ELC 10-Q Quarter ended Sept. 30, 2023

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Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory authorities, 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. The following are updates to that discussion.

As discussed in the Form 10-K, in March 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building.  The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building.  The total cost of assessment, restoration of off-site power, site restoration, debris removal, and replacement of damaged property and equipment was approximately $ 95 million.  Entergy Arkansas pursued its options for recovering damages that resulted from the stator drop, including its insurance coverage and legal action. Entergy Arkansas collected $ 50 million in 2014 from Nuclear Electric Insurance Limited, a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants. Entergy Arkansas also collected a total of $ 21 million in 2018 as a result of stator-related settlements.

In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and incurred incremental replacement power costs for ANO 1 power because the outage extended beyond the originally-planned duration of the refueling outage.  In February 2014 the APSC authorized Entergy Arkansas to retain the $ 65.9 million in its deferred fuel balance with recovery to be reviewed in a later period after more information regarding various claims associated with the ANO stator incident was available.

In October 2023, Entergy Arkansas made a commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the identified costs resulting from the ANO stator incident, specifically all incremental fuel and purchased energy expense, capital and incremental non-fuel operations and maintenance costs, and costs of any judgement that may be rendered against Entergy Arkansas in civil litigation that is not covered by insurance. As a result, in third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred fuel of $ 68.9 million, which includes interest, and the undepreciated balance of $ 9.5 million in capital costs related to the ANO stator incident.

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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. The following are updates to that discussion.

In March 2023 the DOE submitted an offer of judgment to resolve claims in the fourth round ANO damages case. The $ 41 million offer was accepted by Entergy Arkansas, and the U.S. Court of Federal Claims issued a judgment in that amount in favor of Entergy Arkansas and against the DOE. Entergy Arkansas received payment from the U.S. Treasury in April 2023. The effects of recording the judgment were reductions to plant, nuclear fuel expense, other operation and maintenance expense, materials and supplies, and taxes other than income taxes. The ANO damages awarded included $ 18 million related to costs previously recorded as plant, $ 10 million related to costs previously recorded as other operation and maintenance expense, $ 8 million related to costs previously recorded as nuclear fuel expense, $ 3 million related to costs previously recorded as materials and supplies, and $ 2 million related to costs previously recorded as taxes other than income taxes.

In July 2023 the DOE submitted an offer of judgment to resolve claims in the Indian Point 2 fourth round and Indian Point 3 third round combined damages case. The $ 59 million offer was accepted by Entergy and Holtec International, as the current owner. The U.S. Court of Federal Claims issued a final judgment in that amount in favor of Holtec Indian Point 2, LLC and Holtec Indian Point 3, LLC (previously Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC) and against the DOE. Holtec received payment from the U.S. Treasury in July 2023. Consistent with certain terms agreed upon in connection with the sale of Indian Point Energy Center in May 2021, Holtec transferred $ 40 million to Entergy for its pro-rata share of the litigation proceeds in August 2023. The remainder of the judgment was retained by Holtec. The effect of recording Entergy’s pro-rata share of the judgment was a reduction to asset write-offs, impairments, and related charges (credits). Entergy’s pro-rata share of the damages awarded included $ 18 million related to costs previously recorded as spending on the asset retirement obligation, $ 15 million related to costs previously recorded as other operation and maintenance expense, $ 6 million related to costs previously recorded as plant, and $ 1 million related to costs previously recorded as taxes other than income taxes.

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.

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.

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Nelson Industrial Steam Company

Entergy Louisiana is a partner in the Nelson Industrial Steam Company (NISCO) partnership which owns two petroleum coke generating units. In April 2023 these generating units suspended operations in the MISO market, and Entergy Louisiana currently is working to wind up the NISCO partnership, which will ultimately result in ownership of the generating units transferring to Entergy Louisiana. In May 2023, Entergy Louisiana filed an application with the FERC for transaction authorization pursuant to Section 203 of the Federal Power Act. In June 2023 the LPSC filed a notice to intervene in the proceeding. Entergy Louisiana is evaluating the effect of the transaction on its results of operations, cash flows, and financial condition, but at this time does not expect the effect to be material.

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.

Regulatory activity regarding the Tax Cuts and Jobs Act

System Energy

As discussed in the Form 10-K, in a filing made with the FERC in March 2018, System Energy proposed revisions to the Unit Power Sales Agreement to reflect the effects of the Tax Cuts and Jobs Act. In July 2020 the presiding ALJ in the proceeding issued an initial decision finding that there is an additional $ 147 million in unprotected excess accumulated deferred income taxes related to System Energy’s uncertain decommissioning tax deduction. In December 2022 the FERC issued an order addressing the ALJ’s initial decision and denying System Energy’s motion to vacate the initial decision. The FERC disagreed with the ALJ’s determination that $ 147 million should be credited to customers in the same manner as the excess accumulated deferred income taxes addressed in System Energy’s March 2018 filing, which had included a stated amount of excess accumulated deferred income taxes to be returned pursuant to a specified methodology and had not included any excess accumulated deferred income taxes associated with the decommissioning tax position. Instead, the FERC ordered System Energy to compute the amount of excess accumulated deferred income taxes associated with the decommissioning tax position with consideration for the resolution of the tax position by the IRS. In February 2023, System Energy made the required filing with the FERC. In June 2023 the FERC issued a deficiency letter requesting additional information about the IRS’s resolution of the tax position for 2016 and 2017. In July 2023, System Energy provided the additional information.

Fuel and purchased power cost recovery

Entergy Arkansas

See Note 1 to the financial statements herein for discussion of the write-off in third quarter 2023 of Entergy Arkansas’s $ 68.9 million regulatory asset for deferred fuel related to the ANO stator incident as a result of a commitment, made in October 2023, by Entergy Arkansas to the APSC to make a filing to forgo its opportunity to seek recovery of the incremental fuel and purchased energy expense resulting from the ANO stator incident.

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Energy Cost Recovery Rider

As discussed in the Form 10-K, in March 2021, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which included an adjustment to account for a portion of the increased fuel costs resulting from the February 2021 winter storms. In February 2023 the APSC issued orders initiating proceedings with the utilities under its jurisdiction to address the prudence of costs incurred and appropriate cost allocation of the February 2021 winter storms. With respect to any prudence review of Entergy Arkansas fuel costs, as part of the APSC’s draft report issued in its February 2021 winter storms investigation docket, the APSC included findings that the load shedding plans of the investor-owned utilities and some cooperatives were appropriate and comprehensive, and, further, that Entergy Arkansas’s emergency plan was comprehensive and had a multilayered approach supported by a system-wide response plan, which is considered an industry standard. In September 2023 the APSC issued an order in Entergy Arkansas's company-specific proceeding and found that Entergy Arkansas’s practices during the winter storms were prudent.

In March 2023, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase from $ 0.01639 per kWh to $ 0.01883 per kWh. The primary reason for the rate increase is a large under-recovered balance as a result of higher natural gas prices in 2022 and a $ 32 million deferral related to the February 2021 winter storms consistent with the APSC general staff’s request in 2022. The under-recovered balance included in the filing was partially offset by the proceeds of the $ 41.7 million refund that System Energy made to Entergy Arkansas in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. The redetermined rate of $ 0.01883 per kWh became effective with the first billing cycle in April 2023 through the normal operation of the tariff.

Entergy Louisiana

As discussed in the Form 10-K, 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. In August 2023 the LPSC submitted its audit report and found that materially all costs recovered through the purchased gas adjustment filings were reasonable and eligible for recovery through the purchased gas adjustment clause.

Entergy Mississippi

In June 2023 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi to make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and to include a revision to reduce the net energy cost factor to a level necessary to reflect an average natural gas price of $ 4.50 per MMBtu. The MPSC approved the compliance filing in June 2023, effective for July 2023 bills. See “ Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2023 Formula Rate Plan Filing” below for further discussion of the 2023 formula rate plan filing and the joint stipulation agreement.

Entergy Texas

As discussed in the Form 10-K, in September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2019 through March 2022. During the reconciliation period, Entergy Texas incurred approximately $ 1.7 billion in eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. As of the end of the reconciliation period, Entergy Texas’s cumulative under-recovery balance was approximately $ 103.1 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the

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subsequent reconciliation period beginning April 2022, pending future surcharges or refunds as approved by the PUCT. In November 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In March 2023 municipal intervenors filed testimony proposing a $ 5.2 million disallowance for fuel purchased during Winter Storm Uri. The PUCT staff proposed no disallowance. Entergy Texas filed rebuttal testimony in April 2023. In May 2023, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a joint motion to abate the proceeding to give parties additional time to finalize a settlement and cancelling the hearing on the merits previously scheduled for May 2023. In July 2023, Entergy Texas filed an unopposed settlement, supporting testimony, and an agreed motion to admit evidence and remand the proceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas would receive no disallowance of fuel costs incurred over the three-year reconciliation period and retain $ 9.3 million in margins from off-system sales made during the reconciliation period, resulting in a cumulative under-recovery balance of approximately $ 99.7 million, including interest, as of the end of the reconciliation period. In July 2023 the ALJ with the State Office of Administrative Hearings granted the motion to admit evidence and remanded the proceeding to the PUCT for consideration of the unopposed settlement. The PUCT approved the settlement in September 2023.

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

2023 Formula Rate Plan Filing

In July 2023, Entergy Arkansas filed with the APSC its 2023 formula rate plan filing to set its formula rate for the 2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2024 and a netting adjustment for the historical year 2022. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2024 projected year is 8.11 % resulting in a revenue deficiency of $ 80.5 million. The earned rate of return on common equity for the 2022 historical year was 7.29 % resulting in a $ 49.8 million netting adjustment. The total proposed revenue change for the 2024 projected year and 2022 historical year netting adjustment is $ 130.3 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $ 88.6 million. The APSC general staff and intervenors filed their errors and objections in October 2023, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues which lowers the constraint to $ 87.7 million. Entergy Arkansas filed its rebuttal in October 2023. In October 2023, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding, none of which affected Entergy Arkansas’s requested recovery up to the cap constraint of $ 87.7 million. The settlement agreement is pending the APSC’s approval.

COVID-19 Orders

See Note 2 to the financial statements in the Form 10-K for discussion of APSC orders issued in light of the COVID-19 pandemic. In its 2023 formula rate plan filing, Entergy Arkansas proposed to amortize the COVID-19 regulatory asset over a ten-year period. No party opposed Entergy Arkansas’s request. As of September 30, 2023, Entergy Arkansas had a regulatory asset of $ 39 million for costs associated with the COVID-19 pandemic.

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Filings with the LPSC (Entergy Louisiana)

Retail Rates - Electric

2022 Formula Rate Plan Filing

In May 2023, Entergy Louisiana filed its formula rate plan evaluation report for its 2022 calendar year operations. The 2022 test year evaluation report produced an earned return on common equity of 8.33 %, requiring an approximately $ 70.7 million increase to base rider revenue. Due to a cap for the 2021 and 2022 test years, however, base rider formula rate plan revenues are only being increased by approximately $ 4.9 million, leaving an ongoing revenue deficiency of approximately $ 65.9 million and providing for prospective return on common equity opportunity of approximately 8.38 %. Other changes in formula rate plan revenue driven by increases in capacity costs, primarily legacy capacity costs, additions eligible for recovery through the transmission recovery mechanism and distribution recovery mechanism, and higher sales during the test period are offset by reductions in net MISO costs as well as credits for FERC-ordered refunds. Also included in the 2022 test year distribution recovery mechanism revenue requirement is a $ 6 million credit relating to the distribution recovery mechanism performance accountability standards and requirements. In total, the net increase in formula rate plan revenues, including base formula rate plan revenues inside the formula rate plan bandwidth and subject to the cap, as well as other formula rate plan revenues outside of the bandwidth, is $ 85.2 million. In August 2023 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2021 formula rate plan filings, the calculation of certain refunds from System Energy, and certain calculations relating to the tax reform adjustment mechanism. Subject to refund and LPSC review, the resulting net increase in formula rate plan revenues of $ 85.2 million became effective for bills rendered during the first billing cycle of September 2023.

2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request

In August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contains a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complies with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service/rate case. Entergy Louisiana’s filing supports the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.

The Rate Case path proposes a 2024-2026 test year formula rate plan with an initial revenue requirement increase, net of $ 17 million of one-time credits, of $ 430 million and a return on common equity of 10.5 %. Depreciation rates would be updated for all asset classes. The Rate Mitigation Proposal proposes a 2023-2025 test year formula rate plan with an expected initial revenue requirement increase, also net of $ 17 million of one-time credits, of $ 173 million and a return on common equity of 10.0 %. Depreciation rates would be updated only for nuclear assets and would be phased in over three years.

Under both paths, Entergy Louisiana’s filing proposes removing the cap on amounts allowed to be recovered through the distribution recovery mechanism and continuing the distribution recovery mechanism performance accountability targets, which tie Entergy Louisiana’s ability to fully recover its distribution recovery mechanism investments to its reliability performance. Entergy Louisiana’s filing also includes new customer-centric programs specifically focused on affordability, such as reducing late fees and certain other fees assessed to customers, lowering additional facilities charge rates, providing eligible low-income seniors with monthly discounts on their electric bill, and adding new voluntary customer options to support new transportation electrification

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technologies. A status conference was held in October 2023 at which a procedural schedule was adopted that includes a hearing date of August 2024.

2017-2021 Formula Rate Plan Filings

In October 2023, Entergy Louisiana and the LPSC staff jointly filed an uncontested stipulated settlement agreement for consideration by the LPSC that would resolve the evaluation of Entergy Louisiana’s formula rate plan for test years 2017, 2018, and 2019 and resolve certain disputed issues for test years 2020 and 2021. If approved by the LPSC, the settlement would result in a one-time cost of service credit to customers of $ 5.8 million, would allow Entergy Louisiana to retain approximately $ 6.2 million of excess securitization collection as recovery of a regulatory asset associated with late fees related to the 2016 Baton Rouge flood, and would result in the reversal of a regulatory liability for excess accumulated deferred income taxes recognized in 2017 as a result of the Tax Cuts and Jobs Act. See Note 3 to the financial statements in the Form 10-K for further discussion of the Tax Cuts and Jobs Act. It is anticipated that the settlement will be considered by the LPSC in November 2023.

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 April 2023, Entergy Louisiana filed an application proposing to utilize approximately $ 1.6 billion in certain low interest debt to generate earnings to apply toward the reduction of the COVID-19 regulatory asset, as well as to conduct additional outside right-of-way vegetation management activities and to apply to the minor storm reserve account. In that filing, Entergy Louisiana proposed to delay repayment of certain shorter-term first mortgage bonds that were issued to finance storm restoration costs until the costs could be securitized and to invest the funds that otherwise would be used to repay those bonds in the money pool to take advantage of the spread between prevailing interest rates on investments in the money pool and the interest rates on the bonds. The LPSC approved Entergy Louisiana’s requested relief in June 2023 and a subsequent filing will be required to permit the LPSC to review the COVID-19 regulatory asset. As of September 30, 2023, Entergy Louisiana had a regulatory asset of $ 47.8 million for costs associated with the COVID -19 pandemic.

Filings with the MPSC (Entergy Mississippi)

Retail Rates

2023 Formula Rate Plan Filing

In March 2023, Entergy Mississippi submitted its formula rate plan 2023 test year filing and 2022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2022 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing shows a $ 39.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 6.67 %, within the formula rate plan bandwidth. The 2022 look-back filing compares actual 2022 results to the approved benchmark return on rate base and reflects the need for a $ 19.8 million temporary increase in formula rate plan revenues, including the refund of a $ 1.3 million over-recovery resulting from the demand-side management costs true-up for 2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $ 18.2 million in connection with the look-back feature of the formula rate plan to reflect that the 2022 estimated earned return was below the formula rate plan bandwidth. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $ 27.9 million interim rate increase, reflecting a cap equal to 2 % of 2022 retail revenues, effective in April 2023.

In May 2023, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed a 2023 test year filing resulting in a total revenue increase of $ 26.5 million for 2023. Pursuant to the

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joint stipulation, Entergy Mississippi’s 2022 look-back filing reflected an earned return on rate base of 6.10 % in calendar year 2022, which is below the look-back bandwidth, resulting in a $ 19 million increase in the formula rate plan revenues on an interim basis through June 2024. Entergy Mississippi recorded a regulatory credit of $ 0.8 million in June 2023 to reflect the increase in the look-back regulatory asset. In addition, certain long-term service agreement and conductor handling costs were authorized for realignment from the formula rate plan to the annual power management and grid modernization riders effective January 2023, resulting in regulatory credits recorded in June 2023 of $ 4.1 million and $ 4.3 million, respectively. Also, the amortization of Entergy Mississippi’s COVID-19 bad debt deferral was suspended for calendar year 2023 and will resume in 2024. In June 2023 the MPSC approved the joint stipulation with rates effective in July 2023.

Filings with the City Council (Entergy New Orleans)

Retail Rates

2023 Formula Rate Plan Filing

In April 2023, Entergy New Orleans submitted to the City Council its formula rate plan 2022 test year filing. The 2022 test year evaluation report produced an electric earned return on equity of 7.34 % and a gas earned return on equity of 3.52 % compared to the authorized return on equity for each of 9.35 %. Entergy New Orleans sought approval of a $ 25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula would result in an increase in authorized electric revenues of $ 17.4 million and an increase in authorized gas revenues of $ 8.2 million. Entergy New Orleans also sought to commence collecting $ 3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2023, Entergy New Orleans filed a report to decrease its requested formula rate plan revenues by approximately $ 0.5 million to account for minor errors discovered after the filing. The City Council advisors issued a report seeking a reduction in the requested formula rate plan revenues of approximately $ 8.3 million, combined for electric and gas, due to alleged errors. The City Council advisors proposed additional rate mitigation in the amount of $ 12 million through offsets to the formula rate plan rate increase by certain regulatory liabilities. In September 2023 the City Council approved an agreement to settle the 2023 formula rate plan filing. Effective with the first billing cycle of September 2023, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The agreement provides for a total increase in electric revenues of $ 10.5 million and a total increase in gas revenues of $ 6.9 million. The agreement also provides for a minor storm accrual of $ 0.5 million per year and the distribution of $ 8.9 million of currently held customer credits to implement the City Council advisors’ mitigation recommendations.

Request for Extension and Modification of Formula Rate Plan

In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications which included a capital structure not to exceed 55 % equity.

Filings with the PUCT and Texas Cities (Entergy Texas)

Retail Rates

2022 Base Rate Case

As discussed in the Form 10-K, in July 2022, Entergy Texas filed a base rate case with the PUCT seeking a net increase in base rates of approximately $ 131.4 million. The base rate case was based on a 12-month test year ending December 31, 2021. Key drivers of the requested increase were changes in depreciation rates as the result of

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a depreciation study and an increase in the return on equity. In addition, Entergy Texas included capital additions placed into service for the period of January 1, 2018 through December 31, 2021, including those additions reflected in the then-effective distribution and transmission cost recovery factor riders and the generation cost recovery rider, all of which have been reset to zero as a result of this proceeding.

In May 2023, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding, except for issues related to electric vehicle charging infrastructure, and Entergy Texas filed an agreed motion for interim rates, subject to refund or surcharge to the extent that the interim rates differ from the final approved rates. The unopposed settlement reflected a net base rate increase to be effective and relate back to December 2022 of $ 54 million, exclusive of, and incremental to, the costs being realigned from the distribution and transmission cost recovery factor riders and the generation cost recovery rider and $ 4.8 million of rate case expenses to be recovered through a rider over a period of 36 months. The net base rate increase of $ 54 million includes updated depreciation rates and a total annual revenue requirement of $ 14.5 million for the accrual of a self-insured storm reserve and the recovery of the regulatory assets for the pension and postretirement benefits expense deferral, costs associated with the COVID-19 pandemic, and retired non-advanced metering system electric meters. In May 2023 the ALJ with the State Office of Administrative Hearings granted the motion for interim rates, which became effective in June 2023. Additionally, the ALJ remanded the proceeding, except for the issues related to electric vehicle charging infrastructure, to the PUCT to consider the settlement. In June 2023 the ALJ issued a proposal for decision related to the electric vehicle charging infrastructure issues and which noted recent legislation enacted which permits electric utilities to own and operate such infrastructure. The ALJ’s proposal for decision deferred to the PUCT regarding whether it is appropriate for any vertically integrated electric utility, or Entergy Texas specifically, to own electric vehicle charging infrastructure, and in the event that the PUCT decided ownership is permissible, the ALJ recommended approval of the proposed tariff to charge host customers for utility-owned and operated electric vehicle charging infrastructure sited on customer premises and denial of the proposed tariff to temporarily adjust billing demand charges for separately metered electric vehicle charging infrastructure, citing cost-shifting concerns. In July 2023 the parties filed exceptions and replies to exceptions to the proposal for decision. In August 2023 the PUCT issued an order approving the unopposed settlement and also issued an order severing the issues related to electric vehicle charging infrastructure addressed in the ALJ’s proposal for decision to a separate proceeding. Concurrently, Entergy Texas recorded the reversal of $ 21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved.

Following the PUCT’s approval of the unopposed settlement in August 2023, Entergy Texas recorded a regulatory liability of $ 8.9 million, which reflects the net effects of higher depreciation and amortizations for the relate back period, partially offset by the relate back of base rate revenues that would have been collected had the approved rates been in effect for the period from December 2022 through June 2023, the date the new base rates were implemented on an interim basis. In October 2023, Entergy Texas filed a relate back surcharge rider to collect over six months beginning in January 2024 an additional approximately $ 24.6 million, which is the revenue requirement associated with the relate back of rates from December 2022 through June 2023, including carrying costs, as authorized by the PUCT’s August 2023 order. A final decision by the PUCT is expected by first quarter 2024.

Generation Cost Recovery Rider

As discussed in the Form 10-K, in August 2022 the PUCT approved a unanimous settlement agreement adjusting Entergy Texas’s generation cost recovery rider to recover an annual revenue requirement of approximately $ 92.8 million related to Entergy Texas’s actual investment in the acquisition of the Hardin County Peaking Facility, and rates became effective. In September 2022, Entergy Texas filed a relate-back rider designed to collect over three months an additional approximately $ 5.7 million, which is the revenue requirement, plus carrying costs, associated with Entergy Texas’s acquisition of Hardin County Peaking Facility from June 2021 through August 2022 when the updated revenue requirement took effect. In April 2023 the PUCT approved Entergy Texas’s as-filed request with rates effective over three months beginning in May 2023.

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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. Pursuant to the August 2023 PUCT approval of the unopposed settlement in Entergy Texas’s 2022 base rate case proceeding, the base rate increase of $ 54 million includes an annual revenue requirement of $ 3.4 million related to recovery of the regulatory asset for costs associated with the COVID-19 pandemic. Entergy Texas began recovery of the regulatory asset with the interim increase in the annual base rate effective in June 2023.

Entergy Arkansas Opportunity Sales Proceeding

See Note 2 to the financial statements in the Form 10-K for discussion of the Entergy Arkansas opportunity sales proceeding. As discussed in the Form 10-K, in January 2023, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a notice of appeal of the U.S. District Court for the Eastern District of Arkansas’s order denying its motion to intervene to the United States Court of Appeals for the Eighth Circuit and a motion with the district court to stay the proceedings pending the appeal, which was denied. In February 2023, Arkansas Electric Energy Consumers, Inc. filed a motion with the United States Court of Appeals for the Eighth District to stay the proceedings pending the appeal, which also was denied. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth District to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for the Eighth District granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth District denied Arkansas Electric Energy Consumers, Inc.’s motion to intervene. An order from the district court is pending.

Complaints Against System Energy

See Note 2 to the financial statements in the Form 10-K for information regarding pending complaints against System Energy. System Energy and the Unit Power Sales Agreement are currently the subject of several litigation proceedings at the FERC, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. The claims in these proceedings include claims for refunds and claims for rate adjustments; the aggregate amount of refunds claimed in these proceedings substantially exceeds the net book value of System Energy. The settlement in principle with the APSC described in “ System Energy Settlement with the APSC ” below, if approved by the FERC, will substantially reduce the aggregate amount of this exposure. In the event of an adverse decision in one or more of these proceedings requiring the payment of substantial additional refunds, System Energy would be required to seek financing to pay such refunds which may not be available on terms acceptable to System Energy, or may not be available at all, when required. The following are updates to that discussion.

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in March 2021 the FERC ALJ issued an initial decision in the proceeding initiated by the LPSC, the MPSC, the APSC, and the City Council against System Energy regarding the return on equity component of the Unit Power Sales Agreement. 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

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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 $ 40 million, which includes interest through September 30, 2023, and the estimated resulting annual rate reduction would be approximately $ 29 million. As a result of the 2022 settlement agreement with the MPSC, both the estimated refund and rate reduction exclude Entergy Mississippi's portion. See “ System Energy Settlement with the MPSC ” in the Form 10-K for discussion of the settlement. The estimated refund will continue to accrue interest until a final FERC decision is issued.

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, the APSC, the MPSC, the City Council, and the FERC trial staff filed briefs on exceptions. Reply briefs opposing exceptions were filed in May 2021 by System Energy, the FERC trial staff, the LPSC, the APSC, the MPSC, and the City Council. 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. The APSC, the MPSC, and the City Council subsequently intervened in the proceeding. A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision, and in December 2022 the FERC issued an order on the ALJ’s initial decision, which affirmed it in part and modified it in part. The FERC’s order directed System Energy to calculate refunds on three issues, and to provide a compliance report detailing the calculations. The FERC’s order also disallows the future recovery of sale-leaseback renewal costs, which is estimated at approximately $ 11.5 million annually for purchases from Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans through July 2036. The three refund issues are rental expenses related to the renewal of the sale-leaseback arrangements; refunds, if any, for the revenue requirement impact of including accumulated deferred income taxes resulting from the decommissioning uncertain tax positions from 2004 through the present; and refunds for the net effect of correcting the depreciation inputs for capital additions attributable to the portion of plant subject to the sale-leaseback.

In January 2023, System Energy filed its compliance report with the FERC. With respect to the sale-leaseback renewal costs, System Energy calculated a refund of $ 89.8 million, which represented all of the sale-leaseback renewal rental costs that System Energy recovered in rates, with interest. With respect to the decommissioning uncertain tax position issue, System Energy calculated that no additional refunds are owed because it had already provided a one-time historical credit (for the period January 2016 through September 2020) of $ 25.2 million based on the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position, and because it has been providing an ongoing rate base credit for the accumulated deferred income taxes that resulted from the IRS’s partial acceptance of the decommissioning tax position since October 2020. With respect to the depreciation refund, System Energy calculated a refund of $ 13.7 million, which is the net total of a refund to customers for excess depreciation expense previously collected, plus interest, offset by the additional return on rate base that System Energy previously did not collect, without interest. See “ System Energy Settlement with the MPSC ” in the Form 10-K for discussion of the regulatory charge and corresponding regulatory liability recorded in June 2022 related to these proceedings. In January 2023, System Energy paid the refunds of $ 103.5 million, which included refunds of $ 41.7 million to Entergy Arkansas, $ 27.8 million to Entergy Louisiana, and $ 34 million to Entergy New Orleans.

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In January 2023, System Energy filed a request for rehearing of the FERC’s determinations in the December 2022 order on sale-leaseback refund issues and future lease cost disallowances, the FERC’s prospective policy on uncertain tax positions, and the proper accounting of System Energy’s accumulated deferred income taxes adjustment for the Tax Cuts and Jobs Act of 2017; and a motion for confirmation of its interpretation of the December 2022 order’s remedy concerning the decommissioning tax position. In January 2023 the retail regulators filed a motion for confirmation of their interpretation of the refund requirement in the December 2022 FERC order and a provisional request for rehearing. In February 2023 the FERC issued a notice that the rehearing requests have been deemed denied by operation of law. The deemed denial of the rehearing request initiates a sixty-day period in which aggrieved parties may petition for federal appellate court review of the underlying FERC orders; however, the FERC may issue a substantive order on rehearing as long as it continues to have jurisdiction over the case. In March 2023, System Energy filed in the United States Court of Appeals for the Fifth Circuit a petition for review of the December 2022 order. In March 2023, System Energy also filed an unopposed motion to stay the proceeding in the Fifth Circuit pending the FERC’s disposition of the pending motions, and the court granted the motion to stay.

In February 2023, System Energy submitted a tariff compliance filing with the FERC to clarify that, consistent with the releases provided in the MPSC settlement, Entergy Mississippi will continue to be charged for its allocation of the sale-leaseback renewal costs under the Unit Power Sales Agreement. See “ System Energy Settlement with the MPSC ” in the Form 10-K for discussion of the settlement. In March 2023 the MPSC filed a protest to System Energy’s tariff compliance filing. The MPSC argues that the settlement did not specifically address post-settlement sale-leaseback renewal costs and that the sale-leaseback renewal costs may not be recovered under the Unit Power Sales Agreement. Entergy Mississippi’s allocated sale-leaseback renewal costs are estimated at $ 5.7 million annually for the remaining term of the sale-leaseback renewal.

In August 2023 the FERC issued an order addressing arguments raised on rehearing and partially setting aside the prior order (rehearing order). The rehearing order addresses rehearing requests that were filed in January 2023 separately by System Energy and the LPSC, the APSC, and the City Council.

In the rehearing order, the FERC directs System Energy to recalculate refunds for two issues: (1) refunds of rental expenses related to the renewal of the sale-leaseback arrangements and (2) refunds for the net effect of correcting the depreciation inputs for capital additions associated with the sale-leaseback. With regard to the sale-leaseback renewal rental expenses, the rehearing order allows System Energy to recover an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback as of the expiration of the initial lease term. With regard to the depreciation input issue, the rehearing order allows System Energy to offset refunds so that System Energy may collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. The rehearing order further directs System Energy to submit within 60 days of the date of the rehearing order an additional compliance filing to revise the total refunds for these two issues. As discussed above, System Energy’s January 2023 compliance filing calculated $ 103.5 million in total refunds, and the refunds were paid in January 2023. In October 2023, System Energy filed its compliance report with the FERC as directed in the August 2023 rehearing order. The October 2023 compliance report reflected recalculated refunds totaling $ 35.7 million for the two issues resulting in $ 67.8 million in refunds that could be recouped by System Energy. As discussed below in “ System Energy Settlement with the APSC ,” System Energy reached a settlement in principle with the APSC to resolve several pending cases under the FERC’s jurisdiction, including this one, pursuant to which it has agreed not to recoup the $ 27.3 million calculated for Entergy Arkansas in the compliance filing. Consistent with the compliance filing, in October 2023, Entergy Louisiana and Entergy New Orleans paid recoupment amounts of $ 18.2 million and $ 22.3 million, respectively, to System Energy. As a result of the FERC’s rulings on the sale-leaseback and depreciation input issues in the August 2023 rehearing order, in third quarter 2023, System Energy recorded a regulatory asset and corresponding regulatory credit of $ 40 million to reflect the portion of the January 2023 refunds to be recouped from Entergy Louisiana and Entergy New Orleans.

On the third refund issue identified in the rehearing requests, concerning the decommissioning uncertain tax positions, the rehearing order denied all rehearing requests, re-affirmed the remedy contained in the December 2022 order, and did not direct System Energy to recalculate refunds or to submit an additional compliance filing. On this

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issue, as reflected in its January 2023 compliance filing, System Energy believes it has already paid the refunds due under the remedy that the FERC outlined for the uncertain tax positions issue in its December 2022 order. In August 2023 the LPSC issued a media release in which it stated that it disagrees with System Energy’s determination that the rehearing order requires no further refunds to be made on this issue.

In September 2023, System Energy filed a protective appeal of the rehearing order with the United States Court of Appeals for the Fifth Circuit. The appeal was consolidated with System Energy’s prior appeal of the December 2022 order, and both appeals are currently in abeyance.

In September 2023 the LPSC filed with the FERC a request for rehearing and clarification of the rehearing order. The LPSC requests that the FERC reverse its determination in the rehearing order that System Energy may collect an implied return of and on the depreciated cost of the portion of the plant subject to the sale-leaseback, as of the expiration of the initial lease term, as well as its determination in the rehearing order that System Energy may offset the refunds for the depreciation rate input issue and collect interest on the rate base recalculations that were part of the overall depreciation rate recalculations. In addition, the LPSC requests that the FERC either confirm the LPSC’s interpretation of the refund associated with the decommissioning uncertain tax positions or explain why it is not doing so. In October 2023 the FERC issued a notice that the rehearing request has been deemed denied by operation of law. The deemed denial of the rehearing request initiates the sixty-day period in which aggrieved parties may petition for federal appellate court review of the underlying FERC orders; however the FERC may issue a substantive order on rehearing as long as it continues to have jurisdiction over the case.

LPSC Additional Complaints

As discussed in the Form 10-K, in May 2020 the LPSC authorized its staff to file additional complaints at the 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. The following are updates to that discussion.

Unit Power Sales Agreement Complaint

As discussed in the Form 10-K, the first of the additional complaints was filed by the LPSC, the APSC, the MPSC, and the City Council in September 2020. The first complaint raises two sets of rate allegations: violations of the filed rate and a corresponding request for refunds for prior periods; and elements of the Unit Power Sales Agreement are unjust and unreasonable and a corresponding request for refunds for the 15-month refund period and changes to the Unit Power Sales Agreement prospectively. In May 2021 the FERC issued an order addressing the complaint, establishing a refund effective date of September 21, 2020, establishing hearing procedures, and holding those procedures in abeyance pending the FERC’s review of the initial decision in the Grand Gulf sale-leaseback renewal complaint discussed above.

In November 2021 the LPSC, the APSC, and the City Council filed direct testimony and requested the FERC to order refunds for prior periods and prospective amendments to the Unit Power Sales Agreement. System Energy filed answering testimony in January 2022. In March 2022 the FERC trial staff filed direct and answering testimony recommending refunds and prospective modifications to the Unit Power Sales Agreement.

In April 2022, System Energy filed cross-answering testimony in response to the FERC trial staff’s recommendations. In June 2022 the FERC trial staff submitted revised answering testimony, in which it recommended additional refunds associated with the accumulated deferred income tax balances in account 190. Also in June 2022, System Energy filed revised and supplemental cross -answering testimony to respond to the FERC trial staff’s testimony and to oppose its revised recommendation.

In May 2022 the LPSC, the APSC, and the City Council filed rebuttal testimony and asserted new claims. In June 2022 a new procedural schedule was adopted, providing for additional rounds of testimony and for the

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hearing to begin in September 2022. The hearing concluded in December 2022. Also in December 2022, a motion to extend the briefing schedule and the May 2023 deadline for the initial decision was granted.

In November 2022, System Energy filed a partial settlement agreement with the APSC, the City Council, and the LPSC that resolved the following issues raised in the Unit Power Sales Agreement complaint: advance collection of lease payments, aircraft costs, executive incentive compensation, money pool borrowings, advertising expenses, deferred nuclear refueling outage costs, industry association dues, and termination of the capital funds agreement. The settlement provided that System Energy would provide a black-box refund of $ 18 million (inclusive of interest), plus additional refund amounts with interest to be calculated for certain issues to be distributed to Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans as the Utility operating companies other than Entergy Mississippi purchasing under the Unit Power Sales Agreement. The settlement further provided that if the APSC, the City Council, or the LPSC agrees to the global settlement System Energy entered into with the MPSC (see “ System Energy Settlement with the MPSC ” in the Form 10-K for discussion of the settlement), and such global settlement includes a black-box refund amount, then the black-box refund for this settlement agreement shall not be incremental or in addition to the global black-box refund amount. The settlement agreement addressed other matters as well, including adjustments to rate base beginning in October 2022, exclusion of certain other costs, and inclusion of money pool borrowings, if any, in short-term debt within the cost of capital calculation used in the Unit Power Sales Agreement. In April 2023 the FERC approved the settlement agreement. The refund provided for in the settlement agreement was included in the May 2023 service month bills under the Unit Power Sales Agreement.

In May 2023 the presiding ALJ issued an initial decision finding that System Energy should have excluded multiple identified categories of accumulated deferred income taxes from rate base when calculating Unit Power Sales Agreement bills. Based on this finding, the initial decision recommended refunds; System Energy estimates that those refunds for Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans would total approximately $ 116 million plus $ 147 million of interest through September 30, 2023. The initial decision also finds that the Unit Power Sales Agreement should be modified such that a cash working capital allowance of negative $ 36.4 million is applied prospectively. If the FERC ultimately orders these modifications to cash working capital be implemented, the estimated annual revenue requirement impact is expected to be immaterial. On the other non-settled issues for which the complainants sought refunds or changes to the Unit Power Sales Agreement, the initial decision ruled against the complainants.

The initial decision is an interim step in the FERC litigation process, and an ALJ’s determination made in an initial decision is not controlling on the FERC. System Energy disagrees with the ALJ’s findings concerning the accumulated deferred income taxes issues and cash working capital. In July 2023, System Energy filed a brief on exceptions to the initial decision’s accumulated deferred income taxes findings. Also in July 2023, the APSC, the LPSC, the City Council, and the FERC trial staff filed separate briefs on exceptions. The APSC’s brief on exceptions challenges the ALJ’s determinations on the money pool interest and retained earnings issues. The LPSC’s brief on exceptions challenges the ALJ’s determinations regarding the sale-leaseback transaction costs, legal fees, and retained earnings issues. The City Council’s brief on exceptions challenges the ALJ’s determinations on the money pool and cash management issues. The FERC trial staff’s brief on exceptions challenges the ALJ’s determinations on the cash working capital issue as well as certain of the accumulated deferred income taxes issues. In August 2023 all parties filed separate briefs opposing exceptions. System Energy filed a brief opposing the exceptions of the APSC, the LPSC, and the City Council. The APSC, the LPSC, and the City Council filed separate briefs opposing the exceptions raised by System Energy and the FERC trial staff. The FERC trial staff filed its own brief opposing certain exceptions raised by System Energy, the APSC, the LPSC, and the City Council. The case is now pending a decision by the FERC. Refunds, if any, that might be required will become due only after the FERC issues its order reviewing the initial decision.

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Grand Gulf Prudence Complaint

As discussed in the Form 10-K, in March 2021, the second of the additional complaints was filed at the FERC by the LPSC, the APSC, and the City Council against System Energy, Entergy Services, Entergy Operations, and Entergy Corporation. In November 2022 the FERC issued an order setting the complaint for settlement and hearing procedures. In February 2023 the FERC issued an order denying rehearing and thereby affirming its order setting the complaint for settlement and hearing procedures. In July 2023 the FERC chief ALJ terminated settlement procedures and appointed a presiding ALJ to oversee hearing procedures. In September 2023 a procedural schedule for hearing procedures was established. Pursuant to that schedule, testimony is due in December 2023 and throughout 2024. The hearing is scheduled to begin in January 2025, with the presiding ALJ’s initial decision due in July 2025.

In September 2023 the LPSC authorized its staff to file an additional complaint concerning the prudence of System Energy’s operation and management of Grand Gulf in the year 2022. In October 2023 the LPSC, the APSC, and the City Council filed what they styled as an amended and supplemental complaint with the FERC against System Energy, Entergy Services, and Entergy Operations. The amended complaint states that it is being filed for three primary purposes: (1) to include System Energy’s performance in 2021-2022 in the scope of the hearing; (2) to explicitly allege that System Energy’s inadequate performance, excessive costs, unplanned outages, and costs attributable to safety violations violate the contractual obligation to maintain and operate the plant in accordance with “good utility practice”; and (3) to provide and substantiate allegations concerning the damages attributable to the alleged breach of contractual obligations. The amended complaint alleges that potentially more than $ 1 billion in damages may be due. The current deadline for System Energy and the other named respondents to respond is in November 2023.

System Energy Settlement with the APSC

In October 2023, System Energy, Entergy Arkansas, and additional named Entergy parties involved in multiple docketed proceedings pending before the FERC reached a settlement in principle with the APSC to globally resolve all of their actual and potential claims in those dockets and with System Energy’s past implementation of the Unit Power Sales Agreement. The settlement in principle also covers the amended and supplemental complaint, discussed above in “ Grand Gulf Prudence Complaint ,” filed at the FERC in October 2023. The Unit Power Sales Agreement is a FERC-jurisdictional formula rate tariff for sales of energy and capacity from System Energy’s owned and leased share of Grand Gulf to Entergy Mississippi, Entergy Arkansas, Entergy Louisiana, and Entergy New Orleans. System Energy previously settled with the MPSC with respect to these complaints before the FERC. Entergy Mississippi has nearly 40 % of System Energy’s share of Grand Gulf’s output, after its additional purchases from affiliates are considered. The settlements with both the APSC and the MPSC represent almost 65 % of System Energy’s share of the output of Grand Gulf.

The terms of the settlement in principle align with the $ 588 million global black box settlement reached between System Energy and the MPSC in June 2022 and provide for Entergy Arkansas to receive a black box refund of $ 142 million from System Energy, inclusive of $ 50 million already received by Entergy Arkansas from System Energy. In November 2022 the FERC approved the System Energy settlement with the MPSC and stated that the settlement “appears to be fair and reasonable and in the public interest.”

System Energy, Entergy Arkansas, additional Entergy parties, and the APSC intend to file the settlement agreement and supporting materials with the FERC in November 2023. In addition to the black box refund of $ 142 million described above, beginning with the November 2023 service month, the settlement in principle provides for Entergy Arkansas’s bills from System Energy to be adjusted to reflect an authorized rate of return on equity of 9.65 % and a capital structure not to exceed 52 % equity.

If the FERC approves the filed settlement in accordance with its terms, it will become binding upon the Entergy parties and the APSC.

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System Energy Regulatory Liability for Pending Complaints

Prior to June 2022, System Energy recorded a provision and associated liability of $ 37 million for elements of the complaints against System Energy. In June 2022, as discussed in “ System Energy Settlement with the MPSC ” in the Form 10-K, System Energy recorded a regulatory charge of $ 551 million ($ 413 million net-of-tax), increasing System Energy’s regulatory liability to $ 588 million, which consisted of $ 235 million for the settlement with the MPSC and $ 353 million for potential future refunds to Entergy Arkansas, Entergy New Orleans, and Entergy Louisiana. The $ 142 million of refunds for Entergy Arkansas, discussed above in “ System Energy Settlement with the APSC ” is covered within the $ 353 million previously recorded. System Energy paid the black-box refund of $ 235 million to Entergy Mississippi in November 2022. As discussed above in “ Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue ,” in January 2023 System Energy paid refunds of $ 103.5 million as a result of the FERC’s order in December 2022 in that proceeding and recouped $ 40.5 million of the $ 103.5 million from Entergy Louisiana and Entergy New Orleans in October 2023. In addition, as discussed above in “ Unit Power Sales Agreement Complaint ,” a black-box refund of $ 18 million was made by System Energy in 2023 in connection with a partial settlement in that proceeding.

Based on analysis of the pending complaints against System Energy and potential future settlement negotiations, in third quarter 2023, System Energy recorded a regulatory charge of $ 40 million to increase System Energy’s regulatory liability related to complaints against System Energy. System Energy’s remaining regulatory liability related to complaints against System Energy as of September 30, 2023 is approximately $ 270 million. This regulatory liability is consistent with the settlement agreements reached with the MPSC and the APSC, as described above, taking into account amounts already refunded.

Unit Power Sales Agreement

System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills

In March 2023, pursuant to the protocols procedures discussed in Note 2 to the financial statements in the Form 10-K, the LPSC, the APSC, and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2021. The formal challenge alleges: (1) that it was imprudent for System Energy to accept the IRS’s partial acceptance of a previously uncertain tax position; (2) that System Energy used incorrect inputs for retained earnings that are used to determine the capital structure; (3) that the equity ratio charged in rates was excessive; and (4) that all issues in the ongoing Unit Power Sales Agreement complaint proceeding should also be reflected in calendar year 2021 bills. The first, third, and fourth allegations are identical to issues that were raised in the formal challenge to the calendar year 2020 bills. The formal challenge to the calendar year 2021 bills states that the impact of the first allegation is “tens of millions of dollars,” but it does not provide an estimate of the financial impact of the remaining allegations.

In May 2023, System Energy filed an answer to the formal challenge in which it requested that the FERC either deny the formal challenge as a matter of law or hold the proceeding in abeyance pending the resolution of related dockets.

Depreciation Amendment Proceeding

As discussed in Note 2 to the financial statements in the Form 10-K, in December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses. The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. In February 2022 the FERC accepted System Entergy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures. In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had

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negotiated with intervenors to the proceeding. In August 2023 the FERC approved the settlement, which resolves the proceeding. In third quarter 2023, System Energy recorded a reduction in depreciation expense of $ 41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC. In October 2023, System Energy filed a refund report with the FERC. The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement. The deadline for any comments and protests is November 2023.

Pension Costs Amendment Proceeding

In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $ 8.9 million. In March 2022 the FERC accepted System Entergy’s proposed amendments with an effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. In October 2023, System Energy filed direct testimony in support of its proposed amendments. Under the procedural schedule, testimony will be filed through April 2024, and the hearing is scheduled to begin in May 2024. The presiding ALJ’s initial decision is expected to be due in September 2024.

Storm Cost Recovery Filings with Retail Regulators

See Note 2 to the financial statements in the Form 10-K for discussion regarding storm cost recovery filings. The following are updates to that discussion.

Entergy Louisiana

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

As discussed in the Form 10-K, i n 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 February 2021 two winter storms (collectively, Winter Storm Uri) brought freezing rain and ice to Louisiana. Ice accumulation sagged or downed trees, limbs, and power lines, causing damage to Entergy Louisiana’s transmission and distribution systems. The additional weight of ice caused trees and limbs to fall into power lines and other electric equipment. When the ice melted, it affected vegetation and electrical equipment, causing additional outages. In August 2021, Hurricane Ida caused extensive damage to Entergy Louisiana’s distribution and, to a lesser extent, transmission systems resulting in widespread power outages.

In April 2022, Entergy Louisiana filed an application with the LPSC relating to Hurricane Ida restoration costs. Total restoration costs for the repair and/or replacement of Entergy Louisiana’s electric facilities damaged by Hurricane Ida were estimated to be approximately $ 2.54 billion, including approximately $ 1.96 billion in capital costs and approximately $ 586 million in non-capital costs. Including carrying costs of $ 57 million through December 2022, Entergy Louisiana was seeking an LPSC determination that $ 2.60 billion was prudently incurred and, therefore, eligible for recovery from customers. As part of this filing, Entergy Louisiana also was seeking an LPSC determination that an additional $ 32 million in costs associated with the restoration of Entergy Louisiana’s electric facilities damaged by Hurricane Laura, Hurricane Delta, and Hurricane Zeta as well as Winter Storm Uri was prudently incurred. This amount was exclusive of the requested $ 3 million in carrying costs through December 2022. In total, Entergy Louisiana was requesting an LPSC determination that $ 2.64 billion was prudently incurred and, therefore, eligible for recovery from customers. As discussed in the Form 10-K, in March 2022 the LPSC

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approved financing of a $ 1 billion storm escrow account from which funds were withdrawn to finance costs associated with Hurricane Ida restoration. In June 2022, Entergy Louisiana supplemented the application with a request regarding the financing and recovery of the recoverable storm restoration costs. Specifically, Entergy Louisiana requested approval to securitize its restoration costs pursuant to Louisiana Act 55 financing, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. In October 2022 the LPSC staff recommended a finding that the requested storm restoration costs of $ 2.64 billion, including associated carrying costs of $ 59.1 million, were prudently incurred and eligible for recovery from customers. The LPSC staff further recommended approval of Entergy Louisiana’s plans to securitize these costs, net of the $ 1 billion in funds withdrawn from the storm escrow account described above. The parties negotiated and executed an uncontested stipulated settlement which was filed with the LPSC in December 2022. The settlement agreement contains the following key terms: $ 2.57 billion of restoration costs from Hurricane Ida, Hurricane Laura, Hurricane Delta, Hurricane Zeta, and Winter Storm Uri were prudently incurred and eligible for recovery; carrying costs of $ 59.2 million were recoverable; and Entergy Louisiana was authorized to finance $ 1.657 billion utilizing the securitization process authorized by Act 55, as supplemented by Act 293. In January 2023 the LPSC approved the stipulated settlement subject to certain modifications. These modifications include the recognition of accumulated deferred income tax benefits related to damaged assets and system restoration costs as a reduction of the amount authorized to be financed utilizing the securitization process authorized by Act 55, as supplemented by Act 293, from $ 1.657 billion to $ 1.491 billion. These modifications did not affect the LPSC’s conclusion that all system restoration costs sought by Entergy Louisiana were reasonable and prudent. In February 2023 the Louisiana Bond Commission voted to authorize the Louisiana Local Government Environmental Facilities and Community Development Authority (LCDA), a political subdivision of the State of Louisiana, to issue the bonds authorized in the LPSC’s financing order.

In March 2023 the Hurricane Ida securitization financing closed, resulting in the issuance of approximately $ 1.491 billion principal amount of bonds by the LCDA and a remaining regulatory asset of $ 180 million to be recovered through the exclusion of the accumulated deferred income taxes related to damaged assets and system restoration costs from the determination of future rates. The securitization was authorized pursuant to the Louisiana Utilities Restoration Corporation Act, Part VIII of Chapter 9 of Title 45 of the Louisiana Revised Statutes, as supplemented by Act 293 of the Louisiana Legislature’s Regular Session of 2021. The LCDA loaned the proceeds to the LURC. Pursuant to Act 293, the LURC contributed the net bond proceeds to a State legislatively authorized and LURC-sponsored trust, Restoration Law Trust II (the storm trust II).

Pursuant to Act 293, the net proceeds of the bonds were used by the storm trust II to purchase 14,576,757.48 Class B preferred, non-voting membership interest units (the preferred membership interests) issued by Entergy Finance Company, LLC, a majority-owned indirect subsidiary of Entergy. Entergy Finance Company is required to make annual distributions (dividends) commencing on December 15, 2023 on the preferred membership interests issued to the storm trust II. These annual dividends received by the storm trust II will be distributed to Entergy Louisiana and the LURC, as beneficiaries of the storm trust II. Specifically, 1 % of the annual dividends received by the storm trust II will be distributed to the LURC for the benefit of customers, and 99 % will be distributed to Entergy Louisiana, net of storm trust expenses. The preferred membership interests have a stated annual cumulative cash dividend rate of 7.5 % and a liquidation price of $ 100 per unit. The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject. Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.

Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA. The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers. The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds. Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee. Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of April 2023 and the system restoration charge is expected to remain in place for up to 15 years. Entergy and Entergy Louisiana do not

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report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC. In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust II is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default. The estimated value of this indirect guarantee is immaterial.

From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company loaned approximately $ 1.5 billion to Entergy, which was indirectly contributed to Entergy Louisiana as a capital contribution.

As discussed in Note 10 to the financial statements herein, the securitization resulted in recognition of a net reduction of income tax expense of approximately $ 133 million, after taking into account a provision for uncertain tax positions, by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was offset by other tax charges resulting in a net reduction of income tax expense of $ 129 million, after taking into account a provision for uncertain tax positions. I n recognition of its obligations related to an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded in first quarter 2023 a $ 103 million ($ 76 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to share the benefits of the securitization with customers.

As discussed in Note 3 and Note 12 to the financial statements herein, Entergy Louisiana consolidates the storm trust II as a variable interest entity and the LURC’s 1 % beneficial interest is shown as noncontrolling interest in the financial statements. In first quarter 2023, Entergy Louisiana recorded a charge of $ 14.6 million in other income to reflect the LURC’s beneficial interest in the storm trust II.

Entergy New Orleans

Hurricane Ida

As discussed in the Form 10-K, in August 2021, Hurricane Ida caused significant damage to Entergy New Orleans’s service area, including Entergy’s electrical grid. The storm resulted in widespread power outages, including the loss of 100% of Entergy New Orleans’s load and damage to distribution and transmission infrastructure, including the loss of connectivity to the eastern interconnection. In September 2021, Entergy New Orleans withdrew $ 39 million from its funded storm reserves. In June 2022, Entergy New Orleans filed an application with the City Council requesting approval and certification that storm restoration costs associated with Hurricane Ida of approximately $ 170 million, which included $ 11 million in estimated costs, were reasonable, necessary, and prudently incurred to enable Entergy New Orleans to restore electric service to its customers and to repair Entergy New Orleans’s electric utility infrastructure. In addition, estimated carrying costs through December 2022 related to Hurricane Ida restoration costs were $ 9 million, which were subsequently included in an addendum to the June 2022 application. Also, Entergy New Orleans requested approval that the $ 39 million withdrawal from its funded storm reserve in September 2021, the $ 125 million withdrawal from its securitized storm reserve, and $ 7 million in excess storm reserve escrow withdrawals related to Hurricane Zeta and prior miscellaneous storms were properly applied to Hurricane Ida storm restoration costs.

In August 2023 the City Council advisors issued a report recommending that the City Council find that Entergy New Orleans prudently incurred approximately $ 164.1 million in storm restoration costs and $ 7.5 million in carrying charges and that such costs have already been properly recovered by Entergy New Orleans through withdrawals from the storm reserve escrow account. The City Council advisors also recommended that the City Council find that approximately $ 1.2 million in storm restoration costs had already been recovered through Entergy New Orleans’s base rates and that approximately $ 0.9 million in unused credits be applied against future storm costs. In August 2023 the City Council hearing officer certified the evidentiary record.

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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 September 30,
			2023												2022
			(In Millions, Except Per Share Data)
									$/share												$/share
Net income attributable to Entergy Corporation			$ 666.8												$ 560.6
Basic shares and earnings per average common share			211.5						$ 3.15						203.4						$ 2.76
Average dilutive effect of:
Stock options			0.2						—						0.5						( 0.01 )
Other equity plans			0.5						( 0.01 )						0.6						( 0.01 )
Equity forwards			—						—						0.1						—
Diluted shares and earnings per average common shares			212.2						$ 3.14						204.6						$ 2.74

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was 1,305,354 options for the three months ended September 30, 2023 and 926,403 options for the three months ended September 30, 2022.

The following table presents Entergy’s basic and diluted earnings per share calculations included on the consolidated income statements:

			For the Nine Months Ended September 30,
			2023												2022
			(In Millions, Except Per Share Data)
									$/share												$/share
Net income attributable to Entergy Corporation			$ 1,368.9												$ 996.7
Basic shares and earnings per average common share			211.4						$ 6.47						203.3						$ 4.90
Average dilutive effect of:
Stock options			0.3						( 0.01 )						0.5						( 0.01 )
Other equity plans			0.5						( 0.01 )						0.5						( 0.01 )
Equity forwards			—						—						0.1						—
Diluted shares and earnings per average common shares			212.2						$ 6.45						204.4						$ 4.88

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was 1,138,384 options for the nine months ended September 30, 2023 and 937,350 options for the nine months ended September 30, 2022.

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.

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Dividends declared per common share were $ 1.07 for the three months ended September 30, 2023 and $ 1.01 for the three months ended September 30, 2022. Dividends declared per common share were $ 3.21 for the nine months ended September 30, 2023 and $ 3.03 for the nine months ended September 30, 2022.

Equity Distribution Program

In January 2021, Entergy entered into an equity distribution sales agreement with several counterparties establishing an at the market equity distribution program, pursuant to which Entergy may offer and sell from time to time shares of its common stock. The sales agreement provides that, in addition to the issuance and sale of shares of Entergy common stock, Entergy may enter into forward sale agreements for the sale of its common stock. The aggregate number of shares of common stock sold under this sales agreement and under any forward sale agreement may not exceed an aggregate gross sales price of $ 2 billion. As of September 30, 2023, shares at an aggregate gross sales price of approximately $ 1,126 million have been sold under the at the market equity distribution program.

During the nine months ended September 30, 2023 and 2022, there were no shares of common stock issued under the at the market equity distribution program.

In March, June, and September 2022, Entergy entered into forward sale agreements for 1,538,010 shares, 2,124,086 shares, and 1,666,172 shares of common stock, respectively. No amounts were recorded on Entergy’s balance sheet with respect to the equity offering until settlements of the equity forward sale agreements occurred in November 2022. The forward sale agreements required Entergy to, at its election prior to September 29, 2023 for the March 2022 agreements and prior to December 29, 2023 for the June and September agreements, either (i) physically settle the transactions by issuing the total of 1,538,010 shares, 2,124,086 shares, and 1,666,172 shares, respectively, of its common stock to the forward counterparties in exchange for net proceeds at the then-applicable forward sale price specified by the agreements (initially approximately $ 108.12 , $ 116.94 , and $ 115.46 per share, respectively) or (ii) net settle the transactions in whole or in part through the delivery or receipt of cash or shares. The forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the agreements. In connection with the forward sale agreements, the forward seller, or its affiliates, borrowed from third parties and sold 1,538,010 shares, 2,124,086 shares, and 1,666,172 shares, respectively, of Entergy Corporation’s common stock. The gross sales price of these shares totaled approximately $ 168 million, $ 250.9 million, and $ 194.2 million, respectively. In connection with the sales of these shares, Entergy paid the forward sellers fees of approximately $ 1.7 million, $ 2.5 million, and $ 1.9 million, respectively, which have not been deducted from the gross sales prices. Entergy did not receive any proceeds from such sales of borrowed shares.

In November 2022, Entergy physically settled its obligations under the then-outstanding forward sale agreements by delivering 7,688,419 shares of common stock in exchange for cash proceeds of $ 853.3 million. See Note 7 to the financial statements in the Form 10-K for discussion of the common stock issued and forward sale agreements settled under the at the market equity distribution program.

In June 2023, Entergy entered into forward sale agreements for 102,995 shares and 365,307 shares of common stock. No amounts have been or will be recorded on Entergy’s balance sheet with respect to the equity offerings until settlements of the equity forward sale agreements occur. The forward sale agreements require Entergy to, at its election prior to May 31, 2024 or June 28, 2024, respectively, either (i) physically settle the transactions by issuing the total of 102,995 shares and 365,307 shares, respectively, of its common stock to the forward counterparty in exchange for net proceeds at the then-applicable forward sale price specified by the agreement (initially approximately $ 101.36 and $ 101.39 per share, respectively) or (ii) net settle the transaction in whole or in part through the delivery or receipt of cash or shares. Each forward sale price is subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the agreement. In connection with the forward sale agreements, the forward seller, or its affiliates, borrowed from third parties and sold 102,995 shares and 365,307 shares, respectively, of Entergy Corporation’s common stock. The gross sales price of these shares totaled approximately $ 10.5 million and $ 37.4 million, respectively. In connection

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with the sale of these shares, Entergy paid the forward sellers fees of approximately $ 0.1 million and $ 0.4 million, respectively, which have not been deducted from the gross sales price. Entergy did not receive any proceeds from such sales of borrowed shares.

Until settlement of the forward sale agreements, earnings per share dilution resulting from the agreements, if any, will be determined under the treasury stock method. Share dilution occurs when the average market price of Entergy’s common stock is higher than the average forward sales price. For the nine months ended September 30, 2023 and 2022, 468,302 shares and 4,757,308 shares, respectively, under the forward sale agreements were not included in the calculation of diluted earnings per share because their effect would have been antidilutive.

Treasury Stock

During the nine months ended September 30, 2023, Entergy Corporation issued 295,304 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 nine months ended September 30, 2023.

Retained Earnings

On October 27, 2023, Entergy Corporation’s Board of Directors declared a common stock dividend of $ 1.13 per share, payable on December 1, 2023 to holders of record as of November 14, 2023.

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 September 30, 2023:

			Pension and Other Postretirement Liabilities
			(In Thousands)
Beginning balance, July 1, 2023			($ 193,019 )
Amounts reclassified from accumulated other comprehensive income (loss)			( 2,434 )
Net other comprehensive income (loss) for the period			( 2,434 )
Ending balance, September 30, 2023			($ 195,453 )

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The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended September 30, 2022 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, July 1, 2022			($ 987 )						($ 324,274 )						$ 1,223												($ 324,038 )
Other comprehensive income (loss) before reclassifications			( 14 )						—						( 1,223 )												( 1,237 )
Amounts reclassified from accumulated other comprehensive income			38						11,867						—												11,905
Net other comprehensive income (loss) for the period			24						11,867						( 1,223 )												10,668
Ending balance, September 30, 2022			($ 963 )						($ 312,407 )						$ —												($ 313,370 )

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2023:

			Pension and Other Postretirement Liabilities
			(In Thousands)
Beginning balance, January 1, 2023			($ 191,754 )
Amounts reclassified from accumulated other comprehensive income (loss)			( 3,699 )
Net other comprehensive income (loss) for the period			( 3,699 )
Ending balance, September 30, 2023			($ 195,453 )

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The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2022 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, 2022			($ 1,035 )						($ 338,647 )						$ 7,154												($ 332,528 )
Other comprehensive income (loss) before reclassifications			( 42 )						—						( 12,997 )												( 13,039 )
Amounts reclassified from accumulated other comprehensive income (loss)			114						26,240						5,843												32,197
Net other comprehensive income (loss) for the period			72						26,240						( 7,154 )												19,158
Ending balance, September 30, 2022			($ 963 )						($ 312,407 )						$ —												($ 313,370 )

The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the three months ended September 30, 2023 and 2022:

						Pension and Other Postretirement Liabilities
						2023						2022
						(In Thousands)
Beginning balance, July 1,						$ 52,811						$ 7,174
Amounts reclassified from accumulated other comprehensive income (loss)						( 1,829 )						295
Net other comprehensive income (loss) for the period						( 1,829 )						295
Ending balance, September 30,						$ 50,982						$ 7,469

The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the nine months ended September 30, 2023 and 2022:

						Pension and Other Postretirement Liabilities
						2023						2022
						(In Thousands)
Beginning balance, January 1,						$ 55,370						$ 8,278
Amounts reclassified from accumulated other comprehensive income (loss)						( 4,388 )						( 809 )
Net other comprehensive income (loss) for the period						( 4,388 )						( 809 )
Ending balance, September 30,						$ 50,982						$ 7,469

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Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the three months ended September 30, 2023 and 2022 were as follows:

			Amounts reclassified from AOCI												Income Statement Location
			2023						2022
			(In Thousands)
Cash flow hedges net unrealized loss
Interest rate swaps			$ —						($ 48 )						Miscellaneous - net
Total realized loss on cash flow hedges			—						( 48 )
Income taxes			—						10						Income taxes
Total realized loss on cash flow hedges (net of tax)			$ —						($ 38 )
Pension and other postretirement liabilities
Amortization of prior-service credit			$ 3,396						$ 3,837						(a)
Amortization of net gain (loss)			1,700						( 4,870 )						(a)
Settlement loss			( 1,919 )						( 14,339 )						(a)
Total amortization and settlement loss			3,177						( 15,372 )
Income taxes			( 743 )						3,505						Income taxes
Total amortization and settlement loss (net of tax)			$ 2,434						($ 11,867 )
Net unrealized investment gain (loss)
Total realized investment gain (loss)			$ —						$ —
Total reclassifications for the period (net of tax)			$ 2,434						($ 11,905 )

(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.

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Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the nine months ended September 30, 2023 and 2022 were as follows:

			Amounts reclassified from AOCI												Income Statement Location
			2023						2022
			(In Thousands)
Cash flow hedges net unrealized loss
Interest rate swaps			$ —						($ 145 )						Miscellaneous - net
Total realized loss on cash flow hedges			—						( 145 )
Income taxes			—						31						Income taxes
Total realized loss on cash flow hedges (net of tax)			$ —						($ 114 )
Pension and other postretirement liabilities
Amortization of prior-service credit			$ 10,191						$ 11,511						(a)
Amortization of net gain (loss)			4,994						( 29,774 )						(a)
Settlement loss			( 10,408 )						( 15,666 )						(a)
Total amortization and settlement loss			4,777						( 33,929 )
Income taxes			( 1,078 )						7,689						Income taxes
Total amortization and settlement loss (net of tax)			$ 3,699						($ 26,240 )
Net unrealized investment loss
Realized loss			$ —						($ 9,245 )						Interest and investment income
Income taxes			—						3,402						Income taxes
Total realized investment loss (net of tax)			$ —						($ 5,843 )
Total reclassifications for the period (net of tax)			$ 3,699						($ 32,197 )

(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.

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Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy Louisiana for the three months ended September 30, 2023 and 2022 were as follows:

						Amounts reclassified from AOCI												Income Statement Location
						2023						2022
						(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit						$ 951						$ 1,158						(a)
Amortization of gain (loss)						1,574						( 222 )						(a)
Settlement loss						( 22 )						( 1,340 )						(a)
Total amortization and settlement loss						2,503						( 404 )
Income taxes						( 674 )						109						Income taxes
Total amortization and settlement loss (net of tax)						1,829						( 295 )
Total reclassifications for the period (net of tax)						$ 1,829						($ 295 )

(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.

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy Louisiana for the nine months ended September 30, 2023 and 2022 were as follows:

						Amounts reclassified from AOCI												Income Statement Location
						2023						2022
						(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit						$ 2,853						$ 3,474						(a)
Amortization of gain (loss)						4,703						( 849 )						(a)
Settlement loss						( 1,551 )						( 1,518 )						(a)
Total amortization and settlement loss						6,005						1,107
Income taxes						( 1,617 )						( 298 )						Income taxes
Total amortization and settlement loss (net of tax)						4,388						809
Total reclassifications for the period (net of tax)						$ 4,388						$ 809

(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.

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Noncontrolling Interests

The dollar value of noncontrolling interests for Entergy Louisiana as of September 30, 2023 and December 31, 2022 is presented below:

			2023						2022
			(In Thousands)
Entergy Louisiana Noncontrolling Interests
Restoration Law Trust I (a)			$ 32,084						$ 31,735
Restoration Law Trust II (b)			15,130						—
Total Noncontrolling Interests			$ 47,214						$ 31,735

(a) See Note 12 to the financial statements herein and Note 17 to the financial statements in the Form 10-K for discussion of Restoration Law Trust I.

(b) Restoration Law Trust II (the storm trust II) was established as part of the Act 293 securitization of Entergy Louisiana’s Hurricane Ida storm restoration costs in March 2023. The storm trust II holds preferred membership interests issued by Entergy Finance Company, and Entergy Finance Company is required to make annual distributions (dividends) on the preferred membership interests. These annual dividends paid on the Entergy Finance Company preferred membership interests will be distributed 1 % to the LURC and 99 % to Entergy Louisiana. Entergy Louisiana, as the primary beneficiary, consolidates the storm trust II and the LURC’s 1 % beneficial interest in noncontrolling interests in the consolidated financial statements for Entergy Louisiana and Entergy. See Note 2 to the financial statements herein for a discussion of the Entergy Louisiana March 2023 storm cost securitization.

Entergy Corporation has in place a credit facility that has a borrowing capacity of $ 3.5 billion and expires in June 2028. 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 nine months ended September 30, 2023 was 6.44 % on the drawn portion of the facility. As of September 30, 2023, amounts outstanding and capacity available under the $ 3.5 billion credit facility are:

Capacity						Borrowings						Letters of Credit						Capacity Available
(In Millions)
$ 3,500						$ —						$ 3						$ 3,497

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 and System Energy) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the Entergy Corporation credit facility’s maturity date may occur.

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $ 2 billion.  As of September 30, 2023, Entergy Corporation had $ 1,351.1 million of commercial paper outstanding. The weighted-average interest rate for the nine months ended September 30, 2023 was 5.35 %.

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Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of September 30, 2023 as follows:

Company						Expiration Date						Amount of Facility						Interest Rate (a)						Amount Drawn as of September 30, 2023						Letters of Credit Outstanding as of September 30, 2023
Entergy Arkansas						April 2024						$ 25 million (b)						7.27 %						$ —						$ —
Entergy Arkansas						June 2028						$ 150 million (c)						6.54 %						$ —						$ —
Entergy Louisiana						June 2028						$ 350 million (c)						6.67 %						$ —						$ —
Entergy Mississippi						July 2025						$ 150 million						6.54 %						$ —						$ —
Entergy New Orleans						June 2024						$ 25 million (c)						7.04 %						$ —						$ —
Entergy Texas						June 2028						$ 150 million (c)						6.67 %						$ —						$ 1.1 million

(a) The interest rate is the estimated interest rate as of September 30, 2023 that would have been applied to outstanding borrowings under the facility.

(b) Borrowings under this 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.

The commitment fees on the credit facilities range from 0.075 % to 0.375 % of the undrawn commitment amount for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas, and of the entire facility amount for Entergy New Orleans. 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 an uncommitted standby letter of credit facility as a means to post collateral to support its obligations to MISO. The f ollowing is a summary of the uncommitted standby letter of credit facilities as of September 30, 2023:

Company

Amount of Uncommitted Facility

Letter of Credit Fee

Letters of Credit Issued as of September 30, 2023 (a) (b)

Entergy Arkansas

$ 25 million

0.78 %

$ 7.8 million

Entergy Louisiana

$ 125 million

0.78 %

$ 11.2 million

Entergy Mississippi

$ 65 million

0.78 %

$ 6.7 million

Entergy New Orleans

$ 15 million

1.625 %

$ 1 million

Entergy Texas

$ 80 million

1.250 %

$ 12.8 million

(a) As of September 30, 2023, letters of credit posted with MISO covered financial transmission right exposure of $ 1.7 million for Entergy Arkansas, $ 0.9 million for Entergy Louisiana, $ 0.6 million for Entergy Mississippi, and $ 0.5 million for Entergy Texas. See Note 8 to the financial statements herein for discussion of financial transmission rights.

(b) As of September 30, 2023, in addition to the $ 6.7 million MISO letters of credit, Entergy Mississippi had $ 1 million in non-MISO letters of credit outstanding under this facility.

The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have FERC-

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authorized short-term borrowing limits effective through April 2025. The FERC-authorized short-term borrowing limit for System Energy is effective through March 2025. 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 intercompany 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 September 30, 2023 (aggregating both internal and external short-term borrowings) for the Registrant Subsidiaries:

			Authorized						Borrowings
			(In Millions)
Entergy Arkansas			$ 250						$ —
Entergy Louisiana			$ 450						$ —
Entergy Mississippi			$ 200						$ 24
Entergy New Orleans			$ 150						$ —
Entergy Texas			$ 200						$ —
System Energy			$ 200						$ —

Vermont Yankee Credit Facility (Entergy Corporation)

In January 2019, Entergy Nuclear Vermont Yankee was transferred to NorthStar and its credit facility was assumed by Entergy Assets Management Operations, LLC (formerly Vermont Yankee Asset Retirement, LLC), Entergy Nuclear Vermont Yankee’s parent company that remains an Entergy subsidiary after the transfer. The credit facility has a borrowing capacity of $ 139 million and expires in December 2024. The commitment fee is currently 0.20 % of the undrawn commitment amount.  As of September 30, 2023, $ 139 million in cash borrowings were outstanding under the credit facility.  The weighted-average interest rate for the nine months ended September 30, 2023 was 6.47 % on the drawn portion of the facility.

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 also issue commercial paper, details of which follow as of September 30, 2023:

Company						Expiration Date						Amount of Facility						Weighted- Average Interest Rate on Borrowings (a)						Amount Outstanding as of September 30, 2023
												(Dollars in Millions)
Entergy Arkansas VIE						June 2025						$ 80						6.03 %						$ 10.6
Entergy Louisiana River Bend VIE						June 2025						$ 105						6.08 %						$ 57.1
Entergy Louisiana Waterford VIE						June 2025						$ 105						6.04 %						$ 13.9
System Energy VIE						June 2025						$ 120						5.90 %						$ 29.2

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

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The commitment fees on the credit facilities are 0.100 % 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. Each lessee is in compliance with this covenant.

The nuclear fuel company VIEs had notes payable that were included in debt on the respective balance sheets as of September 30, 2023 as follows:

Company

Description

Amount

Entergy Arkansas VIE

3.17 % Series M due December 2023

$ 40 million

Entergy Arkansas VIE

1.84 % Series N due July 2026

$ 90 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

Entergy Louisiana Waterford VIE

5.94 % Series J due September 2026

$ 70 million

System Energy VIE

2.05 % Series K due September 2027

$ 90 million

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

As of September 30, 2023, Entergy Arkansas and Entergy Louisiana each has obtained financing authorization from the FERC that extend through April 2025 and System Energy has obtained financing authorization from the FERC that extends through March 2025 for issuances by their nuclear fuel company VIEs.

Debt Issuances and Retirements

(Entergy Arkansas)

In January 2023, Entergy Arkansas issued $ 425 million of 5.15 % Series mortgage bonds due January 2033. Entergy Arkansas used the proceeds, together with other funds, to repay, at maturity, its $ 250 million of 3.05 % Series mortgage bonds due June 2023 and for general corporate purposes.

In August 2023, Entergy Arkansas issued $ 300 million of 5.30 % Series mortgage bonds due September 2033. Entergy Arkansas used the proceeds, together with other funds, to repay debt outstanding under its $ 150 million long-term revolving credit facility and for general corporate purposes, including the repayment of borrowings from the Entergy System money pool.

(Entergy Louisiana)

In September 2023, Entergy Louisiana repaid, at maturity, $ 325 million of 4.05 % Series mortgage bonds.

(Entergy Mississippi)

In May 2023, Entergy Mississippi issued $ 300 million of 5.0 % Series mortgage bonds due September 2033. Entergy Mississippi used the proceeds, together with other funds, to repay, prior to maturity, its $ 250 million of 3.10 % Series mortgage bonds due July 2023 and $ 50 million of its unsecured term loan due December 2023 and for general corporate purposes.

(Entergy New Orleans)

In May 2023, Entergy New Orleans amended its $ 70 million unsecured term loan credit agreement, to provide for additional borrowings of $ 15 million due June 2024. The amended term loan bears interest at a fixed

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interest rate of 6.25 % payable on the unpaid principal amount, compared to the previous rate of 2.5 %. Entergy New Orleans used the funds for general corporate purposes.

In July 2023, Entergy New Orleans repaid, at maturity, $ 100 million of 3.9 % Series mortgage bonds.

(Entergy Texas)

In August 2023, Entergy Texas issued $ 350 million of 5.80 % Series mortgage bonds due September 2053. Entergy Texas used the proceeds, together with other funds, to finance the construction of the Orange County Advanced Power Station and for general corporate purposes, including the repayment of borrowings from the Entergy System money pool.

(System Energy)

In March 2023, System Energy issued $ 325 million of 6.00 % Series mortgage bonds due April 2028. System Energy used the proceeds, together with other funds, to repay, prior to maturity, its $ 50 million term loan due November 2023, and to repay, at maturity, its $ 250 million of 4.10 % Series mortgage bonds due April 2023, and for general corporate purposes.

Fair Value

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of September 30, 2023 were as follows:

			Book Value of Long-Term Debt						Fair Value of Long-Term Debt (a)
			(In Thousands)
Entergy			$ 26,183,400						$ 22,233,532
Entergy Arkansas			$ 4,650,501						$ 3,910,973
Entergy Louisiana			$ 10,399,014						$ 8,893,051
Entergy Mississippi			$ 2,329,185						$ 1,935,895
Entergy New Orleans			$ 685,002						$ 599,005
Entergy Texas			$ 3,233,614						$ 2,702,065
System Energy			$ 745,247						$ 677,274

(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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The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of December 31, 2022 were as follows:

			Book Value of Long-Term Debt						Fair Value of Long-Term Debt (a)
			(In Thousands)
Entergy			$ 25,932,549						$ 22,573,837
Entergy Arkansas			$ 4,166,500						$ 3,538,930
Entergy Louisiana			$ 10,698,922						$ 9,444,665
Entergy Mississippi			$ 2,331,096						$ 1,987,154
Entergy New Orleans			$ 775,632						$ 707,872
Entergy Texas			$ 2,895,913						$ 2,485,705
System Energy			$ 777,905						$ 702,473

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

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 281,874 shares of its common stock under the 2019 Omnibus Incentive Plan during the first quarter 2023 with a fair value of $ 20.07 per option.  As of September 30, 2023, there were options on 2,950,625 shares of common stock outstanding with a weighted-average exercise price of $ 97.49 .  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 September 30, 2023.  The aggregate intrinsic value of the stock options outstanding as of September 30, 2023 was $ 16.6 million.

The following table includes financial information for outstanding stock options for the three months ended September 30, 2023 and 2022:

			2023						2022
			(In Millions)
Compensation expense included in Entergy’s consolidated net income			$ 1.1						$ 0.9
Tax benefit recognized in Entergy’s consolidated net income			$ 0.3						$ 0.2
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 0.5						$ 0.4

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The following table includes financial information for outstanding stock options for the nine months ended September 30, 2023 and 2022:

			2023						2022
			(In Millions)
Compensation expense included in Entergy’s consolidated net income			$ 3.2						$ 3.2
Tax benefit recognized in Entergy’s consolidated net income			$ 0.9						$ 0.8
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 1.6						$ 1.2

Other Equity Awards

In January 2023 the Board approved and Entergy granted 345,983 restricted stock awards and 143,212 long-term incentive awards under the 2019 Omnibus Incentive Plan.  The restricted stock awards were made effective on January 26, 2023 and were valued at $ 108.47 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, a credit measure – adjusted funds from operations/debt ratio – was selected as one of the performance measures for the 2023-2025 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 26, 2023 and eighty percent were valued at $ 130.65 per share based on various factors, primarily market conditions; and twenty percent were valued at $ 108.47 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.

The following table includes financial information for other outstanding equity awards for the three months ended September 30, 2023 and 2022:

			2023						2022
			(In Millions)
Compensation expense included in Entergy’s consolidated net income			$ 9.3						$ 9.1
Tax benefit recognized in Entergy’s consolidated net income			$ 2.4						$ 2.3
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 4.2						$ 3.9

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The following table includes financial information for other outstanding equity awards for the nine months ended September 30, 2023 and 2022:

			2023						2022
			(In Millions)
Compensation expense included in Entergy’s consolidated net income			$ 27.1						$ 31.1
Tax benefit recognized in Entergy’s consolidated net income			$ 7.0						$ 7.9
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 11.8						$ 12.6

Components of Qualified Net Pension Cost

Entergy’s qualified pension costs, including amounts capitalized, for the third quarters of 2023 and 2022, included the following components:

			2023						2022
			(In Thousands)
Service cost - benefits earned during the period			$ 25,302						$ 33,845
Interest cost on projected benefit obligation			73,850						60,734
Expected return on assets			( 96,775 )						( 100,203 )
Amortization of net loss			20,204						42,367
Settlement charges			6,914						125,548
Net pension costs			$ 29,495						$ 162,291

Entergy’s qualified pension costs, including amounts capitalized, for the nine months ended September 30, 2023 and 2022, included the following components:

			2023						2022
			(In Thousands)
Service cost - benefits earned during the period			$ 76,346						$ 108,482
Interest cost on projected benefit obligation			223,584						164,529
Expected return on assets			( 290,660 )						( 306,895 )
Amortization of net loss			63,858						159,359
Settlement charges			152,588						148,201
Net pension costs			$ 225,716						$ 273,676

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The Registrant Subsidiaries’ qualified pension costs, including amounts capitalized, for their current and former employees for the third quarters of 2023 and 2022, included the following components:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 4,566						$ 6,175						$ 1,431						$ 492						$ 1,074						$ 1,430
Interest cost on projected benefit obligation						13,813						14,896						3,797						1,667						3,138						3,419
Expected return on assets						( 17,639 )						( 18,892 )						( 4,830 )						( 2,206 )						( 4,147 )						( 4,392 )
Amortization of net loss						5,438						4,748						1,545						456						1,008						1,204
Settlement charges						558						561						345						248						632						228
Net pension cost						$ 6,736						$ 7,488						$ 2,288						$ 657						$ 1,705						$ 1,889

2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 6,138						$ 8,261						$ 1,953						$ 690						$ 1,441						$ 1,891
Interest cost on projected benefit obligation						11,866						12,523						3,383						1,368						2,795						2,882
Expected return on assets						( 18,731 )						( 20,586 )						( 5,006 )						( 2,487 )						( 4,551 )						( 4,509 )
Amortization of net loss						10,283						10,156						2,941						1,208						2,130						2,641
Settlement charges						11,477						33,507						6,853						4,402						13,082						4,593
Net pension cost						$ 21,033						$ 43,861						$ 10,124						$ 5,181						$ 14,897						$ 7,498

The Registrant Subsidiaries’ qualified pension costs, including amounts capitalized, for their current and former employees for the nine months ended September 30, 2023 and 2022, included the following components:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 13,976						$ 18,654						$ 4,369						$ 1,470						$ 3,271						$ 4,342
Interest cost on projected benefit obligation						42,010						45,219						11,551						5,051						9,542						10,382
Expected return on assets						( 53,593 )						( 56,891 )						( 14,349 )						( 6,783 )						( 12,322 )						( 13,431 )
Amortization of net loss						18,170						14,704						4,937						1,453						3,057						3,939
Settlement charges						24,516						38,791						12,088						1,948						10,902						5,518
Net pension cost						$ 45,079						$ 60,477						$ 18,596						$ 3,139						$ 14,450						$ 10,750

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2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 19,695						$ 26,405						$ 6,158						$ 2,194						$ 4,652						$ 5,937
Interest cost on projected benefit obligation						30,944						33,706						8,857						3,646						7,242						7,614
Expected return on assets						( 57,009 )						( 62,779 )						( 15,373 )						( 7,517 )						( 14,393 )						( 13,718 )
Amortization of net loss						36,557						35,055						10,371						3,944						7,124						9,078
Settlement charges						22,973						37,968						9,061						4,402						15,547						6,616
Net pension cost						$ 53,160						$ 70,355						$ 19,074						$ 6,669						$ 20,172						$ 15,527

Non-Qualified Net Pension Cost

Entergy recognized $ 21.8 million and $ 5.9 million in pension cost for its non-qualified pension plans in the third quarters of 2023 and 2022, respectively. Reflected in the pension cost for non-qualified pension plans in the third quarters of 2023 and 2022, respectively, were settlement charges of $ 18 million and $ 1.4 million related to the payment of lump sum benefits out of the plans. Entergy recognized $ 39.8 million and $ 23.3 million in pension cost for its non-qualified pension plans for the nine months ended September 30, 2023 and 2022, respectively. Reflected in the pension cost for non-qualified pension plans for the nine months ended September 30, 2023 and 2022, respectively, were settlement charges of $ 27.3 million and $ 9.2 million related to the payment of lump sum benefits out of the plans.

The Registrant Subsidiaries recognized the following pension cost for their current and former employees for their non-qualified pension plans for the third quarters of 2023 and 2022:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Thousands)
2023			$ 63						$ 24						$ 85						$ 33						$ 63
2022			$ 69						$ 24						$ 80						$ 28						$ 961

Reflected in Entergy Texas’s non-qualified pension costs in the third quarter of 2022 were settlement charges of $ 886 thousand related to the payment of lump sum benefits out of the plan.

The Registrant Subsidiaries recognized the following pension cost for their current and former employees for their non-qualified pension plans for the nine months ended September 30, 2023 and 2022:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Thousands)
2023			$ 575						$ 76						$ 724						$ 99						$ 190
2022			$ 212						$ 77						$ 241						$ 84						$ 1,264

Reflected in Entergy Arkansas’s non-qualified pension costs for the nine months ended September 30, 2023 were settlement charges of $ 379 thousand related to the payment of lump sum benefits out of the plan. Reflected in Entergy Mississippi’s non-qualified pension costs for the nine months ended September 30, 2023 and 2022, respectively, were settlement charges of $ 453 thousand and $ 2 thousand related to the payment of lump sum benefits out of the plan. Reflected in Entergy Texas’s non-qualified pension costs for the nine months ended September 30, 2022 were settlement charges of $ 1 million related to the payment of lump sum benefits out of the plan.

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Components of Net Other Postretirement Benefits Cost (Income)

Entergy’s other postretirement benefits income, including amounts capitalized, for the third quarters of 2023 and 2022, included the following components:

			2023						2022
			(In Thousands)
Service cost - benefits earned during the period			$ 3,664						$ 6,184
Interest cost on accumulated postretirement benefit obligation (APBO)			10,568						6,827
Expected return on assets			( 9,183 )						( 10,855 )
Amortization of prior service credit			( 5,640 )						( 6,388 )
Amortization of net (gain) loss			( 2,862 )						1,083
Net other postretirement benefits income			($ 3,453 )						($ 3,149 )

Entergy’s other postretirement benefits income, including amounts capitalized, for the nine months ended September 30, 2023 and 2022, included the following components:

			2023						2022
			(In Thousands)
Service cost - benefits earned during the period			$ 10,992						$ 18,552
Interest cost on accumulated postretirement benefit obligation (APBO)			31,704						20,481
Expected return on assets			( 27,549 )						( 32,565 )
Amortization of prior service credit			( 16,920 )						( 19,164 )
Amortization of net (gain) loss			( 8,586 )						3,249
Net other postretirement benefits income			($ 10,359 )						($ 9,447 )

The Registrant Subsidiaries’ other postretirement benefits cost (income), including amounts capitalized, for their current and former employees for the third quarters of 2023 and 2022, included the following components:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 741						$ 845						$ 220						$ 59						$ 202						$ 189
Interest cost on APBO						2,001						2,233						543						290						649						432
Expected return on assets						( 3,778 )						—						( 1,179 )						( 1,316 )						( 2,194 )						( 634 )
Amortization of prior service cost (credit)						524						( 951 )						( 239 )						( 229 )						( 1,093 )						( 73 )
Amortization of net (gain) loss						43						( 1,764 )						21						117						229						—
Net other postretirement benefits cost (income)						($ 469 )						$ 363						($ 634 )						($ 1,079 )						($ 2,207 )						($ 86 )

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2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 1,114						$ 1,408						$ 339						$ 99						$ 331						$ 310
Interest cost on APBO						1,263						1,443						350						174						399						279
Expected return on assets						( 4,483 )						—						( 1,394 )						( 1,499 )						( 2,568 )						( 791 )
Amortization of prior service cost (credit)						471						( 1,158 )						( 443 )						( 229 )						( 1,093 )						( 80 )
Amortization of net (gain) loss						218						( 186 )						56						( 225 )						162						30
Net other postretirement benefits cost (income)						($ 1,417 )						$ 1,507						($ 1,092 )						($ 1,680 )						($ 2,769 )						($ 252 )

The Registrant Subsidiaries’ other postretirement benefits cost (income), including amounts capitalized, for their current and former employees for the nine months ended September 30, 2023 and 2022, included the following components:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 2,223						$ 2,535						$ 660						$ 177						$ 606						$ 567
Interest cost on APBO						6,003						6,699						1,629						870						1,947						1,296
Expected return on assets						( 11,334 )						—						( 3,537 )						( 3,948 )						( 6,582 )						( 1,902 )
Amortization of prior service cost (credit)						1,572						( 2,853 )						( 717 )						( 687 )						( 3,279 )						( 219 )
Amortization of net (gain) loss						129						( 5,292 )						63						351						687						—
Net other postretirement benefits cost (income)						($ 1,407 )						$ 1,089						($ 1,902 )						($ 3,237 )						($ 6,621 )						($ 258 )

2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 3,342						$ 4,224						$ 1,017						$ 297						$ 993						$ 930
Interest cost on APBO						3,789						4,329						1,050						522						1,197						837
Expected return on assets						( 13,449 )						—						( 4,182 )						( 4,497 )						( 7,704 )						( 2,373 )
Amortization of prior service cost (credit)						1,413						( 3,474 )						( 1,329 )						( 687 )						( 3,279 )						( 240 )
Amortization of net (gain) loss						654						( 558 )						168						( 675 )						486						90
Net other postretirement benefits cost (income)						($ 4,251 )						$ 4,521						($ 3,276 )						($ 5,040 )						($ 8,307 )						($ 756 )

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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 third quarters of 2023 and 2022:

2023						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 3,509						($ 113 )						$ 3,396
Amortization of net gain (loss)						( 1,064 )						2,898						( 134 )						1,700
Settlement loss						( 490 )						—						( 1,429 )						( 1,919 )
						($ 1,554 )						$ 6,407						($ 1,676 )						$ 3,177
Entergy Louisiana
Amortization of prior service credit						$ —						$ 951						$ —						$ 951
Amortization of net gain (loss)						( 190 )						1,764						—						1,574
Settlement loss						( 22 )						—						—						( 22 )
						($ 212 )						$ 2,715						$ —						$ 2,503

2022						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 4,014						($ 177 )						$ 3,837
Amortization of net loss						( 3,976 )						( 596 )						( 298 )						( 4,870 )
Settlement loss						( 14,263 )						—						( 76 )						( 14,339 )
						($ 18,239 )						$ 3,418						($ 551 )						($ 15,372 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 1,158						$ —						$ 1,158
Amortization of net gain (loss)						( 407 )						186						( 1 )						( 222 )
Settlement loss						( 1,340 )						—						—						( 1,340 )
						($ 1,747 )						$ 1,344						($ 1 )						($ 404 )

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Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) for the nine months ended September 30, 2023 and 2022:

2023						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 10,529						($ 338 )						$ 10,191
Amortization of net gain (loss)						( 3,208 )						8,693						( 491 )						4,994
Settlement loss						( 7,446 )						—						( 2,962 )						( 10,408 )
						($ 10,654 )						$ 19,222						($ 3,791 )						$ 4,777
Entergy Louisiana
Amortization of prior service credit						$ —						$ 2,853						$ —						$ 2,853
Amortization of net gain (loss)						( 588 )						5,292						( 1 )						4,703
Settlement loss						( 1,551 )						—						—						( 1,551 )
						($ 2,139 )						$ 8,145						($ 1 )						$ 6,005

2022						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 12,042						($ 531 )						$ 11,511
Amortization of net loss						( 26,921 )						( 1,788 )						( 1,065 )						( 29,774 )
Settlement loss						( 14,441 )						—						( 1,225 )						( 15,666 )
						($ 41,362 )						$ 10,254						($ 2,821 )						($ 33,929 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 3,474						$ —						$ 3,474
Amortization of net gain (loss)						( 1,404 )						558						( 3 )						( 849 )
Settlement loss						( 1,518 )						—						—						( 1,518 )
						($ 2,922 )						$ 4,032						($ 3 )						$ 1,107

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.

Qualified Pension Settlement Costs

Year-to-date lump sum benefit payments from the Entergy Corporation Retirement Plan for Bargaining Employees and the Entergy Corporation Retirement Plan for Non-Bargaining Employees exceeded the sum of the Plans’ 2023 service and interest cost, resulting in settlement costs. In accordance with accounting standards, settlement accounting requires immediate recognition of the portion of previously unrecognized losses associated with the settled portion of the plan’s pension liability. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy each participate in one or both of the Entergy

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Corporation Retirement Plan for Bargaining Employees and the Entergy Corporation Retirement Plan for Non-Bargaining Employees and incurred settlement costs. Similar to other pension costs, the settlement costs were included with employee labor costs and charged to expense and capital in the same manner that labor costs were charged. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans each received regulatory approval to defer the expense portion of the settlement costs, with future amortization of the deferred settlement expense over the period in which the expense otherwise would be recorded had the immediate recognition not occurred.

Entergy Texas Reserve

In September 2020, Entergy Texas elected to establish a reserve, in accordance with PUCT regulations, to track the surplus or deficit in the annual amount of actuarially determined pension and other postretirement benefits chargeable to Entergy Texas’s expense. The reserve amounts recorded for 2020 and 2021 were included in the base rate case that was filed with the PUCT in July 2022, and amortization of that amount began in 2023 when interim rates became effective. The reserve amounts recorded for 2022 and through September 2023 will be evaluated in the next scheduled PUCT rate case and an amortization period will be determined by the PUCT at that time. At September 30, 2023, the balance in this reserve was approximately $ 39.3 million.

Employer Contributions

Based on current assumptions, Entergy expects to contribute $ 267 million to its qualified pension plans in 2023.  As of September 30, 2023, Entergy had contributed $ 267 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 2023:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
			(In Thousands)
Expected 2023 pension contributions			$ 54,468						$ 44,565						$ 21,110						$ 1,420						$ 5,314						$ 15,543
Pension contributions made through September 2023			$ 54,468						$ 44,565						$ 21,110						$ 1,420						$ 5,314						$ 15,543
Remaining estimated pension contributions to be made in 2023			$ —						$ —						$ —						$ —						$ —						$ —

Entergy has a single reportable segment, Utility, which 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 in portions of Louisiana.  The Utility segment reflects management’s primary basis of organization with a predominant focus on its utility operations in the Gulf South. Parent & Other includes the parent company, Entergy Corporation, and other business activity, including Entergy’s non-utility operations business which owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers and also provides decommissioning services to nuclear power plants owned by non-affiliated entities in the United States.

As discussed in Note 13 to the financial statements in the Form 10-K, Entergy completed its multi-year strategy to exit the merchant nuclear power business in 2022 and upon completion of all transition activities, effective January 1, 2023, Entergy Wholesale Commodities is no longer a reportable segment. See Note 13 and Note 14 to the financial statements in the Form 10-K for discussion of the asset impairments and restructuring

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charges related to the decision to exit the merchant nuclear power business. Remaining business activity previously reported under Entergy Wholesale Commodities is now included under Parent & Other. Historical segment financial information presented herein has been restated for the third quarter 2022 and the nine months ended September 30, 2022 to reflect the change in reportable segments. The change in reportable segments had no effect on Entergy’s consolidated financial statements or historical segment financial information for the Utility reportable segment.

Entergy’s segment financial information for the third quarters of 2023 and 2022 was as follows:

						Utility						Parent & Other						Eliminations						Consolidated
						(In Thousands)
2023
Operating revenues						$ 3,559,240						$ 36,302						($ 20 )						$ 3,595,522
Income taxes						$ 225,989						$ 1,008						$ —						$ 226,997
Consolidated net income (loss)						$ 754,036						($ 3,304 )						($ 81,018 )						$ 669,714
2022
Operating revenues						$ 4,156,616						$ 62,009						($ 10 )						$ 4,218,615
Income taxes						$ 178,088						$ 6,024						$ —						$ 184,112
Consolidated net income (loss)						$ 667,162						($ 55,870 )						($ 55,410 )						$ 555,882

Entergy’s segment financial information for the nine months ended September 30, 2023 and 2022 was as follows:

						Utility						Parent & Other						Eliminations						Consolidated
						(In Thousands)
2023
Operating revenues						$ 9,325,977						$ 96,661						($ 31 )						$ 9,422,607
Income taxes						$ 304,352						($ 21,534 )						$ —						$ 282,818
Consolidated net income (loss)						$ 1,666,701						($ 74,257 )						($ 218,418 )						$ 1,374,026
Total assets as of September 30, 2023						$ 64,924,653						$ 839,217						($ 5,211,723 )						$ 60,552,147
2022
Operating revenues						$ 10,191,041						$ 300,720						($ 24 )						$ 10,491,737
Income taxes						($ 118,257 )						$ 9,223						$ —						($ 109,034 )
Consolidated net income (loss)						$ 1,166,866						($ 36,772 )						($ 130,608 )						$ 999,486
Total assets as of December 31, 2022						$ 61,399,243						$ 884,442						($ 3,688,494 )						$ 58,595,191

Eliminations are primarily intersegment activity. Almost all of Entergy’s goodwill is related to the Utility segment.

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 are 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. Management allocates resources and assesses financial performance on a consolidated basis.

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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.

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.  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 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 has executed natural gas swaps and options as of September 30, 2023 is 6 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of September 30, 2023 is 16,033,600 MMBtu for Entergy, including 3,660,000 MMBtu for Entergy Louisiana, 11,256,600 MMBtu for Entergy Mississippi, and 1,117,000 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide

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collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.

During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. 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’s non-utility operations 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 September 30, 2023 is 100,632 GWh for Entergy, including 25,018 GWh for Entergy Arkansas, 42,908 GWh for Entergy Louisiana, 12,949 GWh for Entergy Mississippi, 3,960 GWh for Entergy New Orleans, and 15,596 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’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of September 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas as of September 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022.

The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheets as of September 30, 2023 and December 31, 2022 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.

Instrument						Balance Sheet Location						Gross Fair Value (a)						Offsetting Position (b)						Net Fair Value (c) (d)
												(In Millions)
2023
Assets:
Natural gas swaps and options						Prepayments and other						$ 1						$ —						$ 1
Financial transmission rights						Prepayments and other						$ 33						($ 1 )						$ 32
Liabilities:
Natural gas swaps and options						Other current liabilities						$ 7						$ —						$ 7

2022
Assets:
Natural gas swaps and options						Prepayments and other						$ 13						$ —						$ 13
Natural gas swaps and options						Other deferred debits and other assets						$ 3						$ —						$ 3
Financial transmission rights						Prepayments and other						$ 21						($ 2 )						$ 19
Liabilities:
Natural gas swaps and options						Other current liabilities						$ 25						$ —						$ 25

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(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 Sheets

(d) Excludes cash collateral in the amount of $ 8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $ 4 million posted as of September 30, 2023 and $ 3 million posted as of December 31, 2022.

The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended September 30, 2023 and 2022 were as follows:

Instrument

Income Statement location

Amount of gain (loss) recorded in the income statement

(In Millions)

2023

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

(a)

($6)

Financial transmission rights

Purchased power expense

(b)

$ 48

2022

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

(a)

$ 42

Financial transmission rights

Purchased power expense

(b)

$ 30

The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the nine months ended September 30, 2023 and 2022 were as follows:

Instrument

Income Statement location

Amount of gain (loss) recorded in the income statement

(In Millions)

2023

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

(a)

($44)

Financial transmission rights

Purchased power expense

(b)

$ 96

2022

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

(a)

$ 120

Financial transmission rights

Purchased power expense

(b)

$ 90

(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

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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.

The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of September 30, 2023 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.

Instrument						Balance Sheet Location						Gross Fair Value (a)						Offsetting Position (b)						Net Fair Value (c) (d)						Registrant
												(In Millions)
Assets:
Natural gas swaps and options						Prepayments and other						$ 1.0						$ —						$ 1.0						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 11.7						($ 0.1 )						$ 11.6						Entergy Arkansas
Financial transmission rights						Prepayments and other						$ 14.7						$ —						$ 14.7						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 1.2						($ 0.1 )						$ 1.1						Entergy Mississippi
Financial transmission rights						Prepayments and other						$ 1.3						$ —						$ 1.3						Entergy New Orleans
Financial transmission rights						Prepayments and other						$ 3.6						($ 0.3 )						$ 3.3						Entergy Texas
Liabilities:
Natural gas swaps						Other current liabilities						$ 7.1						$ —						$ 7.1						Entergy Mississippi
Natural gas swaps						Other current liabilities						$ 0.3						$ —						$ 0.3						Entergy New Orleans

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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, 2022 were as follows:

Instrument						Balance Sheet Location						Gross Fair Value (a)						Offsetting Position (b)						Net Fair Value (c) (d)						Registrant
												(In Millions)
Assets:
Natural gas swaps and options						Prepayments and other						$ 13.1						$ —						$ 13.1						Entergy Louisiana
Natural gas swaps and options						Other deferred debits and other assets						$ 3.4						$ —						$ 3.4						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 10.3						$ —						$ 10.3						Entergy Arkansas
Financial transmission rights						Prepayments and other						$ 7.7						($ 0.4 )						$ 7.3						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 0.6						$ —						$ 0.6						Entergy Mississippi
Financial transmission rights						Prepayments and other						$ 0.8						$ —						$ 0.8						Entergy New Orleans
Financial transmission rights						Prepayments and other						$ 1.2						($ 1.1 )						$ 0.1						Entergy Texas
Liabilities:
Natural gas swaps						Other current liabilities						$ 24.0						$ —						$ 24.0						Entergy Mississippi
Natural gas swaps						Other current liabilities						$ 1.5						$ —						$ 1.5						Entergy 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 September 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $ 1.7 million for Entergy Arkansas, $ 0.9 million for Entergy Louisiana, $ 0.6 million for Entergy Mississippi, and $ 0.5 million for Entergy Texas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $ 0.2 million for Entergy Mississippi, $ 0.2 million for Entergy New Orleans, and $ 2.4 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 September 30, 2023 and 2022 were as follows:

Instrument

Income Statement Location

Amount of gain (loss) recorded in the income statement

Registrant

(In Millions)

2023

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

($1.7)

(a)

Entergy Louisiana

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

($4.4)

(a)

Entergy Mississippi

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

($0.4)

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 10.2

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 18.3

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 6.6

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 2.4

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 10.4

(b)

Entergy Texas

2022

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

$ 17.9

(a)

Entergy Louisiana

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

$ 24.4

(a)

Entergy Mississippi

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

($0.2)

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 12.4

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 10.2

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 4.8

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 0.6

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 2.3

(b)

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 nine months ended September 30, 2023 and 2022 were as follows:

Instrument

Income Statement Location

Amount of gain (loss) recorded in the income statement

Registrant

(In Millions)

2023

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

($7.5)

(a)

Entergy Louisiana

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

($34.1)

(a)

Entergy Mississippi

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

($2.5)

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 18.2

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 46.7

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 11.1

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 4.8

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 14.5

(b)

Entergy Texas

2022

Natural gas swaps and options

Fuel, fuel-related expenses, and gas purchased for resale

$ 37.7

(a)

Entergy Louisiana

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

$ 81.9

(a)

Entergy Mississippi

Natural gas swaps

Fuel, fuel-related expenses, and gas purchased for resale

$ 0.7

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 35.8

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 35.7

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 8.0

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 3.0

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 7.2

(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.

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

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in a current market exchange.  Gains or losses realized on financial instruments 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.

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 are performed by the Office of Corporate Risk Oversight.  The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the

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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 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 are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 1,414						$ —						$ —						$ 1,414
Decommissioning trust funds (a):
Equity securities						17						—						—						17
Debt securities						567						1,093						—						1,660
Common trusts (b)																								2,741
Securitization recovery trust account						18						—						—						18
Storm reserve escrow accounts						416						—						—						416
Gas hedge contracts						1						—						—						1
Financial transmission rights						—						—						32						32
						$ 2,433						$ 1,093						$ 32						$ 6,299
Liabilities:
Gas hedge contracts						$ 7						$ —						$ —						$ 7

2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 109						$ —						$ —						$ 109
Decommissioning trust funds (a):
Equity securities						24						—						—						24
Debt securities						534						1,122						—						1,656
Common trusts (b)																								2,442
Securitization recovery trust account						13						—						—						13
Storm reserve escrow accounts						402						—						—						402
Gas hedge contracts						13						3						—						16
Financial transmission rights						—						—						19						19
						$ 1,095						$ 1,125						$ 19						$ 4,681
Liabilities:
Gas hedge contracts						$ 25						$ —						$ —						$ 25

(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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(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 for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended September 30, 2023 and 2022:

			2023						2022
			(In Millions)
Balance as of July 1,			$ 40						$ 12
Total gains (losses) for the period
Included as a regulatory liability/asset			40						39
Settlements			( 48 )						( 30 )
Balance as of September 30,			$ 32						$ 21

The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the nine months ended September 30, 2023 and 2022:

									2023						2022
									(In Millions)
Balance as of January 1,									$ 19						$ 4
Total gains (losses) for the period
Included as a regulatory liability/asset									67						91
Issuances of financial transmission rights									42						16
Settlements									( 96 )						( 90 )
Balance as of September 30,									$ 32						$ 21

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 tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

Entergy Arkansas

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 110.3						$ —						$ —						$ 110.3
Decommissioning trust funds (a):
Equity securities						2.4						—						—						2.4
Debt securities						128.8						342.1						—						470.9
Common trusts (b)																								812.3
Financial transmission rights						—						—						11.6						11.6
						$ 241.5						$ 342.1						$ 11.6						$ 1,407.5

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2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 3.4						$ —						$ —						$ 3.4
Decommissioning trust funds (a):
Equity securities						4.5						—						—						4.5
Debt securities						126.8						343.9						—						470.7
Common trusts (b)																								724.7
Financial transmission rights						—						—						10.3						10.3
						$ 134.7						$ 343.9						$ 10.3						$ 1,213.6

Entergy Louisiana

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 765.8						$ —						$ —						$ 765.8
Decommissioning trust funds (a):
Equity securities						10.6						—						—						10.6
Debt securities						243.3						493.5						—						736.8
Common trusts (b)																								1,165.5
Storm reserve escrow account						303.9						—						—						303.9
Gas hedge contracts						1.0						—						—						1.0
Financial transmission rights						—						—						14.7						14.7
						$ 1,324.6						$ 493.5						$ 14.7						$ 2,998.3

2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 6.3						$ —						$ —						$ 6.3
Decommissioning trust funds (a):
Equity securities						16.8						—						—						16.8
Debt securities						209.4						515.7						—						725.1
Common trusts (b)																								1,037.2
Storm reserve escrow account						293.4						—						—						293.4
Gas hedge contracts						13.1						3.4						—						16.5
Financial transmission rights						—						—						7.3						7.3
						$ 539.0						$ 519.1						$ 7.3						$ 2,102.6

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Entergy Mississippi

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 10.3						$ —						$ —						$ 10.3
Storm reserve escrow account						34.7						—						—						34.7
Financial transmission rights						—						—						1.1						1.1
						$ 45.0						$ —						$ 1.1						$ 46.1
Liabilities:
Gas hedge contracts						$ 7.1						$ —						$ —						$ 7.1

2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 17.0						$ —						$ —						$ 17.0
Storm reserve escrow account						33.5						—						—						33.5
Financial transmission rights						—						—						0.6						0.6
						$ 50.5						$ —						$ 0.6						$ 51.1
Liabilities:
Gas hedge contracts						$ 24.0						$ —						$ —						$ 24.0

Entergy New Orleans

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 114.4						$ —						$ —						$ 114.4
Securitization recovery trust account						5.7						—						—						5.7
Storm reserve escrow account						77.7						—						—						77.7
Financial transmission rights						—						—						1.3						1.3
						$ 197.8						$ —						$ 1.3						$ 199.1
Liabilities:
Gas hedge contracts						$ 0.3						$ —						$ —						$ 0.3

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2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 4.4						$ —						$ —						$ 4.4
Securitization recovery trust account						2.2						—						—						2.2
Storm reserve escrow account						75.0						—						—						75.0
Financial transmission rights						—						—						0.8						0.8
						$ 81.6						$ —						$ 0.8						$ 82.4
Liabilities:
Gas hedge contracts						$ 1.5						$ —						$ —						$ 1.5

Entergy Texas

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets :
Temporary cash investments						$ 249.6						$ —						$ —						$ 249.6
Securitization recovery trust account						12.3						—						—						12.3
Financial transmission rights						—						—						3.3						3.3
						$ 261.9						$ —						$ 3.3						$ 265.2

2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets :
Temporary cash investments						$ 3.0						$ —						$ —						$ 3.0
Securitization recovery trust account						10.9						—						—						10.9
Financial transmission rights						—						—						0.1						0.1
						$ 13.9						$ —						$ 0.1						$ 14.0

System Energy

2023						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 94.5						$ —						$ —						$ 94.5
Decommissioning trust funds (a):
Equity securities						4.1						—						—						4.1
Debt securities						195.5						257.3						—						452.8
Common trusts (b)																								762.3
						$ 294.1						$ 257.3						$ —						$ 1,313.7

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2022						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 2.9						$ —						$ —						$ 2.9
Decommissioning trust funds (a):
Equity securities						2.8						—						—						2.8
Debt securities						197.5						262.2						—						459.7
Common trusts (b)																								680.4
						$ 203.2						$ 262.2						$ —						$ 1,145.8

(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 for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended September 30, 2023.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of July 1,			$ 19.6						$ 16.7						$ 1.2						$ 1.5						$ 1.2
Gains (losses) included as a regulatory liability/asset			2.2						16.3						6.5						2.2						12.5
Settlements			( 10.2 )						( 18.3 )						( 6.6 )						( 2.4 )						( 10.4 )
Balance as of September 30,			$ 11.6						$ 14.7						$ 1.1						$ 1.3						$ 3.3

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 September 30, 2022.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of July 1,			$ 4.4						$ 4.7						$ 0.5						$ 0.6						$ 1.5
Gains (losses) included as a regulatory liability/asset			17.6						14.9						5.8						1.1						0.4
Settlements			( 12.4 )						( 10.2 )						( 4.8 )						( 0.6 )						( 2.3 )
Balance as of September 30,			$ 9.6						$ 9.4						$ 1.5						$ 1.1						($ 0.4 )

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The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the nine months ended September 30, 2023.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of January 1,			$ 10.3						$ 7.3						$ 0.6						$ 0.8						$ 0.1
Issuances of financial transmission rights			20.6						18.1						1.4						1.4						0.2
Gains (losses) included as a regulatory liability/asset			( 1.1 )						36.0						10.2						3.9						17.5
Settlements			( 18.2 )						( 46.7 )						( 11.1 )						( 4.8 )						( 14.5 )
Balance as of September 30,			$ 11.6						$ 14.7						$ 1.1						$ 1.3						$ 3.3

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 nine months ended September 30, 2022.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of January 1,			$ 2.3						$ 0.6						$ 0.3						$ 0.1						$ 0.8
Issuances of financial transmission rights			5.4						5.3						0.8						0.8						3.9
Gains (losses) included as a regulatory liability/asset			37.7						39.2						8.4						3.2						2.1
Settlements			( 35.8 )						( 35.7 )						( 8.0 )						( 3.0 )						( 7.2 )
Balance as of September 30,			$ 9.6						$ 9.4						$ 1.5						$ 1.1						($ 0.4 )

The NRC requires Entergy subsidiaries to maintain nuclear decommissioning trusts to fund the costs of decommissioning ANO 1, ANO 2, River Bend, Waterford 3, and Grand Gulf. 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 Palisades non-utility nuclear plant did not meet the criteria for regulatory accounting treatment.  Accordingly, unrealized gains/(losses) recorded on the equity securities in the trust funds were 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. 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.

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As discussed in Note 14 to the financial statements in the Form 10-K, in June 2022, Entergy completed the sale of Palisades to Holtec. As part of the transaction, Entergy transferred the Palisades decommissioning trust fund to Holtec. The disposition-date fair value of the decommissioning trust fund was approximately $ 552 million.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2023 on equity securities still held as of September 30, 2023 were ($ 99 ) million and $ 272 million, respectively. 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 September 30, 2023 and December 31, 2022 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2023
Debt Securities						$ 1,660						$ 1						$ 222
2022
Debt Securities						$ 1,655						$ 4						$ 201

As of September 30, 2023 and December 31, 2022, there were no deferred taxes on unrealized gains/(losses). The amortized cost of available-for-sale debt securities was $ 1,881 million as of September 30, 2023 and $ 1,852 million as of December 31, 2022.  As of September 30, 2023, available-for-sale debt securities had an average coupon rate of approximately 3.37 %, an average duration of approximately 6.30 years, and an average maturity of approximately 10.71 years.

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 September 30, 2023 and December 31, 2022:

						September 30, 2023												December 31, 2022
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 585						$ 30						$ 840						$ 63
More than 12 months						1,010						192						666						138
Total						$ 1,595						$ 222						$ 1,506						$ 201

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The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2023 and December 31, 2022 were as follows:

			2023						2022
			(In Millions)
Less than 1 year			$ 80						$ 62
1 year - 5 years			499						520
5 years - 10 years			477						461
10 years - 15 years			108						117
15 years - 20 years			155						161
20 years+			341						334
Total			$ 1,660						$ 1,655

During the three months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 226 million and $ 119 million, respectively.  During the three months ended September 30, 2023, there were no gross gains and $ 11 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2022, there were gross gains of $ 0.2 million and gross losses of $ 8 million reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 486 million and $ 755 million, respectively.  During the nine months ended September 30, 2023, there were $ 1 million in gross gains and $ 28 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the nine months ended September 30, 2022, there were gross gains of $ 2 million and gross losses of $ 36 million reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

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 September 30, 2023 and December 31, 2022 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2023
Debt Securities						$ 470.9						$ 0.1						$ 78.1
2022
Debt Securities						$ 470.7						$ 0.2						$ 69.3

The amortized cost of available-for-sale debt securities was $ 548.9 million as of September 30, 2023 and $ 539.8 million as of December 31, 2022.  As of September 30, 2023, the available-for-sale debt securities had an average coupon rate of approximately 2.58 %, an average duration of approximately 5.78 years, and an average maturity of approximately 7.35 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2023 on equity securities still held as of September 30, 2023 were ($ 29.3 ) million and $ 80 million, respectively. The equity securities are generally held in funds that are designed to approximate the return of the Standard & Poor’s 500

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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 September 30, 2023 and December 31, 2022:

						September 30, 2023												December 31, 2022
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 68.8						$ 4.3						$ 197.6						$ 18.8
More than 12 months						391.8						73.8						260.1						50.5
Total						$ 460.6						$ 78.1						$ 457.7						$ 69.3

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2023 and December 31, 2022 were as follows:

			2023						2022
			(In Millions)
Less than 1 year			$ 45.6						$ 21.2
1 year - 5 years			135.8						159.7
5 years - 10 years			189.8						191.7
10 years - 15 years			38.9						38.0
15 years - 20 years			42.2						42.6
20 years+			18.6						17.5
Total			$ 470.9						$ 470.7

During the three months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 1.8 million and $ 17.2 million, respectively.  During the three months ended September 30, 2023, there were no gross gains and $ 0.1 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2022, there were no gross gains and gross losses of $ 2 million reclassified out of other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 18.4 million and $ 33.1 million, respectively.  During the nine months ended September 30, 2023, there were no gross gains and $ 1.8 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the nine months ended September 30, 2022, there were gross gains of $ 0.1 million and gross losses of $ 2.5 million reclassified out of other regulatory liabilities/assets into earnings.

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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 September 30, 2023 and December 31, 2022 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2023
Debt Securities						$ 736.8						$ 1.3						$ 74.5
2022
Debt Securities						$ 725.1						$ 3.5						$ 67.5

The amortized cost of available-for-sale debt securities was $ 809.9 million as of September 30, 2023 and $ 789.1 million as of December 31, 2022.  As of September 30, 2023, the available-for-sale debt securities had an average coupon rate of approximately 3.87 %, an average duration of approximately 6.72 years, and an average maturity of approximately 13.11 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2023 on equity securities still held as of September 30, 2023 were ($ 42.3 ) million and $ 117.2 million, respectively. 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 September 30, 2023 and December 31, 2022:

						September 30, 2023												December 31, 2022
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 339.7						$ 14.9						$ 409.9						$ 24.6
More than 12 months						354.9						59.6						207.5						42.9
Total						$ 694.6						$ 74.5						$ 617.4						$ 67.5

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The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2023 and December 31, 2022 were as follows:

			2023						2022
			(In Millions)
Less than 1 year			$ 31.9						$ 33.6
1 year - 5 years			164.6						159.1
5 years - 10 years			169.2						161.7
10 years - 15 years			64.2						67.1
15 years - 20 years			79.4						83.3
20 years+			227.5						220.3
Total			$ 736.8						$ 725.1

During the three months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale securities amounted to $ 148.1 million and $ 47.6 million, respectively.  During the three months ended September 30, 2023, there were no gross gains and gross losses of $ 8.6 million reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2022, there were gross gains of $ 0.2 million and gross losses of $ 2.8 million reclassified out of other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 280.7 million and $ 288.5 million, respectively.  During the nine months ended September 30, 2023, there were gross gains of $ 0.5 million and gross losses of $ 17.6 million reclassified out of other regulatory liabilities/assets into earnings. During the nine months ended September 30, 2022, there were gross gains of $ 1.3 million and gross losses of $ 15 million 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 September 30, 2023 and December 31, 2022 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2023
Debt Securities						$ 452.8						$ 0.1						$ 69.8
2022
Debt Securities						$ 459.7						$ 0.7						$ 63.7

The amortized cost of available-for-sale debt securities was $ 522.6 million as of September 30, 2023 and $ 522.7 million as of December 31, 2022.  As of September 30, 2023, the available-for-sale debt securities had an average coupon rate of approximately 3.36 %, an average duration of approximately 6.15 years, and an average maturity of approximately 10.26 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2023 on equity securities still held as of September 30, 2023 were ($ 27.5 ) million and $ 75.2 million, respectively. 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 September 30, 2023 and December 31, 2022:

						September 30, 2023												December 31, 2022
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
			(In Millions)
Less than 12 months						$ 176.1						$ 11.0						$ 231.9						$ 19.2
More than 12 months						263.0						58.8						198.0						44.5
Total						$ 439.1						$ 69.8						$ 429.9						$ 63.7

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2023 and December 31, 2022 were as follows:

			2023						2022
			(In Millions)
Less than 1 year			$ 2.7						$ 6.8
1 year - 5 years			198.9						201.7
5 years - 10 years			118.4						107.1
10 years - 15 years			4.7						11.7
15 years - 20 years			33.1						35.0
20 years+			95.0						97.4
Total			$ 452.8						$ 459.7

During the three months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 76.2 million and $ 54.6 million, respectively.  During the three months ended September 30, 2023, there were no gross gains and $ 2.7 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2022, there were gross gains of $ 0.02 million and gross losses of $ 3 million reclassified out of other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2023 and 2022, proceeds from the dispositions of available-for-sale debt securities amounted to $ 187.3 million and $ 158.6 million, respectively.  During the nine months ended September 30, 2023, there were no gross gains and $ 9.1 million in gross losses reclassified out of other regulatory liabilities/assets into earnings. During the nine months ended September 30, 2022, there were gross gains of $ 0.2 million and gross losses of $ 8.3 million 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.  Entergy did not have an allowance for expected credit losses related to available-for-sale securities as of September 30, 2023 and December 31, 2022. Entergy did not record any impairments of available-

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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.

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 authorities. 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. There was no return of unprotected excess accumulated deferred income taxes for Entergy or the Registrant Subsidiaries for the three months ended September 30, 2023 or for the nine months ended September 30, 2023. For the three months ended September 30, 2022, the return of unprotected excess accumulated deferred income taxes reduced the regulatory liability for income taxes by $ 16 million for Entergy, including $ 6 million for Entergy Louisiana and $ 10 million for Entergy Texas. For the nine months ended September 30, 2022, the return of unprotected excess accumulated deferred income taxes reduced the regulatory liability for income taxes by $ 50 million for Entergy, including $ 25 million for Entergy Louisiana, $ 1 million for Entergy New Orleans, and $ 24 million for Entergy Texas.

Income Tax Audits

Entergy and the Registrant Subsidiaries anticipate the resolution of the IRS 2016-2018 audit and expect to record the effects of the adjustments associated with such audit in the fourth quarter of 2023. As described more fully in Note 3 to the financial statements in the Form 10-K, the resolution of audit issues could result in significant changes to the amounts of unrecognized tax benefits in the fourth quarter of 2023.

In 2018, Entergy Arkansas adopted a new method of accounting for income tax return purposes in which nuclear decommissioning liabilities are treated as production costs of electricity includable in cost of goods sold. Entergy Arkansas anticipates that the position will be resolved with the IRS upon conclusion of the audit. Entergy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans anticipate resolving with the IRS the mark-to-market income tax treatment for various wholesale electric power purchase and sale agreements. Also included in this IRS audit is the income tax treatment of the 2018 restructuring of Entergy Arkansas. Entergy Arkansas anticipates resolving this tax treatment with the IRS upon conclusion of the audit.

Other Tax Matters

Act 293 Securitization

As described in Note 2 to the financial statements herein, Entergy Louisiana implemented a securitization authorized under Act 293 of the Louisiana Legislature’s Regular Session of 2021 in the first quarter 2023. Act 293 provides that the LURC contribute the net bond proceeds to a LURC-sponsored trust. Over the 15-year term of the Act 293 bonds, the storm trust II will make distributions to Entergy Louisiana, a beneficiary of the storm trust II, that will not be taxable to Entergy Louisiana. Additionally, Entergy Louisiana will not include the receipt of the

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system restoration charges in taxable income because the right to receive the system restoration charges has been granted directly to the LURC, and Entergy Louisiana only acts as an agent to collect those charges on behalf of the LURC.

Accordingly, the securitization provides for a tax accounting permanent difference resulting in a net reduction of income tax expense of approximately $ 133 million, after taking into account a provision for uncertain tax positions, by Entergy Louisiana. Entergy’s recognition of reduced income tax expense was offset by other tax charges resulting in a net reduction of income tax expense of $ 129 million, after taking into account a provision for uncertain tax positions.

I n recognition of its obligations related to an LPSC ancillary order issued as part of the securitization regulatory proceeding, Entergy Louisiana recorded in first quarter 2023 a $ 103 million ($ 76 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to share the benefits of the securitization with its customers. See Note 2 to the financial statements herein for discussion of the Entergy Louisiana March 2023 storm cost securitization.

Arkansas Corporate Income Tax Rate Changes

In April 2023, Arkansas Act 532 reduced the Arkansas corporate income tax rate from 5.3 % to 5.1 %. As a result of the rate reduction, Entergy Arkansas accrued a regulatory liability for income taxes of approximately $ 8 million in second quarter 2023, including a gross-up for the treatment of income taxes in Entergy Arkansas’s retail and wholesale ratemaking formulas.

In September 2023, Arkansas Act 6 reduced the Arkansas corporate income tax rate from 5.1 % to 4.8 %, which will be effective January 1, 2024. As a result of the rate reduction, Entergy Arkansas accrued an additional regulatory liability for income taxes of approximately $ 14 million in third quarter 2023, including a gross-up for the treatment of income taxes in Entergy Arkansas’s retail and wholesale ratemaking formulas.

Accrued Construction Expenditures

Accrued construction expenditures at September 30, 2023 were $ 447 million for Entergy, $ 62 million for Entergy Arkansas, $ 111.3 million for Entergy Louisiana, $ 31.2 million for Entergy Mississippi, $ 4.7 million for Entergy New Orleans, $ 178.7 million for Entergy Texas, and $ 16.7 million for System Energy.  Accrued construction expenditures at December 31, 2022 were $ 462 million for Entergy, $ 93.2 million for Entergy Arkansas, $ 156.7 million for Entergy Louisiana, $ 59.5 million for Entergy Mississippi, $ 11.2 million for Entergy New Orleans, $ 68.9 million for Entergy Texas, and $ 29 million for System Energy.

See Note 17 to the financial statements in the Form 10-K for a discussion of variable interest entities (VIEs).  See Note 4 to the financial statements herein for details of the nuclear fuel companies’ credit facilities, commercial paper borrowings, and long-term debt. See Note 6 to the financial statements in the Form 10-K and Note 3 to the financial statements herein for discussion of noncontrolling interests.

Restoration Law Trust I (the storm trust I), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. As of September 30, 2023 and December 31, 2022, the primary asset held by

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the storm trust I was $ 3 billion and $ 3.2 billion, respectively, of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The LURC’s 1 % beneficial interest in the storm trust I is presented as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with balances of $ 32.1 million as of September 30, 2023 and $ 31.7 million as of December 31, 2022.

Restoration Law Trust II (the storm trust II), a trust consolidated by Entergy Louisiana, is a VIE and Entergy Louisiana is the primary beneficiary. The storm trust II was established as part of the March 2023 Act 293 securitization of Entergy Louisiana’s Hurricane Ida restoration costs, less Hurricane Ida amounts previously financed in May 2022 in a prior securitization transaction. Entergy Louisiana is the primary beneficiary of the storm trust II because it was created to facilitate the financing of Entergy Louisiana’s storm restoration costs and Entergy Louisiana is entitled to receive a majority of the proceeds received by the storm trust II. As of September 30, 2023, the primary asset held by the storm trust II is the $ 1.5 billion of outstanding Entergy Finance Company preferred membership interests, which is reflected as an investment in affiliate preferred membership interests on the consolidated balance sheets of Entergy Louisiana. The storm trust II’s investment in affiliate preferred membership interests was purchased with the net bond proceeds of the securitization bonds issued by the LCDA. After the securitization bonds were issued, the LCDA loaned the net bond proceeds to the LURC, and pursuant to Act 293, the LURC contributed the net bond proceeds to the storm trust II. The holders of the securitization bonds do not have recourse to the assets or revenues of the storm trust II or to any Entergy affiliate and the bonds are not reflected in the consolidated balance sheets of Entergy or Entergy Louisiana. The LURC’s 1 % beneficial interest in the storm trust II is presented as noncontrolling interest on the consolidated balance sheets of Entergy and Entergy Louisiana, with a balance of $ 15.1 million as of September 30, 2023. See Note 2 to the financial statements herein for additional discussion of the securitization bonds and the preferred membership interests.

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 $ 17.2 million in each of the nine months ended September 30, 2023 and the nine months ended September 30, 2022.

AR Searcy Partnership, LLC is a tax equity partnership that qualifies as a VIE, which Entergy Arkansas is required to consolidate as it is the primary beneficiary. As of September 30, 2023, AR Searcy Partnership, LLC recorded assets equal to $ 135.4 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s ownership interest in the partnership was approximately $ 110.6 million. As of December 31, 2022, AR Searcy Partnership, LLC recorded assets equal to $ 138.3 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Arkansas’s ownership interest in the partnership was approximately $ 109 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.

MS Sunflower Partnership, LLC is a tax equity partnership that qualifies as a VIE, which Entergy Mississippi is required to consolidate as it is the primary beneficiary. As of September 30, 2023, MS Sunflower Partnership, LLC recorded assets equal to $ 164 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $ 127.2 million. As of December 31, 2022, MS Sunflower Partnership, LLC recorded assets equal to $ 154.5 million, primarily consisting of property, plant, and equipment, and the carrying value of Entergy Mississippi’s ownership interest in the partnership was approximately $ 117.2 million. The tax equity investor’s ownership interest is recorded as noncontrolling interest.

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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 September 30, 2023 and 2022 were as follows:

						2023						2022
						(In Thousands)
Utility:
Residential						$ 1,602,496						$ 1,570,940
Commercial						884,585						940,604
Industrial						797,982						1,109,245
Governmental						73,846						84,649
Total billed retail						3,358,909						3,705,438
Sales for resale (a)						86,505						311,479
Other electric revenues (b)						66,211						83,679
Revenues from contracts with customers						3,511,625						4,100,596
Other Utility revenues (c)						15,310						9,462
Electric revenues						3,526,935						4,110,058
Natural gas revenues						32,305						46,548
Other revenues (d)						36,282						62,009
Total operating revenues						$ 3,595,522						$ 4,218,615

Entergy’s total revenues for the nine months ended September 30, 2023 and 2022 were as follows:

						2023						2022
						(In Thousands)
Utility:
Residential						$ 3,595,378						$ 3,592,025
Commercial						2,291,673						2,290,893
Industrial						2,411,882						2,731,075
Governmental						204,999						209,044
Total billed retail						8,503,932						8,823,037
Sales for resale (a)						262,714						689,473
Other electric revenues (b)						358,000						420,710
Revenues from contracts with customers						9,124,646						9,933,220
Other Utility revenues (c)						70,942						90,869
Electric revenues						9,195,588						10,024,089
Natural gas revenues						130,389						166,917
Other revenues (d)						96,630						300,731
Total operating revenues						$ 9,422,607						$ 10,491,737

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The Utility operating companies’ total revenues for the three months ended September 30, 2023 and 2022 were as follows:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 346,454						$ 547,485						$ 257,241						$ 120,311						$ 331,005
Commercial						183,352						313,112						184,164						69,927						134,030
Industrial						194,284						393,172						58,253						9,163						143,110
Governmental						5,895						20,936						17,226						22,358						7,431
Total billed retail						729,985						1,274,705						516,884						221,759						615,576
Sales for resale (a)						73,081						95,257						17,403						13,007						3,426
Other electric revenues (b)						25,922						43,094						2,086						( 1,474 )						( 2,074 )
Revenues from contracts with customers						828,988						1,413,056						536,373						233,292						616,928
Other revenues (c)						2,671						8,542						2,442						1,988						( 333 )
Electric revenues						831,659						1,421,598						538,815						235,280						616,595
Natural gas revenues						—						13,269						—						19,036						—
Total operating revenues						$ 831,659						$ 1,434,867						$ 538,815						$ 254,316						$ 616,595

2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 323,767						$ 618,056						$ 206,708						$ 116,968						$ 305,441
Commercial						165,609						402,027						150,137						75,083						147,748
Industrial						175,304						693,445						50,931						10,973						178,592
Governmental						6,104						28,022						14,837						27,406						8,280
Total billed retail						670,784						1,741,550						422,613						230,430						640,061
Sales for resale (a)						157,008						191,664						56,162						33,158						9,149
Other electric revenues (b)						35,478						61,549						( 21,997 )						( 900 )						10,895
Revenues from contracts with customers						863,270						1,994,763						456,778						262,688						660,105
Other revenues (c)						1,232						8,246						2,354						216						( 549 )
Electric revenues						864,502						2,003,009						459,132						262,904						659,556
Natural gas revenues						—						17,789						—						28,759						—
Total operating revenues						$ 864,502						$ 2,020,798						$ 459,132						$ 291,663						$ 659,556

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The Utility operating companies’ total revenues for the nine months ended September 30, 2023 and 2022 were as follows:

2023						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 790,760						$ 1,242,378						$ 589,630						$ 252,412						$ 720,198
Commercial						445,279						844,655						460,836						180,091						360,812
Industrial						479,337						1,310,121						164,406						24,138						433,880
Governmental						15,500						63,417						46,080						58,052						21,950
Total billed retail						1,730,876						3,460,571						1,260,952						514,693						1,536,840
Sales for resale (a)						187,365						258,741						82,219						48,992						7,857
Other electric revenues (b)						105,446						161,033						45,926						4,611						45,011
Revenues from contracts with customers						2,023,687						3,880,345						1,389,097						568,296						1,589,708
Other revenues (c)						7,068						52,914						7,276						4,895						( 1,177 )
Electric revenues						2,030,755						3,933,259						1,396,373						573,191						1,588,531
Natural gas revenues						—						52,428						—						77,961						—
Total operating revenues						$ 2,030,755						$ 3,985,687						$ 1,396,373						$ 651,152						$ 1,588,531

2022						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 750,762						$ 1,372,538						$ 503,351						$ 256,110						$ 709,264
Commercial						406,078						949,680						379,075						179,456						376,604
Industrial						420,788						1,681,628						133,826						26,462						468,371
Governmental						15,702						68,880						39,449						62,617						22,396
Total billed retail						1,593,330						4,072,726						1,055,701						524,645						1,576,635
Sales for resale (a)						384,175						422,596						121,328						96,523						44,927
Other electric revenues (b)						136,870						185,405						29,665						17,936						54,874
Revenues from contracts with customers						2,114,375						4,680,727						1,206,694						639,104						1,676,436
Other revenues (c)						6,022						57,461						6,926						2,530						20,193
Electric revenues						2,120,397						4,738,188						1,213,620						641,634						1,696,629
Natural gas revenues						—						64,367						—						102,550						—
Total operating revenues						$ 2,120,397						$ 4,802,555						$ 1,213,620						$ 744,184						$ 1,696,629

(a) Sales for resale includes 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, unbilled revenue, and certain customer credits as directed by regulators.

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(c) Other Utility revenues include the equity component of carrying costs related to securitization, settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.

(d) Other revenues include competitive business sales including day-ahead sales of energy in a market administered by an ISO, operation and management services fees, and amortization of a below-market power purchase agreement.

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. The following tables set forth a reconciliation of changes in the allowance for doubtful accounts for the nine months ended September 30, 2023 and 2022.

			Entergy						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of December 31, 2022			$ 30.9						$ 6.5						$ 7.6						$ 2.5						$ 11.9						$ 2.4
Provisions			29.3						5.4						12.2						3.8						3.6						4.3
Write-offs			( 64.9 )						( 16.5 )						( 25.9 )						( 5.7 )						( 8.6 )						( 8.2 )
Recoveries			32.5						10.2						13.7						2.4						2.3						3.9
Balance as of September 30, 2023			$ 27.8						$ 5.6						$ 7.6						$ 3.0						$ 9.2						$ 2.4

			Entergy						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of December 31, 2021			$ 68.6						$ 13.1						$ 29.2						$ 7.2						$ 13.3						$ 5.8
Provisions (a)			28.8						12.1						8.3						1.5						4.0						2.9
Write-offs			( 95.1 )						( 27.3 )						( 38.1 )						( 9.8 )						( 11.7 )						( 8.2 )
Recoveries			28.4						8.4						10.5						3.2						3.8						2.5
Balance as of September 30, 2022			$ 30.7						$ 6.3						$ 9.9						$ 2.1						$ 9.4						$ 3.0

(a) Provisions include estimated incremental bad debt expenses, and revisions to those estimates, resulting from the COVID-19 pandemic of ($ 6.4 ) million for Entergy, $ 6.4 million for Entergy Arkansas, ($ 8.5 ) million for Entergy Louisiana, ($ 3.0 ) million for Entergy New Orleans, and ($ 1.3 ) million for Entergy Texas that have been deferred as regulatory assets. See Note 2 to the financial statements herein and in the Form 10-K for discussion of the COVID-19 orders issued by retail regulators.

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. The rate of customer write-offs has historically experienced minimal variation, although general economic conditions, such as the COVID-19 pandemic or other economic hardships, can affect the rate of customer write-offs. Management monitors the current condition of individual customer accounts to manage collections and ensure bad debt expense is recorded in a timely manner.

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See Note 9 to the financial statements in the Form 10-K for a discussion of asset retirement obligations. The following is an update to that discussion.

In third quarter 2023, Entergy Louisiana recorded a revision to its estimated decommissioning cost liability for River Bend as a result of a revised decommissioning cost study. The revised estimate resulted in a $ 10.8 million increase in its decommissioning cost liability, along with a corresponding increase in the related asset retirement cost asset that will be depreciated over the remaining useful life of the unit.

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