
(b)Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to the buyer for any damages. Certain unit-contingent sales include a guarantee
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Management's Financial Discussion and Analysis

of availability. Availability guarantees provide for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.
(c)Amount of output expected to be generated by Entergy Wholesale Commodities nuclear resources considering plant operating characteristics.
(d)Assumes the shutdown of Indian Point 3 on April 30, 2021 and planned shutdown of Palisades on May 31, 2022. For a discussion regarding the shutdown of the Indian Point 3 plant and planned shutdown of the Palisades plant, see “Entergy Wholesale Commodities Exit from the Merchant Power Business” above.
(e)Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.
(f)A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.
(g)A contract for the sale of an installed capacity product in a regional market.
(h)Excludes non-cash revenue from the amortization of the Palisades below-market purchased power agreement, mark-to-market activity, and service revenues.

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ power plants contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations under the agreements. The Entergy subsidiary is required to provide credit support based upon the difference between the current market prices and contracted power prices in the regions where Entergy Wholesale Commodities sells power. The primary form of credit support to satisfy these requirements is an Entergy Corporation guarantee.  Cash and letters of credit are also acceptable forms of credit support. At March 31, 2021, based on power prices at that time, Entergy had liquidity exposure of $51 million under the guarantees in place supporting Entergy Wholesale Commodities transactions and $7 million of posted cash collateral. In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of March 31, 2021, Entergy would have been required to provide approximately $30 million of additional cash or letters of credit under some of the agreements. As of March 31, 2020, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by $7 million for a $1 per MMBtu increase in gas prices in both the short- and long-term markets.

As of March 31, 2021, substantially all of the credit exposure associated with the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2022 is with counterparties or their guarantors that have public investment grade credit ratings.

Nuclear Matters

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

NRC Reactor Oversight Process

As discussed in the Form 10-K, the NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, and “multiple/repetitive degraded cornerstone column,” or Column 4. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Nuclear generating plants owned and operated by Entergy’s Utility and Entergy Wholesale Commodities businesses are currently in Column 1, except for Grand Gulf, which is in Column 3.
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In March 2021 the NRC placed Grand Gulf in Column 3 based on the incidence of five unplanned plant scrams during calendar year 2020, some of which were related to upgrades made to the plant’s turbine control system during the spring 2020 refueling outage. The NRC plans to conduct a supplemental inspection of Grand Gulf in accordance with its inspection procedures for nuclear plants in Column 3.

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See Note 1 to the financial statements in the Form 10-K for discussion of new accounting pronouncements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands, Except Share Data)
OPERATING REVENUES
Electric$2,538,420 $2,050,638 
Natural gas58,168 43,976 
Competitive businesses248,250 332,565 
TOTAL2,844,838 2,427,179 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale501,167 397,403 
Purchased power379,734 216,614 
Nuclear refueling outage expenses43,739 50,218 
Other operation and maintenance706,786 702,084 
Asset write-offs, impairments, and related charges3,273 5,095 
Decommissioning98,642 93,684 
Taxes other than income taxes156,702 170,294 
Depreciation and amortization414,519 399,710 
Other regulatory charges (credits) - net32,279 (7,679)
TOTAL2,336,841 2,027,423 
OPERATING INCOME 507,997 399,756 
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction14,577 35,953 
Interest and investment income (loss)143,315 (216,853)
Miscellaneous - net(60,929)23,389 
TOTAL96,963 (157,511)
INTEREST EXPENSE
Interest expense205,886 205,589 
Allowance for borrowed funds used during construction(6,013)(15,444)
TOTAL199,873 190,145 
INCOME BEFORE INCOME TAXES405,087 52,100 
Income taxes65,942 (71,194)
CONSOLIDATED NET INCOME 339,145 123,294 
Preferred dividend requirements of subsidiaries4,580 4,580 
NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION
$334,565 $118,714 
Earnings per average common share:
Basic$1.67 $0.59 
Diluted$1.66 $0.59 
Basic average number of common shares outstanding200,525,549 199,790,016 
Diluted average number of common shares outstanding201,059,665 200,901,349 
See Notes to Financial Statements.


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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
Net Income $339,145 $123,294 
Other comprehensive income (loss)
Cash flow hedges net unrealized loss (net of tax benefit of $7,869 and $5,777)
(29,580)(21,710)
Pension and other postretirement liabilities (net of tax expense of $6,314 and $15,076)
22,967 53,899 
Net unrealized investment gain (loss) (net of tax expense (benefit) of ($25,581) and $8,743)
(44,687)15,744 
Other comprehensive income (loss)(51,300)47,933 
Comprehensive Income 287,845 171,227 
Preferred dividend requirements of subsidiaries4,580 4,580 
Comprehensive Income Attributable to Entergy Corporation$283,265 $166,647 
See Notes to Financial Statements.
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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Consolidated net income $339,145 $123,294 
Adjustments to reconcile consolidated net income to net cash flow provided by (used in) operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization580,571 568,596 
Deferred income taxes, investment tax credits, and non-current taxes accrued240,431 (31,405)
Asset write-offs, impairments, and related charges3,278 4,962 
Changes in working capital:
Receivables(52,690)70,357 
Fuel inventory26,878 (15,389)
Accounts payable(175,651)(127,727)
Taxes accrued(231,182)(44,241)
Interest accrued(3,778)(4,791)
Deferred fuel costs(353,099)30,560 
Other working capital accounts(43,582)(21,758)
Changes in provisions for estimated losses(60,923)(35,829)
Changes in other regulatory assets89,910 99,275 
Changes in other regulatory liabilities(14,464)(450,905)
Changes in pension and other postretirement liabilities(166,733)(113,071)
Other(227,676)607,132 
Net cash flow provided by (used in) operating activities(49,565)659,060 
INVESTING ACTIVITIES
Construction/capital expenditures(1,552,103)(1,043,608)
Allowance for equity funds used during construction14,577 35,953 
Nuclear fuel purchases(47,916)(85,334)
Payment for purchase of assets— (24,633)
Changes in securitization account(1,304)(70)
Payments to storm reserve escrow account(10)(1,557)
Receipts from storm reserve escrow account44,205 40,589 
Decrease in other investments12,521 2,265 
Litigation proceeds for reimbursement of spent nuclear fuel storage costs15,735 62,162 
Proceeds from nuclear decommissioning trust fund sales3,225,510 687,487 
Investment in nuclear decommissioning trust funds(3,224,487)(718,741)
Net cash flow used in investing activities(1,513,272)(1,045,487)
See Notes to Financial Statements.
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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt3,676,242 3,195,345 
Treasury stock979 39,964 
Retirement of long-term debt(1,346,172)(1,614,578)
Changes in credit borrowings and commercial paper - net(599,860)(4,911)
Other10,380 (756)
Dividends paid:
Common stock(190,595)(185,763)
Preferred stock(4,580)(4,763)
Net cash flow provided by financing activities1,546,394 1,424,538 
Net increase (decrease) in cash and cash equivalents(16,443)1,038,111 
Cash and cash equivalents at beginning of period1,759,099 425,722 
Cash and cash equivalents at end of period$1,742,656 $1,463,833 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized$202,451 $203,466 
Income taxes$9,015 ($23,063)
See Notes to Financial Statements.
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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$67,574 $128,851 
Temporary cash investments1,675,082 1,630,248 
Total cash and cash equivalents1,742,656 1,759,099 
Accounts receivable:
Customer883,352 833,478 
Allowance for doubtful accounts(119,027)(117,794)
Other158,838 135,208 
Accrued unbilled revenues415,253 434,835 
Total accounts receivable1,338,416 1,285,727 
Deferred fuel costs226,619 4,380 
Fuel inventory - at average cost146,056 172,934 
Materials and supplies - at average cost972,771 962,185 
Deferred nuclear refueling outage costs182,721 179,150 
Prepayments and other179,315 196,424 
TOTAL4,788,554 4,559,899 
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds7,339,088 7,253,215 
Non-utility property - at cost (less accumulated depreciation)355,819 343,328 
Other169,094 214,222 
TOTAL7,864,001 7,810,765 
PROPERTY, PLANT, AND EQUIPMENT
Electric60,901,229 59,696,443 
Natural gas621,682 610,768 
Construction work in progress1,311,997 2,012,030 
Nuclear fuel591,124 601,281 
TOTAL PROPERTY, PLANT, AND EQUIPMENT63,426,032 62,920,522 
Less - accumulated depreciation and amortization24,403,999 24,067,745 
PROPERTY, PLANT, AND EQUIPMENT - NET39,022,033 38,852,777 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $92,585 as of March 31, 2021 and $119,238 as of December 31, 2020)
5,986,639 6,076,549 
Deferred fuel costs240,555 240,422 
Goodwill377,172 377,172 
Accumulated deferred income taxes56,068 76,289 
Other332,606 245,339 
TOTAL6,993,040 7,015,771 
TOTAL ASSETS$58,667,628 $58,239,212 
See Notes to Financial Statements.
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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt$629,019 $1,164,015 
Notes payable and commercial paper1,027,629 1,627,489 
Accounts payable1,697,206 2,739,437 
Customer deposits391,032 401,512 
Taxes accrued209,829 441,011 
Interest accrued198,013 201,791 
Deferred fuel costs22,386 153,113 
Pension and other postretirement liabilities63,752 61,815 
Current portion of unprotected excess accumulated deferred income taxes65,056 63,683 
Other207,984 206,640 
TOTAL4,511,906 7,060,506 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued4,568,106 4,361,772 
Accumulated deferred investment tax credits217,888 212,494 
Regulatory liability for income taxes-net1,465,852 1,521,757 
Other regulatory liabilities2,363,919 2,323,851 
Decommissioning and asset retirement cost liabilities6,528,450 6,469,452 
Accumulated provisions181,912 242,835 
Pension and other postretirement liabilities2,684,343 2,853,013 
Long-term debt (includes securitization bonds of $146,881 as of March 31, 2021 and $174,635 as of December 31, 2020)
24,075,456 21,205,761 
Other798,210 807,219 
TOTAL42,884,136 39,998,154 
Commitments and Contingencies
Subsidiaries' preferred stock without sinking fund219,410 219,410 
EQUITY
Common stock, $.01 par value, authorized 500,000,000 shares; issued 270,035,180 shares in 2021 and 2020
2,700 2,700 
Paid-in capital6,520,052 6,549,923 
Retained earnings10,041,152 9,897,182 
Accumulated other comprehensive loss(500,507)(449,207)
Less - treasury stock, at cost (69,402,016 shares in 2021 and 69,790,346 shares in 2020)
5,046,221 5,074,456 
Total common shareholders' equity11,017,176 10,926,142 
Subsidiaries' preferred stock without sinking fund35,000 35,000 
TOTAL11,052,176 10,961,142 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$58,667,628 $58,239,212 
See Notes to Financial Statements.
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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Common Shareholders’ Equity
Subsidiaries’ Preferred StockCommon
Stock		Treasury
Stock		Paid-in
Capital		Retained EarningsAccumulated Other Comprehensive LossTotal
(In Thousands)
Balance at December 31, 2019$35,000 $2,700 ($5,154,150)$6,564,436 $9,257,609 ($446,920)$10,258,675 
Implementation of accounting standards
— — — — (419)— (419)
Balance at January 1, 202035,000 2,700 (5,154,150)6,564,436 9,257,190 (446,920)10,258,256 
Consolidated net income (a)4,580 — — — 118,714 — 123,294 
Other comprehensive income— — — — — 47,933 47,933 
Common stock issuances related to stock plans
— — 73,580 (53,753)— — 19,827 
Common stock dividends declared— — — — (185,763)— (185,763)
Preferred dividend requirements of subsidiaries (a)
(4,580)— — — — — (4,580)
Balance at March 31, 2020$35,000 $2,700 ($5,080,570)$6,510,683 $9,190,141 ($398,987)$10,258,967 
Balance at December 31, 2020$35,000 $2,700 ($5,074,456)$6,549,923 $9,897,182 ($449,207)$10,961,142 
Consolidated net income (a)4,580 — — — 334,565 — 339,145 
Other comprehensive loss— — — — — (51,300)(51,300)
Common stock issuances related to stock plans
— — 28,235 (29,871)— — (1,636)
Common stock dividends declared— — — — (190,595)— (190,595)
Preferred dividend requirements of subsidiaries (a)
(4,580)— — — — — (4,580)
Balance at March 31, 2021$35,000 $2,700 ($5,046,221)$6,520,052 $10,041,152 ($500,507)$11,052,176 
(a) Consolidated net income and preferred dividend requirements of subsidiaries for first quarter 2021 and first quarter 2020 each includes $4.1 million of preferred dividends on subsidiaries’ preferred stock without sinking fund that is not presented as equity.
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ENTERGY CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1.  COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory commissions, and governmental agencies in the ordinary course of business.  While management is unable to predict with certainty the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy’s results of operations, cash flows, or financial condition, except as otherwise discussed in the Form 10-K or in this report.  Entergy discusses regulatory proceedings in Note 2 to the financial statements in the Form 10-K and herein and discusses tax proceedings in Note 3 to the financial statements in the Form 10-K and Note 10 to the financial statements herein.

Vidalia Purchased Power Agreement

See Note 8 to the financial statements in the Form 10-K for information on Entergy Louisiana’s Vidalia purchased power agreement.

ANO Damage, Outage, and NRC Reviews

See Note 8 to the financial statements in the Form 10-K for a discussion of the ANO stator incident, subsequent NRC reviews, and the deferral of replacement power costs.

Spent Nuclear Fuel Litigation

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s spent nuclear fuel litigation.
    
In January 2021 the U.S. Court of Federal Claims issued a final judgment in the amount of $23.1 million in favor of Entergy Nuclear Palisades and against the DOE in the second round Palisades damages case. Entergy received payment from the U.S. Treasury in February 2021. The effects of recording the judgment were reductions to plant, other operation and maintenance expense, and taxes other than income taxes. The Palisades damages awarded included $15.7 million related to costs previously capitalized, $7.1 million related to costs previously recorded as other operation and maintenance expenses, and $0.3 million related to costs previously recorded as taxes other than income taxes. Of the $15.7 million previously capitalized, Entergy recorded $9.1 million as a reduction to previously-recorded depreciation expense.

Nuclear Insurance

See Note 8 to the financial statements in the Form 10-K for information on nuclear liability and property insurance associated with Entergy’s nuclear power plants.

Non-Nuclear Property Insurance

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s non-nuclear property insurance program.

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Notes to Financial Statements
Employment and Labor-related Proceedings

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s employment and labor-related proceedings.

Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)

See Note 8 to the financial statements in the Form 10-K for information regarding asbestos litigation.

Grand Gulf-Related Agreements

See Note 8 to the financial statements in the Form 10-K for information regarding Grand Gulf-related agreements.


NOTE 2.  RATE AND REGULATORY MATTERS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Regulatory Assets and Regulatory Liabilities

See Note 2 to the financial statements in the Form 10-K for information regarding regulatory assets and regulatory liabilities in the Utility business presented on the balance sheets of Entergy and the Registrant Subsidiaries.  The following are updates to that discussion.

Fuel and purchased power cost recovery

Entergy Arkansas

Energy Cost Recovery Rider

In March 2021, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease from $0.01052 per kWh to $0.00959 per kWh. The redetermined rate calculation also included an adjustment to account for a portion of the increased fuel costs resulting from the February 2021 winter storms. The redetermined rate became effective with the first billing cycle in April 2021 through the normal operation of the tariff.

Entergy Louisiana

In February 2021, Entergy Louisiana incurred extraordinary fuel costs associated with the February 2021 winter storms. To mitigate the effect of these costs on customer bills, in March 2021 Entergy Louisiana requested and the LPSC approved the deferral and recovery of $166 million in incremental fuel costs over 5 months beginning in April 2021. The incremental fuel costs remain subject to review for reasonableness and eligibility for recovery through the fuel adjustment clause mechanism. At its April 2021 meeting, the LPSC authorized its staff to review the prudence of the February 2021 fuel costs incurred by all LPSC jurisdictional utilities.

In March 2021 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings covering the period January 2018 through December 2020. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for that period. No audit report has been filed.


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Entergy Texas

In February 2021, Entergy Texas filed an application to implement a fuel refund for a cumulative over-recovery of approximately $75 million that is primarily attributable to settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas planned to issue the refund over the period of March through August 2021. On February 22, 2021, Entergy Texas filed a motion to abate its fuel refund proceeding to assess how the February 2021 winter storm impacted Entergy Texas’s fuel over-recovery position. In March 2021, Entergy Texas withdrew its application to implement the fuel refund. Entergy Texas is continuing to evaluate its fuel balance and will file a subsequent refund or surcharge application consistent with the requirements of the PUCT’s rules.

Retail Rate Proceedings

See Note 2 to the financial statements in the Form 10-K for information regarding retail rate proceedings involving the Utility operating companies.  The following are updates to that discussion.

Filings with the APSC (Entergy Arkansas)

Retail Rates

2020 Formula Rate Plan Filing

As discussed in the Form 10-K, in December 2020, Entergy Arkansas filed a petition for rehearing of the APSC’s decision in the 2020 formula rate plan proceeding regarding the 2019 netting adjustment, and in January 2021 the APSC granted further consideration of Entergy Arkansas’s petition. Based on the progress of the proceeding to date, in December 2020, Entergy Arkansas recorded a regulatory liability of $43.5 million to reflect the netting adjustment for 2019, as included in the APSC’s December 2020 order, which would be returned to customers in 2021. Entergy Arkansas also requested an extension of the formula rate plan rider for a second five-year term. In March 2021 the Arkansas Governor signed HB1662 into law (Act 404). Act 404 clarified aspects of the original formula rate plan legislation enacted in 2015, including with respect to the extension of a formula rate plan, the methodology for the netting adjustment, and debt and equity levels; it also reaffirmed the customer protections of the original formula rate plan legislation, including the cap on annual formula rate plan rate changes. Pursuant to Act 404, Entergy Arkansas’s formula rate plan rider is extended for a second five-year term. Entergy Arkansas filed a compliance tariff in its formula rate plan docket in April 2021 to effectuate the netting provisions of Act 404, which reflected a net change in required formula rate plan rider revenue of $39.8 million, effective with the first billing cycle of May 2021. In April 2021 the APSC issued an order approving the compliance tariff and recognizing the formula rate plan extension. Also in April 2021, Entergy Arkansas filed for approval of modifications to the formula rate plan tariff incorporating the provisions in Act 404, and the APSC approved the tariff modifications in April 2021. Given the APSC general staff’s support for the expedited approval of these filings by the APSC, Entergy Arkansas supported an amendment to Act 404 to achieve a reduced return on equity from 9.75% to 9.65% to apply for years applicable to the extension term; that amendment was signed by the Arkansas Governor in April 2021 and is now Act 894. Based on the APSC’s order issued in April 2021, in the first quarter 2021 Entergy Arkansas reversed the remaining regulatory liability for the netting adjustment for 2019.

COVID-19 Orders

See the Form 10-K for discussion of APSC orders issued in light of the COVID-19 pandemic. In March 2021 the APSC issued an order confirming the lifting of the moratorium on service disconnects effective in May 2021. As of March 31, 2021, Entergy Arkansas recorded a regulatory asset of $11.4 million for costs associated with the COVID-19 pandemic.

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Filings with the LPSC (Entergy Louisiana)

Retail Rates - Electric

2017 Formula Rate Plan Filing

As discussed in the Form 10-K, in May 2019, Entergy Louisiana filed an update to its 2017 formula rate plan evaluation report to include the estimated first-year revenue requirement of $109.5 million associated with the J. Wayne Leonard Power Station (formerly St. Charles Power Station). In February 2021, LPSC staff filed testimony that substantially all the costs to construct J. Wayne Leonard Power Station were prudently incurred and eligible for recovery from customers. LPSC staff further recommended that the LPSC consider monitoring the remaining $3.1 million that was estimated to be incurred for completion of the project in the event the final costs exceed the estimated amounts. Settlement discussions are in progress.

Request for Extension and Modification of Formula Rate Plan

As discussed in the Form 10-K, in May 2020, Entergy Louisiana filed with the LPSC its application for authority to extend its formula rate plan. The parties reached a settlement in April 2021 regarding Entergy Louisiana’s proposed FRP extension. Entergy Louisiana and the LPSC staff filed a joint motion asking the LPSC to consider and approve the uncontested settlement at the May 2021 LPSC meeting. Key terms of the settlement include: a three year term (test years 2020, 2021, and 2022) covering a rate-effective period of September 2021 through August 2024; a 9.50% return on equity, with a smaller, 50 basis point deadband above and below (9.0%-10.0%); elimination of sharing if earnings are outside the deadband; a $63 million rate increase for test year 2020 (exclusive of riders); continuation of existing riders (transmission, additional capacity, etc.); addition of a distribution recovery mechanism permitting $225 million per year of distribution investment above a baseline level to be recovered dollar for dollar; modification of the tax mechanism to allow timely rate changes in the event the federal corporate income tax rate is changed from 21%; a cumulative rate increase limit of $70 million (exclusive of riders) for test years 2021 and 2022; and deferral of up to $7 million per year in 2021 and 2022 of expenditures on vegetation management for outside of right of way hazard trees.

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In addition, utilities may seek future recovery, subject to LPSC review and approval, of losses and expenses incurred due to compliance with the LPSC’s COVID-19 orders. The suspension of late fees and disconnects for non-payment was extended until the first billing cycle after July 16, 2020. In January 2021, Entergy Louisiana resumed disconnections for customers in all customer classes with past-due balances that have not made payment arrangements. Utilities seeking to recover the regulatory asset must formally petition the LPSC to do so, identifying the direct and indirect costs for which recovery is sought. Any such request is subject to LPSC review and approval. As of March 31, 2021, Entergy Louisiana recorded a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic.

Filings with the MPSC (Entergy Mississippi)

2021 Formula Rate Plan Filing

In March 2021, Entergy Mississippi submitted its formula rate plan 2021 test year filing and 2020 look-back filing showing Entergy Mississippi’s earned return for the historical 2020 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2021 calendar year to be below the formula rate plan bandwidth. The 2020 test year filing shows a $95.4 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.69% return on rate base,
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within the formula rate plan bandwidth. The change in formula rate plan revenues, however, is capped at 4% of retail revenues, which equates to a revenue change of $44.3 million. The 2021 evaluation report also includes $3.9 million in demand side management costs for which the MPSC approved realignment of recovery from the energy efficiency rider to the formula rate plan. These costs are not subject to the 4% cap and result in a total change in formula rate plan revenues of $48.2 million. The 2020 look-back filing compares actual 2020 results to the approved benchmark return on rate base and reflects the need for a $16.8 million interim increase in formula rate plan revenues. In addition, the 2020 look-back filing includes an interim capacity adjustment true-up for the Choctaw Generating Station, which increases the look-back interim rate adjustment by $1.7 million. These interim rate adjustments total $18.5 million. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $22.1 million interim rate increase, reflecting a cap equal to 2% of 2020 retail revenues, effective with the April 2021 billing cycle, subject to refund, pending a final MPSC order. The $3.9 million of demand side management costs and the Choctaw Generating Station true-up of $1.7 million, which are not subject to the 2% cap of 2020 retail revenues, were included in the April 2021 rate adjustments. A final order is expected in the second quarter 2021, with the resulting final rates, including amounts above the 2% cap of 2020 retail revenues, effective July 2021.

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the MPSC issued an order authorizing utilities to defer incremental costs and expenses associated with COVID-19 compliance and to seek future recovery through rates of the prudently incurred incremental costs and expenses. In December 2020, Entergy Mississippi resumed disconnections for commercial, industrial, and governmental customers with past-due balances that have not made payment arrangements. In January 2021, Entergy Mississippi resumed disconnecting service for residential customers with past-due balances that have not made payment arrangements. As of March 31, 2021, Entergy Mississippi recorded a regulatory asset of $16.3 million for costs associated with the COVID-19 pandemic.

Filings with the City Council (Entergy New Orleans)

COVID-19 Orders

As discussed in the Form 10-K, in June 2020 the City Council established the City Council Cares Program and directed Entergy New Orleans to use the approximately $7 million refund received from the Entergy Arkansas opportunity sales FERC proceeding, currently being held in escrow, and approximately $15 million of non-securitized storm reserves to fund this program, which was intended to provide temporary bill relief to customers who became unemployed during the COVID-19 pandemic. The program became effective July 1, 2020 and offered qualifying residential customers bill credits of $100 per month for up to four months, for a maximum of $400 in residential customer bill credits. As of March 31, 2021 the program expired and credits of $4.3 million have been applied to customer bills under the City Council Cares Program.

Additionally, as discussed in the Form 10-K, in February 2021 the City Council adopted a resolution suspending residential customer disconnections for non-payment of utility bills and suspending the assessment and accumulation of late fees on residential customers with past-due balances through May 15, 2021. As of March 31, 2021, Entergy New Orleans recorded a regulatory asset of $14.8 million for costs associated with the COVID-19 pandemic.

Filings with the PUCT and Texas Cities (Entergy Texas)

Distribution Cost Recovery Factor (DCRF) Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $26.3 million annually, or $6.8 million in incremental annual revenues beyond Entergy Texas’s currently effective
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Notes to Financial Statements
DCRF rider based on its capital invested in distribution between January 1, 2020 and August 31, 2020. In February 2021 the administrative law judge with the State Office of Administrative Hearings approved Entergy Texas’s agreed motion for interim rates, which went into effect in March 2021. In March 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested DCRF revenue requirement and resolving all issues in the proceeding. This case has been remanded to the PUCT for consideration of a final order at a future open meeting.

Transmission Cost Recovery Factor (TCRF) Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $51 million annually, or $31.6 million in incremental annual revenues beyond Entergy Texas’s currently effective TCRF rider based on its capital invested in transmission between July 1, 2019 and August 31, 2020. A procedural schedule was established with a hearing scheduled in March 2021. In February 2021, Entergy Texas filed an agreed motion to abate the procedural schedule, noting that the parties had reached a settlement in principle, and the administrative law judge granted the motion to abate. In March 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2021 and resolving all issues in the proceeding. In March 2021 the administrative law judge granted the motion for interim rates, admitted evidence, and remanded this case to the PUCT for consideration of a final order at a future open meeting.

COVID-19 Orders

As discussed in the Form 10-K, in March 2020 the PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of the COVID-19 pandemic. In future proceedings the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the appropriate period of recovery, and any amount of carrying costs thereon. In March 2020 the PUCT ordered a moratorium on disconnections for nonpayment for all customer classes, but, in April 2020, revised the disconnect moratorium to apply only to residential customers. The PUCT allowed the moratorium to expire on June 13, 2020, but on July 17, 2020, the PUCT re-established the disconnect moratorium for residential customers until August 31, 2020. In January 2021, Entergy Texas resumed disconnections for customers with past-due balances that have not made payment arrangements. As of March 31, 2021, Entergy Texas recorded a regulatory asset of $10.7 million for costs associated with the COVID-19 pandemic.

Generation Cost Recovery Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed an application to establish a generation cost recovery rider with an initial annual revenue requirement of approximately $91 million to begin recovering a return of and on its capital investment in the Montgomery County Power Station through August 31, 2020. In December 2020, Entergy Texas filed an unopposed settlement supporting a generation cost recovery rider with an annual revenue requirement of approximately $86 million. On January 14, 2021, the PUCT approved the generation cost recovery rider settlement rates on an interim basis and abated the proceeding. In March 2021, Entergy Texas filed to update its generation cost recovery rider to include investment in Montgomery County Power Station after August 31, 2020. In April 2021 the ALJ issued an order unabating the proceeding to consider Entergy Texas’s updated application and establishing a procedural schedule that will result in administrative approval of Entergy Texas’s application in June 2021 if it is unopposed by parties to the proceeding.

In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which is expected to close in June 2021. The initial generation cost recovery rider rates proposed in the application represent no change from the generation cost recovery rider rates to be established in Entergy Texas’s previous generation cost recovery rider proceeding. Once Entergy Texas has acquired the Hardin County Peaking Facility, its investment in the facility will be reflected in an updated filing to Entergy Texas’s application, which will be made within 60 days of the acquisition’s closing.

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Entergy Arkansas Opportunity Sales Proceeding

As discussed in the Form 10-K, in May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover from its retail customers the costs of the opportunity sales payments made to the other Utility operating companies, and in July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and the parties await further instructions from the court.

Complaints Against System Energy

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in May 2020 the FERC issued an order on rehearing of Opinion No. 569 (Opinion No. 569-A). In June 2020 the procedural schedule in the System Energy proceeding was further revised in order to allow parties to address the Opinion No. 569-A methodology. The parties and FERC trial staff filed final rounds of testimony in August 2020. The hearing before a FERC ALJ occurred in late-September through early-October 2020, post-hearing briefing took place in November and December 2020.

In March 2021 the FERC ALJ issued an initial decision. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% is no longer just and reasonable, and that the replacement authorized return on equity, based on application of the Opinion No. 569-A methodology, should be 9.32%. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (January 2017-April 2018) based on the difference between the current return on equity and the replacement authorized return on equity. The ALJ determined that the April 2018 complaint concerning the authorized return on equity should be dismissed, and that no refunds for a second fifteen-month refund period should be due. With regard to System Energy’s capital structure, the ALJ determined that System Energy’s actual equity ratio is excessive and that the just and reasonable equity ratio is 48.15% equity, based on the average equity ratio of the proxy group used to evaluate the return on equity for the second complaint. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (September 2018-December 2019) based on the difference between the actual equity ratio and the 48.15% equity ratio. If the ALJ’s initial decision is upheld, the estimated refund for this proceeding is approximately $59 million, which includes interest through March 31, 2021, and the estimated resulting annual rate reduction would be approximately $46 million. The estimated refund will continue to accrue interest until a final FERC decision is issued. Based on the course of the proceeding to date, System Energy has recorded a provision of $36 million, including interest, as of March 31, 2021.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. In April 2021, System Energy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity and capital structure issues. Also in April 2021, the LPSC, APSC, MPSC, City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions are due in May 2021. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that
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System Energy is recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which is approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and that System Energy’s rate base should have been reduced for those liabilities. If the ALJ’s initial decision is upheld, the estimated refund for this issue through March 31, 2021, is approximately $422 million, plus interest, which is approximately $115 million through March 31, 2021. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections. If the initial decision is affirmed on this issue, System Energy estimates refunds of approximately $19 million, which includes interest through March 31, 2021.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. The ALJ in the initial decision acknowledges that these are issues of first impression before the FERC. The case is pending before the FERC, which will review the case and issue an order on the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

Also as discussed in the Form 10-K, in November 2020 the IRS issued a Revenue Agent’s Report (RAR) for the 2014/2015 tax year and in December 2020 Entergy executed it. The RAR contained an adjustment to System Energy’s uncertain nuclear decommissioning tax position. As a result of the RAR, in December 2020, System Energy filed amendments to its new Federal Power Act section 205 filings to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from the decommissioning uncertain tax position and to credit excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position. The amendments both propose the inclusion of the RAR as support for the filings. In December 2020 the LPSC, APSC, and City Council filed a protest in response to the amendments, reiterating their prior objections to the filings. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filings subject to refund, setting them for hearing, and holding the hearing in abeyance.

In December 2020, System Energy filed a new Federal Power Act section 205 filing to provide a one-time, historical credit to customers of $25.2 million for the accumulated deferred income taxes that would have been created by the decommissioning uncertain tax position if the IRS’s decision had been known in 2016. In January 2021 the LPSC, APSC, MPSC, and City Council filed a protest to the filing. In February 2021, the FERC issued an order accepting System Energy’s Federal Power Act section 205 filing subject to refund, setting it for hearing, and holding the hearing in abeyance. The one-time credit was made during the first quarter 2021.

LPSC Authorization of Additional Complaints

As discussed in the Form 10-K, in May 2020 the LPSC authorized its staff to file additional complaints at FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement, and the first of the additional complaints was filed by the LPSC, the APSC, the MPSC and the City Council in September 2020. The second of the additional complaints was filed at the FERC in March 2021 by the LPSC, the APSC, and the City Council against System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. The second complaint contains two primary allegations. First, it alleges that, based on the plant’s capacity factor and alleged safety performance, System Energy and the other
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respondents imprudently operated Grand Gulf during the period 2016-2020, and it seeks refunds of at least $360 million in alleged replacement energy costs, in addition to other costs, including those that can only be identified upon further investigation. Second, it alleges that the performance and/or management of the 2012 extended power uprate of Grand Gulf was imprudent, and it seeks refunds of all costs of the 2012 uprate that are determined to result from imprudent planning or management of the project. In addition to the requested refunds, the complaint asks that the FERC modify the Unit Power Sales Agreement to provide for full cost recovery only if certain performance indicators are met and to require pre-authorization of capital improvement projects in excess of $125 million before related costs may be passed through to customers in rates. In April 2021, System Energy and the other respondents filed their motion to dismiss and answer to the complaint. System Energy requested that the FERC dismiss the claims within the complaint. With respect to the claim concerning operations, System Energy argues that the complaint does not meet its legal burden because, among other reasons, it fails to allege any specific imprudent conduct. With respect to the claim concerning the uprate, System Energy argues that the complaint fails because, among other reasons, the complainants’ own conduct prevents them from raising a serious doubt as to the prudence of the uprate. System Energy also requests that the FERC dismiss other elements of the complaint, including the proposed modifications to the Unit Power Sales Agreement, because they are not warranted.

Storm Cost Recovery Filings with Retail Regulators

Entergy Louisiana

Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri

In August 2020 and October 2020, Hurricane Laura, Hurricane Delta, and Hurricane Zeta caused significant damage to portions of Entergy Louisiana’s service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the outages. Additionally, as a result of Hurricane Laura’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild.

In October 2020, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments to facilitate issuance of shorter-term bonds to provide interim financing for restoration costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta. Subsequently, Entergy Louisiana and the LPSC staff filed a joint motion seeking approval to exclude from the derivation of Entergy Louisiana’s capital structure and cost rate of debt for ratemaking purposes, including the allowance for funds used during construction, shorter-term debt up to $1.1 billion issued by Entergy Louisiana to fund costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta costs on an interim basis. In November 2020 the LPSC issued an order approving the joint motion, and Entergy Louisiana issued $1.1 billion of 0.62% Series mortgage bonds due November 2023. Also in November 2020, Entergy Louisiana drew $257 million from its funded storm reserves.

In February 2021, two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing incremental outages. As discussed above in “Fuel and purchased power recovery,” Entergy Louisiana is recovering the incremental fuel costs associated with Winter Storm Uri over a five-month period from April 2021 through August 2021.

In April 2021, Entergy Louisiana filed an application with the LPSC relating to Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by the storms are currently estimated to be approximately $2.05 billion, including approximately $1.74 billion in capital costs and approximately $310 million in non-capital costs. Including carrying costs through January 2022, Entergy Louisiana is seeking an LPSC determination that $2.10 billion was prudently incurred and, therefore, is eligible for recovery from customers. Additionally, Entergy Louisiana is requesting that the LPSC determine that re-establishment of a storm escrow
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Notes to Financial Statements
account to the previously authorized amount of $290 million is appropriate. Entergy Louisiana intends to supplement this application with a request regarding the financing and recovery of the recoverable storm restoration costs.

Entergy New Orleans

Hurricane Zeta

In October 2020, Hurricane Zeta caused significant damage to Entergy New Orleans’s service area. The storm resulted in widespread power outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy New Orleans’s electric facilities damaged by Hurricane Zeta are currently estimated to be approximately $36 million, including approximately $28 million in capital costs and approximately $8 million in non-capital costs. In March 2021, Entergy New Orleans withdrew $44 million from its funded storm reserves. Entergy New Orleans expects to initiate its storm cost recovery proceeding in May 2021.

Entergy Texas

Hurricane Laura, Hurricane Delta, and Winter Storm Uri

In August 2020 and October 2020, Hurricane Laura and Hurricane Delta caused extensive damage to Entergy Texas’s service area. In February 2021, Winter Storm Uri also caused damage to Entergy Texas’s service area. The storms resulted in widespread power outages, significant damage primarily to distribution and transmission infrastructure, and the loss of sales during the power outages. In April 2021, Entergy Texas filed an application with the PUCT requesting a determination that its system restoration costs associated with Hurricane Laura, Hurricane Delta, and Winter Storm Uri of approximately $250 million, including approximately $200 million in capital costs and approximately $50 million in non-capital costs were reasonable and necessary to enable Entergy Texas to restore electric service to its customers and Entergy Texas’s electric utility infrastructure. The filing currently includes only a portion of the Winter Storm Uri costs. Entergy Texas expects to initiate a proceeding later in 2021 to securitize the costs approved by the PUCT.


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Notes to Financial Statements
NOTE 3.  EQUITY (Entergy Corporation and Entergy Louisiana)

Common Stock

Earnings per Share

The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:
For the Three Months Ended March 31,
20212020
(In Millions, Except Per Share Data)
IncomeShares$/shareIncomeShares$/share
Basic earnings per share
Net income attributable to Entergy Corporation$334.6 200.5 $1.67 $118.7 199.8 $0.59 
Average dilutive effect of:
Stock options0.4 (0.01)0.7 — 
Other equity plans0.2 — 0.4 — 
Diluted earnings per share$334.6 201.1 $1.66 $118.7 200.9 $0.59 
The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 1.0 million for the three months ended March 31, 2021 and approximately 0.5 million for the three months ended March 31, 2020.

Entergy’s stock options and other equity compensation plans are discussed in Note 5 to the financial statements herein and in Note 12 to the financial statements in the Form 10-K.

Dividends declared per common share were $0.95 for the three months ended March 31, 2021 and $0.93 for the three months ended March 31, 2020.

Treasury Stock

During the three months ended March 31, 2021, Entergy Corporation issued 388,330 shares of its previously repurchased common stock to satisfy stock option exercises, vesting of shares of restricted stock, and other stock-based awards.  Entergy Corporation did not repurchase any of its common stock during the three months ended March 31, 2021.

Retained Earnings

On April 12, 2021, Entergy Corporation’s Board of Directors declared a common stock dividend of $0.95 per share, payable on June 1, 2021, to holders of record as of May 6, 2021.

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Notes to Financial Statements
Comprehensive Income
Accumulated other comprehensive income (loss) is included in the equity section of the balance sheets of Entergy and Entergy Louisiana. The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended March 31, 2021 by component:
Cash flow
hedges
net
unrealized
gain (loss)		Pension
and
other
postretirement
liabilities		Net
unrealized
investment
gain (loss)		Total
Accumulated
Other
Comprehensive
Income (Loss)
(In Thousands)
Beginning balance, January 1, 2021$28,719 ($534,576)$56,650 ($449,207)
Other comprehensive income (loss) before reclassifications1,482 — (45,301)(43,819)
Amounts reclassified from accumulated other comprehensive income (loss)(31,062)22,967 614 (7,481)
Net other comprehensive income (loss) for the period(29,580)22,967 (44,687)(51,300)
Ending balance, March 31, 2021
($861)($511,609)$11,963 ($500,507)

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended March 31, 2020 by component:
Cash flow
hedges
net
unrealized
gain (loss)		Pension
and
other
postretirement
liabilities		Net
unrealized
investment
gain (loss)		Total
Accumulated
Other
Comprehensive
Income (Loss)
(In Thousands)
Beginning balance, January 1, 2020$84,206 ($557,072)$25,946 ($446,920)
Other comprehensive income (loss) before reclassifications52,846 34,349 17,713 104,908 
Amounts reclassified from accumulated other comprehensive income (loss)(74,556)19,550 (1,969)(56,975)
Net other comprehensive income (loss) for the period(21,710)53,899 15,744 47,933 
Ending balance, March 31, 2020
$62,496 ($503,173)$41,690 ($398,987)
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Notes to Financial Statements
The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the three months ended March 31, 2021 and 2020:
Pension and Other
Postretirement Liabilities
20212020
(In Thousands)
Beginning balance, January 1,$4,327 $4,562 
Other comprehensive income (loss) before reclassifications— 10,050 
Amounts reclassified from accumulated other comprehensive income (loss)(407)(583)
Net other comprehensive income (loss) for the period(407)9,467 
Ending balance, March 31,
$3,920 $14,029 
Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the three months ended March 31, 2021 and 2020 were as follows:
Amounts reclassified
from AOCI		Income Statement Location
20212020
(In Thousands)
Cash flow hedges net unrealized gain (loss)
   Power contracts$39,367 $94,423 Competitive business operating revenues
   Interest rate swaps(48)(48)Miscellaneous - net
Total realized gain (loss) on cash flow hedges39,319 94,375 
Income taxes(8,257)(19,819)Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)$31,062 $74,556 
Pension and other postretirement liabilities
   Amortization of prior-service credit$5,248 $3,719 (a)
   Amortization of loss(34,529)(27,318)(a)
Total amortization(29,281)(23,599)
Income taxes6,314 4,049 Income taxes
Total amortization (net of tax)($22,967)($19,550)
Net unrealized investment gain (loss)
Realized gain (loss)($972)$3,116 Interest and investment income
Income taxes358 (1,147)Income taxes
Total realized investment gain (loss) (net of tax)($614)$1,969 
Total reclassifications for the period (net of tax)$7,481 $56,975 

(a)These accumulated other comprehensive income (loss) components were included in the computation of net periodic pension and other postretirement cost.  See Note 6 to the financial statements herein for additional
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Notes to Financial Statements
details.
Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy Louisiana for the three months ended March 31, 2021 and 2020 were as follows:
Amounts reclassified
from AOCI		Income Statement Location
20212020
(In Thousands)
Pension and other postretirement liabilities
   Amortization of prior-service credit$1,230 $1,089 (a)
   Amortization of loss(679)(301)(a)
Total amortization551 788 
Income taxes(144)(205)Income taxes
Total amortization (net of tax)407 583 
Total reclassifications for the period (net of tax)$407 $583 

(a)These accumulated other comprehensive income (loss) components were included in the computation of net periodic pension and other postretirement cost.  See Note 6 to the financial statements herein for additional details.


NOTE 4.  REVOLVING CREDIT FACILITIES, LINES OF CREDIT, SHORT-TERM BORROWINGS, AND LONG-TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in September 2024.  The facility includes fronting commitments for the issuance of letters of credit against $20 million of the total borrowing capacity of the credit facility.  The commitment fee is currently 0.225% of the undrawn commitment amount.  Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation.  The weighted average interest rate for the three months ended March 31, 2021 was 1.63% on the drawn portion of the facility.  Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2021.
Capacity BorrowingsLetters
of Credit		Capacity
Available
(In Millions)
$3,500$55$6$3,439

Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization.  Entergy is in compliance with this covenant.  If Entergy fails to meet this ratio, or if Entergy Corporation or one of the Registrant Subsidiaries (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility maturity date may occur.

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $2 billion.  As of March 31, 2021, Entergy Corporation had approximately $1,028 million of commercial paper outstanding.  The weighted-average interest rate for the three months ended March 31, 2021 was 0.34%.

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Notes to Financial Statements
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of March 31, 2021 as follows:
CompanyExpiration
Date		Amount of
Facility		Interest Rate (a)Amount Drawn
as of
March 31, 2021		Letters of Credit
Outstanding as of
March 31, 2021
Entergy ArkansasApril 2022$25 million (b)2.75%$—$—
Entergy ArkansasSeptember 2024$150 million (c)1.21%$—$—
Entergy LouisianaSeptember 2024$350 million (c)1.21%$—$—
Entergy MississippiApril 2022$37.5 million (d)1.58%$—$—
Entergy MississippiApril 2022$35 million (d)1.58%$—$—
Entergy MississippiApril 2022$10 million (d)1.58%$—$—
Entergy New OrleansNovember 2021$25 million (c)1.36%$—$—
Entergy TexasSeptember 2024$150 million (c)1.58%$—$1.3 million

(a)The interest rate is the estimated interest rate as of March 31, 2021 that would have been applied to outstanding borrowings under the facility.
(b)Borrowings under the Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.
(c)The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $5 million for Entergy Arkansas; $15 million for Entergy Louisiana; $10 million for Entergy New Orleans; and $30 million for Entergy Texas.
(d)Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable at Entergy Mississippi’s option.

The commitment fees on the credit facilities range from 0.075% to 0.225% of the undrawn commitment amount. Each of the credit facilities requires the Registrant Subsidiary borrower to maintain a debt ratio, as defined, of 65% or less of its total capitalization.  Each Registrant Subsidiary is in compliance with this covenant.

In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each entered into one or more uncommitted standby letter of credit facilities primarily as a means to post collateral to support its obligations to MISO. Following is a summary of the uncommitted standby letter of credit facilities as of March 31, 2021:
CompanyAmount of
Uncommitted Facility		Letter of Credit FeeMISO Letters of Credit
Issued as of
March 31, 2021 (a) (b)
Entergy Arkansas$25 million0.78%$1 million
Entergy Louisiana$125 million 0.78%$12.8 million
Entergy Mississippi$65 million0.78%$1 million
Entergy New Orleans$15 million1.00%$2 million
Entergy Texas$50 million0.70%$30.2 million

(a)As of March 31, 2021, letters of credit posted with MISO covered financial transmission rights exposure of $0.4 million for Entergy Arkansas, $0.2 million for Entergy Louisiana, $0.4 million for Entergy Mississippi, and $0.1 million for Entergy New Orleans. See Note 8 to the financial statements herein for discussion of financial transmission rights.
(b)As of March 31, 2021, in addition to the $1 million MISO letter of credit, Entergy Mississippi has $1 million of non-MISO letters of credit outstanding under this facility.
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Entergy Corporation and Subsidiaries
Notes to Financial Statements

The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are effective through July 14, 2022. In addition to borrowings from commercial banks, these companies may also borrow from the Entergy System money pool and from other internal short-term borrowing arrangements.  The money pool and the other internal borrowing arrangements are inter-company borrowing arrangements designed to reduce the Utility subsidiaries’ dependence on external short-term borrowings.  Borrowings from internal and external short-term borrowings combined may not exceed the FERC-authorized limits.  The following were the FERC-authorized limits for short-term borrowings and the outstanding short-term borrowings as of March 31, 2021 (aggregating both internal and external short-term borrowings) for the Registrant Subsidiaries:
 AuthorizedBorrowings
 (In Millions)
Entergy Arkansas$250$—
Entergy Louisiana $450 $—
Entergy Mississippi$175$—
Entergy New Orleans$150$25
Entergy Texas$200$31
System Energy$200$—

Variable Interest Entities (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)

See Note 17 to the financial statements in the Form 10-K for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIEs).  To finance the acquisition and ownership of nuclear fuel, the nuclear fuel company VIEs have credit facilities and three of the four VIEs have commercial paper programs in place. Following is a summary as of March 31, 2021:
CompanyExpiration
Date 		Amount
of
Facility		Weighted
 Average Interest
 Rate on
 Borrowings (a)		Amount
Outstanding as of
March 31, 2021
(Dollars in Millions)
Entergy Arkansas VIESeptember 2022$801.26%$4.8
Entergy Louisiana River Bend VIESeptember 2022$1051.24%$70.5
Entergy Louisiana Waterford VIESeptember 2022$1051.25%$73.2
System Energy VIESeptember 2022$1201.23%$63.4

(a)Includes letter of credit fees and bank fronting fees on commercial paper issuances, if any, by the nuclear fuel company variable interest entities for Entergy Arkansas, Entergy Louisiana, and System Energy. The nuclear fuel company variable interest entity for Entergy Louisiana River Bend does not issue commercial paper, but borrows directly on its bank credit facility.

The commitment fees on the credit facilities are 0.125% of the undrawn commitment amount for the Entergy Arkansas, Entergy Louisiana, and System Energy VIEs.  Each credit facility requires the respective lessee of nuclear fuel (Entergy Arkansas, Entergy Louisiana, or Entergy Corporation as guarantor for System Energy) to maintain a consolidated debt ratio, as defined, of 70% or less of its total capitalization.

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Notes to Financial Statements
The nuclear fuel company variable interest entities had notes payable that were included in debt on the respective balance sheets as of March 31, 2021 as follows:
CompanyDescriptionAmount
Entergy Arkansas VIE
3.65% Series L due July 2021
$90 million
Entergy Arkansas VIE
3.17% Series M due December 2023
$40 million
Entergy Louisiana River Bend VIE
2.51% Series V due June 2027
$70 million
Entergy Louisiana Waterford VIE
3.22% Series I due December 2023
$20 million
System Energy VIE
2.05% Series K due September 2027
$90 million

In accordance with regulatory treatment, interest on the nuclear fuel company variable interest entities’ credit facilities, commercial paper, and long-term notes payable is reported in fuel expense.

Entergy Arkansas, Entergy Louisiana, and System Energy each have obtained financing authorizations from the FERC that extend through July 14, 2022 for issuances by its nuclear fuel company variable interest entities.

Debt Issuances and Retirements

(Entergy Corporation)

In March 2021, Entergy Corporation issued $650 million of 1.90% Series senior notes due June 2028 and $650 million of 2.40% Series senior notes due June 2031. Entergy Corporation used the proceeds to repay a portion of its outstanding commercial paper and for general corporate purposes.

(Entergy Arkansas)

In March 2021, Entergy Arkansas issued $400 million of 3.35% Series mortgage bonds due June 2052. Entergy Arkansas expects to use, or has used, the proceeds, together with other funds, to finance in part the purchase of the Searcy Solar Facility, to repay a portion of the debt outstanding under its $150 million long-term revolving credit facility, to repay a portion of the debt outstanding under its $25 million short-term revolving credit facility, and for general corporate purposes.

(Entergy Louisiana)

In March 2021, Entergy Louisiana issued $500 million of 2.35% Series mortgage bonds due June 2032 and $500 million of 3.10% Series mortgage bonds due June 2041. Entergy Louisiana used the proceeds, together with other funds, to repay on or prior to maturity, its $200 million of 4.80% Series mortgage bonds due May 2021, to finance, on an interim basis, storm restoration costs related to Hurricane Laura, Hurricane Delta, Hurricane Zeta, and the winter storms of February 2021, and for general corporate purposes.

In April 2021, Entergy Louisiana arranged for the issuance by the Louisiana Local Government Environmental Facilities and Community Development Authority of (i) $16.2 million of 2.00% pollution control revenue bonds Series 2021A due June 2030, and (ii) $182.480 million of 2.50% pollution control revenue bonds Series 2021B due April 2036, each of which is evidenced by a separate series of collateral trust mortgage bonds of Entergy Louisiana. A portion of the proceeds were applied in April 2021 to the refunding of $83.680 million of outstanding pollution control revenue bonds previously issued on behalf of Entergy Louisiana. The remainder of the proceeds were held in trust as of April 1, 2021 and are expected to be applied in June 2021 to the refunding of $115 million of outstanding pollution control revenue bonds previously issued on behalf of Entergy Louisiana.

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Entergy Corporation and Subsidiaries
Notes to Financial Statements
(Entergy Mississippi)

In March 2021, Entergy Mississippi issued $200 million of 3.50% Series mortgage bonds due June 2051. Entergy Mississippi used the proceeds, together with other funds, to repay a portion of the debt outstanding under its three short-term revolving credit facilities with an aggregate commitment of $82.5 million and for general corporate purposes.

(Entergy Texas)

In May 2021, Entergy Texas redeemed $125 million of 2.55% Series mortgage bonds due June 2021.

Fair Value

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of March 31, 2021 were as follows:
Book Value
of Long-Term Debt		Fair Value
of Long-Term Debt (a)
(In Thousands)
Entergy$24,704,475 $25,716,967 
Entergy Arkansas$3,958,751 $4,126,514 
Entergy Louisiana$10,059,885 $10,681,713 
Entergy Mississippi$1,981,429 $2,084,891 
Entergy New Orleans$642,412 $584,475 
Entergy Texas$2,465,827 $2,545,973 
System Energy$768,969 $785,758 

(a)Fair values were classified as Level 2 in the fair value hierarchy discussed in Note 8 to the financial statements herein.

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of December 31, 2020 were as follows:
Book Value
of Long-Term Debt		Fair Value
of Long-Term Debt (a)
(In Thousands)
Entergy$22,369,776 $24,813,818 
Entergy Arkansas$3,967,507 $4,355,632 
Entergy Louisiana$9,027,451 $10,258,294 
Entergy Mississippi$1,780,577 $2,021,432 
Entergy New Orleans$642,233 $620,634 
Entergy Texas$2,493,708 $2,765,193 
System Energy$805,274 $840,540 

(a)Fair values were classified as Level 2 in the fair value hierarchy discussed in Note 8 to the financial statements herein.


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Notes to Financial Statements
NOTE 5.  STOCK-BASED COMPENSATION (Entergy Corporation)

Entergy grants stock and stock-based awards, which are described more fully in Note 12 to the financial statements in the Form 10-K.  Awards under Entergy’s plans generally vest over three years.

Stock Options

Entergy granted options on 508,704 shares of its common stock under the 2019 Omnibus Incentive Plan during the first quarter 2021 with a fair value of $12.27 per option.  As of March 31, 2021, there were options on 2,890,582 shares of common stock outstanding with a weighted-average exercise price of $90.75.  The intrinsic value, which has no effect on net income, of the outstanding stock options is calculated by the positive difference between the weighted average exercise price of the stock options granted and Entergy Corporation’s common stock price as of March 31, 2021.  The aggregate intrinsic value of the stock options outstanding as of March 31, 2021 was $41.6 million.

The following table includes financial information for outstanding stock options for the three months ended March 31, 2021 and 2020:
20212020
(In Millions)
Compensation expense included in Entergy’s net income$1.0 $1.0 
Tax benefit recognized in Entergy’s net income$0.3 $0.3 
Compensation cost capitalized as part of fixed assets and materials and supplies$0.4 $0.4 
Other Equity Awards

In January 2021 the Board approved and Entergy granted 392,382 restricted stock awards and 203,983 long-term incentive awards under the 2019 Omnibus Incentive Plan.  The restricted stock awards were made effective on January 28, 2021 and were valued at $95.87 per share, which was the closing price of Entergy’s common stock on that date.  Shares of restricted stock have the same dividend and voting rights as other common stock, are considered issued and outstanding shares of Entergy upon vesting, and are expensed ratably over the three-year vesting period. One-third of the restricted stock awards and accrued dividends will vest upon each anniversary of the grant date.  

In addition, long-term incentive awards were also granted in the form of performance units that represent the value of, and are settled with, one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period on the number of performance units earned. To emphasize the importance of strong cash generation for the long-term health of its business, Entergy Corporation is replacing the cumulative adjusted earnings per share metric with a credit measure – adjusted funds from operations/debt ratio for the 2021-2023 performance period. Performance will be measured based eighty percent on relative total shareholder return and twenty percent on the credit measure.  The performance units were granted on January 28, 2021 and eighty percent were valued at $110.74 per share based on various factors, primarily market conditions; and twenty percent were valued at $95.87 per share, the closing price of Entergy’s common stock on that date.  Performance units have the same dividend rights as shares of Entergy common stock and are considered issued and outstanding shares of Entergy upon vesting. Performance units are expensed ratably over the three-year vesting period and compensation cost for the portion of the award based on cumulative adjusted earnings per share will be adjusted based on the number of units that ultimately vest. See Note 12 to the financial statements in the Form 10-K for a description of the Long-Term Performance Unit Program.

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Entergy Corporation and Subsidiaries
Notes to Financial Statements
The following table includes financial information for other outstanding equity awards for the three months ended March 31, 2021 and 2020:
20212020
(In Millions)
Compensation expense included in Entergy’s net income$10.8 $9.4 
Tax benefit recognized in Entergy’s net income$2.7 $2.4 
Compensation cost capitalized as part of fixed assets and materials and supplies$4.0 $3.4 

NOTE 6.  RETIREMENT AND OTHER POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Components of Qualified Net Pension Cost    
Entergy’s qualified pension cost, including amounts capitalized, for the first quarters of 2021 and 2020, included the following components:
20212020
(In Thousands)
Service cost - benefits earned during the period$45,241 $40,379 
Interest cost on projected benefit obligation46,099 60,799 
Expected return on assets(105,713)(103,565)
Amortization of net loss104,392 87,259 
Net pension costs$90,019 $84,872 
The Registrant Subsidiaries’ qualified pension cost, including amounts capitalized, for their employees for the first quarters of 2021 and 2020, included the following components:
2021Entergy
Arkansas		Entergy
Louisiana		Entergy
 Mississippi		Entergy
New Orleans		Entergy
Texas		System
Energy
(In Thousands)
Service cost - benefits earned during the period$7,418 $10,043 $2,364 $796 $1,801 $2,314 
Interest cost on projected benefit obligation8,341 9,562 2,462 1,029 1,949 2,142 
Expected return on assets(19,670)(22,538)(5,587)(2,622)(5,237)(4,778)
Amortization of net loss19,303 19,204 5,668 2,270 3,711 5,326 
Net pension cost$15,392 $16,271 $4,907 $1,473 $2,224 $5,004 

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Notes to Financial Statements
2020Entergy
Arkansas		Entergy
Louisiana		Entergy
 Mississippi		Entergy
New Orleans		Entergy
Texas		System
Energy
(In Thousands)
Service cost - benefits earned during the period$6,566 $8,794 $2,023 $663 $1,546 $1,965 
Interest cost on projected benefit obligation11,433 12,841 3,340 1,456 2,782 2,814 
Expected return on assets(19,622)(22,402)(5,757)(2,627)(5,486)(4,663)
Amortization of net loss16,897 16,627 4,748 2,005 3,265 4,279 
Net pension cost$15,274 $15,860 $4,354 $1,497 $2,107 $4,395 

Non-Qualified Net Pension Cost

Entergy recognized $4.6 million and $4.5 million in pension cost for its non-qualified pension plans in the first quarters of 2021 and 2020, respectively.
The Registrant Subsidiaries recognized the following pension cost for their employees for their non-qualified pension plans for the first quarters of 2021 and 2020:
Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New Orleans		Entergy
Texas
(In Thousands)
2021$90 $44 $96 $8 $115 
2020$83 $37 $90 $8 $117 

Components of Net Other Postretirement Benefit Cost (Income)
Entergy’s other postretirement benefit cost (income), including amounts capitalized, for the first quarters of 2021 and 2020, included the following components:
 20212020
 (In Thousands)
Service cost - benefits earned during the period$6,645 $5,801 
Interest cost on accumulated postretirement benefit obligation (APBO)5,320 7,932 
Expected return on assets(10,805)(10,328)
Amortization of prior service credit(8,267)(5,922)
Amortization of net loss713 468 
Net other postretirement benefit income($6,394)($2,049)


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Notes to Financial Statements

The Registrant Subsidiaries’ other postretirement benefit cost (income), including amounts capitalized, for their employees for the first quarters of 2021 and 2020, included the following components:
2021Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New Orleans		Entergy
Texas		System
Energy
(In Thousands)
Service cost - benefits earned during the period$1,034 $1,544 $362 $109 $346 $335 
Interest cost on APBO932 1,130 278 130 317 220 
Expected return on assets(4,505)— (1,384)(1,438)(2,548)(789)
Amortization of prior service credit(280)(1,230)(444)(229)(936)(109)
Amortization of net (gain) loss49 (91)19 (178)100 15 
Net other postretirement benefit cost (income)($2,770)$1,353 ($1,169)($1,606)($2,721)($328)

2020Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New Orleans		Entergy
Texas		System
Energy
(In Thousands)
Service cost - benefits earned during the period
$828 $1,423 $351 $105 $303 $294 
Interest cost on APBO
1,217 1,723 422 227 582 307 
Expected return on assets
(4,326)— (1,307)(1,355)(2,435)(748)
Amortization of prior service credit
(661)(1,089)(321)(76)(550)(219)
Amortization of net (gain) loss
55 (199)29 (38)212 20 
Net other postretirement benefit cost (income)
($2,887)$1,858 ($826)($1,137)($1,888)($346)

Reclassification out of Accumulated Other Comprehensive Income (Loss)
Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) for the first quarters of 2021 and 2020:
2021Qualified
Pension
Costs		Other
Postretirement
Costs		Non-Qualified
Pension Costs		Total
(In Thousands)
Entergy
Amortization of prior service (cost) credit$— $5,288 ($40)$5,248 
Amortization of net loss(33,439)(495)(595)(34,529)
($33,439)$4,793 ($635)($29,281)
Entergy Louisiana
Amortization of prior service credit$— $1,230 $— $1,230 
Amortization of net gain (loss)(769)91 (1)(679)
($769)$1,321 ($1)$551 
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2020Qualified
Pension
Costs		Other
Postretirement
Costs		Non-Qualified
Pension Costs		Total
(In Thousands)
Entergy
Amortization of prior service (cost) credit$— $3,776 ($57)$3,719 
Amortization of net gain (loss)(26,462)(25)(831)(27,318)
($26,462)$3,751 ($888)($23,599)
Entergy Louisiana
Amortization of prior service credit$— $1,089 $— $1,089 
Amortization of net gain (loss)(499)199 (1)(301)
($499)$1,288 ($1)$788 

Accounting for Pension and Other Postretirement Benefits

In accordance with ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” the other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income.

Other Postretirement Benefits

In March 2020, Entergy announced changes to its other postretirement benefits. Effective January 1, 2021, certain retired, former non-bargaining employees age 65 and older who are eligible for Entergy-sponsored retiree welfare benefits, and their eligible spouses who are age 65 and older (collectively, Medicare-eligible participants), are eligible to participate in a new Entergy-sponsored retiree health plan, and are no longer eligible for retiree coverage under the Entergy Corporation Companies’ Benefits Plus Medical, Dental and Vision Plans. Under the new Entergy retiree health plan, Medicare-eligible participants are eligible to participate in a health reimbursement arrangement which they may use towards the purchase of various types of qualified insurance offered through a Medicare exchange provider and for other qualified medical expenses. In accordance with accounting standards, the effects of this change were reflected in the March 31, 2020 other postretirement obligation.

Employer Contributions

Based on current assumptions, Entergy expects to contribute $356 million to its qualified pension plans in 2021.  As of March 31, 2021, Entergy had contributed $152.2 million to its pension plans.  Based on current assumptions, the Registrant Subsidiaries expect to contribute the following to qualified pension plans for their employees in 2021:
Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New Orleans		Entergy
Texas		System
Energy
(In Thousands)
Expected 2021 pension contributions$66,649 $59,882 $13,715 $5,395 $6,955 $18,663 
Pension contributions made through March 2021$21,361 $29,159 $4,799 $2,629 $2,935 $6,675 
Remaining estimated pension contributions to be made in 2021$45,288 $30,723 $8,916 $2,766 $4,020 $11,988 


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Notes to Financial Statements
NOTE 7.  BUSINESS SEGMENT INFORMATION (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy’s reportable segments as of March 31, 2021 were Utility and Entergy Wholesale Commodities.  Utility includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, and natural gas utility service in portions of Louisiana.  Entergy Wholesale Commodities includes the ownership, operation, and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers.  Entergy Wholesale Commodities also includes the ownership of interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.  “All Other” includes the parent company, Entergy Corporation, and other business activity.
Entergy’s segment financial information for the first quarters of 2021 and 2020 was as follows:
UtilityEntergy
Wholesale
Commodities		All OtherEliminationsConsolidated
(In Thousands)
2021
Operating revenues$2,596,616 $248,219 $23 ($20)$2,844,838 
Income taxes$59,734 $15,560 ($9,352)$— $65,942 
Consolidated net income (loss)$360,600 $38,124 ($27,680)($31,899)$339,145 
Total assets as of March 31, 2021$56,086,185 $3,793,754 $867,301 ($2,079,612)$58,667,628 
2020
Operating revenues$2,094,629 $332,549 $11 ($10)$2,427,179 
Income taxes($52,949)($30,540)$12,295 $— ($71,194)
Consolidated net income (loss)$323,849 ($110,428)($58,228)($31,899)$123,294 
Total assets as of December 31, 2020$55,940,153 $3,800,378 $552,632 ($2,053,951)$58,239,212 

The Entergy Wholesale Commodities business is sometimes referred to as the “competitive businesses.”  Eliminations were primarily intersegment activity. Almost all of Entergy’s goodwill was related to the Utility segment.

As discussed in Note 13 to the financial statements in the Form 10-K, Entergy management has undertaken a strategy to manage and reduce the risk of the Entergy Wholesale Commodities business, which includes taking actions to shut down and sell all of the remaining plants in the merchant nuclear fleet. These decisions and transactions resulted in asset impairments; employee retention and severance expenses and other benefits-related costs; and contracted economic development contributions.
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Total restructuring charges for the first quarters of 2021 and 2020 were comprised of the following:
20212020
Employee retention and severance
expenses and other benefits-related costs		Contracted economic development costsTotalEmployee retention and severance
expenses and other benefits-related costs		Contracted economic development costsTotal
 (In Millions)
Balance as of January 1,$145 $14 $159 $129 $14 $143 
Restructuring costs accrued13 — 13 21 — 21 
Cash paid out1 — 1 — — — 
Balance as of March 31,$157 $14 $171 $150 $14 $164 

In addition, Entergy Wholesale Commodities incurred $3 million in the first quarter 2021 and $5 million in the first quarter 2020 of impairment and other related charges associated with these strategic decisions and transactions.

Going forward, Entergy Wholesale Commodities expects to incur employee retention and severance expenses associated with management’s strategy to exit the merchant power business of approximately $40 million in 2021, of which $13 million has been incurred as of March 31, 2021, and a total of approximately $15 million in 2022.

Registrant Subsidiaries

Each of the Registrant Subsidiaries has one reportable segment, which is an integrated utility business, except for System Energy, which is an electricity generation business.  Each of the Registrant Subsidiaries’ operations is managed on an integrated basis by that company because of the substantial effect of cost-based rates and regulatory oversight on the business process, cost structures, and operating results.


NOTE 8.  RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Market Risk

In the normal course of business, Entergy is exposed to a number of market risks.  Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument.  All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk.  Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk.

The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation.  To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs that are recovered from customers.

As a wholesale generator, Entergy Wholesale Commodities’ core business is selling energy, measured in MWh, to its customers.  Entergy Wholesale Commodities enters into forward contracts with its customers and also sells energy and capacity in the day ahead or spot markets.  In addition to its forward physical power and gas
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Notes to Financial Statements
contracts, Entergy Wholesale Commodities may also use a combination of financial contracts, including swaps, collars, and options, to mitigate commodity price risk.  When the market price falls, the combination of instruments is expected to settle in gains that offset lower revenue from generation, which results in a more predictable cash flow.

Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity.  For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk.  A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk.  Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace.  Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies.  Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods.  These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives.

Derivatives

Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions.  Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements.  Financially-settled cash flow hedges can include natural gas and electricity swaps and options and interest rate swaps.  Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments.

Entergy enters into derivatives to manage natural risks inherent in its physical or financial assets or liabilities.  Electricity over-the-counter instruments and futures contracts that financially settle against day-ahead power pool prices are used to manage price exposure for Entergy Wholesale Commodities generation. Entergy Wholesale Commodities is hedging the variability in future cash flows with derivatives for forecasted power transactions through April 30, 2021.  Planned generation currently under contract from Entergy Wholesale Commodities nuclear power plants is 98% for the remainder of 2021, of which approximately 12% is sold under financial derivatives and the remainder under normal purchase/normal sale contracts.  Total planned generation for the remainder of 2021 is 5.8 TWh.

Entergy may use standardized master netting agreements to help mitigate the credit risk of derivative instruments. These master agreements facilitate the netting of cash flows associated with a single counterparty and may include collateral requirements. Cash, letters of credit, and parental/affiliate guarantees may be obtained as security from counterparties in order to mitigate credit risk. The collateral agreements require a counterparty to post cash or letters of credit in the event an exposure exceeds an established threshold. The threshold represents an unsecured credit limit, which may be supported by a parental/affiliate guarantee, as determined in accordance with Entergy’s credit policy. In addition, collateral agreements allow for termination and liquidation of all positions in the event of a failure or inability to post collateral.

Certain of the agreements to sell the power produced by Entergy Wholesale Commodities power plants contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations depending on the mark-to-market values of the contracts. The primary form of credit support to satisfy these requirements is an Entergy Corporation guarantee.  As of March 31, 2021, a derivative contract with one counterparty is in a liability position (approximately $1 million total). In addition to the corporate guarantee, $6 million in cash collateral was required to be posted by the Entergy subsidiary to its counterparties and $7 million in letters of credit
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were required to be posted by its counterparties to the Entergy subsidiary. As of December 31, 2020, there were no derivative contracts with counterparties in a liability position. In addition to the corporate guarantee, $5 million in cash collateral was required to be posted by the Entergy subsidiary to its counterparties and $39 million in letters of credit were required to be posted by it counterparties to the Entergy subsidiary. If the Entergy Corporation credit rating falls below investment grade, Entergy would have to post collateral equal to the estimated outstanding liability under the contract at the applicable date.   

Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy had executed natural gas swaps and options as of March 31, 2021 was 3 years for Entergy Louisiana and the maximum length of time over which Entergy had executed natural gas swaps as of March 31, 2021 was 7 months for Entergy Mississippi. The total volume of natural gas swaps and options outstanding as of March 31, 2021 was 41,296,000 MMBtu for Entergy, including 21,920,000 MMBtu for Entergy Louisiana and 19,376,000 MMBtu for Entergy Mississippi. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.

During the second quarter 2020, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2020 through May 31, 2021. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy Wholesale Commodities are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of March 31, 2021 was 23,009 GWh for Entergy, including 5,765 GWh for Entergy Arkansas, 10,716 GWh for Entergy Louisiana, 2,576 GWh for Entergy Mississippi, 1,055 GWh for Entergy New Orleans, and 2,820 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy Wholesale Commodities is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy Wholesale Commodities as of March 31, 2021 and December 31, 2020. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans as of March 31, 2021 and for Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2020.

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The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of March 31, 2021 are shown in the table below.  Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
InstrumentBalance Sheet LocationGross Fair Value (a)Offsetting Position (b)Net Fair Value (c) (d)Business
(In Millions)
Derivatives not designated as hedging instruments
Assets:
Natural gas swaps and optionsPrepayments and other (current portion)$1$—$1Utility
Financial transmission rightsPrepayments and other$4$—$4Utility and Entergy Wholesale Commodities
Liabilities:
Natural gas swaps and optionsOther current liabilities (current portion)$2$—$2Utility
Natural gas swaps and optionsOther non-current liabilities (non-current portion)$1$—$1Utility
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The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of December 31, 2020 are shown in the table below.  Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
InstrumentBalance Sheet LocationGross Fair Value (a)Offsetting Position (b)Net Fair Value (c) (d)Business
(In Millions)
Derivatives designated as hedging instruments    
Assets:    
Electricity swaps and optionsPrepayments and other (current portion)$39($1)$38Entergy Wholesale Commodities
Liabilities:    
Electricity swaps and optionsOther current liabilities (current portion)$1($1)$—Entergy Wholesale Commodities
Derivatives not designated as hedging instruments    
Assets:    
Natural gas swaps and optionsPrepayments and other (current portion)$1$—$1Utility
Natural gas swaps and optionsOther deferred debits and other assets (non-current portion)$1$—$1Utility
Financial transmission rightsPrepayments and other$9$—$9Utility and Entergy Wholesale Commodities
Liabilities:    
Natural gas swaps and optionsOther current liabilities (current portion)$6$—$6Utility
Natural gas swaps and optionsOther non-current liabilities (non-current portion)$1$—$1Utility

(a)Represents the gross amounts of recognized assets/liabilities
(b)Represents the netting of fair value balances with the same counterparty
(c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheet
(d)Excludes cash collateral in the amount of $6 million posted as of March 31, 2021 and $5 million posted as of December 31, 2020. Also excludes letters of credit in the amount of $1 million posted and $7 million held as of March 31, 2021 and $1 million posted and $39 million held as of December 31, 2020.

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Notes to Financial Statements
The effects of Entergy’s derivative instruments designated as cash flow hedges on the consolidated income statements for the three months ended March 31, 2021 and 2020 were as follows:
InstrumentAmount of gain (loss)
recognized in other
comprehensive income		Income Statement locationAmount of gain
(loss)
reclassified from
accumulated
other
comprehensive
income into
income (a)
(In Millions)(In Millions)
2021
Electricity swaps and options$2Competitive businesses operating revenues$39
2020
Electricity swaps and options$67Competitive businesses operating revenues$94

(a)Before taxes of $8 million and $20 million for the three months ended March 31, 2021 and 2020, respectively

Based on market prices as of March 31, 2021, unrealized gains (losses) recorded in accumulated other comprehensive income on cash flow hedges relating to power sales totaled $0.3 million, which are expected to be reclassified from accumulated other comprehensive income to operating revenues in the next twelve months.  The actual amount reclassified from accumulated other comprehensive income, however, could vary due to future changes in market prices.    

Entergy may effectively liquidate a cash flow hedge instrument by entering into a contract offsetting the original hedge, and then de-designating the original hedge in this situation.  Gains or losses accumulated in other comprehensive income prior to de-designation continue to be deferred in other comprehensive income until they are included in income as the original hedged transaction occurs. From the point of de-designation, the gains or losses on the original hedge and the offsetting contract are recorded as assets or liabilities on the balance sheet and offset as they flow through to earnings.


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The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended March 31, 2021 and 2020 were as follows:
InstrumentIncome Statement
location		Amount of gain (loss)
recorded in the income statement
(In Millions)
2021
Natural gas swaps and optionsFuel, fuel-related expenses, and gas purchased for resale(a)$7
Financial transmission rightsPurchased power expense(b)$128
Electricity swaps and options (c)Competitive business operating revenues($2)
2020
Natural gas swapsFuel, fuel-related expenses, and gas purchased for resale(a)($7)
Financial transmission rightsPurchased power expense(b)$13
Electricity swaps and options (c)Competitive business operating revenues$—

(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms.
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.
(c)There were no gains (losses) recognized in accumulated other comprehensive income from electricity swaps and options.

The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of March 31, 2021 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
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InstrumentBalance Sheet LocationGross Fair Value (a)Offsetting Position (b)Net Fair Value (c) (d)Registrant
(In Millions)
Assets:
Natural gas swaps and optionsPrepayments and other$1.0$—$1.0Entergy Louisiana
Natural gas swaps and optionsOther deferred debits and other assets (non-current portion)$0.4$—$0.4Entergy Louisiana
Financial transmission rightsPrepayments and other$1.5($0.1)$1.4Entergy Arkansas
Financial transmission rightsPrepayments and other$1.3($0.1)$1.2Entergy Louisiana
Financial transmission rightsPrepayments and other$0.3$—$0.3Entergy Mississippi
Financial transmission rightsPrepayments and other$0.1$—$0.1
Entergy New Orleans
Financial transmission rightsPrepayments and other$0.5$—$0.5Entergy Texas
Liabilities:
Natural gas swaps and optionsOther non-current liabilities$0.8$—$0.8Entergy Louisiana
Natural gas swapsOther current liabilities$2.3$—$2.3Entergy Mississippi

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The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2020 were as follows:
InstrumentBalance Sheet LocationGross Fair Value (a)Offsetting Position (b)Net Fair Value (c) (d)Registrant
(In Millions)
Assets:
Natural gas swaps and optionsPrepayments and other $0.8$—$0.8Entergy Louisiana
Natural gas swaps and optionsOther deferred debits and other assets$0.5$—$0.5Entergy Louisiana
Financial transmission rightsPrepayments and other$2.9($0.2)$2.7Entergy Arkansas
Financial transmission rightsPrepayments and other$4.3($0.1)$4.2Entergy Louisiana
Financial transmission rightsPrepayments and other$0.6$—$0.6Entergy Mississippi
Financial transmission rightsPrepayments and other$0.2($0.1)$0.1Entergy New Orleans
Financial transmission rightsPrepayments and other$1.6$—$1.6Entergy Texas
Liabilities:
Natural gas swaps and optionsOther current liabilities$0.3$—$0.3Entergy Louisiana
Natural gas swaps and optionsOther non-current liabilities$1.3$—$1.3Entergy Louisiana
Natural gas swapsOther current liabilities$5.0$—$5.0Entergy Mississippi
Natural gas swapsOther current liabilities$0.3$—$0.3Entergy New Orleans

(a)Represents the gross amounts of recognized assets/liabilities
(b)Represents the netting of fair value balances with the same counterparty
(c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets
(d)As of March 31, 2021, letters of credit posted with MISO covered financial transmission rights exposure of $0.4 million for Entergy Arkansas, $0.2 million for Entergy Louisiana, $0.4 million for Entergy Mississippi, and $0.1 million for Entergy New Orleans. As of December 31, 2020, letters of credit posted with MISO covered financial transmission rights exposure of $0.3 million for Entergy Louisiana, $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $0.5 million for Entergy Texas.
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The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended March 31, 2021 and 2020 were as follows:
InstrumentIncome Statement LocationAmount of gain
(loss) recorded
in the income statement		Registrant
(In Millions)
2021
Natural gas swaps and optionsFuel, fuel-related expenses, and gas purchased for resale$1.8(a)Entergy Louisiana
Natural gas swapsFuel, fuel-related expenses, and gas purchased for resale$5.2(a)Entergy Mississippi
Natural gas swapsFuel, fuel-related expenses, and gas purchased for resale($0.1)(a)Entergy New Orleans
Financial transmission rightsPurchased power expense$26.1(b)Entergy Arkansas
Financial transmission rightsPurchased power expense$12.3(b)Entergy Louisiana
Financial transmission rightsPurchased power expense$7.2(b)Entergy Mississippi
Financial transmission rightsPurchased power expense$1.3(b)Entergy New Orleans
Financial transmission rightsPurchased power expense$77.9(b)Entergy Texas
2020
Natural gas swaps and optionsFuel, fuel-related expenses, and gas purchased for resale($1.3)(a)Entergy Louisiana
Natural gas swapsFuel, fuel-related expenses, and gas purchased for resale($5.2)(a)Entergy Mississippi
Natural gas swapsFuel, fuel-related expenses, and gas purchased for resale($0.4)(a)Entergy New Orleans
Financial transmission rightsPurchased power expense$4.6(b)Entergy Arkansas
Financial transmission rightsPurchased power expense$5.3(b)Entergy Louisiana
Financial transmission rightsPurchased power expense($0.1)(b)Entergy Mississippi
Financial transmission rightsPurchased power expense$0.4(b)Entergy New Orleans
Financial transmission rightsPurchased power expense$2.4(b)Entergy Texas

(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms.
(b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms.

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Notes to Financial Statements
Fair Values

The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling.  Considerable judgment is required in developing the estimates of fair value.  Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange.  Gains or losses realized on financial instruments other than those instruments held by the Entergy Wholesale Commodities business are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments.

Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement.  Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value.  The inputs can be readily observable, corroborated by market data, or generally unobservable.  Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value.

Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs.  

The three levels of the fair value hierarchy are:

•Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.  Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets.  Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase.

•Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

–quoted prices for similar assets or liabilities in active markets;
–quoted prices for identical assets or liabilities in inactive markets;
–inputs other than quoted prices that are observable for the asset or liability; or
–inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs.

•Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources.  These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability.  Level 3 consists primarily of financial transmission rights and derivative power contracts used as cash flow hedges of power sales at merchant power plants.
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Notes to Financial Statements

The values for power contract assets or liabilities are based on both observable inputs including public market prices and interest rates, and unobservable inputs such as implied volatilities, unit contingent discounts, expected basis differences, and credit adjusted counterparty interest rates.  They are classified as Level 3 assets and liabilities.  The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight and the Entergy Wholesale Commodities Accounting group.  The primary related functions of the Office of Corporate Risk Oversight include: gathering, validating and reporting market data, providing market risk analyses and valuations in support of Entergy Wholesale Commodities’ commercial transactions, developing and administering protocols for the management of market risks, and implementing and maintaining controls around changes to market data in the energy trading and risk management system.  The Office of Corporate Risk Oversight is also responsible for managing the energy trading and risk management system, forecasting revenues, forward positions and analysis.  The Entergy Wholesale Commodities Accounting group performs functions related to market and counterparty settlements, revenue reporting and analysis, and financial accounting. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer while the Entergy Wholesale Commodities Accounting group reports to the Chief Accounting Officer.

The amounts reflected as the fair value of electricity swaps are based on the estimated amount that the contracts are in-the-money at the balance sheet date (treated as an asset) or out-of-the-money at the balance sheet date (treated as a liability) and would equal the estimated amount receivable to or payable by Entergy if the contracts were settled at that date.  These derivative contracts include cash flow hedges that swap fixed for floating cash flows for sales of the output from the Entergy Wholesale Commodities business.  The fair values are based on the mark-to-market comparison between the fixed contract prices and the floating prices determined each period from quoted forward power market prices.  The differences between the fixed price in the swap contract and these market-related prices multiplied by the volume specified in the contract and discounted at the counterparties’ credit adjusted risk free rate are recorded as derivative contract assets or liabilities.  For contracts that have unit contingent terms, a further discount is applied based on the historical relationship between contract and market prices for similar contract terms.

The amounts reflected as the fair values of electricity options are valued based on a Black Scholes model, and are calculated at the end of each month for accounting purposes.  Inputs to the valuation include end of day forward market prices for the period when the transactions will settle, implied volatilities based on market volatilities provided by a third-party data aggregator, and U.S. Treasury rates for a risk-free return rate.  As described further below, prices and implied volatilities are reviewed and can be adjusted if it is determined that there is a better representation of fair value.  

On a daily basis, the Office of Corporate Risk Oversight calculates the mark-to-market for electricity swaps and options.  The Office of Corporate Risk Oversight also validates forward market prices by comparing them to other sources of forward market prices or to settlement prices of actual market transactions.  Significant differences are analyzed and potentially adjusted based on these other sources of forward market prices or settlement prices of actual market transactions.  Implied volatilities used to value options are also validated using actual counterparty quotes for Entergy Wholesale Commodities transactions when available and compared with other sources of market implied volatilities.  Moreover, on a quarterly basis, the Office of Corporate Risk Oversight confirms the mark-to-market calculations and prepares price scenarios and credit downgrade scenario analysis.  The scenario analysis is communicated to senior management within Entergy and within Entergy Wholesale Commodities.  Finally, for all proposed derivative transactions, an analysis is completed to assess the risk of adding the proposed derivative to Entergy Wholesale Commodities’ portfolio.  In particular, the credit and liquidity effects are calculated for this analysis.  This analysis is communicated to senior management within Entergy and Entergy Wholesale Commodities.

The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices.  They are classified as Level 3 assets and liabilities.  The valuations of these assets and liabilities
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Notes to Financial Statements
are performed by the Office of Corporate Risk Oversight.  The values are calculated internally and verified against the data published by MISO. Entergy’s Entergy Wholesale Commodities Accounting group review these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer.  The Entergy Wholesale Commodities Accounting group reports to the Chief Accounting Officer.

The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2021 and December 31, 2020.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$1,675 $— $— $1,675 
Decommissioning trust funds (a):
Equity securities807 — — 807 
Debt securities (b)1,489 1,947 — 3,436 
Common trusts (c)3,102 
Securitization recovery trust account44 — — 44 
Escrow accounts103 — — 103 
Gas hedge contracts1 — — 1 
Financial transmission rights— — 4 4 
$4,119 $1,947 $4 $9,172 
Liabilities:
Gas hedge contracts$2 $1 $— $3 

2020Level 1Level 2Level 3Total
(In Millions)
Assets:    
Temporary cash investments$1,630 $— $— $1,630 
Decommissioning trust funds (a):    
Equity securities1,533 — — 1,533 
Debt securities (b)919 1,698 — 2,617 
Common trusts (c)3,103 
Power contracts— — 38 38 
Securitization recovery trust account42 — — 42 
Escrow accounts148 — — 148 
Gas hedge contracts1 1 — 2 
Financial transmission rights— — 9 9 
 $4,273 $1,699 $47 $9,122 
Liabilities:    
Gas hedge contracts$6 $1 $— $7 

(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 to the financial statements herein for additional information on the investment portfolios.
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Notes to Financial Statements
(b)The decommissioning trust funds fair values presented herein do not include the recognition of a credit loss valuation allowance of $6.4 million as of March 31, 2021 and $0.1 million as of December 31, 2020 on debt securities due to the adoption of ASU 2016-13. See Note 9 to the financial statements herein for additional information on the allowance for expected credit losses.
(c)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended March 31, 2021 and 2020:
20212020
Power ContractsFinancial transmission rightsPower ContractsFinancial transmission rights
(In Millions)
Balance as of January 1,$38 $9 $118 $10 
Total gains (losses) for the period (a)
Included in earnings(2)4 (18)— 
Included in other comprehensive income2 — 67 — 
Included as a regulatory liability/asset— 119 — 7 
Settlements(38)(128)(82)(13)
Balance as of March 31,$— $4 $85 $4 

(a)Change in unrealized gains or losses for the period included in earnings for derivatives held at the end of the reporting period was $0.7 million for the three months ended March 31, 2021 and $1 million for the three months ended March 31, 2020.
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO.

The following table sets forth an analysis of each of the types of unobservable inputs impacting the fair value of items classified as Level 3 within the fair value hierarchy, and the sensitivity to changes to those inputs:
Significant
Unobservable
Input		Transaction TypePositionChange to InputEffect on
Fair Value
Unit contingent discountElectricity swapsSellIncrease (Decrease)Decrease (Increase)

The following table sets forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2021 and December 31, 2020.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.

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Entergy Arkansas
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$123.7 $— $— $123.7 
Decommissioning trust funds (a):
Equity securities53.3 — — 53.3 
Debt securities89.9 336.0 — 425.9 
Common trusts (b)831.9 
Financial transmission rights— — 1.4 1.4 
$266.9 $336.0 $1.4 $1,436.2 

2020Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$168.0 $— $— $168.0 
Decommissioning trust funds (a):
Equity securities1.3 — — 1.3 
Debt securities98.2 349.7 — 447.9 
Common trusts (b)824.7 
Financial transmission rights— — 2.7 2.7 
$267.5 $349.7 $2.7 $1,444.6 

Entergy Louisiana
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$601.6 $— $— $601.6 
Decommissioning trust funds (a):
Equity securities68.8 — — 68.8 
Debt securities218.9 413.9 — 632.8 
Common trusts (b)1,177.7 
Securitization recovery trust account8.8 — — 8.8 
Gas hedge contracts1.0 0.4 — 1.4 
Financial transmission rights— — 1.2 1.2 
$899.1 $414.3 $1.2 $2,492.3 
Liabilities:
Gas hedge contracts$— $0.8 $— $0.8 

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2020Level 1Level 2Level 3Total
 (In Millions)
Assets:    
Temporary cash investments$726.7 $— $— $726.7 
Decommissioning trust funds (a):    
Equity securities8.7 — — 8.7 
Debt securities172.4 459.8 — 632.2 
Common trusts (b)1,153.1 
Securitization recovery trust account2.7 — — 2.7 
Gas hedge contracts0.8 0.5 — 1.3 
Financial transmission rights— — 4.2 4.2 
 $911.3 $460.3 $4.2 $2,528.9 
Liabilities:
Gas hedge contracts$0.3 $1.3 $— $1.6 

Entergy Mississippi
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$76.7 $— $— $76.7 
Escrow accounts64.6 — — 64.6 
Financial transmission rights— — 0.3 0.3 
$141.3 $— $0.3 $141.6 
Liabilities:
Gas hedge contracts$2.3 $— $— $2.3 

2020Level 1Level 2Level 3Total
(In Millions)
Assets:
Escrow accounts$64.6 $— $— $64.6 
Financial transmission rights— — 0.6 0.6 
 $64.6 $— $0.6 $65.2 
Liabilities:
Gas hedge contracts$5.0 $— $— $5.0 

Entergy New Orleans
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Securitization recovery trust account$6.8 $— $— $6.8 
Escrow accounts38.8 — — 38.8 
Financial transmission rights— — 0.1 0.1 
$45.6 $— $0.1 $45.7 
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2020Level 1Level 2Level 3Total
(In Millions)
Assets:
Securitization recovery trust account$3.4 $— $— $3.4 
Escrow accounts83.0 — — 83.0 
Financial transmission rights— — 0.1 0.1 
$86.4 $— $0.1 $86.5 
Liabilities:
Gas hedge contracts$0.3 $— $— $0.3 

Entergy Texas
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Securitization recovery trust account$28.1 $— $— $28.1 
Financial transmission rights— — 0.5 0.5 
$28.1 $— $0.5 $28.6 

2020Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$248.6 $— $— $248.6 
Securitization recovery trust account36.2 — — 36.2 
Financial transmission rights— — 1.6 1.6 
$284.8 $— $1.6 $286.4 
System Energy
2021Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$132.1 $— $— $132.1 
Decommissioning trust funds (a):
Equity securities60.6 — — 60.6 
Debt Securities179.4 227.0 — 406.4 
Common trusts (b)782.8 
$372.1 $227.0 $— $1,381.9 

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2020Level 1Level 2Level 3Total
(In Millions)
Assets:
Temporary cash investments$216.4 $— $— $216.4 
Decommissioning trust funds (a):
Equity securities3.8 — — 3.8 
Debt securities177.3 250.4 — 427.7 
Common trusts (b)784.4 
$397.5 $250.4 $— $1,432.3 

(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 to the financial statements herein for additional information on the investment portfolios.
(b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.
The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended March 31, 2021.
Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
 (In Millions)
Balance as of January 1,$2.7 $4.2 $0.6 $0.1 $1.6 
Gains (losses) included as a regulatory liability/asset24.8 9.3 6.9 1.2 76.8 
Settlements(26.1)(12.3)(7.2)(1.2)(77.9)
Balance as of March 31,$1.4 $1.2 $0.3 $0.1 $0.5 

The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended March 31, 2020.
Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
 (In Millions)
Balance as of January 1,$3.3 $4.5 $0.8 $0.3 $0.9 
Gains (losses) included as a regulatory liability/asset2.4 2.7 (0.6)0.1 1.8 
Settlements(4.6)(5.3)0.1 (0.4)(2.4)
Balance as of March 31,$1.1 $1.9 $0.3 $— $0.3 


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NOTE 9.  DECOMMISSIONING TRUST FUNDS (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)

The NRC requires Entergy subsidiaries to maintain nuclear decommissioning trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, Grand Gulf, Indian Point 1, Indian Point 2, Indian Point 3, and Palisades. Entergy’s nuclear decommissioning trust funds invest in equity securities, fixed-rate debt securities, and cash and cash equivalents.

Entergy records decommissioning trust funds on the balance sheet at their fair value.  Because of the ability of the Registrant Subsidiaries to recover decommissioning costs in rates and in accordance with the regulatory treatment for decommissioning trust funds, the Registrant Subsidiaries have recorded an offsetting amount of unrealized gains/(losses) on investment securities in other regulatory liabilities/assets.  For the 30% interest in River Bend formerly owned by Cajun, Entergy Louisiana records an offsetting amount in other deferred credits for the unrealized trust earnings not currently expected to be needed to decommission the plant.  Decommissioning trust funds for the Entergy Wholesale Commodities nuclear plants do not meet the criteria for regulatory accounting treatment.  Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds are recognized in earnings. Unrealized gains recorded on the available-for-sale debt securities in the trust funds are recognized in the accumulated other comprehensive income component of shareholders’ equity.  Unrealized losses (where cost exceeds fair market value) on the available-for-sale debt securities in the trust funds are also recorded in the accumulated other comprehensive income component of shareholders’ equity unless the unrealized loss is other than temporary and therefore recorded in earnings. A portion of Entergy’s decommissioning trust funds were held in a wholly-owned registered investment company, and unrealized gains and losses on both the equity and debt securities held in the registered investment company were recognized in earnings. Generally, Entergy records gains and losses on its debt and equity securities using the specific identification method to determine the cost basis of its securities.

The unrealized gains/(losses) recognized during the three months ended March 31, 2021 on equity securities still held as of March 31, 2021 were $200 million. The equity securities are generally held in funds that are designed to approximate or somewhat exceed the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the equity securities are held in funds intended to replicate the return of the Wilshire 4500 Index or the Russell 3000 Index. The debt securities are generally held in individual government and credit issuances.

The available-for-sale securities held as of March 31, 2021 and December 31, 2020 are summarized as follows:
Fair
Value		Total
Unrealized
Gains		Total
Unrealized
Losses
(In Millions)
2021
Debt Securities$3,436 $102 $43 
2020
Debt Securities$2,617 $197 $3 

The unrealized gains/(losses) above are reported before deferred taxes of $5 million as of March 31, 2021 and $31 million as of December 31, 2020 for debt securities. The amortized cost of available-for-sale debt securities was $3,376 million as of March 31, 2021 and $2,423 million as of December 31, 2020.  As of March 31, 2021, available-for-sale debt securities had an average coupon rate of approximately 2.59%, an average duration of approximately 5.98 years, and an average maturity of approximately 8.45 years.

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Notes to Financial Statements
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
(In Millions)
Less than 12 months$1,748 $43 $187 $3 
More than 12 months3 — 2 — 
Total$1,751 $43 $189 $3 

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of March 31, 2021 and December 31, 2020 were as follows:
20212020
(In Millions)
Less than 1 year$— ($4)
1 year - 5 years1,027 672 
5 years - 10 years1,257 852 
10 years - 15 years492 377 
15 years - 20 years128 144 
20 years+532 576 
Total$3,436 $2,617 

During the three months ended March 31, 2021 and 2020, proceeds from the dispositions of available-for-sale securities amounted to $524 million and $400 million, respectively.  During the three months ended March 31, 2021 and 2020, gross gains of $11 million and $14 million, respectively, and gross losses of $11 million and $3 million, respectively, related to available-for-sale securities were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

The fair values of the decommissioning trust funds related to the Entergy Wholesale Commodities nuclear plants as of March 31, 2021 were $631 million for Indian Point 1, $760 million for Indian Point 2, $970 million for Indian Point 3, and $545 million for Palisades. The fair values of the decommissioning trust funds related to the Entergy Wholesale Commodities nuclear plants as of December 31, 2020 were $631 million for Indian Point 1, $794 million for Indian Point 2, $991 million for Indian Point 3, and $554 million for Palisades. The fair values of the decommissioning trust funds for the Registrant Subsidiaries’ nuclear plants are detailed below.

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Entergy Arkansas

Entergy Arkansas holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts.  The available-for-sale securities held as of March 31, 2021 and December 31, 2020 are summarized as follows:
Fair
Value		Total
Unrealized
Gains		Total
Unrealized
Losses
(In Millions)
2021
Debt Securities$425.9 $13.2 $6.8 
2020
Debt Securities$447.9 $27.7 $0.3 

The amortized cost of available-for-sale debt securities was $419.5 million as of March 31, 2021 and $420.4 million as of December 31, 2020.  As of March 31, 2021, available-for-sale debt securities had an average coupon rate of approximately 2.42%, an average duration of approximately 6.40 years, and an average maturity of approximately 7.62 years.

The unrealized gains/(losses) recognized during the three months ended March 31, 2021 on equity securities still held as of March 31, 2021 was $45.2 million. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the equity securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
(In Millions)
Less than 12 months$139.1 $6.8 $29.9 $0.3 
More than 12 months— — — — 
Total$139.1 $6.8 $29.9 $0.3 

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of March 31, 2021 and December 31, 2020 were as follows:
 20212020
 (In Millions)
Less than 1 year$— $— 
1 year - 5 years84.7 113.1 
5 years - 10 years179.2 189.8 
10 years - 15 years100.8 81.4 
15 years - 20 years26.7 28.5 
20 years+34.5 35.1 
Total$425.9 $447.9 
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Notes to Financial Statements

During the three months ended March 31, 2021 and 2020, proceeds from the dispositions of available-for-sale securities amounted to $13.8 million and $48.6 million, respectively.  During the three months ended March 31, 2021 and 2020, gross gains of $0.8 million and $4.5 million, respectively, and gross losses of $0.1 million and $0.2 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

Entergy Louisiana

Entergy Louisiana holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts.  The available-for-sale securities held as of March 31, 2021 and December 31, 2020 are summarized as follows:
Fair
Value		Total
Unrealized
Gains		Total
Unrealized
Losses
(In Millions)
2021
Debt Securities$632.8 $31.2 $4.6 
2020
Debt Securities$632.2 $51.3 $0.5 

The amortized cost of available-for-sale debt securities was $606.3 million as of March 31, 2021 and $581.4 million as of December 31, 2020.  As of March 31, 2021, the available-for-sale debt securities had an average coupon rate of approximately 3.25%, an average duration of approximately 6.59 years, and an average maturity of approximately 11.56 years.

The unrealized gains/(losses) recognized during the three months ended March 31, 2021 on equity securities still held as of March 31, 2021 was $64.9 million. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the equity securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
(In Millions)
Less than 12 months$171.7 $4.6 $36.4 $0.5 
More than 12 months2.3 — 0.8 — 
Total$174.0 $4.6 $37.2 $0.5 

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The fair value of available-for-sale debt securities, summarized by contractual maturities, as of March 31, 2021 and December 31, 2020 were as follows:
20212020
(In Millions)
Less than 1 year$— $— 
1 year - 5 years89.3 117.0 
5 years - 10 years186.0 159.4 
10 years - 15 years113.7 101.2 
15 years - 20 years63.4 66.9 
20 years+180.4 187.7 
Total$632.8 $632.2 

During the three months ended March 31, 2021 and 2020, proceeds from the dispositions of available-for-sale securities amounted to $108.4 million and $67.4 million, respectively.  During the three months ended March 31, 2021 and 2020, gross gains of $3.3 million and $2.9 million, respectively, and gross losses of $3.2 million and $0.6 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

System Energy

System Energy holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts.  The available-for-sale securities held as of March 31, 2021 and December 31, 2020 are summarized as follows:
Fair
Value		Total
Unrealized
Gains		Total
Unrealized
Losses
(In Millions)
2021
Debt Securities$406.4 $14.3 $5.0 
2020
Debt Securities$427.7 $30.0 $0.8 

The amortized cost of available-for-sale debt securities was $397 million as of March 31, 2021 and $398.4 million as of December 31, 2020.  As of March 31, 2021, available-for-sale debt securities had an average coupon rate of approximately 2.36%, an average duration of approximately 6.31 years, and an average maturity of approximately 9.62 years.

The unrealized gains/(losses) recognized during the three months ended March 31, 2021 on equity securities still held as of March 31, 2021 was $43.1 million. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500 Index.  A relatively small percentage of the equity securities are held in funds intended to replicate the return of the Wilshire 4500 Index.

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Notes to Financial Statements
The fair value and gross unrealized losses of available-for-sale debt securities, summarized by length of time that the securities had been in a continuous loss position, were as follows as of March 31, 2021 and December 31, 2020:
March 31, 2021December 31, 2020
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
(In Millions)
Less than 12 months$157.5 $5.0 $28.9 $0.8 
More than 12 months— — — — 
Total$157.5 $5.0 $28.9 $0.8 

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of March 31, 2021 and December 31, 2020 were as follows:
20212020
(In Millions)
Less than 1 year$— ($1.1)
1 year - 5 years136.2 134.7 
5 years - 10 years120.4 141.5 
10 years - 15 years35.1 31.5 
15 years - 20 years4.5 5.3 
20 years+110.2 115.8 
Total$406.4 $427.7 

During the three months ended March 31, 2021 and 2020, proceeds from the dispositions of available-for-sale securities amounted to $74.1 million and $92 million, respectively.  During the three months ended March 31, 2021 and 2020, gross gains of $1.2 million and $1.7 million, respectively, and gross losses of $1.6 million and $0.2 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

Allowance for expected credit losses

Entergy estimates the expected credit losses for its available-for-sale securities based on the current credit rating and remaining life of the securities.  To the extent an individual security is determined to be uncollectible it is written off against this allowance.  Entergy’s available-for-sale securities are held in trusts managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments.  Specifically, available-for-sale securities are subject to credit worthiness restrictions, with requirements for both the average credit rating of the portfolio and minimum credit ratings for individual debt securities.  As of March 31, 2021 and December 31, 2020, Entergy’s allowance for expected credit losses related to available-for-sale securities were $6.4 million and $0.1 million, respectively. Entergy did not record any impairments of available-for-sale debt securities for the three months ended March 31, 2021 and 2020.


NOTE 10.  INCOME TAXES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

See “Income Tax Audits” and “Other Tax Matters” in Note 3 to the financial statements in the Form 10-K for a discussion of income tax audits, the Tax Cuts and Jobs Act, and other income tax matters involving Entergy. The following are updates to that discussion.
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Tax Cuts and Jobs Act

During the second quarter 2018, the Registrant Subsidiaries began returning unprotected excess accumulated deferred income taxes, associated with the effects of the Tax Cuts and Jobs Act, to their customers through rate riders and other means approved by their respective regulatory commissions. Return of the unprotected excess accumulated deferred income taxes results in a reduction in the regulatory liability for income taxes and a corresponding reduction in income tax expense. This manner of regulatory accounting affects the effective tax rate for the period as compared to the statutory tax rate. The return of unprotected excess accumulated deferred income taxes reduced Entergy’s and the Registrant Subsidiaries’ regulatory liability for income taxes as follows:
Three Months
Ended March 31,
20212020
(In Millions)
Entergy$41 $30 
Entergy Arkansas$8 $13 
Entergy Louisiana$8 $8 
Entergy New Orleans$— $3 
Entergy Texas$7 $6 
System Entergy$18 $— 


NOTE 11.  PROPERTY, PLANT, AND EQUIPMENT (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Construction Expenditures in Accounts Payable

Construction expenditures included in accounts payable at March 31, 2021 were $496.4 million for Entergy, $39.6 million for Entergy Arkansas, $330.4 million for Entergy Louisiana, $24.1 million for Entergy Mississippi, $4 million for Entergy New Orleans, $44.6 million for Entergy Texas, and $17.7 million for System Energy.  Construction expenditures included in accounts payable at December 31, 2020 were $745 million for Entergy, $59.7 million for Entergy Arkansas, $460.5 million for Entergy Louisiana, $31.4 million for Entergy Mississippi, $9.2 million for Entergy New Orleans, $116.8 million for Entergy Texas, and $17.7 million for System Energy.


NOTE 12.  VARIABLE INTEREST ENTITIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

See Note 17 to the financial statements in the Form 10-K for a discussion of variable interest entities.  See Note 4 to the financial statements herein for details of the nuclear fuel companies’ credit facilities, commercial paper borrowings, and long-term debt.

System Energy is considered to hold a variable interest in the lessor from which it leases an undivided interest representing approximately 11.5% of the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 5 to the financial statements in the Form 10-K. System Energy made payments under this arrangement, including interest, of $8.6 million in the three months ended March 31, 2021 and in the three months ended March 31, 2020.

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NOTE 13.  REVENUE (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Operating Revenues

See Note 19 to the financial statements in the Form 10-K for a discussion of revenue recognition.  Entergy’s total revenues for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Utility:
Residential$966,855 $798,028 
Commercial572,676 538,940 
Industrial597,652 557,515 
Governmental56,798 52,582 
    Total billed retail2,193,981 1,947,065 
Sales for resale (a)205,075 53,725 
Other electric revenues (b)80,261 50,166 
    Revenues from contracts with customers2,479,317 2,050,956 
Other revenues (c)59,103 (318)
    Total electric revenues2,538,420 2,050,638 
Natural gas58,168 43,976 
Entergy Wholesale Commodities:
Competitive businesses sales from contracts with customers (a)232,113 216,002 
Other revenues (c)16,137 116,563 
    Total competitive businesses revenues248,250 332,565 
    Total operating revenues$2,844,838 $2,427,179 




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Notes to Financial Statements

The Registrant Subsidiaries’ total revenues for the three months ended March 31, 2021 and 2020 were as follows:
2021Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
(In Thousands)
Residential$237,182 $335,760 $147,636 $66,427 $179,850 
Commercial106,416 224,649 97,936 47,799 95,876 
Industrial103,412 347,009 33,980 6,789 106,462 
Governmental4,256 18,616 10,543 16,380 7,003 
    Total billed retail451,266 926,034 290,095 137,395 389,191 
Sales for resale (a)110,085 80,428 40,311 4,696 74,073 
Other electric revenues (b)19,583 43,910 3,950 (3,359)17,529 
Revenues from contracts with customers580,934 1,050,372 334,356 138,732 480,793 
Other revenues (c)2,452 29,291 2,263 416 (573)
    Total electric revenues583,386 1,079,663 336,619 139,148 480,220 
Natural gas— 27,981 — 30,187 — 
    Total operating revenues$583,386 $1,107,644 $336,619 $169,335 $480,220 

2020Entergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
(In Thousands)
Residential$219,688 $259,860 $127,102 $50,899 $140,480 
Commercial111,245 202,246 96,798 45,505 83,146 
Industrial101,088 322,342 36,390 7,347 90,348 
Governmental4,030 16,754 10,327 15,851 5,620 
    Total billed retail436,051 801,202 270,617 119,602 319,594 
Sales for resale (a)41,140 78,530 14,422 10,170 8,629 
Other electric revenues (b)1,596 32,008 6,443 763 10,702 
Revenues from contracts with customers
478,787 911,740 291,482 130,535 338,925 
Other revenues (c)3,125 801 2,440 (7,104)411 
    Total electric revenues481,912 912,541 293,922 123,431 339,336 
Natural gas— 18,106 — 25,871 — 
    Total operating revenues$481,912 $930,647 $293,922 $149,302 $339,336 



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Notes to Financial Statements

(a)Sales for resale and competitive businesses sales include day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments, and includes them as part of customer revenues.
(b)Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market and unbilled revenue.
(c)Other revenues include the settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.

Allowance for doubtful accounts

The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. Due to the essential nature of utility services, Entergy has historically experienced a low rate of default on its accounts receivables. Due to the effect of the COVID-19 pandemic on customer receivables, however, Entergy recorded increases in its allowance for doubtful accounts in 2020. The following table sets forth a reconciliation of changes in the allowance for doubtful accounts for the three months ended March 31, 2021 and 2020.
EntergyEntergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
 (In Millions)
Balance as of December 31, 2020$117.7 $18.3 $45.7 $19.5 $17.4 $16.8 
Provisions3.2 2.4 2.3 (2.2)1.8 (1.1)
Write-offs(3.8)(0.1)(2.1)(0.8)— (0.8)
Recoveries1.9 0.6 0.7 0.3 0.2 0.1 
Balance as of March 31, 2021$119.0 $21.2 $46.6 $16.8 $19.4 $15.0 
EntergyEntergy
Arkansas		Entergy
Louisiana		Entergy
Mississippi		Entergy
New
Orleans		Entergy
Texas
 (In Millions)
Balance as of December 31, 2019$7.4 $1.2 $1.9 $0.6 $3.2 $0.5 
Provisions6.6 1.2 3.0 0.9 0.8 0.7 
Write-offs(8.4)(1.8)(3.5)(1.2)(0.8)(1.1)
Recoveries2.9 0.9 1.1 0.3 0.2 0.5 
Balance as of March 31, 2020$8.5 $1.5 $2.5 $0.6 $3.4 $0.6 
The allowance for currently expected credit losses is calculated as the historical rate of customer write-offs multiplied by the current accounts receivable balance, taking into account the length of time the receivable balances have been outstanding. Although the rate of customer write-offs has historically experienced minimal variation, management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner.
________________

In the opinion of the management of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy, the accompanying unaudited financial
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statements contain all adjustments (consisting primarily of normal recurring accruals and reclassification of previously reported amounts to conform to current classifications) necessary for a fair statement of the results for the interim periods presented.  Entergy’s business is subject to seasonal fluctuations, however, with peak periods occurring typically during the first and third quarters.  The results for the interim periods presented should not be used as a basis for estimating results of operations for a full year.


Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk

See “Market and Credit Risk Sensitive Instruments” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.

Part I, Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of March 31, 2021, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

Under the supervision and with the participation of each Registrants’ management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended March 31, 2021 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.



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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

Winter Storm Uri

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter Storms” in the Form 10-K for a discussion of the winter storms and extreme cold temperatures experienced in the United States, including Entergy Arkansas’s service area, in February 2021 (Winter Storm Uri). Fuel and purchased power costs for Entergy Arkansas were approximately $145 million in February 2021 compared to approximately $40 million in February 2020. See Note 2 to the financial statements herein and in the Form 10-K for discussion of fuel cost recovery at Entergy Arkansas.

In March 2021 the APSC opened an investigation into Arkansas utilities’ preparation, response, operational performance, and communication regarding the February 2021 extreme weather events. In April 2021, the Arkansas Attorney General notified utilities of its intent to conduct an investigation into the fuel costs that were charged during the February 2021 winter storms, specifically, whether there was price gouging by suppliers.

Results of Operations

Net Income

Net income increased $48.4 million primarily due to the reversal in 2021 of the remaining regulatory liability for the formula rate plan 2019 historical year netting adjustment and higher volume/weather, partially offset by a higher effective income tax rate.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2021 to the first quarter 2020:
Amount
(In Millions)
2020 operating revenues$481.9 
Fuel, rider, and other revenues that do not significantly affect net income63.4 
Volume/weather35.9 
Return of unprotected excess accumulated deferred income taxes to customers5.1 
Retail electric price(2.9)
2021 operating revenues$583.4 

Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
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The volume/weather variance is primarily due to an increase of 474 GWh, or 9%, in billed electricity usage, including the effect of more favorable weather on residential sales and increased industrial usage. The increase in industrial usage is primarily due to an increase in demand from expansion projects, primarily in the metals industry.

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a tax adjustment rider beginning in April 2018. In first quarter 2021, $8 million was returned to customers as compared to $13.1 million in first quarter 2020. There is no effect on net income as the reduction in operating revenues in each period was offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

Billed electric energy sales for Entergy Arkansas for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential2,470 2,075 19 
Commercial1,266 1,284 (1)
Industrial1,908 1,811 5 
Governmental54 54 — 
  Total retail 5,698 5,224 9 
Sales for resale:
  Associated companies597 403 48 
  Non-associated companies2,030 1,146 77 
Total8,325 6,773 23 

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

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to lower nuclear insurance refunds of $5.8 million, partially offset by a decrease of $2.4 million in nuclear generation expenses primarily due to lower nuclear labor costs, including contract labor.

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

Other regulatory charges (credits) - net in the first quarter 2021 included the reversal of the remaining $38.8 million regulatory liability for the 2019 historical year netting adjustment as part of its 2020 formula rate plan proceeding. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the 2020 formula rate plan filing.

Other income increased primarily due to changes in decommissioning trust fund investment activity.

Income Taxes

The effective income tax rate was 17.3% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items,
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partially offset by state income taxes. See Note 10 to the financial statements herein and Note 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (17.6%) for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, permanent differences related to income tax deductions for stock-based compensation, and certain book and tax differences related to utility plant items, partially offset by state income taxes. See Note 10 to the financial statements herein and Note 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for discussion of the income tax deductions for stock-based compensation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
 20212020
 (In Thousands)
Cash and cash equivalents at beginning of period$192,128 $3,519 
Cash flow provided by (used in):
Operating activities91,573 209,674 
Investing activities(162,611)(190,551)
Financing activities2,690 114,850 
Net increase (decrease) in cash and cash equivalents(68,348)133,973 
Cash and cash equivalents at end of period$123,780 $137,492 

Operating Activities

Net cash flow provided by operating activities decreased $118.1 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•lower collections of receivables from customers, in part due to the COVID-19 pandemic;
•increased fuel costs as a result of Winter Storm Uri. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery;
•$25 million in proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation; and
•an increase of $11.2 million in pension contributions in 2021. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

The decrease was partially offset by the timing of payments to vendors and a decrease of $6.3 million in spending on nuclear refueling outages in 2021.

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Investing Activities

Net cash flow used in investing activities decreased $27.9 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•a decrease of $33.4 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle;
•a decrease of $14.3 million in nuclear construction expenditures primarily as a result of work performed in 2020 on various ANO 2 outage projects;
•a decrease of $13.4 million in transmission construction expenditures primarily due to a lower scope of work performed in 2021 as compared to 2020; and
•money pool activity.

The decrease was partially offset by $55 million in proceeds received from the DOE in 2020 resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements in the Form 10-K for discussion of the spent nuclear fuel litigation.

Increases in Entergy Arkansas’s receivable from the money pool are a use of cash flow, and Entergy Arkansas’s receivable from the money pool increased by $12.5 million for the three months ended March 31, 2021 compared to increasing by $24.9 million for the three months ended March 31, 2020. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities decreased $112.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•the repayment, at maturity, of $350 million of 3.75% Series mortgage bonds due February 2021;
•issuance of $100 million of 4.00% Series mortgage bonds in March 2020;
•the repayment, at maturity, of $45 million of 2.375% governmental bonds due January 2021; and
•net repayments of long-term borrowings of $7.4 million in 2021 compared to net long-term borrowings of $28.7 million in 2020 on the Entergy Arkansas nuclear fuel company variable interest entity credit facility.

The decrease was partially offset by the issuance of $400 million of 3.35% Series mortgage bonds in March 2021 and money pool activity.

Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased by $21.6 million for the three months ended March 31, 2020.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

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Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following table.
March 31,
2021		December 31,
2020
Debt to capital54.1 %54.8 %
Effect of subtracting cash(0.8 %)(1.2 %)
Net debt to net capital53.3 %53.6 %

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Arkansas uses the debt to capital ratio in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition.  Entergy Arkansas also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Arkansas’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.

Entergy Arkansas’s receivables from or (payables to) the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
$15,610$3,110$24,935($21,634)

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

Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in September 2024. Entergy Arkansas also has a $25 million credit facility scheduled to expire in April 2022. The $150 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of March 31, 2021, no cash borrowings and no letters of credit were outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2021, a $1 million letter of credit was outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in September 2022.  As of March 31, 2021, $4.8 million in loans were outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facility.

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State and Local Rate Regulation and Fuel-Cost Recovery

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of state and local rate regulation and fuel-cost recovery.  The following are updates to that discussion.

Retail Rates

2020 Formula Rate Plan Filing

As discussed in the Form 10-K, in December 2020, Entergy Arkansas filed a petition for rehearing of the APSC’s decision in the 2020 formula rate plan proceeding regarding the 2019 netting adjustment, and in January 2021 the APSC granted further consideration of Entergy Arkansas’s petition. Based on the progress of the proceeding to date, in December 2020, Entergy Arkansas recorded a regulatory liability of $43.5 million to reflect the netting adjustment for 2019, as included in the APSC’s December 2020 order, which would be returned to customers in 2021. Entergy Arkansas also requested an extension of the formula rate plan rider for a second five-year term. In March 2021, the Arkansas Governor signed HB1662 into law (Act 404). Act 404 clarified aspects of the original formula rate plan legislation enacted in 2015, including with respect to the extension of a formula rate plan, the methodology for the netting adjustment, and debt and equity levels; it also reaffirmed the customer protections of the original formula rate plan legislation, including the cap on annual formula rate plan rate changes. Pursuant to Act 404, Entergy Arkansas’s formula rate plan rider is extended for a second five-year term. Entergy Arkansas filed a compliance tariff in its formula rate plan docket in April 2021 to effectuate the netting provisions of Act 404, which reflected a net change in required formula rate plan rider revenue of $39.8 million, effective with the first billing cycle of May 2021. In April 2021 the APSC issued an order approving the compliance tariff and recognizing the formula rate plan extension. Also in April 2021, Entergy Arkansas filed for approval of modifications to the formula rate plan tariff incorporating the provisions in Act 404, and the APSC approved the tariff modifications in April 2021. Given the APSC general staff’s support for the expedited approval of these filings by the APSC, Entergy Arkansas supported an amendment to Act 404 to achieve a reduced return on equity from 9.75% to 9.65% to apply for years applicable to the extension term; that amendment was signed by the Arkansas Governor in April 2021 and is now Act 894. Based on the APSC’s order issued in April 2021, in the first quarter 2021, Entergy Arkansas reversed the remaining regulatory liability for the netting adjustment for 2019.

Energy Cost Recovery Rider

In March 2021, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease from $0.01052 per kWh to $0.00959 per kWh. The redetermined rate calculation also included an adjustment to account for a portion of the increased fuel costs resulting from the February 2021 winter storms. The redetermined rate became effective with the first billing cycle in April 2021 through the normal operation of the tariff.

Opportunity Sales Proceeding

As discussed in the Form 10-K, in May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover from its retail customers the costs of the opportunity sales payments made to the other Utility operating companies, and in July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and the parties await further instructions from the court.

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Management's Financial Discussion and Analysis
Net Metering Legislation

See the Form 10-K for discussion of Arkansas net metering legislation and subsequent APSC net metering proceedings. In January 2021, Entergy Arkansas, pursuant to an APSC order, filed an updated net metering tariff, which was approved in February 2021.

COVID-19 Orders

See the Form 10-K for discussion of APSC orders issued in light of the COVID-19 pandemic. In March 2021 the APSC issued an order confirming the lifting of the moratorium on service disconnects effective in May 2021. As of March 31, 2021, Entergy Arkansas recorded a regulatory asset of $11.4 million for costs associated with the COVID-19 pandemic.

Federal Regulation

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

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Arkansas’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$583,386 $481,912 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale126,181 87,411 
Purchased power70,221 46,041 
Nuclear refueling outage expenses12,647 16,247 
Other operation and maintenance154,908 151,857 
Decommissioning19,000 17,941 
Taxes other than income taxes29,743 31,060 
Depreciation and amortization88,279 83,521 
Other regulatory charges (credits) - net(37,467)(20,001)
TOTAL463,512 414,077 
OPERATING INCOME119,874 67,835 
OTHER INCOME
Allowance for equity funds used during construction2,993 2,917 
Interest and investment income27,887 7,938 
Miscellaneous - net(5,791)(6,436)
TOTAL25,089 4,419 
INTEREST EXPENSE
Interest expense33,786 35,623 
Allowance for borrowed funds used during construction(1,290)(1,281)
TOTAL32,496 34,342 
INCOME BEFORE INCOME TAXES112,467 37,912 
Income taxes19,430 (6,683)
NET INCOME$93,037 $44,595 
See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$93,037 $44,595 
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization126,630 123,160 
Deferred income taxes, investment tax credits, and non-current taxes accrued42,885 8,251 
Changes in assets and liabilities:
Receivables(56,256)32,820 
Fuel inventory17,930 (9,419)
Accounts payable(21,622)(42,694)
Taxes accrued8,365 9,302 
Interest accrued18,837 16,839 
Deferred fuel costs(55,704)23,594 
Other working capital accounts(8,025)(2,691)
Provisions for estimated losses(12,383)4,695 
Other regulatory assets42,388 (13,187)
Other regulatory liabilities(38,604)(161,989)
Pension and other postretirement liabilities(25,116)11,704 
Other assets and liabilities(40,789)164,694 
Net cash flow provided by operating activities91,573 209,674 
INVESTING ACTIVITIES
Construction expenditures(146,334)(179,117)
Allowance for equity funds used during construction2,993 2,917 
Nuclear fuel purchases(17,621)(52,211)
Proceeds from sale of nuclear fuel16,059 17,210 
Proceeds from nuclear decommissioning trust fund sales143,575 115,030 
Investment in nuclear decommissioning trust funds(148,783)(121,003)
Change in money pool receivable - net(12,500)(24,935)
Changes in securitization account— (3,443)
Litigation proceeds for reimbursement of spent nuclear fuel storage costs— 55,001 
Net cash flow used in investing activities(162,611)(190,551)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt604,760 264,505 
Retirement of long-term debt(613,706)(127,203)
Changes in money pool payable - net— (21,634)
Other11,636 (818)
Net cash flow provided by financing activities2,690 114,850 
Net increase (decrease) in cash and cash equivalents(68,348)133,973 
Cash and cash equivalents at beginning of period192,128 3,519 
Cash and cash equivalents at end of period$123,780 $137,492 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: 
Cash paid during the period for:
Interest - net of amount capitalized$14,359 $17,578 
See Notes to Financial Statements.
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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$122 $24,108 
Temporary cash investments123,658 168,020 
Total cash and cash equivalents123,780 192,128 
Accounts receivable:
Customer215,233 183,719 
Allowance for doubtful accounts(21,176)(18,334)
Associated companies56,711 34,216 
Other69,110 35,845 
Accrued unbilled revenues93,324 109,000 
Total accounts receivable413,202 344,446 
Deferred fuel costs2,506 — 
Fuel inventory - at average cost25,881 43,811 
Materials and supplies - at average cost243,721 237,640 
Deferred nuclear refueling outage costs26,613 32,692 
Prepayments and other15,134 13,296 
TOTAL850,837 864,013 
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds1,311,053 1,273,921 
Other340 341 
TOTAL1,311,393 1,274,262 
UTILITY PLANT
Electric12,963,731 12,905,322 
Construction work in progress288,269 234,213 
Nuclear fuel143,835 163,044 
TOTAL UTILITY PLANT13,395,835 13,302,579 
Less - accumulated depreciation and amortization5,323,933 5,255,355 
UTILITY PLANT - NET8,071,902 8,047,224 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets1,789,996 1,832,384 
Deferred fuel costs68,353 68,220 
Other20,675 14,028 
TOTAL1,879,024 1,914,632 
TOTAL ASSETS$12,113,156 $12,100,131 
See Notes to Financial Statements.
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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt$90,000 $485,000 
Accounts payable:
Associated companies39,361 59,448 
Other190,966 208,591 
Customer deposits92,626 98,506 
Taxes accrued90,202 81,837 
Interest accrued41,582 22,745 
Deferred fuel costs— 53,065 
Other40,776 40,628 
TOTAL585,513 1,049,820 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued1,326,518 1,286,123 
Accumulated deferred investment tax credits30,200 30,500 
Regulatory liability for income taxes - net452,987 467,031 
Other regulatory liabilities662,312 686,872 
Decommissioning1,333,159 1,314,160 
Accumulated provisions57,786 70,169 
Pension and other postretirement liabilities336,515 361,682 
Long-term debt3,868,751 3,482,507 
Other90,209 75,098 
TOTAL8,158,437 7,774,142 
Commitments and Contingencies
EQUITY
Member's equity3,369,206 3,276,169 
TOTAL3,369,206 3,276,169 
TOTAL LIABILITIES AND EQUITY$12,113,156 $12,100,131 
See Notes to Financial Statements.
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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Member's Equity
(In Thousands)
Balance at December 31, 2019$3,125,937 
Net income44,595 
Balance at March 31, 2020$3,170,532 
Balance at December 31, 2020$3,276,169 
Net income93,037 
Balance at March 31, 2021$3,369,206 
See Notes to Financial Statements.
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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

Hurricane Laura, Hurricane Delta, and Hurricane Zeta

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Laura, Hurricane Delta, and Hurricane Zeta” in the Form 10-K for a discussion of Hurricane Laura, Hurricane Delta, and Hurricane Zeta, which caused significant damage to portions of Entergy Louisiana’s service area. See Note 2 to the financial statements herein for discussion of storm cost recovery filings made by Entergy Louisiana in April 2021.

Winter Storm Uri

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter Storms” in the Form 10-K for a discussion of the winter storms and extreme cold temperatures experienced in the United States, including Entergy Louisiana’s service area, in February 2021 (Winter Storm Uri). Fuel and purchased power costs for Entergy Louisiana were approximately $285 million in February 2021 compared to approximately $95 million in February 2020. See Note 2 to the financial statements herein for discussion of the storm cost recovery filing made by Entergy Louisiana in April 2021. See Note 2 to the financial statements herein and in the Form 10-K for discussion of fuel cost recovery at Entergy Louisiana.

Results of Operations

Net Income

Net income decreased $22.8 million primarily due to the $58 million reduction in income tax expense resulting from an IRS settlement in the first quarter 2020 related to the uncertain tax position regarding the Hurricane Isaac Louisiana Act 55 financing, which also resulted in a $29 million ($21 million net-of-tax) regulatory charge to reflect Entergy Louisiana’s agreement to share the savings with customers. Also contributing to the decrease was higher other operation and maintenance expenses, higher interest expense, and a higher effective income tax rate. The decrease was partially offset by higher retail electric price and higher volume/weather. See Note 3 to the financial statements in the Form 10-K for further discussion of the tax settlement.

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Management's Financial Discussion and Analysis
Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2021 to the first quarter 2020:
Amount
(In Millions)
2020 operating revenues$930.6 
Fuel, rider, and other revenues that do not significantly affect net income88.1 
Retail electric price52.4 
Volume/weather36.5 
2021 operating revenues$1,107.6 

Entergy Louisiana’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The retail electric price variance is primarily due to:

•an interim increase in formula rate plan revenues effective April 2020 due to the inclusion of the first-year revenue requirement for the Lake Charles Power Station;
•an increase in formula rate plan revenues and an increase in the transmission recovery mechanism effective September 2020; and
•an interim increase in formula rate plan revenues effective December 2020 due to the inclusion of the first-year revenue requirement for the Washington Parish Energy Center.

See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the formula rate plan proceedings.

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales and an increase in usage during the unbilled sales period. The increase is partially offset by a decrease in industrial usage and decreased demand from mid to small customers. The decrease in industrial usage is primarily due to decreased demand from existing customers in the chemicals and petroleum refining industries as a result of the COVID-19 pandemic and plant shutdowns and operational issues. The decrease in industrial usage is partially offset by an increase in demand from expansion projects, primarily in the transportation and chemicals industries. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

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Management's Financial Discussion and Analysis
Billed electric energy sales for Entergy Louisiana for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential3,500 2,975 18 
Commercial2,409 2,459 (2)
Industrial7,010 7,450 (6)
Governmental197 199 (1)
  Total retail 13,116 13,083 — 
Sales for resale:
  Associated companies959 1,341 (28)
  Non-associated companies386 457 (16)
Total14,461 14,881 (3)

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

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $8.9 million in nuclear generation expenses primarily due to spending on sanitation and social distancing protocols, as a result of the COVID-19 pandemic;
•a decrease of $4.2 million in nuclear insurance refunds; and
•an increase of $1.5 million in non-nuclear generation expenses due to higher expenses associated with the Lake Charles Power Station, which began commercial operation in March 2020, partially offset by a lower scope of work performed during plant outages in 2021 as compared to the prior year.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Lake Charles Power Station, which was placed in service in March 2020.

Other regulatory charges (credits) - net include regulatory charges of $29 million recorded in first quarter 2020 due to a settlement with the IRS related to the uncertain tax position regarding Hurricane Isaac Louisiana Act 55 financing because the savings will be shared with customers. See Note 3 in the Form 10-K for further discussion of the settlement and savings obligation.

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

Interest expense increased primarily due to:

•the issuance of $350 million of 2.90% Series mortgage bonds in March 2020;
•the issuance of $1.1 billion of 0.62% Series mortgage bonds, $300 million of 2.90% Series mortgage bonds, and $300 million of 1.60% Series mortgage bonds, each in November 2020;
•the issuance of $500 million of 2.35% Series mortgage bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021; and
•a decrease in the allowance for borrowed funds used during construction due to higher construction work in progress in 2020, including the Lake Charles Power Station project.
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Management's Financial Discussion and Analysis

The increase was partially offset by the repayment of $200 million of 5.25% Series mortgage bonds and $100 million of 4.70% Series mortgage bonds, each in December 2020.

Income Taxes

The effective income tax rate was 18.5% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to book and tax differences related to the non-taxable income distributions earned on preferred membership interests, certain book and tax differences related to utility plant items, and the amortization of excess accumulated deferred income taxes, partially offset by state income taxes. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was (36.0%) for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to the settlement with the IRS on the treatment of funds received in conjunction with the Louisiana Act 55 financing of Hurricane Isaac storm costs, permanent differences related to income tax deductions for stock-based compensation, book and tax differences related to the non-taxable income distributions earned on preferred membership interests, certain book and tax differences related to utility plant items, book and tax differences related to the allowance for equity funds used during construction, and the amortization of excess accumulated deferred income taxes, partially offset by state income taxes. See Note 3 in the Form 10-K for discussion of the IRS settlement and the income tax deductions for stock-based compensation. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Cash and cash equivalents at beginning of period$728,020 $2,006 
Cash flow provided by (used in):
    Operating activities(54,598)313,799 
    Investing activities(1,098,466)(373,239)
    Financing activities1,026,860 522,828 
Net increase (decrease) in cash and cash equivalents(126,204)463,388 
Cash and cash equivalents at end of period$601,816 $465,394 
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Management's Financial Discussion and Analysis

Operating Activities

Entergy Louisiana’s operating activities used $54.6 million of cash for the three months ended March 31, 2021 compared to providing $313.8 million of cash for the three months ended March 31, 2020 primarily due to:

•an increase of approximately $170 million in storm spending in 2021, primarily due to Hurricane Laura, Hurricane Delta, and Hurricane Zeta restoration efforts. See “Hurricane Laura, Hurricane Delta, and Hurricane Zeta” above for discussion of storm restoration efforts;
•increased fuel costs as a result of Winter Storm Uri. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery;
•an increase of $24 million in spending on nuclear refueling outages;
•income tax refunds of $20.7 million in 2020. Entergy Louisiana had income tax refunds in 2020 as a result of a refund of an overpayment on a prior year state income tax return; and
•an increase of $20.5 million in pension contributions in 2021. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding.

Investing Activities

Net cash flow used in investing activities increased $725.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•an increase of 437.9 million in distribution construction expenditures primarily due to storm spending in 2021. See “Hurricane Laura, Hurricane Delta, and Hurricane Zeta” above for discussion of storm restoration efforts;
•an increase of $162.6 million in transmission construction expenditures primarily due to storm spending in 2021. See “Hurricane Laura, Hurricane Delta, and Hurricane Zeta” above for discussion of storm restoration efforts;
•an increase of $68.3 million as a result of fluctuations in nuclear fuel activity, primarily due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle;
•$39.5 million in net receipts from storm reserve escrow accounts in the first quarter 2020; and
•an increase of $19.7 million in nuclear construction expenditures primarily due to increased spending on various projects in 2021.

The increase was partially offset by:

•a decrease of $19.7 million in non-nuclear generation construction expenditures due to a lower scope of work performed in 2021 as compared to 2020; and
•money pool activity.

Increases in Entergy Louisiana’s receivable from the money pool are a use of cash flow, and Entergy Louisiana’s receivable from the money pool increased by $62.3 million for the three months ended March 31, 2021 compared to increasing by $84.5 million for the three months ended March 31, 2020. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

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Financing Activities

Net cash flow provided by financing activities increased $504 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•the issuance of $500 million of 2.35% Series mortgage bonds and $500 million of 3.10% Series mortgage bonds, each in March 2021, as compared to the issuances of $350 million of 2.90% Series mortgage bonds and $300 million of 4.20% Series mortgage bonds, each in March 2020;
•net long-term borrowings of $85.5 million in 2021 compared to net repayments of long-term borrowings of $28.5 million in 2020 on the nuclear fuel company variable interest entities’ credit facilities;
•money pool activity; and
•the payment of $11.5 million in common equity distributions in March 2020 primarily to maintain Entergy Louisiana’s capital structure.

The decrease was partially offset by the repayment of Entergy Louisiana Waterford VIE’s $40 million of 3.92% Series H secured notes in February 2021.

Decreases in Entergy Louisiana’s payable to the money pool are a use of cash flow, and Entergy Louisiana’s payable to the money pool decreased by $82.8 million for the three months ended March 31, 2020.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

Capital Structure

Entergy Louisiana’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Louisiana is primarily due to the issuance of $1 billion of mortgage bonds in March 2021.
March 31, 2021December 31, 2020
Debt to capital56.9 %54.8 %
Effect of excluding securitization bonds0.0 %0.0 %
Debt to capital, excluding securitization bonds (a)56.9 %54.8 %
Effect of subtracting cash(1.5 %)(2.1 %)
Net debt to net capital, excluding securitization bonds (a)55.4 %52.7 %

(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy Louisiana.

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Louisiana uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because the securitization bonds are non-recourse to Entergy Louisiana, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy Louisiana also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because net debt indicates Entergy Louisiana’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

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Management's Financial Discussion and Analysis
Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Louisiana’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.

Entergy Louisiana’s receivables from or (payables to) the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
$75,772$13,426$84,466($82,826)

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

Entergy Louisiana has a credit facility in the amount of $350 million scheduled to expire in September 2024.  The credit facility includes fronting commitments for the issuance of letters of credit against $15 million of the borrowing capacity of the facility. As of March 31, 2021, there were no cash borrowings and no letters of credit outstanding under the credit facility.  In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2021, $12.8 million in letters of credit were outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, each in the amount of $105 million and scheduled to expire in September 2022.  As of March 31, 2021, $70.5 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of March 31, 2021, $73.2 million in loans were outstanding under the credit facility for the Entergy Louisiana Waterford nuclear fuel company variable interest entity. See Note 4 to the financial statements herein for additional discussion of the nuclear fuel company variable interest entity credit facilities.

State and Local Rate Regulation and Fuel-Cost Recovery

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation and Fuel Cost Recovery” in the Form 10-K for a discussion of state and local rate regulation and fuel cost recovery. The following are updates to that discussion.

Retail Rates - Electric

2017 Formula Rate Plan Filing

As discussed in the Form 10-K, in May 2019, Entergy Louisiana filed an update to its 2017 formula rate plan evaluation report to include the estimated first-year revenue requirement of $109.5 million associated with the J. Wayne Leonard Power Station (formerly St. Charles Power Station). In February 2021, LPSC staff filed testimony that substantially all the costs to construct J. Wayne Leonard Power Station were prudently incurred and eligible for recovery from customers. LPSC staff further recommended that the LPSC consider monitoring the remaining $3.1 million that was estimated to be incurred for completion of the project in the event the final costs exceed the estimated amounts. Settlement discussions are in progress.

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Management's Financial Discussion and Analysis
Request for Extension and Modification of Formula Rate Plan

As discussed in the Form 10-K, in May 2020, Entergy Louisiana filed with the LPSC its application for authority to extend its formula rate plan. The parties reached a settlement in April 2021 regarding Entergy Louisiana’s proposed FRP extension. Entergy Louisiana and the LPSC staff filed a joint motion asking the LPSC to consider and approve the uncontested settlement at the May 2021 LPSC meeting. Key terms of the settlement include: a three year term (test years 2020, 2021, and 2022) covering a rate-effective period of September 2021 through August 2024; a 9.50% return on equity, with a smaller, 50 basis point deadband above and below (9.0%-10.0%); elimination of sharing if earnings are outside the deadband; a $63 million rate increase for test year 2020 (exclusive of riders); continuation of existing riders (transmission, additional capacity, etc.); addition of a distribution recovery mechanism permitting $225 million per year of distribution investment above a baseline level to be recovered dollar for dollar; modification of the tax mechanism to allow timely rate changes in the event the federal corporate income tax rate is changed from 21%; a cumulative rate increase limit of $70 million (exclusive of riders) for test years 2021 and 2022; and deferral of up to $7 million per year in 2021 and 2022 of expenditures on vegetation management for outside of right of way hazard trees.

Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri

In August 2020 and October 2020, Hurricane Laura, Hurricane Delta, and Hurricane Zeta caused significant damage to portions of Entergy Louisiana’s service area. The storms resulted in widespread outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the outages. Additionally, as a result of Hurricane Laura’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild.

In October 2020, Entergy Louisiana filed an application at the LPSC seeking approval of certain ratemaking adjustments to facilitate issuance of shorter-term bonds to provide interim financing for restoration costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta. Subsequently, Entergy Louisiana and the LPSC staff filed a joint motion seeking approval to exclude from the derivation of Entergy Louisiana’s capital structure and cost rate of debt for ratemaking purposes, including the allowance for funds used during construction, shorter-term debt up to $1.1 billion issued by Entergy Louisiana to fund costs associated with Hurricane Laura, Hurricane Delta, and Hurricane Zeta costs on an interim basis. In November 2020 the LPSC issued an order approving the joint motion, and Entergy Louisiana issued $1.1 billion of 0.62% Series mortgage bonds due November 2023. Also in November 2020, Entergy Louisiana drew $257 million from its funded storm reserves.

In February 2021, two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing incremental outages. As discussed above in “Fuel and purchased power recovery,” Entergy Louisiana is recovering the incremental fuel costs associated with Winter Storm Uri over a five-month period from April 2021 through August 2021.

In April 2021, Entergy Louisiana filed an application with the LPSC relating to Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by the storms are currently estimated to be approximately $2.05 billion, including approximately $1.74 billion in capital costs and approximately $310 million in non-capital costs. Including carrying costs through January 2022, Entergy Louisiana is seeking an LPSC determination that $2.10 billion was prudently incurred and, therefore, is eligible for recovery from customers. Additionally, Entergy Louisiana is requesting that the LPSC determine that re-establishment of a storm escrow account to the previously authorized amount of $290 million is appropriate. Entergy Louisiana intends to supplement this application with a request regarding the financing and recovery of the recoverable storm restoration costs.
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Fuel and purchased power recovery

In February 2021, Entergy Louisiana incurred extraordinary fuel costs associated with the February 2021 winter storms. To mitigate the effect of these costs on customer bills, in March 2021 Entergy Louisiana requested and the LPSC approved the deferral and recovery of $166 million in incremental fuel costs over five months beginning in April 2021. The incremental fuel costs remain subject to review for reasonableness and eligibility for recovery through the fuel adjustment clause mechanism. At its April 2021 meeting, the LPSC authorized its staff to review the prudence of February 2021 fuel costs incurred by all LPSC jurisdictional utilities.

In March 2021 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings covering the period January 2018 through December 2020. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for that period. No audit report has been filed.

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In addition, utilities may seek future recovery, subject to LPSC review and approval, of losses and expenses incurred due to compliance with the LPSC’s COVID-19 orders. The suspension of late fees and disconnects for non-payment was extended until the first billing cycle after July 16, 2020. In January 2021, Entergy Louisiana resumed disconnections for customers in all customer classes with past-due balances that have not made payment arrangements. Utilities seeking to recover the regulatory asset must formally petition the LPSC to do so, identifying the direct and indirect costs for which recovery is sought. Any such request is subject to LPSC review and approval. As of March 31, 2021, Entergy Louisiana recorded a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic.

Industrial and Commercial Customers

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

Federal Regulation

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

Nuclear Matters

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

Environmental Risks

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

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Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Louisiana’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.
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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$1,079,663 $912,541 
Natural gas27,981 18,106 
TOTAL1,107,644 930,647 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale145,234 144,492 
Purchased power209,961 160,743 
Nuclear refueling outage expenses13,282 13,630 
Other operation and maintenance237,483 222,658 
Decommissioning16,823 16,001 
Taxes other than income taxes52,484 50,077 
Depreciation and amortization160,813 145,135 
Other regulatory charges (credits) - net31,097 11,132 
TOTAL867,177 763,868 
OPERATING INCOME240,467 166,779 
OTHER INCOME
Allowance for equity funds used during construction6,101 14,887 
Interest and investment income72,515 (19,669)
Miscellaneous - net(34,638)49,601 
TOTAL43,978 44,819 
INTEREST EXPENSE
Interest expense82,806 79,517 
Allowance for borrowed funds used during construction(2,759)(7,132)
TOTAL80,047 72,385 
INCOME BEFORE INCOME TAXES204,398 139,213 
Income taxes37,772 (50,183)
NET INCOME$166,626 $189,396 
See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
Net Income$166,626 $189,396 
Other comprehensive income (loss)
Pension and other postretirement liabilities (net of tax expense (benefit) of ($144) and $3,340)
(407)9,467 
Other comprehensive income (loss)(407)9,467 
Comprehensive Income$166,219 $198,863 
See Notes to Financial Statements.



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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$166,626 $189,396 
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization198,868 191,447 
Deferred income taxes, investment tax credits, and non-current taxes accrued67,823 (39,681)
Changes in working capital:
Receivables(13,080)23,004 
Fuel inventory1,194 (456)
Accounts payable(126,070)(86,317)
Prepaid taxes and taxes accrued20,619 48,840 
Interest accrued(9,163)(2,384)
Deferred fuel costs(203,815)(18,280)
Other working capital accounts(25,628)(3,156)
Changes in provisions for estimated losses(258)(41,113)
Changes in other regulatory assets(70,784)55,539 
Changes in other regulatory liabilities22,503 (129,370)
Changes in pension and other postretirement liabilities(30,745)(22,806)
Other(52,688)149,136 
Net cash flow provided by (used in) operating activities(54,598)313,799 
INVESTING ACTIVITIES
Construction expenditures(945,831)(344,522)
Allowance for equity funds used during construction6,101 14,887 
Nuclear fuel purchases(52,435)(18,052)
Proceeds from the sale of nuclear fuel— 33,889 
Receipts from storm reserve escrow account— 40,589 
Payments to storm reserve escrow account— (1,113)
Changes to securitization account(6,050)(5,348)
Proceeds from nuclear decommissioning trust fund sales291,275 144,962 
Investment in nuclear decommissioning trust funds(329,180)(154,065)
Changes in money pool receivable - net(62,346)(84,466)
Net cash flow used in investing activities(1,098,466)(373,239)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt1,399,245 1,221,900 
Retirement of long-term debt(368,707)(603,607)
Change in money pool payable - net— (82,826)
Common equity distributions paid— (11,500)
Other(3,678)(1,139)
Net cash flow provided by financing activities1,026,860 522,828 
Net increase (decrease) in cash and cash equivalents(126,204)463,388 
Cash and cash equivalents at beginning of period728,020 2,006 
Cash and cash equivalents at end of period$601,816 $465,394 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized$89,432 $79,794 
Income taxes$— ($20,684)
See Notes to Financial Statements.
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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$233 $1,303 
Temporary cash investments601,583 726,717 
Total cash and cash equivalents601,816 728,020 
Accounts receivable:
Customer326,475 317,905 
Allowance for doubtful accounts(46,655)(45,693)
Associated companies144,640 81,624 
Other39,401 41,760 
Accrued unbilled revenues186,001 178,840 
Total accounts receivable649,862 574,436 
Deferred fuel costs206,065 2,250 
Fuel inventory49,486 50,680 
Materials and supplies - at average cost433,841 437,933 
Deferred nuclear refueling outage costs75,916 48,407 
Prepayments and other41,100 36,813 
TOTAL2,058,086 1,878,539 
OTHER PROPERTY AND INVESTMENTS
Investment in affiliate preferred membership interests1,390,587 1,390,587 
Decommissioning trust funds1,879,332 1,794,042 
Non-utility property - at cost (less accumulated depreciation)335,730 323,110 
Other13,521 13,399 
TOTAL3,619,170 3,521,138 
UTILITY PLANT
Electric25,960,969 25,619,789 
Natural gas268,865 262,744 
Construction work in progress526,575 667,281 
Nuclear fuel252,555 210,128 
TOTAL UTILITY PLANT27,008,964 26,759,942 
Less - accumulated depreciation and amortization9,502,347 9,372,224 
UTILITY PLANT - NET17,506,617 17,387,718 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $— as of March 31, 2021 and $5,088 as of December 31, 2020)
1,796,850 1,726,066 
Deferred fuel costs168,122 168,122 
Other32,212 23,924 
TOTAL1,997,184 1,918,112 
TOTAL ASSETS$25,181,057 $24,705,507 
See Notes to Financial Statements.
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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt$200,000 $240,000 
Accounts payable:
Associated companies75,431 103,148 
Other685,493 1,450,008 
Customer deposits151,307 152,612 
Taxes accrued63,236 42,617 
Interest accrued83,086 92,249 
Current portion of unprotected excess accumulated deferred income taxes31,138 31,138 
Other60,652 62,968 
TOTAL1,350,343 2,174,740 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued2,193,429 2,138,522 
Accumulated deferred investment tax credits106,135 107,317 
Regulatory liability for income taxes - net436,577 447,628 
Other regulatory liabilities951,847 918,293 
Decommissioning1,592,903 1,573,307 
Accumulated provisions24,681 24,939 
Pension and other postretirement liabilities661,999 692,728 
Long-term debt (includes securitization bonds of $10,344 as of March 31, 2021 and $10,278 as of December 31, 2020)
9,859,885 8,787,451 
Other379,367 382,894 
TOTAL16,206,823 15,073,079 
Commitments and Contingencies
EQUITY
Member's equity7,619,971 7,453,361 
Accumulated other comprehensive income3,920 4,327 
TOTAL7,623,891 7,457,688 
TOTAL LIABILITIES AND EQUITY$25,181,057 $24,705,507 
See Notes to Financial Statements.
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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Common Equity
Member’s
Equity		Accumulated
Other
Comprehensive
Income		Total
(In Thousands)
Balance at December 31, 2019$6,392,556 $4,562 $6,397,118 
Net income189,396 — 189,396 
Other comprehensive income— 9,467 9,467 
Distributions declared on common equity(11,500)— (11,500)
Other(10)— (10)
Balance at March 31, 2020$6,570,442 $14,029 $6,584,471 
Balance at December 31, 2020$7,453,361 $4,327 $7,457,688 
Net income166,626 — 166,626 
Other comprehensive loss— (407)(407)
Other(16)— (16)
Balance at March 31, 2021$7,619,971 $3,920 $7,623,891 
See Notes to Financial Statements.
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ENTERGY MISSISSIPPI, LLC

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

Winter Storm Uri

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter Storms” in the Form 10-K for a discussion of the winter storms and extreme cold temperatures experienced in Entergy Mississippi’s service area, in February 2021 (Winter Storm Uri). Fuel and purchased power costs for Entergy Mississippi were approximately $65 million in February 2021 compared to approximately $35 million in February 2020. See Note 2 to the financial statements in the Form 10-K for discussion of storm cost recovery and fuel cost recovery at Entergy Mississippi.

In February 2021 the MPSC announced that it would launch a comprehensive review of the condition and resiliency of the state’s public utility infrastructure in response to the impacts of the February 2021 winter storms. Although the MPSC did not open a formal docket, the MPSC submitted data requests to Entergy Mississippi regarding the actions taken to ensure reliable operations of the electric network during the winter storm events and in anticipation of other future extreme weather events. In April 2021 the MPSC opened a docket to investigate Entergy Mississippi’s membership in MISO. In the order, the MPSC noted the impact of the February 2021 winter storms, stating that it observed “excessive prices of natural gas and electricity” during the winter event. The MPSC has requested comments due 75 days after publication of the order.

Results of Operations

Net Income

Net income increased $3.4 million primarily due to higher retail electric price and higher volume/weather, partially offset by higher other operation and maintenance expenses, a higher effective income tax rate, and higher depreciation and amortization expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2021 to the first quarter 2020:
Amount
(In Millions)
2020 operating revenues$293.9 
Fuel, rider, and other revenues that do not significantly affect net income22.9 
Retail electric price12.3 
Volume/weather7.5 
2021 operating revenues$336.6 

Entergy Mississippi’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not
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affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The retail electric price variance is primarily due to increases in formula rate plan rates effective with the first billing cycle of April 2020 and the implementation of a vegetation management rider effective with the April 2020 billing cycle. See Note 2 to the financial statements in the Form 10-K for further discussion of the formula rate plan filings and the vegetation management rider.

The volume/weather variance is primarily due to an increase of 213 GWh, or 7%, in billed electricity usage, including the effect of more favorable weather on residential sales, partially offset by a decrease in industrial usage.

Billed electric energy sales for Entergy Mississippi for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential1,495 1,250 20 
Commercial1,009 1,006 — 
Industrial520 556 (6)
Governmental95 94 1 
  Total retail 3,119 2,906 7 
Sales for resale:
  Non-associated companies1,452 827 76 
Total4,571 3,733 22 

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

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $4.1 million in vegetation maintenance costs;
•an increase of $1.4 million due to bad debt expense as a result of the COVID-19 pandemic; and
•an increase of $1.4 million as a result of the amount of transmission costs allocated by MISO. See Note 2 to the financial statements for further information on the recovery of these costs.

The increase was partially offset by a decrease of $1.1 million in energy efficiency costs.

Depreciation and amortization expenses increased primarily as a result of additions to plant in service.

Income Taxes

The effective income tax rate was 22.2% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to certain book and tax differences related to utility plant items, partially offset by state income taxes.

The effective income tax rate was 7.7% for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to certain book and tax differences related to utility plant items and permanent differences related to income tax deductions for stock-based
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compensation, partially offset by state income taxes. See Note 3 to the financial statements in the Form 10-K for a discussion of the income tax deductions for stock-based compensation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Cash and cash equivalents at beginning of period$18 $51,601 
Cash flow provided by (used in):
Operating activities54,311 33,261 
Investing activities(162,802)(103,615)
Financing activities185,189 18,772 
Net increase (decrease) in cash and cash equivalents76,698 (51,582)
Cash and cash equivalents at end of period$76,716 $19 

Operating Activities

Net cash flow provided by operating activities increased $21.1 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to the timing of payments to vendors. The increase was partially offset by increased fuel costs as a result of Winter Storm Uri and the timing of collections of receivables from customers, in part due to the COVID-19 pandemic. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery.

Investing Activities

Net cash flow used in investing activities increased $59.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to money pool activity and an increase of $43.5 million in distribution construction expenditures primarily due to increased spending on the reliability and infrastructure of Entergy Mississippi’s distribution system in 2021 as compared to 2020. The increase was partially offset by $24.6 million in plant upgrades for Choctaw Generating Station in March 2020.

Increases in Entergy Mississippi’s receivable from the money pool are a use of cash flow, and Entergy Mississippi’s receivable from the money pool increased by $9.7 million for the three months ended March 31, 2021 compared to decreasing $44.7 million for the three months ended March 31, 2020. The money pool is an inter-company borrowing arrangement designed to reduce the Utility’s subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities increased $166.4 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to the issuance of $200 million of 3.5% Series mortgage bonds in March 2021, partially offset by money pool activity. See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

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Decreases in Entergy Mississippi’s payable to the money pool are a use of cash flow, and Entergy Mississippi’s payable to the money pool decreased by $16.5 million for the three months ended March 31, 2021 compared to increasing by $19 million for the three months ended March 31, 2020.

Capital Structure

Entergy Mississippi’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Mississippi is primarily due to the issuance of $200 million of mortgage bonds in March 2021.
March 31, 2021December 31, 2020
Debt to capital54.0 %51.7 %
Effect of subtracting cash(1.0 %)— %
Net debt to net capital53.0 %51.7 %

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion.  Capital consists of debt and equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Mississippi uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition.  Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Mississippi’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.

Entergy Mississippi’s receivables from or (payables to) the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
$9,683($16,516)($19,006)$44,693

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

Entergy Mississippi has three separate credit facilities in the aggregate amount of $82.5 million scheduled to expire in April 2022. No borrowings were outstanding under the credit facilities as of March 31, 2021.  In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility primarily as a means to post collateral to support its obligations to MISO. As of March 31, 2021, $1 million of MISO letters of credit and $1 million of non-MISO letters of credit were outstanding under this facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

Entergy Mississippi has $33 million in its storm reserve escrow account at March 31, 2021.

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State and Local Rate Regulation and Fuel-Cost Recovery

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of the formula rate plan and fuel and purchased power cost recovery. The following are updates to that discussion.

2021 Formula Rate Plan Filing

In March 2021, Entergy Mississippi submitted its formula rate plan 2021 test year filing and 2020 look-back filing showing Entergy Mississippi’s earned return for the historical 2020 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2021 calendar year to be below the formula rate plan bandwidth. The 2020 test year filing shows a $95.4 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.69% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, is capped at 4% of retail revenues, which equates to a revenue change of $44.3 million. The 2021 evaluation report also includes $3.9 million in demand side management costs for which the MPSC approved realignment of recovery from the energy efficiency rider to the formula rate plan. These costs are not subject to the 4% cap and result in a total change in formula rate plan revenues of $48.2 million. The 2020 look-back filing compares actual 2020 results to the approved benchmark return on rate base and reflects the need for a $16.8 million interim increase in formula rate plan revenues. In addition, the 2020 look-back filing includes an interim capacity adjustment true-up for the Choctaw Generating Station, which increases the look-back interim rate adjustment by $1.7 million. These interim rate adjustments total $18.5 million. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $22.1 million interim rate increase, reflecting a cap equal to 2% of 2020 retail revenues, effective with the April 2021 billing cycle, subject to refund, pending a final MPSC order. The $3.9 million of demand side management costs and the Choctaw Generating Station true-up of $1.7 million, which are not subject to the 2% cap of 2020 retail revenues, were included in the April 2021 rate adjustments. A final order is expected in the second quarter 2021, with the resulting final rates, including amounts above the 2% cap of 2020 retail revenues, effective July 2021.

COVID-19 Orders

As discussed in the Form 10-K, in April 2020 the MPSC issued an order authorizing utilities to defer incremental costs and expenses associated with COVID-19 compliance and to seek future recovery through rates of the prudently incurred incremental costs and expenses. In December 2020, Entergy Mississippi resumed disconnections for commercial, industrial, and governmental customers with past-due balances that have not made payment arrangements. In January 2021, Entergy Mississippi resumed disconnecting service for residential customers with past-due balances that have not made payment arrangements. As of March 31, 2021, Entergy Mississippi recorded a regulatory asset of $16.3 million for costs associated with the COVID-19 pandemic.

Federal Regulation

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

Nuclear Matters

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

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Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy Mississippi’s accounting for utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.
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INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$336,619 $293,922 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale60,197 63,297 
Purchased power68,591 52,643 
Other operation and maintenance67,831 62,337 
Taxes other than income taxes25,899 27,190 
Depreciation and amortization55,036 51,155 
Other regulatory charges (credits) - net8,129 (3,881)
TOTAL285,683 252,741 
OPERATING INCOME50,936 41,181 
OTHER DEDUCTIONS
Allowance for equity funds used during construction1,668 1,439 
Interest and investment income42 120 
Miscellaneous - net(2,313)(2,296)
TOTAL(603)(737)
INTEREST EXPENSE
Interest expense17,613 16,583 
Allowance for borrowed funds used during construction(677)(551)
TOTAL16,936 16,032 
INCOME BEFORE INCOME TAXES33,397 24,412 
Income taxes7,425 1,886 
NET INCOME $25,972 $22,526 
See Notes to Financial Statements.


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ENTERGY MISSISSIPPI, LLC
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$25,972 $22,526 
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization55,036 51,155 
Deferred income taxes, investment tax credits, and non-current taxes accrued22,593 2,762 
Changes in assets and liabilities:
Receivables4,557 17,971 
Fuel inventory1,736 (3,266)
Accounts payable26,391 (8,125)
Taxes accrued(75,886)(58,651)
Interest accrued4,238 6,201 
Deferred fuel costs(25,722)13,406 
Other working capital accounts(3,425)7,849 
Provisions for estimated losses(7,689)(47)
Other regulatory assets11,015 (8,484)
Other regulatory liabilities19,147 (5,532)
Pension and other postretirement liabilities(5,668)(2,482)
Other assets and liabilities2,016 (2,022)
Net cash flow provided by operating activities54,311 33,261 
INVESTING ACTIVITIES
Construction expenditures(154,788)(124,986)
Allowance for equity funds used during construction1,668 1,439 
Changes in money pool receivable - net(9,683)44,693 
Payment for the purchase of plant or assets— (24,633)
Other1 (128)
Net cash flow used in investing activities(162,802)(103,615)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt200,573 — 
Changes in money pool payable - net(16,516)19,006 
Common equity distributions paid— (2,500)
Other1,132 2,266 
Net cash flow provided by financing activities185,189 18,772 
Net increase (decrease) in cash and cash equivalents76,698 (51,582)
Cash and cash equivalents at beginning of period18 51,601 
Cash and cash equivalents at end of period$76,716 $19 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized$12,757 $9,800 
Income taxes($8,045)$— 
See Notes to Financial Statements.
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ENTERGY MISSISSIPPI, LLC
BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
 20212020
 (In Thousands)
CURRENT ASSETS  
Cash and cash equivalents:  
Cash$11 $11 
Temporary cash investments76,705 7 
Total cash and cash equivalents76,716 18 
Accounts receivable:  
Customer104,649 105,732 
Allowance for doubtful accounts(16,771)(19,527)
Associated companies13,857 2,740 
Other13,596 11,821 
Accrued unbilled revenues50,075 59,514 
Total accounts receivable165,406 160,280 
Deferred fuel costs11,031 — 
Fuel inventory - at average cost15,381 17,117 
Materials and supplies - at average cost61,336 59,542 
Prepayments and other3,792 4,876 
TOTAL333,662 241,833 
OTHER PROPERTY AND INVESTMENTS  
Non-utility property - at cost (less accumulated depreciation)4,539 4,543 
Escrow accounts64,637 64,635 
TOTAL69,176 69,178 
UTILITY PLANT  
Electric6,151,971 6,084,730 
Construction work in progress192,649 134,854 
TOTAL UTILITY PLANT6,344,620 6,219,584 
Less - accumulated depreciation and amortization2,046,216 2,005,087 
UTILITY PLANT - NET4,298,404 4,214,497 
DEFERRED DEBITS AND OTHER ASSETS  
Regulatory assets:  
Other regulatory assets456,326 467,341 
Other19,886 14,413 
TOTAL476,212 481,754 
TOTAL ASSETS$5,177,454 $5,007,262 
See Notes to Financial Statements.  
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BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
 20212020
 (In Thousands)
CURRENT LIABILITIES  
Accounts payable:  
Associated companies$37,053 $61,727 
Other144,652 117,629 
Customer deposits85,953 86,200 
Taxes accrued32,198 108,084 
Interest accrued25,127 20,889 
Deferred fuel costs— 14,691 
Other32,239 34,270 
TOTAL357,222 443,490 
NON-CURRENT LIABILITIES  
Accumulated deferred income taxes and taxes accrued664,704 646,674 
Accumulated deferred investment tax credits11,080 9,062 
Regulatory liability for income taxes - net222,078 224,000 
Other regulatory liabilities36,897 15,828 
Asset retirement cost liabilities9,898 9,762 
Accumulated provisions38,815 46,504 
Pension and other postretirement liabilities105,176 110,901 
Long-term debt1,981,429 1,780,577 
Other51,449 47,730 
TOTAL3,121,526 2,891,038 
Commitments and Contingencies  
EQUITY  
Member's equity1,698,706 1,672,734 
TOTAL1,698,706 1,672,734 
TOTAL LIABILITIES AND EQUITY$5,177,454 $5,007,262 
See Notes to Financial Statements.  
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ENTERGY MISSISSIPPI, LLC
STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
  
 Member's Equity
 (In Thousands)
Balance at December 31, 2019$1,542,151 
Net income22,526 
Common equity distributions(2,500)
Balance at March 31, 2020$1,562,177 
Balance at December 31, 2020$1,672,734 
Net income25,972 
Balance at March 31, 2021$1,698,706 
See Notes to Financial Statements.
116

ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

Hurricane Zeta

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Zeta” in the Form 10-K for a discussion of Hurricane Zeta, which caused significant damage to Entergy New Orleans’s service area. In March 2021, Entergy New Orleans withdrew $44 million from its funded storm reserves. Entergy New Orleans expects to initiate its storm cost recovery proceeding in May 2021.

Winter Storm Uri

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter Storms” in the Form 10-K for a discussion of the winter storms and extreme cold temperatures experienced in the United States, including Entergy New Orleans’s service area, in February 2021 (Winter Storm Uri). Fuel and purchased power costs for Entergy New Orleans were approximately $35 million in February 2021 compared to approximately $25 million in February 2020. See Note 2 to the financial statements in the Form 10-K for discussion of fuel cost recovery at Entergy New Orleans. See “Load Shed Investigation” below for discussion of the investigation initiated by the City Council in February 2021 .

Results of Operations

Net Income

Net income decreased $9.4 million primarily due to higher other operation and maintenance expenses, partially offset by higher retail electric price.

Operating Revenues

Following is an analysis of the change in operating revenues comparing first quarter 2021 to first quarter 2020:
Amount
(In Millions)
2020 operating revenues$149.3 
Fuel, rider, and other revenues that do not significantly affect net income5.3 
Retail electric price15.2 
Volume/weather(0.5)
2021 operating revenues$169.3 

Entergy New Orleans’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.
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The retail electric price variance is primarily due to an increase in formula rate plan revenues resulting from the recovery of New Orleans Power Station costs, effective November 2020. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the rate case resolution.

The volume/weather variance is primarily due to decreased commercial and residential usage and the effect of decreased usage during the unbilled sales period, significantly offset by more favorable weather on residential sales.

Billed electric energy sales for Entergy New Orleans for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential595 501 19 
Commercial450 496 (9)
Industrial92 102 (10)
Governmental171 184 (7)
  Total retail 1,308 1,283 2 
Sales for resale:
  Non-associated companies89 601 (85)
Total1,397 1,884 (26)

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

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to an increase of $3.6 million in energy efficiency costs and an increase of $3.5 million in non-nuclear generation expenses primarily due to the timing of the scope of work performed during plant outages as compared to the same period in 2020 and the New Orleans Power Station, which was placed in service in May 2020.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the New Orleans Power Station, which was placed in service in May 2020.

Other regulatory charges (credits) - net include regulatory credits recorded in first quarter 2020 to reflect compliance with terms of the 2018 combined rate case resolution approved by the City Council in February 2020. See Note 2 to the financial statements in the Form 10-K for discussion of the rate case resolution.

Income Taxes

The effective income tax rate was 33.9% for first quarter 2021. The difference in the effective income tax rate for first quarter 2021 versus the federal statutory rate of 21% was primarily due to the provision for uncertain tax positions and state income taxes, partially offset by certain book and tax differences related to utility plant items.

The effective income tax rate was (32.4%) for first quarter 2020. The difference in the effective income tax rate for first quarter 2020 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, permanent differences related to income tax deductions for stock-based compensation, certain book and tax differences related to utility plant items, and book and tax differences related to
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Management's Financial Discussion and Analysis
the allowance for equity funds used during construction, partially offset by the provision for uncertain tax positions. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for discussion of the income tax deductions for stock-based compensation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Cash and cash equivalents at beginning of period$26 $6,017 
Cash flow provided by (used in):
Operating activities(14,114)17,318 
Investing activities14,875 (68,691)
Financing activities14,825 118,671 
Net increase in cash and cash equivalents15,586 67,298 
Cash and cash equivalents at end of period$15,612 $73,315 

Operating Activities

Entergy New Orleans’s operating activities used $14.1 million of cash for the three months ended March 31, 2021 compared to providing $17.3 million of cash for the three months ended March 31, 2020 primarily due to the following activity:

•the timing of payments to vendors;
•increased fuel costs as a result of Winter Storm Uri. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements in the Form 10-K for a discussion of fuel and purchased power cost recovery;
•the timing of collection of receivables from customers, in part due to the COVID-19 pandemic; and
•an increase of approximately $5 million in storm spending in 2021, primarily due to Hurricane Zeta restoration efforts. See “Hurricane Zeta” above for discussion of hurricane restoration efforts.

Investing Activities

Entergy New Orleans’s investing activities provided $14.9 million of cash for the three months ended March 31, 2021 compared to using $68.7 million of cash for the three months ended March 31, 2020 primarily due to the following activity:

•$44.2 million in receipts from storm reserve escrow accounts in 2021; and
•a decrease of $33.8 million in construction expenditures primarily due to lower spending in 2021 on the New Orleans Power Station and the New Orleans Solar Station projects and lower spending in 2021 on advanced metering infrastructure, partially offset by storm spending in 2021. See “Hurricane Zeta” above for discussion of hurricane restoration efforts.

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Management's Financial Discussion and Analysis

Financing Activities

Net cash flow provided by financing activities decreased $103.8 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to the issuance of $78 million of 3.00% Series mortgage bonds and the issuance of $62 million of 3.75% Series mortgage bonds, each in March 2020. The decrease was partially offset by $20 million in repayments on long-term credit borrowings in 2020 and money pool activity.

Increases in Entergy New Orleans’s payable to the money pool are a source of cash flow, and Entergy New Orleans’s payable to the money pool increased $15 million for the three months ended March 31, 2021. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

Capital Structure

Entergy New Orleans’s debt to capital ratio is shown in the following table.
March 31, 2021December 31, 2020
Debt to capital51.5 %51.5 %
Effect of excluding securitization bonds (1.7 %)(1.6 %)
Debt to capital, excluding securitization bonds (a)49.8 %49.9 %
Effect of subtracting cash(0.6 %)— %
Net debt to net capital, excluding securitization bonds (a)49.2 %49.9 %

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

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, long-term debt, including the currently maturing portion, and the long-term payable due to an associated company. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy New Orleans uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because the securitization bonds are non-recourse to Entergy New Orleans, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy New Orleans also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because net debt indicates Entergy New Orleans’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy New Orleans’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.  
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Management's Financial Discussion and Analysis

Entergy New Orleans’s receivables from or (payables to) the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
($25,229)($10,190)$13,170$5,191

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

Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in November 2021. The credit facility includes fronting commitments for the issuance of letters of credit against $10 million of the borrowing capacity of the facility. As of March 31, 2021, there were no cash borrowings and no letters of credit outstanding under the facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2021, a $2 million letter of credit was outstanding under Entergy New Orleans’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

Entergy New Orleans has $38.8 million in its storm reserve escrow account at March 31, 2021.

State and Local Rate Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – State and Local Rate Regulation” in the Form 10-K for a discussion of state and local rate regulation. The following are updates to that discussion.

Retail Rates

COVID-19 Orders

As discussed in the Form 10-K, in June 2020 the City Council established the City Council Cares Program and directed Entergy New Orleans to use the approximately $7 million refund received from the Entergy Arkansas opportunity sales FERC proceeding, currently being held in escrow, and approximately $15 million of non-securitized storm reserves to fund this program, which was intended to provide temporary bill relief to customers who became unemployed during the COVID-19 pandemic. The program became effective July 1, 2020 and offered qualifying residential customers bill credits of $100 per month for up to four months, for a maximum of $400 in residential customer bill credits. As of March 31, 2021 the program expired and credits of $4.3 million have been applied to customer bills under the City Council Cares Program.

Additionally, as discussed in the Form 10-K, in February 2021 the City Council adopted a resolution suspending residential customer disconnections for non-payment of utility bills and suspending the assessment and accumulation of late fees on residential customers with past-due balances through May 15, 2021. As of March 31, 2021, Entergy New Orleans recorded a regulatory asset of $14.8 million for costs associated with the COVID-19 pandemic.

Hurricane Zeta

In October 2020, Hurricane Zeta caused significant damage to Entergy New Orleans’s service area. The storm resulted in widespread power outages, significant damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy New Orleans’s electric facilities damaged by Hurricane Zeta are currently estimated to be approximately $36 million, including approximately $28 million in capital costs and approximately $8 million in non-capital costs. In March
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Management's Financial Discussion and Analysis

2021, Entergy New Orleans withdrew $44 million from its funded storm reserves. Entergy New Orleans expects to initiate its storm cost recovery proceeding in May 2021.

Load Shed Investigation

On February 16, 2021, due to high customer demand and limited generation, MISO issued an order requiring load-serving entities throughout its southern region to shed load to protect the integrity of the bulk electric system. Entergy New Orleans was required to shed load of at least 26 MW, but due to certain complications with its automated load shed program and certain load measurement issues, it inadvertently shed approximately 105 MW of load in its service area. The maximum time any customer was without power due to the load shed event was one hour and forty minutes. In late February 2021 the City Council ordered its advisors to conduct an investigation into the load shed event and to issue a report, which was completed and filed in April 2021. The report recommended that the City Council open an additional docket to determine whether any of Entergy New Orleans’s actions were imprudent, and the City Council Utility Committee Chairperson has made statements in the media that the City Council may seek to impose a fine on Entergy New Orleans. Entergy New Orleans would oppose any attempt to levy a fine under the circumstances presented.

Federal Regulation

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

Nuclear Matters

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy New Orleans’s accounting for utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$139,148 $123,431 
Natural gas30,187 25,871 
TOTAL169,335 149,302 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale19,012 27,495 
Purchased power68,670 56,467 
Other operation and maintenance38,178 30,704 
Taxes other than income taxes12,556 13,206 
Depreciation and amortization18,161 15,075 
Other regulatory charges (credits) - net3,130 (5,736)
TOTAL159,707 137,211 
OPERATING INCOME9,628 12,091 
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used during construction258 2,485 
Interest and investment income9 53 
Miscellaneous - net(302)(738)
TOTAL(35)1,800 
INTEREST EXPENSE
Interest expense7,029 6,640 
Allowance for borrowed funds used during construction(116)(1,195)
TOTAL6,913 5,445 
INCOME BEFORE INCOME TAXES2,680 8,446 
Income taxes909 (2,740)
NET INCOME$1,771 $11,186 
See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$1,771 $11,186 
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization18,161 15,075 
Deferred income taxes, investment tax credits, and non-current taxes accrued4,572 1,339 
Changes in assets and liabilities:
Receivables(1,975)4,039 
Fuel inventory2,234 (25)
Accounts payable(27,777)(5,291)
Taxes accrued13 122 
Interest accrued(3,203)(929)
Deferred fuel costs(4,886)3,702 
Other working capital accounts(11,103)(10,795)
Provisions for estimated losses(40,680)923 
Other regulatory assets28,879 1,867 
Other regulatory liabilities8,728 (9,599)
Pension and other postretirement liabilities(4,397)(4,878)
Other assets and liabilities15,549 10,582 
Net cash flow provided by (used in) operating activities(14,114)17,318 
INVESTING ACTIVITIES
Construction expenditures(26,165)(60,001)
Allowance for equity funds used during construction258 2,485 
Changes in money pool receivable - net— (7,979)
Receipts from storm reserve escrow account44,200 — 
Payments to storm reserve escrow account(3)(314)
Changes in securitization account(3,415)(2,882)
Net cash flow provided by (used in) investing activities14,875 (68,691)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt— 139,116 
Retirement of long-term debt— (20,000)
Change in money pool payable - net15,039 — 
Other(214)(445)
Net cash flow provided by financing activities14,825 118,671 
Net increase in cash and cash equivalents15,586 67,298 
Cash and cash equivalents at beginning of period26 6,017 
Cash and cash equivalents at end of period$15,612 $73,315 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized$9,921 $7,275 
See Notes to Financial Statements.
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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$15,612 $26 
Total cash and cash equivalents15,612 26 
Securitization recovery trust account6,779 3,364 
Accounts receivable: 
Customer82,902 70,694 
Allowance for doubtful accounts(19,365)(17,430)
Associated companies1,331 2,381 
Other5,060 4,248 
Accrued unbilled revenues23,009 31,069 
Total accounts receivable92,937 90,962 
Deferred fuel costs7,016 2,130 
Fuel inventory - at average cost— 1,978 
Materials and supplies - at average cost16,434 16,550 
Prepayments and other14,733 3,715 
TOTAL153,511 118,725 
OTHER PROPERTY AND INVESTMENTS
Non-utility property at cost (less accumulated depreciation)1,016 1,016 
Storm reserve escrow account38,841 83,038 
TOTAL39,857 84,054 
UTILITY PLANT
Electric1,806,961 1,821,638 
Natural gas352,817 348,024 
Construction work in progress26,927 12,460 
TOTAL UTILITY PLANT2,186,705 2,182,122 
Less - accumulated depreciation and amortization751,117 740,796 
UTILITY PLANT - NET1,435,588 1,441,326 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Deferred fuel costs4,080 4,080 
Other regulatory assets (includes securitization property of $32,859 as of March 31, 2021 and $35,559 as of December 31, 2020)
237,911 266,790 
Other29,864 23,931 
TOTAL271,855 294,801 
TOTAL ASSETS$1,900,811 $1,938,906 
See Notes to Financial Statements.
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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Payable due to associated company$1,618 $1,618 
Accounts payable:
Associated companies66,122 54,234 
Other40,944 60,766 
Customer deposits27,315 27,912 
Taxes accrued4,713 4,700 
Interest accrued4,892 8,095 
Current portion of unprotected excess accumulated deferred income taxes3,327 3,296 
Other6,160 5,462 
TOTAL155,091 166,083 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued341,217 338,714 
Accumulated deferred investment tax credits16,081 16,095 
Regulatory liability for income taxes - net55,180 55,675 
Asset retirement cost liabilities3,833 3,768 
Accumulated provisions49,218 89,898 
Long-term debt (includes securitization bonds of $41,352 as of March 31, 2021 and $41,291 as of December 31, 2020)
629,883 629,704 
Long-term payable due to associated company10,911 10,911 
Other30,709 21,141 
TOTAL1,137,032 1,165,906 
Commitments and Contingencies
EQUITY
Member's equity608,688 606,917 
TOTAL608,688 606,917 
TOTAL LIABILITIES AND EQUITY$1,900,811 $1,938,906 
See Notes to Financial Statements.
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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
  
 Member's Equity
 (In Thousands)
Balance at December 31, 2019$497,579 
Net income11,186 
Balance at March 31, 2020$508,765 
Balance at December 31, 2020$606,917 
Net income1,771 
Balance at March 31, 2021$608,688 
See Notes to Financial Statements. 

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ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

The COVID-19 Pandemic

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - The COVID-19 Pandemic” in the Form 10-K for a discussion of the COVID-19 pandemic.

Hurricane Laura and Hurricane Delta

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Hurricane Laura and Hurricane Delta” in the Form 10-K for a discussion of Hurricane Laura and Hurricane Delta, which caused significant damage to portions of Entergy Texas’s service territory. See Note 2 to the financial statements herein for discussion of storm cost recovery filings made by Entergy Texas in April 2021.

Winter Storm Uri

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - February 2021 Winter Storms” in the Form 10-K for a discussion of the winter storms and extreme cold temperatures experienced in the United States, including Entergy Texas’s service area, in February 2021 (Winter Storm Uri). Fuel and purchased power costs for Entergy Texas were approximately $185 million in February 2021 compared to approximately $50 million in February 2020. See Note 2 to the financial statements herein for discussion of the storm cost recovery filing made by Entergy Texas in April 2021. See Note 2 to the financial statements herein and in the Form 10-K for discussion of fuel cost recovery at Entergy Texas.

Results of Operations

Net Income

Net income increased $17.4 million primarily due to higher retail electric price and higher volume/weather. The increase was partially offset by a higher effective tax rate, lower other income, and higher depreciation and amortization expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing the first quarter 2021 to the first quarter 2020:
Amount
(In Millions)
2020 operating revenues$339.3 
Fuel, rider, and other revenues that do not significantly affect net income105.9 
Retail electric price19.1 
Volume/weather17.3 
Return of unprotected excess accumulated deferred income taxes to customers(1.4)
2021 operating revenues$480.2 

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Entergy Texas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The retail electric price variance is primarily due to the implementation of the generation cost recovery rider effective January 2021, an increase in the transmission cost recovery factor rider effective March 2021, and an increase in the distribution cost recovery factor rider effective March 2021. See Note 2 to the financial statements herein and in the Form 10-K for further discussion of the generation cost recovery rider and transmission and distribution cost recovery factor rider filings.     

The volume/weather variance is primarily due to the effect of more favorable weather on residential sales.

The return of unprotected excess accumulated deferred income taxes to customers resulted from the return of unprotected excess accumulated deferred income taxes through a rider effective October 2018. In first quarter 2021, $7.1 million was returned to customers as compared to $5.7 million in first quarter 2020. There is no effect on net income as the reduction in operating revenues is offset by a reduction in income tax expense. See Note 2 to the financial statements in the Form 10-K for further discussion of regulatory activity regarding the Tax Cuts and Jobs Act.

Billed electric energy sales for Entergy Texas for the three months ended March 31, 2021 and 2020 are as follows:
20212020% Change
(GWh)
Residential1,539 1,326 16 
Commercial1,000 1,000 — 
Industrial1,928 1,897 2 
Governmental62 64 (3)
  Total retail 4,529 4,287 6 
Sales for resale:
  Associated companies296 244 21 
  Non-associated companies341 85 301 
Total5,166 4,616 12 

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

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $1.3 million due to bad debt expense as a result of the COVID-19 pandemic;
•an increase of $1.3 million in non-nuclear generation expenses primarily due to higher expenses associated with the Montgomery County Power Station, which was placed in service in January 2021, and a higher scope of work performed in 2021 as compared to the same period in 2020; and
•several individually insignificant items.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes as a result of higher estimated ad valorem taxes associated with the Montgomery County Power Station.
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Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Montgomery County Power Station, which was placed in service in January 2021.

Other income decreased primarily due to a decrease in the allowance for equity funds used during construction due to higher construction work in progress in 2020, including the Montgomery County Power Station project, as compared to the same period in 2021.

Interest expense increased primarily due to a decrease in the allowance for borrowed funds used during construction due to higher construction work in progress in 2020, including the Montgomery County Power Station project, as compared to the same period in 2021.

Income Taxes

The effective income tax rate was 9.1% for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes and certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.    

The effective income tax rate was (14.8%) for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, permanent differences related to income tax deductions for stock-based compensation, book and tax differences related to the allowance for equity funds used during construction, and certain book and tax differences related to utility plant items. See Note 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for discussion of the income tax deductions for stock-based compensation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Cash and cash equivalents at beginning of period$248,596 $12,929 
Cash flow provided by (used in):
Operating activities(28,864)37,114 
Investing activities(223,696)(232,650)
Financing activities3,989 342,320 
Net increase (decrease) in cash and cash equivalents(248,571)146,784 
Cash and cash equivalents at end of period$25 $159,713 

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Operating Activities

Entergy Texas’s operating activities used $28.9 million of cash for the three months ended March 31, 2021 compared to providing $37.1 million of cash for the three months ended March 31, 2020 primarily due to increased fuel costs as a result of Winter Storm Uri and an increase of approximately $25 million in storm spending in 2021, primarily due to Hurricane Laura and Hurricane Delta restoration efforts. See “Winter Storm Uri” above for discussion of the incremental fuel and purchased power costs incurred. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of fuel and purchased power cost recovery. See “Hurricane Laura and Hurricane Delta” above for discussion of hurricane restoration efforts.

Investing Activities

Net cash flow used in investing activities decreased $9.0 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to a decrease of $42.9 million in non-nuclear generation construction expenditures, primarily due to higher spending in 2020 on the Montgomery County Power Station project, and money pool activity. The decrease was partially offset by an increase of $50.7 million in distribution construction expenditures primarily due to storm spending in 2021. See “Hurricane Laura and Hurricane Delta” above for discussion of hurricane restoration efforts.

Decreases in Entergy Texas’s receivable from the money pool are a source of cash flow, and Entergy Texas’s receivable from the money pool decreased $4.6 million for the three months ended March 31, 2021 compared to increasing $17.9 million for the three months ended March 31, 2020. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities decreased $338.3 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to a capital contribution of $175 million received from Entergy Corporation in March 2020 in anticipation of upcoming expenditures, including Montgomery County Power Station, and the issuance of $175 million of 3.55% Series mortgage bonds in March 2020. The decrease was partially offset by money pool activity.

Increases in Entergy Texas’s payable to the money pool are a source of cash flow, and Entergy Texas’s payable to the money pool increased by $30.9 million for the three months ended March 31, 2021.

See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for more details on long-term debt.

Capital Structure

Entergy Texas’s debt to capital ratio is shown in the following table.
March 31, 2021December 31, 2020
Debt to capital52.8 %53.7 %
Effect of excluding the securitization bonds(0.9 %)(1.3 %)
Debt to capital, excluding securitization bonds (a)51.9 %52.4 %
Effect of subtracting cash— %(2.7 %)
Net debt to net capital, excluding securitization bonds (a)51.9 %49.7 %

(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy Texas.
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Net debt consists of debt less cash and cash equivalents.  Debt consists of finance lease obligations and long-term debt, including the currently maturing portion.  Capital consists of debt and equity.  Net capital consists of capital less cash and cash equivalents.  Entergy Texas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because the securitization bonds are non-recourse to Entergy Texas, as more fully described in Note 5 to the financial statements in the Form 10-K.  Entergy Texas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because net debt indicates Entergy Texas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy Texas’s uses and sources of capital. Following are updates to information provided in the Form 10-K.

Entergy Texas’s receivables from or (payables to) the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
($30,858)$4,601$29,092$11,181

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

Entergy Texas has a credit facility in the amount of $150 million scheduled to expire in September 2024.  The credit facility includes fronting commitments for the issuance of letters of credit against $30 million of the borrowing capacity of the facility. As of March 31, 2021, there were no cash borrowings and $1.3 million of letters of credit outstanding under the credit facility.  In addition, Entergy Texas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of March 31, 2021, $30.2 million in letters of credit were outstanding under Entergy Texas’s uncommitted letter of credit facility. See Note 4 to the financial statements herein for additional discussion of the credit facilities.

Liberty County Solar Facility

In September 2020, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to acquire the 100 MW Liberty County Solar Facility and a determination that Entergy Texas’s acquisition of the facility through a tax equity partnership is in the public interest. In its preliminary order, the PUCT determined that, in considering Entergy Texas’s application, it would not specifically address whether Entergy Texas’s use of a tax equity partnership is in the public interest. In March 2021 intervenors and PUCT staff filed testimony, and Entergy Texas filed rebuttal testimony in April 2021. A hearing on the merits was held in April 2021. Post-hearing briefs and reply briefs are due in May 2021. Closing is expected to occur in 2023.

Hardin County Peaking Facility

In April 2020, Entergy Texas and East Texas Electric Cooperative, Inc. filed a joint report and application seeking PUCT approvals related to two transactions: (1) Entergy Texas’s acquisition of the Hardin County Peaking Facility from East Texas Electric Cooperative, Inc.; and (2) Entergy Texas’s sale of a 7.56% partial interest in the Montgomery County Power Station to East Texas Electric Cooperative, Inc. The two transactions, currently
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Management's Financial Discussion and Analysis
expected to close in June 2021, are interdependent. In October 2020, Entergy Texas filed an unopposed settlement agreement supporting approval of the transactions. Key provisions of the settlement include: Entergy Texas will propose to depreciate its investment in Hardin County Peaking Facility through the end of 2041; Entergy Texas’s recovery of its investment in Hardin County Peaking Facility will be capped at approximately $36 million; and Entergy Texas will not seek recovery of an acquisition adjustment, if any, or transaction costs for either transaction. The settlement was approved by the PUCT in April 2021.

State and Local Rate Regulation and Fuel-Cost Recovery

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - State and Local Rate Regulation and Fuel-Cost Recovery” in the Form 10-K for a discussion of state and local rate regulation and fuel-cost recovery. The following are updates to that discussion.

Distribution Cost Recovery Factor (DCRF) Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $26.3 million annually, or $6.8 million in incremental annual revenues beyond Entergy Texas’s currently effective DCRF rider based on its capital invested in distribution between January 1, 2020 and August 31, 2020. In February 2021 the administrative law judge with the State Office of Administrative Hearings approved Entergy Texas’s agreed motion for interim rates, which went into effect in March 2021. In March 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested DCRF revenue requirement and resolving all issues in the proceeding. This case has been remanded to the PUCT for consideration of a final order at a future open meeting.

Transmission Cost Recovery Factor (TCRF) Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $51 million annually, or $31.6 million in incremental annual revenues beyond Entergy Texas’s currently effective TCRF rider based on its capital invested in transmission between July 1, 2019 and August 31, 2020. A procedural schedule was established with a hearing scheduled in March 2021. In February 2021, Entergy Texas filed an agreed motion to abate the procedural schedule, noting that the parties had reached a settlement in principle, and the administrative law judge granted the motion to abate. In March 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2021 and resolving all issues in the proceeding. In March 2021 the administrative law judge granted the motion for interim rates, admitted evidence, and remanded this case to the PUCT for consideration of a final order at a future open meeting.

Fuel and purchased power recovery

In February 2021, Entergy Texas filed an application to implement a fuel refund for a cumulative over-recovery of approximately $75 million that is primarily attributable to settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas planned to issue the refund over the period of March through August 2021. On February 22, 2021, Entergy Texas filed a motion to abate its fuel refund proceeding to assess how the February 2021 winter storm impacted Entergy Texas’s fuel over-recovery position. In March 2021, Entergy Texas withdrew its application to implement the fuel refund. Entergy Texas is continuing to evaluate its fuel balance and will file a subsequent refund or surcharge application consistent with the requirements of the PUCT’s rules.

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COVID-19 Orders

As discussed in the Form 10-K, in March 2020 the PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of the COVID-19 pandemic. In future proceedings the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the appropriate period of recovery, and any amount of carrying costs thereon. In March 2020 the PUCT ordered a moratorium on disconnections for nonpayment for all customer classes, but, in April 2020, revised the disconnect moratorium to apply only to residential customers. The PUCT allowed the moratorium to expire on June 13, 2020, but on July 17, 2020, the PUCT re-established the disconnect moratorium for residential customers until August 31, 2020. In January 2021, Entergy Texas resumed disconnections for customers with past-due balances that have not made payment arrangements. As of March 31, 2021, Entergy Texas recorded a regulatory asset of $10.7 million for costs associated with the COVID-19 pandemic.

Generation Cost Recovery Rider

As discussed in the Form 10-K, in October 2020, Entergy Texas filed an application to establish a generation cost recovery rider with an initial annual revenue requirement of approximately $91 million to begin recovering a return of and on its capital investment in the Montgomery County Power Station through August 31, 2020. In December 2020, Entergy Texas filed an unopposed settlement supporting a generation cost recovery rider with an annual revenue requirement of approximately $86 million. On January 14, 2021, the PUCT approved the generation cost recovery rider settlement rates on an interim basis and abated the proceeding. In March 2021, Entergy Texas filed to update its generation cost recovery rider to include investment in Montgomery County Power Station after August 31, 2020. In April 2021 the ALJ issued an order unabating the proceeding to consider Entergy Texas’s updated application and establishing a procedural schedule that will result in administrative approval of Entergy Texas’s application in June 2021 if it is unopposed by parties to the proceeding.

In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which is expected to close in June 2021. The initial generation cost recovery rider rates proposed in the application represent no change from the generation cost recovery rider rates to be established in Entergy Texas’s previous generation cost recovery rider proceeding. Once Entergy Texas has acquired the Hardin County Peaking Facility, its investment in the facility will be reflected in an updated filing to Entergy Texas’s application, which will be made within 60 days of the acquisition’s closing.

Hurricane Laura, Hurricane Delta, and Winter Storm Uri

In August 2020 and October 2020, Hurricane Laura and Hurricane Delta caused extensive damage to Entergy Texas’s service area. In February 2021, Winter Storm Uri also caused damage to Entergy Texas’s service area. The storms resulted in widespread power outages, significant damage primarily to distribution and transmission infrastructure, and the loss of sales during the power outages. In April 2021, Entergy Texas filed an application with the PUCT requesting a determination that its system restoration costs associated with Hurricane Laura, Hurricane Delta, and Winter Storm Uri of approximately $250 million, including approximately $200 million in capital costs and approximately $50 million in non-capital costs were reasonable and necessary to enable Entergy Texas to restore electric service to its customers and Entergy Texas’s electric utility infrastructure. The filing currently includes only a portion of the Winter Storm Uri costs. Entergy Texas expects to initiate a proceeding later in 2021 to securitize the costs approved by the PUCT.

Federal Regulation

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

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Nuclear Matters

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

Industrial and Commercial Customers

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

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.
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ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$480,220 $339,336 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale112,396 41,346 
Purchased power141,362 119,791 
Other operation and maintenance62,955 58,933 
Taxes other than income taxes21,875 19,272 
Depreciation and amortization50,936 42,566 
Other regulatory charges (credits) - net15,840 21,368 
TOTAL405,364 303,276 
OPERATING INCOME74,856 36,060 
OTHER INCOME
Allowance for equity funds used during construction2,445 10,641 
Interest and investment income224 429 
Miscellaneous - net(423)(346)
TOTAL2,246 10,724 
INTEREST EXPENSE
Interest expense23,038 22,858 
Allowance for borrowed funds used during construction(984)(4,573)
TOTAL22,054 18,285 
INCOME BEFORE INCOME TAXES55,048 28,499 
Income taxes4,990 (4,208)
NET INCOME50,058 32,707 
Preferred dividend requirements470 470 
EARNINGS APPLICABLE TO COMMON STOCK$49,588 $32,237 
See Notes to Financial Statements.


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ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$50,058 $32,707 
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation and amortization50,936 42,566 
Deferred income taxes, investment tax credits, and non-current taxes accrued(1,522)3,921 
Changes in assets and liabilities:
Receivables(16,424)1,221 
Fuel inventory3,509 (1,127)
Accounts payable(42,511)(35,288)
Taxes accrued(5,123)(20,597)
Interest accrued(10,989)(7,380)
Deferred fuel costs(62,970)8,138 
Other working capital accounts1,118 5,004 
Provisions for estimated losses(31)5 
Other regulatory assets40,484 34,309 
Other regulatory liabilities(13,649)(8,854)
Pension and other postretirement liabilities(5,434)(9,086)
Other assets and liabilities(16,316)(8,425)
Net cash flow provided by (used in) operating activities(28,864)37,114 
INVESTING ACTIVITIES
Construction expenditures(238,903)(236,984)
Allowance for equity funds used during construction2,445 10,641 
Changes in money pool receivable - net4,601 (17,911)
Changes in securitization account8,161 11,604 
Net cash flow used in investing activities(223,696)(232,650)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt— 194,631 
Retirement of long-term debt(27,951)(26,864)
Capital contribution from parent— 175,000 
Change in money pool payable - net30,858 — 
Preferred stock dividends paid(470)(653)
Other1,552 206 
Net cash flow provided by financing activities3,989 342,320 
Net increase (decrease) in cash and cash equivalents(248,571)146,784 
Cash and cash equivalents at beginning of period248,596 12,929 
Cash and cash equivalents at end of period$25 $159,713 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized$33,394 $29,699 
Income taxes($836)($2,358)
See Notes to Financial Statements.
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ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$25 $26 
Temporary cash investments— 248,570 
Total cash and cash equivalents25 248,596 
Securitization recovery trust account28,072 36,233 
Accounts receivable:
Customer108,152 103,221 
Allowance for doubtful accounts(15,058)(16,810)
Associated companies14,385 18,892 
Other14,995 11,780 
Accrued unbilled revenues62,845 56,411 
Total accounts receivable185,319 173,494 
Fuel inventory - at average cost50,022 53,531 
Materials and supplies - at average cost60,011 56,227 
Prepayments and other12,493 20,165 
TOTAL335,942 588,246 
OTHER PROPERTY AND INVESTMENTS
Investments in affiliates - at equity336 349 
Non-utility property - at cost (less accumulated depreciation)376 376 
Other17,552 19,889 
TOTAL18,264 20,614 
UTILITY PLANT
Electric6,771,662 6,007,687 
Construction work in progress178,917 879,908 
TOTAL UTILITY PLANT6,950,579 6,887,595 
Less - accumulated depreciation and amortization1,898,407 1,864,494 
UTILITY PLANT - NET5,052,172 5,023,101 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets (includes securitization property of $60,618 as of March 31, 2021 and $78,590 as of December 31, 2020)
484,229 524,713 
Other78,654 70,397 
TOTAL562,883 595,110 
TOTAL ASSETS$5,969,261 $6,227,071 
See Notes to Financial Statements.  
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ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt$200,000 $200,000 
Accounts payable:
Associated companies81,613 55,944 
Other139,190 350,947 
Customer deposits33,831 36,282 
Taxes accrued47,315 52,438 
Interest accrued9,867 20,856 
Current portion of unprotected excess accumulated deferred income taxes30,591 29,249 
Deferred fuel costs22,386 85,356 
Other12,377 12,370 
TOTAL577,170 843,442 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued635,212 639,422 
Accumulated deferred investment tax credits9,788 9,942 
Regulatory liability for income taxes - net164,680 175,594 
Other regulatory liabilities28,220 32,297 
Asset retirement cost liabilities8,175 8,063 
Accumulated provisions8,351 8,382 
Long-term debt (includes securitization bonds of $95,185 as of March 31, 2021 and $123,066 as of December 31, 2020)
2,265,827 2,293,708 
Other64,672 58,643 
TOTAL3,184,925 3,226,051 
Commitments and Contingencies
EQUITY
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2021 and 2020
49,452 49,452 
Paid-in capital955,162 955,162 
Retained earnings1,167,552 1,117,964 
Total common shareholder's equity2,172,166 2,122,578 
Preferred stock without sinking fund35,000 35,000 
TOTAL2,207,166 2,157,578 
TOTAL LIABILITIES AND EQUITY$5,969,261 $6,227,071 
See Notes to Financial Statements.
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ENTERGY TEXAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Common Equity
Preferred StockCommon
Stock		Paid-in
Capital		Retained
Earnings		Total
(In Thousands)
Balance at December 31, 2019$35,000 $49,452 $780,182 $934,773 $1,799,407 
Net income— — — 32,707 32,707 
Capital contribution from parent— — 175,000 — 175,000 
Preferred stock dividends— — — (470)(470)
Balance at March 31, 2020$35,000 $49,452 $955,182 $967,010 $2,006,644 
Balance at December 31, 2020$35,000 $49,452 $955,162 $1,117,964 $2,157,578 
Net income— — — 50,058 50,058 
Preferred stock dividends— — — (470)(470)
Balance at March 31, 2021$35,000 $49,452 $955,162 $1,167,552 $2,207,166 
See Notes to Financial Statements.
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SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS


System Energy’s principal asset currently consists of an ownership interest and a leasehold interest in Grand Gulf.  The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.  System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement.  Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues.

Results of Operations

Net Income

Net income decreased $4.6 million primarily due to a decrease in the allowance for equity funds used during construction resulting from higher spending in 2020 including the scheduled 2020 Grand Gulf refueling outage.

Income Taxes

The effective income tax rate was (79.5%) for the first quarter 2021. The difference in the effective income tax rate for the first quarter 2021 versus the federal statutory rate of 21% was primarily due to the amortization of excess accumulated deferred income taxes, certain book and tax differences related to utility plant items, the amortization of investment tax credits, and book and tax differences related to the allowance for equity funds used during construction, partially offset by state income taxes. See Notes 2 and 10 to the financial statements herein and Notes 2 and 3 to the financial statements in the Form 10-K for a discussion of the effects and regulatory activity regarding the Tax Cuts and Jobs Act.

The effective income tax rate was 16% for the first quarter 2020. The difference in the effective income tax rate for the first quarter 2020 versus the federal statutory rate of 21% was primarily due to certain book and tax differences related to utility plant items, permanent differences related to income tax deductions for stock-based compensation, and book and tax differences related to the allowance for equity funds used during construction, partially offset by state income taxes. See Note 3 to the financial statements in the Form 10-K for discussion of the income tax deductions for stock-based compensation.


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Liquidity and Capital Resources

Cash Flow

Cash flows for the three months ended March 31, 2021 and 2020 were as follows:
20212020
(In Thousands)
Cash and cash equivalents at beginning of period$242,469 $68,534 
Cash flow provided by (used in):
Operating activities(29,242)60,442 
Investing activities(23,437)(79,532)
Financing activities(57,563)43,002 
Net increase (decrease) in cash and cash equivalents(110,242)23,912 
Cash and cash equivalents at end of period$132,227 $92,446 

Operating Activities

System Energy’s operating activities used $29.2 million of cash for the three months ended March 31, 2021 compared to providing $60.4 million of cash for the three months ended March 31, 2020 primarily due to income tax payments of $39.1 million in 2021 and timing of payments to vendors, partially offset by a decrease in spending of $18 million on nuclear refueling outages in 2021 as compared to the same period in 2020. System Energy had income tax payments in 2021 as a result of the amended Mississippi tax returns filed based on federal adjustments related to the resolution of the 2014-2015 IRS audit, as well as a portion of the payments made in accordance with an intercompany income tax allocation agreement. See Note 3 to the financial statements in the Form 10-K for discussion of the 2014-2015 IRS audit.

Investing Activities

Net cash flow used in investing activities decreased $56.1 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to:

•an increase of $67.4 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and
•a decrease of $46.4 million in nuclear construction expenditures as a result of spending in 2020 on Grand Gulf outage projects and upgrades.

The decrease was partially offset by money pool activity.

Increases in System Energy’s receivable from the money pool are a use of cash flow and System Energy’s receivable from the money pool increased by $12.7 million for the three months ended March 31, 2021 compared to decreasing by $42.5 million for the three months ended March 31, 2020. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.

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Financing Activities

System Energy’s financing activities used $57.6 million of cash for the three months ended March 31, 2021 compared to providing $43 million of cash for the three months ended March 31, 2020 primarily due to the repayment in February 2021 of $100 million of 3.42% Series J notes by the System Energy nuclear fuel company variable interest entity.

Capital Structure

System Energy’s debt to capital ratio is shown in the following table. The decrease in the debt to capital ratio is primarily due to the net repayment of long-term debt in 2021.
 March 31, 2021December 31, 2020
Debt to capital41.5 %42.7 %
Effect of subtracting cash(4.5 %)(8.5 %)
Net debt to net capital37.0 %34.2 %

Net debt consists of debt less cash and cash equivalents.  Debt consists of short-term borrowings and long-term debt, including the currently maturing portion.  Capital consists of debt and common equity.  Net capital consists of capital less cash and cash equivalents.  System Energy uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition.  System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Uses and Sources of Capital

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of System Energy’s uses and sources of capital. Following are updates to the information provided in the Form 10-K.

System Energy’s receivables from the money pool were as follows:
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
(In Thousands)
$16,682$4,004$16,819$59,298

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

The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $120 million scheduled to expire in September 2022. As of March 31, 2021, $63.4 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements herein for additional discussion of the variable interest entity credit facility.

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Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation - Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis in the Form 10-K and Note 2 to the financial statements herein and in the Form 10-K for a discussion of federal regulation.

Complaints Against System Energy

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in May 2020 the FERC issued an order on rehearing of Opinion No. 569 (Opinion No. 569-A). In June 2020 the procedural schedule in the System Energy proceeding was further revised in order to allow parties to address the Opinion No. 569-A methodology. The parties and FERC trial staff filed final rounds of testimony in August 2020. The hearing before a FERC ALJ occurred in late-September through early-October 2020, post-hearing briefing took place in November and December 2020. System Energy recorded a provision against revenue for the potential outcome of this proceeding.

In March 2021 the FERC ALJ issued an initial decision. With regard to System Energy’s authorized return on equity, the ALJ determined that the existing return on equity of 10.94% is no longer just and reasonable, and that the replacement authorized return on equity, based on application of the Opinion No. 569-A methodology, should be 9.32%. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (January 2017-April 2018) based on the difference between the current return on equity and the replacement authorized return on equity. The ALJ determined that the April 2018 complaint concerning the authorized return on equity should be dismissed, and that no refunds for a second fifteen-month refund period should be due. With regard to System Energy’s capital structure, the ALJ determined that System Energy’s actual equity ratio is excessive and that the just and reasonable equity ratio is 48.15% equity, based on the average equity ratio of the proxy group used to evaluate the return on equity for the second complaint. The ALJ further determined that System Energy should pay refunds for a fifteen-month refund period (September 2018-December 2019) based on the difference between the actual equity ratio and the 48.15% equity ratio. If the ALJ’s initial decision is upheld, the estimated refund for this proceeding is approximately $59 million, which includes interest through March 31, 2021, and the estimated resulting annual rate reduction would be approximately $46 million. The estimated refund will continue to accrue interest until a final FERC decision is issued. Based on the course of the proceeding to date, System Energy has recorded a provision of $36 million, including interest, as of March 31, 2021.

The ALJ initial decision is an interim step in the FERC litigation process. In April 2021, System Energy filed its brief on exceptions, in which it challenged the initial decision’s findings on both the return on equity and capital structure issues. Also in April 2021, the LPSC, APSC, MPSC, City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions are due in May 2021.

Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5% undivided interest in Grand Gulf Unit 1. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy is recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which is approximately $70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this
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remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and that System Energy’s rate base should have been reduced for those liabilities. If the ALJ’s initial decision is upheld, the estimated refund for this issue through March 31, 2021, is approximately $422 million, plus interest, which is approximately $115 million through March 31, 2021. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections. If the initial decision is affirmed on this issue, System Energy estimates refunds of approximately $19 million, which includes interest through March 31, 2021.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. The ALJ in the initial decision acknowledges that these are issues of first impression before the FERC. The case is pending before the FERC, which will review the case and issue an order on the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

Also as discussed in the Form 10-K, in November 2020 the IRS issued a Revenue Agent’s Report (RAR) for the 2014/2015 tax year and in December 2020 Entergy executed it. The RAR contained an adjustment to System Energy’s uncertain nuclear decommissioning tax position. As a result of the RAR, in December 2020, System Energy filed amendments to its new Federal Power Act section 205 filings to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from the decommissioning uncertain tax position and to credit excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position. The amendments both propose the inclusion of the RAR as support for the filings. In December 2020 the LPSC, APSC, and City Council filed a protest in response to the amendments, reiterating their prior objections to the filings. In February 2021 the FERC issued an order accepting System Energy’s Federal Power Act section 205 filings subject to refund, setting them for hearing, and holding the hearing in abeyance.

In December 2020, System Energy filed a new Federal Power Act section 205 filing to provide a one-time, historical credit to customers of $25.2 million for the accumulated deferred income taxes that would have been created by the decommissioning uncertain tax position if the IRS’s decision had been known in 2016. In January 2021 the LPSC, APSC, MPSC, and City Council filed a protest to the filing. In February 2021, the FERC issued an order accepting System Energy’s Federal Power Act section 205 filing subject to refund, setting it for hearing, and holding the hearing in abeyance. The one-time credit was made during the first quarter 2021.

LPSC Authorization of Additional Complaints

As discussed in the Form 10-K, in May 2020 the LPSC authorized its staff to file additional complaints at FERC related to the rates charged by System Energy for Grand Gulf energy and capacity supplied to Entergy Louisiana under the Unit Power Sales Agreement, and the first of the additional complaints was filed by the LPSC, the APSC, the MPSC and the City Council in September 2020. The second of the additional complaints was filed at the FERC in March 2021 by the LPSC, the APSC, and the City Council against System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. The second complaint contains two primary allegations. First, it alleges that, based on the plant’s capacity factor and alleged safety performance, System Energy and the other respondents imprudently operated Grand Gulf during the period 2016-2020, and it seeks refunds of at least $360 million in alleged replacement energy costs, in addition to other costs, including those that can only be identified upon further investigation. Second, it alleges that the performance and/or management of the 2012 extended power uprate of Grand Gulf was imprudent, and it seeks refunds of all costs of the 2012 uprate that are determined to result from imprudent planning or management of the project. In addition to the requested refunds, the complaint asks that the FERC modify the Unit Power Sales Agreement to provide for full cost recovery only if certain performance
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indicators are met and to require pre-authorization of capital improvement projects in excess of $125 million before related costs may be passed through to customers in rates. In April 2021, System Energy and the other respondents filed their motion to dismiss and answer to the complaint. System Energy requested that the FERC dismiss the claims within the complaint. With respect to the claim concerning operations, System Energy argues that the complaint does not meet its legal burden because, among other reasons, it fails to allege any specific imprudent conduct. With respect to the claim concerning the uprate, System Energy argues that the complaint fails because, among other reasons, the complainants’ own conduct prevents them from raising a serious doubt as to the prudence of the uprate. System Energy also requests that the FERC dismiss other elements of the complaint, including the proposed modifications to the Unit Power Sales Agreement, because they are not warranted.

Nuclear Matters

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

NRC Reactor Oversight Process

As discussed in the Form 10-K, the NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, and “multiple/repetitive degraded cornerstone column,” or Column 4. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs.

In March 2021 the NRC placed Grand Gulf in Column 3 based on the incidence of five unplanned plant scrams during calendar year 2020, some of which were related to upgrades made to the plant’s turbine control system during the spring 2020 refueling outage. The NRC plans to conduct a supplemental inspection of Grand Gulf in accordance with its inspection procedures for nuclear plants in Column 3.

Environmental Risks

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

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in System Energy’s accounting for nuclear decommissioning costs, utility regulatory accounting, impairment of long-lived assets, taxation and uncertain tax positions, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “New Accounting Pronouncements” section of Note 1 to the financial statements in the Form 10-K for a discussion of new accounting pronouncements.
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SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING REVENUES
Electric$117,746 $130,664 
OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale16,859 13,143 
Nuclear refueling outage expenses6,718 8,272 
Other operation and maintenance41,960 40,471 
Decommissioning9,529 9,157 
Taxes other than income taxes6,825 7,973 
Depreciation and amortization28,194 26,899 
Other regulatory charges (credits) - net11,550 (10,560)
TOTAL121,635 95,355 
OPERATING INCOME (LOSS)(3,889)35,309 
OTHER INCOME
Allowance for equity funds used during construction1,111 3,584 
Interest and investment income27,442 5,338 
Miscellaneous - net(2,024)(2,460)
TOTAL26,529 6,462 
INTEREST EXPENSE
Interest expense9,535 8,540 
Allowance for borrowed funds used during construction(188)(711)
TOTAL9,347 7,829 
INCOME BEFORE INCOME TAXES13,293 33,942 
Income taxes(10,571)5,429 
NET INCOME$23,864 $28,513 
See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
20212020
(In Thousands)
OPERATING ACTIVITIES
Net income$23,864 $28,513 
Adjustments to reconcile net income to net cash flow provided by (used in) operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization53,433 47,041 
Deferred income taxes, investment tax credits, and non-current taxes accrued(10,197)(5,764)
Changes in assets and liabilities:
Receivables9,255 22,292 
Accounts payable(21,296)15,049 
Taxes accrued(33,364)(3,590)
Interest accrued(1,088)(201)
Other working capital accounts2,347 (30,385)
Other regulatory assets20,923 (3,893)
Other regulatory liabilities(12,591)(135,561)
Pension and other postretirement liabilities(7,424)(2,587)
Other assets and liabilities(53,104)129,528 
Net cash flow provided by (used in) operating activities(29,242)60,442 
INVESTING ACTIVITIES
Construction expenditures(14,890)(60,551)
Allowance for equity funds used during construction1,111 3,584 
Nuclear fuel purchases(4,745)(69,022)
Proceeds from the sale of nuclear fuel12,626 9,503 
Proceeds from nuclear decommissioning trust fund sales211,481 132,661 
Investment in nuclear decommissioning trust funds(216,342)(138,186)
Changes in money pool receivable - net(12,678)42,479 
Net cash flow used in investing activities(23,437)(79,532)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt189,244 243,559 
Retirement of long-term debt(225,807)(186,904)
Common stock dividends and distributions paid(21,000)(13,653)
Net cash flow provided by (used in) financing activities(57,563)43,002 
Net increase (decrease) in cash and cash equivalents(110,242)23,912 
Cash and cash equivalents at beginning of period242,469 68,534 
Cash and cash equivalents at end of period$132,227 $92,446 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized$10,720 $8,598 
Income taxes$39,085 $— 
See Notes to Financial Statements.
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SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash$78 $26,086 
Temporary cash investments132,149 216,383 
Total cash and cash equivalents132,227 242,469 
Accounts receivable:
Associated companies59,422 57,743 
Other4,294 2,550 
Total accounts receivable63,716 60,293 
Materials and supplies - at average cost126,444 123,006 
Deferred nuclear refueling outage costs27,932 34,459 
Prepayments and other7,605 6,864 
TOTAL357,924 467,091 
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds1,249,846 1,215,868 
TOTAL1,249,846 1,215,868 
UTILITY PLANT
Electric5,310,445 5,309,458 
Construction work in progress73,360 59,831 
Nuclear fuel150,948 175,005 
TOTAL UTILITY PLANT5,534,753 5,544,294 
Less - accumulated depreciation and amortization3,381,583 3,355,367 
UTILITY PLANT - NET2,153,170 2,188,927 
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Other regulatory assets518,040 538,963 
Other2,441 3,119 
TOTAL520,481 542,082 
TOTAL ASSETS$4,281,421 $4,413,968 
See Notes to Financial Statements.
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SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2021 and December 31, 2020
(Unaudited)
20212020
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt$19 $100,015 
Accounts payable:
Associated companies4,644 15,309 
Other36,849 41,313 
Taxes accrued49,613 82,977 
Interest accrued11,634 12,722 
Other4,247 4,248 
TOTAL107,006 256,584 
NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued340,689 359,835 
Accumulated deferred investment tax credits43,963 38,902 
Regulatory liability for income taxes - net134,350 151,829 
Other regulatory liabilities670,284 665,396 
Decommissioning978,439 968,910 
Pension and other postretirement liabilities117,988 125,412 
Long-term debt768,950 705,259 
Other36,342 61,295 
TOTAL3,091,005 3,076,838 
Commitments and Contingencies
COMMON EQUITY
Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2021 and 2020
951,850 951,850 
Retained earnings131,560 128,696 
TOTAL1,083,410 1,080,546 
TOTAL LIABILITIES AND EQUITY$4,281,421 $4,413,968 
See Notes to Financial Statements.
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SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CHANGES IN COMMON EQUITY
For the Three Months Ended March 31, 2021 and 2020
(Unaudited)
Common Equity
Common
Stock		Retained
Earnings		Total
(In Thousands)
Balance at December 31, 2019$601,850 $110,218 $712,068 
Net income— 28,513 28,513 
Common stock dividends and distributions— (13,653)(13,653)
Balance at March 31, 2020$601,850 $125,078 $726,928 
Balance at December 31, 2020$951,850 $128,696 $1,080,546 
Net income— 23,864 23,864 
Common stock dividends and distributions— (21,000)(21,000)
Balance at March 31, 2021$951,850 $131,560 $1,083,410 
See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

See “PART I, Item 1, Litigation” in the Form 10-K for a discussion of legal, administrative, and other regulatory proceedings affecting Entergy.  Also see Notes 1 and 2 to the financial statements herein and “Item 5, Other Information, Environmental Regulation” below for updates regarding environmental proceedings and regulation.

Item 1A.  Risk Factors

There have been no material changes to the risk factors discussed in “PART I, Item 1A, Risk Factors” in the Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities (a)
PeriodTotal Number of
Shares Purchased		Average Price Paid
per Share		Total Number of
Shares Purchased
as Part of a
Publicly
Announced Plan		Maximum $
Amount
of Shares that May
Yet be Purchased
Under a Plan (b)
1/01/2021-1/31/2021— $— — $350,052,918 
2/01/2021-2/28/2021— $— — $350,052,918 
3/01/2021-3/31/2021— $— — $350,052,918 
Total— $— —  

In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options to key employees, which may be exercised to obtain shares of Entergy’s common stock.  According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market.  Entergy’s management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans.  In addition to this authority, the Board has authorized share repurchase programs to enable opportunistic purchases in response to market conditions. In October 2010 the Board granted authority for a $500 million share repurchase program. The amount of share repurchases under these programs may vary as a result of material changes in business results or capital spending or new investment opportunities.  In addition, in the first quarter 2021, Entergy withheld 81,434 shares of its common stock at $95.12 per share, 40,476 shares of its common stock at $95.15 per share, 36,804 shares of its common stock at $94.75 per share, 36,347 shares of its common stock at $95.33 per share, 1,188 shares of its common stock at $91.16 per share, 853 shares of its common stock at $96.47 per share, 719 shares of its common stock at $98.01 per share, 678 shares of its common stock at $92.70 per share, 584 shares of its common stock at $94.69 per share, 118 shares of its common stock at $95 per share, and 10 shares of its common stock at $95.25 per share to pay income taxes due upon vesting of restricted stock granted and payout of performance units as part of its long-term incentive program.

(a)See Note 12 to the financial statements in the Form 10-K for additional discussion of the stock-based compensation plans.
(b)Maximum amount of shares that may yet be repurchased relates only to the $500 million plan and does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans.

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Item 5.  Other Information

Regulation of the Nuclear Power Industry

Following is an update to the “Regulation of the Nuclear Power Industry” section of Part I, Item 1 of the Form 10-K.

Nuclear Waste Policy Act of 1982

Nuclear Plant Decommissioning

In March 2021 filings with the NRC were made reporting on decommissioning funding for all of Entergy subsidiaries’ nuclear plants.  Those reports showed that decommissioning funding for each of the nuclear plants met the NRC’s financial assurance requirements.

NRC Reactor Oversight Process

In March 2021 the NRC placed Grand Gulf in Column 3 based on the incidence of five unplanned plant scrams during calendar year 2020, some of which were related to upgrades made to the plant’s turbine control system during the spring 2020 refueling outage. The NRC plans to conduct a supplemental inspection of Grand Gulf in accordance with its inspection procedures for nuclear plants in Column 3.

Environmental Regulation

Following are updates to the “Environmental Regulation” section of Part I, Item 1 of the Form 10-K.

Clean Air Act and Subsequent Amendments

See the Form 10-K for discussion of the Clean Air Act and Subsequent Amendments set by the EPA in accordance with the Clean Air Act. Following are updates to that discussion.

New Source Review

As discussed in the Form 10-K, in January and February 2018, Entergy Arkansas, Entergy Mississippi, Entergy Power, and other co-owners received 60-day notice of intent to sue letters from the Sierra Club and the National Parks Conservation Association concerning allegations of violations of new source review and permitting provisions of the Clean Air Act at the Independence and White Bluff coal-burning units, respectively. In November 2018, following extensive negotiations, Entergy Arkansas, Entergy Mississippi, and Entergy Power entered a proposed settlement resolving those claims as well as other issues facing Entergy Arkansas’s fossil generation plants. The settlement, which formally resolves a complaint filed by the Sierra Club and the National Parks Conservation Association, was subject to approval by the U.S. District Court for the Eastern District of Arkansas. In March 2021 the District Court approved and entered the proposed settlement. For further information about the settlement, see “Regional Haze” discussed below.

National Ambient Air Quality Standards

See the Form 10-K for discussion of the National Ambient Air Quality Standards set by the EPA in accordance with the Clean Air Act. Following are updates to that discussion.


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Hazardous Air Pollutants

The EPA released the final Mercury and Air Toxics Standard (MATS) rule in December 2011, which had a compliance date, with a widely granted one-year extension, of April 2016. The required controls have been installed and are operational at all affected Entergy units. In May 2020 the EPA finalized a rule that finds that it is not “appropriate and necessary” to regulate hazardous air pollutants from electric steam generating units under the provisions of section 112(n) of the Clean Air Act. This is a reversal of the EPA’s previous finding requiring such regulation. The final appropriate and necessary finding does not revise the underlying MATS rule. Several lawsuits have been filed challenging the appropriate and necessary finding. In February 2021 the D.C. Circuit granted the EPA’s motion to hold the litigation in abeyance pending the agency’s review of the appropriate and necessary rule. The EPA must file status reports with the court every 120 days. Entergy will continue to monitor this situation.

Cross-State Air Pollution

As discussed in the Form 10-K, for 12 states, including Louisiana, the EPA proposes additional emission reductions through proposed reductions in the number of NOx emission allowances allocated to each state. Entergy, through its various trade associations, filed comments on the proposal. In March 2021 the EPA released the prepublication version of the final rule which further decreases the Louisiana ozone season emissions budget from that in the proposed rule. Entergy is currently analyzing the potential impact on its facilities in Louisiana. Preliminary analysis indicates that ozone season NOx allowances may become significantly more expensive in Louisiana, which could impact the cost of dispatching Entergy’s generating units located in Louisiana.

Regional Haze

As discussed in the Form 10-K, in January and February 2018, Entergy Arkansas, Entergy Mississippi, Entergy Power, and other co-owners received 60-day notice of intent to sue letters from the Sierra Club and the National Parks Conservation Association concerning allegations of violations of new source review and permitting provisions of the Clean Air Act at the Independence and White Bluff coal-burning units, respectively. In November 2018, following extensive negotiations, Entergy Arkansas, Entergy Mississippi, and Entergy Power entered a proposed settlement resolving those claims and reducing the risk that Entergy Arkansas, as operator of Independence and White Bluff, might be compelled under the Clean Air Act’s regional haze program to install costly emissions control technologies. Consistent with the terms of the settlement and in many cases also the Part II state implementation plan (SIP), Entergy Arkansas, along with co-owners, will begin using only low-sulfur coal at Independence and White Bluff by mid-2021; cease to use coal at White Bluff and Independence by the end of 2028 and 2030, respectively; cease operation of the remaining gas unit at Lake Catherine by the end of 2027; reserve the option to develop new generating sources at each plant site; and commit to install or propose to regulators at least 800 MWs of renewable generation by the end of 2027, with at least half installed or proposed by the end of 2022 (which includes two existing Entergy Arkansas projects) and with all qualifying co-owner projects counting toward satisfaction of the obligation. Under the settlement, the Sierra Club and the National Parks Conservation Association also waive certain potential existing claims under federal and state environmental law with respect to specified generating plants. The settlement, which formally resolves a complaint filed by the Sierra Club and the National Parks Conservation Association, was subject to approval by the U.S. District Court for the Eastern District of Arkansas. In November 2020 the court denied motions by the Arkansas Attorney General and the Arkansas Affordable Energy Coalition to intervene and to stay the proceedings. The proposed intervenors did not appeal the ruling. The District Court approved and entered the proposed settlement in March 2021.

The second planning period (2018-2028) for the regional haze program requires states to examine sources for impacts on visibility and to prepare SIPs by July 31, 2021. Entergy has received information collection requests from Arkansas and Louisiana requesting an evaluation of technical and economic feasibility of various NOx and SO2 control technologies for Independence, Nelson 6, and Ninemile. Responses to the information requests have been submitted to the respective state agencies.

157
New and Existing Source Performance Standards for Greenhouse Gas Emissions

As discussed in the Form 10-K, in January 2021 the U.S. Court of Appeals for the D.C. Circuit vacated the Affordable Clean Energy Rule (ACE). The court held that ACE relied on an incorrect interpretation of the Clean Air Act that the statute expressly forecloses emission reduction approaches, such as emissions trading and generating shifting, that cannot be applied at and to the individual source. The court remanded ACE to the EPA for further consideration and also vacated the repeal of the Clean Power Plan. In March 2021 the D.C. Circuit issued a partial mandate vacating the ACE rule, but withheld the mandate vacating the repeal of the Clean Power Plan pending the EPA’s new rulemaking to regulate greenhouse gas emissions. Thus, the Clean Power Plan will not take effect during the rulemaking process and there currently is no regulation in place with respect to greenhouse gas emissions from electric generating units and states are not expected to take further action to develop and submit plans at this time.

Coal Combustion Residuals

As discussed in the Form 10-K, in late 2017, Entergy determined that certain in-ground wastewater treatment system recycle ponds at its White Bluff and Independence facilities require management under the new EPA regulations. Each site has commenced closure of its two recycle ponds (four ponds total), prior to the April 11, 2021 deadline under the finalized CCR rule for unlined recycle ponds.

Other Environmental Matters

Entergy Texas

As discussed in the Form 10-K, due to COVID-19 pandemic delays, the Texas Commission on Environmental Quality (TCEQ) extended the Affected Property Assessment Report (APAR) and Ecological Risk Assessment submittal dates to December 2020, which Entergy timely met. Following the TCEQ’s review of the APAR and Ecological Risk Assessment, the TCEQ issued a No Further Action determination for the site in March 2021.

Item 6.  Exhibits
4(a) -
Officer’s Certificate for Entergy Corporation relating to 1.90% Senior Notes due June 15, 2028 (4.02(a) to Form 8-K filed March 5, 2021 in 1-11299).
4(b) -
Officer’s Certificate for Entergy Corporation relating to 2.40% Senior Notes due June 15, 2031 (4.02(b) to Form 8-K filed March 5, 2021 in 1-11299).
4(c) -
Eighty-fourth Supplemental Indenture, dated as of March 1, 2021, to Entergy Arkansas Mortgage and Deed of Trust, dated as of October 1, 1944 (4.49 to Form 8-K filed March 30, 2021 in 1-10764).
4(d) -
Ninety-fifth Supplemental Indenture, dated as of March 1, 2021, to Entergy Louisiana Mortgage and Deed of Trust, dated as of April 1, 1944 (4.53 to Form 8-K filed March 10, 2021 in 1-32718).
4(e) -
Ninety-fourth Supplemental Indenture, dated as of March 1, 2021, to Entergy Louisiana Indenture of Mortgage, dated September 1, 1926 (4.52 to Form 8-K filed March 10, 2021 in 1-32718).
4(f) -
Fifteenth Supplemental Indenture, dated as of March 1, 2021, to Entergy Louisiana Mortgage and Deed of Trust, dated as of November 1, 2015 (4.51 to Form 8-K filed March 10, 2021 in 1-32718).
4(g) -
Sixteenth Supplemental Indenture, dated as of April 1, 2021, to Entergy Louisiana Mortgage and Deed of Trust, dated as of November 1, 2015 (4(b) to Form 8-K filed April 1, 2021 in 1-32718).
158
Table of Contents
4(h) -
Officer’s Certificate No. 21-B-15, dated March 1, 2021, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.50(a) to Form 8-K filed March 10, 2021 in 1-32718).
4(i) -
Officer’s Certificate No. 21-B-16, dated March 1, 2021, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.50(b) to Form 8-K filed March 10, 2021 in 1-32718).
4(j) -
Officer’s Certificate No. 22-B-17, dated April 1, 2021, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4(a) to Form 8-K filed April 1, 2021 in 1-32718).
4(k) -
Loan Agreement, dated as of April 1, 2021, between the Louisiana Local Government Environmental Facilities and Community Development Authority and Entergy Louisiana relating to Revenue Refunding Bonds (Entergy Louisiana, LLC Project) Series 2021A (4(c) to Form 8-K filed April 1, 2021 in 1-32718).
4(l) -
Trust Indenture, dated as of April 1, 2021, between the Louisiana Local Government Environmental Facilities and Community Development Authority and The Bank of New York Mellon authorizing Revenue Refunding Bonds (Entergy Louisiana, LLC Project) Series 2021A (4(d) to Form 8-K filed April 1, 2021 in 1-32718).
4(m) -
Loan Agreement, dated as of April 1, 2021, between the Louisiana Local Government Environmental Facilities and Community Development Authority and Entergy Louisiana relating to Revenue Refunding Bonds (Entergy Louisiana, LLC Project) Series 2021B (4(e) to Form 8-K filed April 1, 2021 in 1-32718).
4(n) -
Trust Indenture, dated as of April 1, 2021, between the Louisiana Local Government Environmental Facilities and Community Development Authority and The Bank of New York Mellon authorizing Revenue Refunding Bonds (Entergy Louisiana, LLC Project) Series 2021B (4(f) to Form 8-K filed April 1, 2021 in 1-32718).
*31(a) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
*31(b) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation.
*31(c) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
*31(d) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas.
*31(e) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
*31(f) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana.
*31(g) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
*31(h) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi.
*31(i) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
*31(j) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans.
*31(k) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
*31(l) -
Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas.
*31(m) -
Rule 13a-14(a)/15d-14(a) Certification for System Energy.
*31(n) -
Rule 13a-14(a)/15d-14(a) Certification for System Energy.
**32(a) -
Section 1350 Certification for Entergy Corporation.
**32(b) -
Section 1350 Certification for Entergy Corporation.
**32(c) -
Section 1350 Certification for Entergy Arkansas.
**32(d) -
Section 1350 Certification for Entergy Arkansas.
**32(e) -
Section 1350 Certification for Entergy Louisiana.
159
Table of Contents
**32(f) -
Section 1350 Certification for Entergy Louisiana.
**32(g) -
Section 1350 Certification for Entergy Mississippi.
**32(h) -
Section 1350 Certification for Entergy Mississippi.
**32(i) -
**32(j) -
**32(k) -
**32(l) -
**32(m) -
**32(n) -
99(a) -
Equity Distribution Sales Agreement, dated January 11, 2021 by and among Entergy Corporation and BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC and Wells Fargo Securities, LLC, as sales agents and as forward sellers, and Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, National Association, New York Branch, Mizuho Markets Americas LLC (with Mizuho Securities USA LLC acting as agent) and Wells Fargo Bank, National Association, as forward purchasers (1.01 to Form 8-K filed January 11, 2021 in 1-11299).
99(b) -
Master Forward Confirmation, dated January 11, 2021, between Entergy Corporation and Bank of America, N.A. (99.01 to Form 8-K filed January 11, 2021 in 1-11299).
99(c) -
Master Forward Confirmation, dated January 11, 2021, between Entergy Corporation and Citigroup Global Markets Inc. (99.02 to Form 8-K filed January 11, 2021 in 1-11299).
99(d) -
Master Forward Confirmation, dated January 11, 2021, between Entergy Corporation and JPMorgan Chase Bank, National Association (99.03 to Form 8-K filed January 11, 2021 in 1-11299).
99(e) -
Master Forward Confirmation, dated January 11, 2021, between Entergy Corporation and Mizuho Markets Americas LLC (with Mizuho Securities USA LLC acting as agent) (99.04 to Form 8-K filed January 11, 2021 in 1-11299).
99(f) -
Master Forward Confirmation, dated January 11, 2021, between Entergy Corporation and Wells Fargo Bank, National Association (99.05 to Form 8-K filed January 11, 2021 in 1-11299).
*101 INS -
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
*101 SCH -
Inline XBRL Schema Document.
*101 PRE -
Inline XBRL Presentation Linkbase Document.
*101 LAB -
Inline XBRL Label Linkbase Document.
*101 CAL -
Inline XBRL Calculation Linkbase Document.
*101 DEF -
Inline XBRL Definition Linkbase Document.
*104 -
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibits 101).
___________________________
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Entergy Corporation agrees to furnish to the Commission upon request any instrument with respect to long-term debt that is not registered or listed herein as an Exhibit because the total amount of securities authorized under such agreement does not exceed ten percent of the total assets of Entergy Corporation and its subsidiaries on a consolidated basis.
*Filed herewith.
**Furnished, not filed, herewith.
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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.
ENTERGY CORPORATION
ENTERGY ARKANSAS, LLC
ENTERGY LOUISIANA, LLC
ENTERGY MISSISSIPPI, LLC
ENTERGY NEW ORLEANS, LLC
ENTERGY TEXAS, INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Kimberly A. Fontan
Kimberly A. Fontan
Senior Vice President and Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)

Date:    May 6, 2021

161

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