ENJ 10-Q Quarter ended Sept. 30, 2020

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

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

Vidalia Purchased Power Agreement

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

ANO Damage, Outage, and NRC Reviews

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

Spent Nuclear Fuel Litigation

See Note 8 to the financial statements in the Form 10-K for information on Entergy’s spent nuclear fuel litigation.

As discussed in the Form 10-K, in December 2019 the U.S. Court of Federal Claims issued a judgment in the amount of $ 80 million in favor of Entergy Arkansas to resolve claims in the third round ANO damages case and issued a judgment in the amount of $ 7 million in favor of Entergy FitzPatrick Properties (formerly Entergy Nuclear FitzPatrick) in the second round FitzPatrick damages case. Payment of both judgments was received from the U.S. Treasury in January 2020.

In April 2020 the U.S. Court of Federal Claims issued a final judgment in the amount of $ 33 million in favor of Entergy Louisiana against the DOE in the second round Waterford 3 damages case. Entergy Louisiana received payment from the U.S. Treasury in June 2020. The effects of recording the judgment were reductions to plant, nuclear fuel expense, and other operation and maintenance expense. The Waterford 3 damages awarded included $ 20 million related to costs previously recorded as nuclear fuel expense, $ 8 million related to costs previously recorded as other operation and maintenance expenses, and $ 5 million in costs previously capitalized.

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.

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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

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

Regulatory Assets and Regulatory Liabilities

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

Other Regulatory Assets

Hurricane Laura

In August 2020, Hurricane Laura caused severe damage to the Entergy distribution and transmission systems across Louisiana and Texas. The storm resulted in widespread power outages and, as a result of the storm’s extensive damage to the grid infrastructure serving the impacted area, large portions of the underlying transmission system required nearly a complete rebuild. Total restoration costs for the repair and/or replacement of the electrical system damaged by Hurricane Laura are currently estimated to be in the range of $ 1.5 billion to $ 1.7 billion, including $ 1.25 billion to $ 1.4 billion at Entergy Louisiana and $ 230 million to $ 260 million at Entergy Texas. Entergy also expects Utility revenues in 2020 to be adversely affected, primarily due to power outages resulting from the hurricane. Entergy is considering all available avenues to recover storm-related costs from Hurricane Laura, including accessing funded storm reserve escrows and securitization. Storm cost recovery or financing will be subject to review by applicable regulatory authorities.

Entergy has recorded accounts payable for the estimated costs incurred that were necessary to return customers to service. Entergy recorded co rresponding regulatory assets of approximately $ 205 million, including $ 155 million at Entergy Louisiana and $ 40 million at Entergy Texas, and construction work in progress of approximately $ 1.295 billion, including $ 1.095 billion at Entergy Louisiana and $ 190 million at Entergy Texas. Entergy recorded the regulatory assets in accordance with its accounting policies and based on the historic treatment o f such costs in its service area because management believes that recovery through some form of regulatory mechanism is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Because Entergy has not gone through the regulatory process regarding these storm costs, there is

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an element of risk, and Entergy is unable to predict with certainty the degree of success it may have in its recovery initiatives, the amount of restoration costs that it may ultimately recover, or the timing of such recovery.

Regulatory activity regarding the Tax Cuts and Jobs Act

System Energy

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 Act. In the filing System Energy proposed to return identified quantities of unprotected excess accumulated deferred income taxes to its customers by the end of 2018. In May 2018 the FERC accepted System Energy’s proposed tax revisions with an effective date of June 1, 2018, subject to refund and the outcome of settlement and hearing procedures.  Settlement discussions were terminated in April 2019, and the hearing was held in March 2020. The retail regulators of the Utility operating companies that are parties to the Unit Power Sales Agreement challenged the treatment and amount of excess accumulated deferred income tax liabilities associated with uncertain tax positions related to nuclear decommissioning. 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. The initial decision determined that System Energy should have included the $ 147 million in its March 2018 filing. System Energy had not included credits related to the effect of the Tax Act on the uncertain decommissioning tax position because it was uncertain whether the IRS would allow the deduction. The initial decision rejected both System Energy’s alternative argument that any crediting should occur over a ten-year period and the retail regulators’ argument that any crediting should occur over a two-year period. Instead, the initial decision concluded that System Energy should credit the additional unprotected excess accumulated deferred income taxes in a single lump sum revenue requirement reduction following a FERC order addressing the initial decision.

The ALJ initial decision is an interim step in the FERC litigation process. In September 2020, System Energy filed a brief on exceptions with the FERC, re-urging its positions and requesting the reversal of the ALJ’s initial decision. Briefs opposing exceptions are scheduled for December 2020. The FERC will then review the case and issue an order in the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Credits, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

As discussed below in “Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue,” in September 2020 the IRS issued a Notice of Proposed Adjustment (NOPA) and Entergy executed it. In September 2020, System Energy filed a motion to lodge the NOPA into the record in the FERC proceeding. In October 2020 the LPSC, APSC, MPSC, City Council, and FERC trial staff filed oppositions to System Energy’s motion. As a result of the NOPA, System Energy filed, in October 2020, a new Federal Power Act section 205 filing at the FERC to credit the excess accumulated deferred income taxes resulting from the decommissioning uncertain tax position. System Energy proposes to credit the entire amount of the excess accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position by issuing a one-time credit of $ 17.8 million on the October 2020 bill. Comments, protests, and interventions in this filing are due in November 2020.

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Fuel and purchased power cost recovery

Entergy Arkansas

Energy Cost Recovery Rider

In March 2020, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease from $ 0.01462 per kWh to $ 0.01052 per kWh. The redetermined rate became effective with the first billing cycle in April 2020 through the normal operation of the tariff.

Entergy Louisiana

In March 2020 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2016 through 2019. Discovery commenced in September 2020.

Entergy Mississippi

In November 2019, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation included $ 39.6 million of prior over-recovery flowing back to customers beginning February 2020. Entergy Mississippi’s balance in its deferred fuel account did not decrease as expected after implementation of the new factor. In an effort to assist customers during the COVID-19 pandemic, in May 2020, Entergy Mississippi requested an interim adjustment to the energy cost recovery rider to credit approximately $ 50 million from the over-recovered balance in the deferred fuel account to customers over four consecutive billing months. The MPSC approved this interim adjustment in May 2020 effective for June through September 2020 bills.

Entergy Texas

In September 2019, Entergy Texas filed an application to reconcile its fuel and purchased power costs for the period from April 2016 through March 2019. During the reconciliation period, Entergy Texas incurred approximately $ 1.6 billion in Texas jurisdictional eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. Entergy Texas estimated an under-recovery balance of approximately $ 25.8 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2019. In March 2020 an intervenor filed testimony proposing that the PUCT disallow: (1) $ 2 million in replacement power costs associated with generation outages during the reconciliation period; and (2) $ 24.4 million associated with the operation of the Spindletop natural gas storage facility during the reconciliation period.  In April 2020, Entergy Texas filed rebuttal testimony refuting all points raised by the intervenor.  In June 2020 the parties filed a stipulation and settlement agreement, which included a $ 1.2 million disallowance not associated with any particular issue raised by any party. The PUCT approved the settlement in August 2020.

In July 2020, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $ 25.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented beginning with the first August 2020 billing cycle over a three-month period for smaller customers and in a lump sum amount in the billing month of August 2020 for transmission-level customers. The interim fuel refund was approved in July 2020, and Entergy Texas began refunds in August 2020.

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Retail Rate Proceedings

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

Filings with the APSC (Entergy Arkansas)

Retail Rates

2020 Formula Rate Plan Filing

In July 2020, Entergy Arkansas filed with the APSC its 2020 formula rate plan filing to set its formula rate for the 2021 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2021, as amended through subsequent filings in the proceeding, and a netting adjustment for the historical year 2019. Entergy Arkansas’s earned rate of return on common equity is 8.22 % for the 2021 projected year and 9.07 % for the 2019 historical year. The total revenue change is based upon a deficiency of approximately $ 64.3 million for the 2021 projected year and approximately $ 23.9 million for the 2019 historical year netting adjustment. The total proposed formula rate plan rider revenue change for 2021 is $ 88.2 million to produce a target rate of return of 9.75 % for the projected year and the historical year. 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 exceeds the constraint, the resulting increase is limited to $ 72.6 million. In October 2020 other parties in the proceeding filed their errors and objections recommending certain adjustments that would reduce the initially-proposed $ 74.3 million revenue requirement increase, and Entergy Arkansas filed responsive testimony disputing these adjustments. In October 2020, Entergy Arkansas filed with the APSC a unanimous settlement agreement reached with the other parties that resolved all but one issue. As a result of the settlement agreement, Entergy Arkansas’s requested revenue increase is $ 68.4 million, which is below the $ 72.6 million cap constraint. The remaining issue to be litigated concerns the methodology used to account for historical year revenues in the netting adjustment. Two parties have proposed a new methodology that, if adopted, effectively would reduce Entergy Arkansas’s request to $ 0.9 million for the 2021 projected year. This remaining issue will go to hearing in November 2020 and a final decision by the APSC is expected in December 2020. Also with the formula rate plan filing, Entergy Arkansas is requesting an extension of the formula rate plan rider for a second five-year term. A decision by the APSC on the extension is requested before February 2021.

COVID-19 Orders

In April 2020, in light of the COVID-19 pandemic, the APSC issued an order requiring utilities, to the extent they had not already done so, to suspend service disconnections during the remaining pendency of the Arkansas Governor’s emergency declaration or until the APSC rescinds the directive. The order also authorizes utilities to establish a regulatory asset to record costs resulting from the suspension of service disconnections, directs that in future proceedings the APSC will consider whether the request for recovery of these regulatory assets is reasonable and necessary, and requires utilities to track and report the costs and any savings directly attributable to suspension of disconnects. In May 2020 the APSC approved Entergy Arkansas expanding deferred payment agreements to assist customers during the pandemic. Quarterly reporting began in August 2020 and the APSC ordered additional reporting in October 2020 regarding utilities’ transitional plans for ending the moratorium on service disconnects. As of September 30, 2020, Entergy Arkansas recorded a regulatory asset of $ 6.1 million for costs associated with the COVID-19 pandemic.

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Filings with the LPSC (Entergy Louisiana)

Retail Rates - Electric

2017 Formula Rate Plan Filing

As discussed in the Form 10-K, in May 2019, Entergy Louisiana filed an update to its 2017 formula rate plan evaluation report to include the estimated first-year revenue requirement of $ 109.5 million associated with the J. Wayne Leonard Power Station (formerly St. Charles Power Station). The resulting interim adjustment to rates became effective with the first billing cycle of June 2019. In June 2020, Entergy Louisiana submitted information to the LPSC to review the prudence of Entergy Louisiana’s management of the project. In August 2020 discovery commenced and a procedural schedule was established with a hearing in July 2021.

2018 Formula Rate Plan Filing

Commercial operation at Lake Charles Power Station commenced in March 2020. In March 2020, Entergy Louisiana filed an update to its 2018 formula rate plan evaluation report to include the estimated first-year revenue requirement of $ 108 million associated with the Lake Charles Power Station. The resulting interim adjustment to rates became effective with the first billing cycle of April 2020.

2019 Formula Rate Plan Filing

In May 2020, Entergy Louisiana filed with the LPSC its formula rate plan evaluation report for its 2019 calendar year operations. The 2019 test year evaluation report produced an earned return on common equity of 9.66 %. As such, no change to base rider formula rate plan revenue is required. Although base rider formula rate plan revenue will not change as a result of this filing, overall formula rate plan revenues will increase by approximately $ 103 million. This outcome is driven by the removal of prior year credits associated with the sale of the Willow Glen Power Station and an increase in the transmission recovery mechanism. Also contributing to the overall change is an increase in legacy formula rate plan revenue requirements driven by legacy Entergy Louisiana capacity cost true-ups and higher annualized legacy Entergy Gulf States Louisiana revenues due to higher billing determinants, offset by reductions in MISO cost recovery mechanism and tax reform adjustment mechanism revenue requirements. In August 2020 the LPSC staff submitted a list of items for which it needs additional information to confirm the accuracy and compliance of the 2019 test year evaluation report. The LPSC staff objected to a proposed revenue neutral adjustment regarding a certain rider as being beyond the scope of permitted formula rate plan adjustments. Rates reflected in the May 2020 filing, with the exception of the revenue neutral rider adjustment, and as updated in an August 2020 filing, were implemented in September 2020, subject to refund. Entergy Louisiana is in the process of providing additional information and details on the May 2020 filing as requested by the LPSC staff.

Request for Extension and Modification of Formula Rate Plan

In May 2020, Entergy Louisiana filed with the LPSC its application for authority to extend its formula rate plan. In its application, Entergy Louisiana seeks to maintain a 9.8 % return on equity, with a bandwidth of 60 basis points above and below the midpoint, with a first-year midpoint reset. Entergy Louisiana also seeks to maintain its existing additional capacity mechanism, tax reform adjustment mechanism, transmission recovery mechanism, and the MISO cost recovery mechanism. Entergy Louisiana also seeks to add a distribution cost recovery mechanism which operates in substantially the same manner as the transmission recovery mechanism, seeks to utilize end of period rate base to calculate cost of service, and requests a deferral of certain expenses incurred for outside of right-of-way vegetation programs.

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Retail Rates - Gas

2017 Rate Stabilization Plan Filing

As discussed in the Form 10-K, in January 2018 Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2017. As-filed rates from the supplemental filing were implemented, subject to refund, with customers receiving a cost reduction of approximately $ 0.7 million effective with bills rendered on and after the first billing cycle of May 2018, as well as a $ 0.2 million reduction in the gas infrastructure rider effective with bills rendered on and after the first billing cycle of July 2018. In October 2019 the LPSC staff issued its report finding that Entergy Louisiana’s filing complied with the terms of the rate stabilization plan but recommending an additional refund of $ 0.7 million related to the Tax Act. In June 2020, the LPSC approved a joint report acknowledging Entergy Louisiana’s prior refunds and offsets for flood recovery costs, and required a further refund of $ 0.8 million, inclusive of carrying costs.

2018 Rate Stabilization Plan Filing

As discussed in the Form 10-K, in January 2019 Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2018. The filing of the evaluation report for the test year 2018 reflected an earned return on common equity of 2.69 %. This earned return is below the earning sharing band of the gas rate stabilization plan and results in a rate increase of $ 2.8 million. Rates were implemented during the first billing cycle of May 2019, subject to refund and final LPSC review. In August 2020 the LPSC staff filed its report concurring with Entergy Louisiana’s calculation that the gas rate stabilization plan required a rate increase of $ 2.8 million. The LPSC accepted the staff’s report at its September 2020 meeting.

COVID-19 Orders

In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In addition, utilities may seek future recovery, subject to LPSC review and approval, of losses and expenses incurred due to compliance with the LPSC’s COVID-19 orders. While the suspension of late fees and disconnects for non-pay was only extended until the first billing cycle after July 16, 2020, Entergy Louisiana has not yet resumed disconnections and continues to defer the associated costs. Utilities seeking to recover the regulatory asset must formally petition the LPSC to do so, identifying the direct and indirect costs for which recovery is sought. Any such request is subject to LPSC review and approval. As of September 30, 2020, Entergy Louisiana recorded a regulatory asset of $ 27.4 million for costs associated with the COVID-19 pandemic.

Filings with the MPSC (Entergy Mississippi)

Formula Rate Plan Filings

See the Form 10-K for revisions to Entergy Mississippi’s formula rate plan approved by the MPSC in December 2019. In January 2020 Entergy Mississippi began billing an interim capacity rate adjustment rider to recover the $ 59 million first-year annual revenue requirement associated with the non-fuel ownership costs of the Choctaw Generating Station. Also, effective with the April 2020 billing cycle, Entergy Mississippi implemented a rider to recover $ 22 million in vegetation management costs. Vegetation management costs were previously recovered through the formula rate plan.

In March 2020, Entergy Mississippi submitted its formula rate plan 2020 test year filing and 2019 look-back filing showing Entergy Mississippi’s earned return for the historical 2019 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2020 calendar year to be below the formula rate plan bandwidth. The 2020 test year filing shows a $ 24.6 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51 % return on rate base,

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within the formula rate plan bandwidth. The 2019 look-back filing compares actual 2019 results to the approved benchmark return on rate base and reflects the need for a $ 7.3 million interim increase in formula rate plan revenues. In accordance with the MPSC-approved revisions to the formula rate plan, Entergy Mississippi implemented a $ 24.3 million interim rate increase, reflecting a cap equal to 2 % of 2019 retail revenues, effective with the April 2020 billing cycle, subject to refund. In June 2020, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the 2020 test year filing showed that a $ 23.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51 % return on rate base, within the formula rate plan bandwidth. Pursuant to the joint stipulation, Entergy Mississippi’s 2019 look-back filing reflected an earned return on rate base of 6.75 % in calendar year 2019, which is within the look-back bandwidth. As a result, there is no change in formula rate plan revenues in the 2019 look-back filing. In June 2020 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July 2020.

COVID-19 Orders

In March 2020 the MPSC issued an order suspending disconnections for a period of sixty days. The MPSC extended the order on disconnections through May 26, 2020. In April 2020 the MPSC issued an order authorizing utilities to defer incremental costs and expenses associated with COVID-19 compliance and to seek future recovery through rates of the prudently incurred incremental costs and expenses. While the MPSC order on suspension of disconnections has expired, Entergy Mississippi has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy Mississippi recorded a regulatory asset of $ 10.4 million for costs associated with the COVID-19 pandemic.

Filings with the City Council (Entergy New Orleans)

Energy Efficiency

As discussed in the Form 10-K, in December 2019, Entergy New Orleans filed an application with the City Council seeking approval of an implementation plan for the Energy Smart energy efficiency program from April 2020 through December 2022. Entergy New Orleans proposed to recover the costs of the program through mechanisms previously approved by the City Council or through the energy efficiency cost recovery rider, which was approved in the 2018 combined rate case resolution. In February 2020 the City Council approved Entergy New Orleans’s application.

2018 Base Rate Case Filing

See the Form 10-K for discussion of the electric and gas base rate case filed in September 2018. In response to the City Council’s November 2019 resolution in the rate case, Entergy New Orleans made a compliance filing in December 2019 and also filed timely a petition for appeal and judicial review and for stay of or injunctive relief alleging that the resolution is unlawful in failing to produce just and reasonable rates. A hearing on the requested injunction was scheduled in Civil District Court for February 2020, but by joint motion of the City Council and Entergy New Orleans, the Civil District Court issued an order for a limited remand to the City Council to consider a potential agreement in principle/stipulation at its February 20, 2020 meeting. On February 17, 2020, Entergy New Orleans filed with the City Council an agreement in principle between Entergy New Orleans and the City Council’s advisors. On February 20, 2020, the City Council voted to approve the proposed agreement in principle and issued a resolution modifying the required treatment of certain accumulated deferred income taxes. As a result of the agreement in principle, the total annual revenue requirement reduction will be approximately $ 45 million ($ 42 million electric, including $ 29 million in rider reductions; and $ 3 million gas). Entergy New Orleans fully implemented the new rates in April 2020. In accordance with the provisions of the agreement in principle approved by the City Council related to the 2020 formula rate plan filing, Entergy New Orleans anticipates moving forward with dismissal of its judicial review petition in the Civil District Court.

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2020 Formula Rate Plan Filing

Entergy New Orleans’s first annual filing under the three-year formula rate plan approved by the City Council in November 2019 was originally due to be filed in April 2020. The authorized return on equity under the approved three-year formula rate plan is 9.35 % for both electric and gas operations. The City Council approved several extensions of the deadline to allow additional time to assess the effects of the COVID-19 pandemic on the New Orleans community, Entergy New Orleans customers, and Entergy New Orleans itself. In October 2020 the City Council approved an agreement in principle filed by Entergy New Orleans that results in Entergy New Orleans foregoing its 2020 formula rate plan filing and shifting the three-year formula rate plan to filings in 2021, 2022, and 2023. Key provisions of the agreement in principle include: changing the lower of actual equity ratio or 50 % equity ratio approved in the rate case to a hypothetical capital structure of 51 % equity and 49 % debt for the duration of the three-year formula rate plan; changing the 2 % depreciation rate for the New Orleans Power Station approved in the rate case to 3 %; retention of over-recovery of $ 2.2 million in rider revenues; recovery of $ 1.4 million of certain rate case expenses outside of the earnings band; recovery of the New Orleans Solar Station costs upon commercial operation; and Entergy New Orleans’s dismissal of its 2018 rate case appeal.

COVID-19 Orders

In March 2020, Entergy New Orleans voluntarily suspended customer disconnections for non-payment of utility bills through May 2020. Subsequently, the City Council ordered that the moratorium be extended to August 1, 2020. In May 2020 the City Council issued an accounting order authorizing Entergy New Orleans to establish a regulatory asset for incremental COVID-19-related expenses. While the City Council moratorium on customer disconnections has expired, Entergy New Orleans has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy New Orleans recorded a regulatory asset of $ 8.4 million for costs associated with the COVID-19 pandemic.

In June 2020 the City Council established the City Council Cares Program and directed Entergy New Orleans to use the approximately $ 7 million refund received from the Entergy Arkansas opportunity sales FERC proceeding, currently being held in escrow, and approximately $ 15 million of non-securitized storm reserves to fund this program, which is intended to provide temporary bill relief to customers who become unemployed during the COVID-19 pandemic. The program became effective July 1, 2020, and offers qualifying residential customers bill credits of $ 100 per month for up to four months, for a maximum of $ 400 in residential customer bill credits. As of September 30, 2020, credits of $ 1.9 million have been applied to customer bills under the City Council Cares Program.

Filings with the PUCT (Entergy Texas)

Distribution Cost Recovery Factor (DCRF) Rider

In March 2020, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $ 23.6 million annually, or $ 20.4 million in incremental annual DCRF revenue beyond Entergy Texas’s currently effective DCRF rider, based on its capital invested in distribution between January 1, 2019 and December 31, 2019. In May and June 2020 intervenors filed testimony recommending reductions in Entergy Texas’s annual revenue requirement of approximately $ 0.3 million and $ 4.1 million. The parties briefed the contested issues in this matter and a proposal for decision was issued in September 2020 recommending a $ 4.1 million revenue reduction related to non-Advanced Metering System meters included in the DCRF calculation. The parties filed exceptions to the proposal for decision and replies to those exceptions in September 2020. In October 2020 the PUCT issued a final order approving a $ 16.3 million incremental annual DCRF revenue increase.

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In October 2020, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $ 26.3 million annually, or $ 6.8 million in incremental annual revenues beyond Entergy Texas’s currently effective DCRF rider based on its capital invested in distribution between January 1, 2020 and August 31, 2020.

Transmission Cost Recovery Factor (TCRF) Rider

As discussed in the Form 10-K, in August 2019, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The new TCRF rider is designed to collect approximately $ 19.4 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and June 30, 2019. In January 2020 the PUCT issued an order approving an unopposed settlement providing for recovery of the requested revenue requirement. Entergy Texas implemented the amended rider beginning with bills covering usage on and after January 23, 2020.

In October 2020, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $ 51 million annually, or $ 31.6 million in incremental annual revenues beyond Entergy Texas’s currently effective TCRF rider based on its capital invested in transmission between July 1, 2019 and August 31, 2020.

COVID-19 Orders

In March 2020 the PUCT authorized electric utilities to record as a regulatory asset expenses resulting from the effects of COVID-19. In future proceedings the PUCT will consider whether each utility's request for recovery of these regulatory assets is reasonable and necessary, the appropriate period of recovery, and any amount of carrying costs thereon. In March 2020 the PUCT ordered a moratorium on disconnections for nonpayment for all customer classes, but, in April 2020, revised the disconnect moratorium to apply only to residential customers. The PUCT allowed the moratorium to expire on June 13, 2020, but on July 17, 2020, the PUCT re-established the disconnect moratorium for residential customers until August 31, 2020. While the PUCT moratorium on disconnections has expired, Entergy Texas has not yet resumed disconnections and continues to defer the associated costs. As of September 30, 2020, Entergy Texas recorded a regulatory asset of $ 8.7 million for costs associated with the COVID-19 pandemic.

Generation Rider

In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its capital investment in the Montgomery County Power Station. In October 2020 the administrative law judge set a procedural schedule that will result in an administrative approval of Entergy Texas’s application in December 2020 if it is unopposed by parties to the proceeding.

System Agreement Cost Equalization Proceedings

Rough Production Cost Equalization Rates

Consolidated 2011, 2012, 2013, and 2014 Rate Filing Proceedings

As discussed in the Form 10-K, in April 2018 the LPSC requested rehearing of the FERC’s March 2018 order affirming the ALJ’s initial decision in the consolidated proceedings. Entergy filed in May 2018 the bandwidth true-up payments and receipts for the 2011-2014 rate filings and the payments were made in May 2018. In April 2020 the FERC issued an order partially granting the LPSC’s rehearing request.  In the order the FERC reversed its prior finding and determined that the tax gain portion of the Waterford 3 financing accumulated deferred income tax should be included in the bandwidth calculation.  The order requires Entergy Services to redetermine bandwidth true-up payments and receipts for the 2010-2012 test years.

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In May 2020, Entergy and the LPSC both separately requested rehearing of the FERC’s April 2020 order partially granting the LPSC’s rehearing request. In June 2020 the FERC issued an order accepting the May 2018 true-up filing for the 2011-2014 rate filings. Also in June 2020, Entergy filed bandwidth true-up payments and receipts for the 2010-2012 test years to address the FERC’s April 2020 rehearing order:

			Payments (Receipts)
			(In Millions)
Entergy Arkansas			($ 2.8 )
Entergy Louisiana			$ 2.3
Entergy Mississippi			$ 0.2
Entergy New Orleans			($ 0.1 )
Entergy Texas			$ 0.4

In July 2020, Entergy filed a correction to the June 2020 filing to address an error in the 2012 test year calculation. This resulted in additional payments of $ 1.5 million from Entergy Arkansas to Entergy Louisiana. In August 2020 both Entergy and the LPSC filed petitions for review, at the D.C. Circuit, of FERC’s orders in the consolidated 2011, 2012, 2013, and 2014 rate filings.

Entergy Arkansas Opportunity Sales Proceeding

As discussed in the Form 10-K, the FERC’s opportunity sales orders have been appealed to the D.C. Circuit by Entergy, the LPSC, and the APSC. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing was completed in September 2020 and oral argument is scheduled for December 2020.

In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In March 2019, Entergy Services filed an answer and motion to dismiss the new complaint. In November 2019 the FERC issued an order denying the LPSC’s complaint. The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint. In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing. In September 2020 the LPSC appealed the FERC’s orders dismissing the new opportunity sales complaint to the D.C. Circuit.

Also as discussed in the Form 10-K, in May 2019, Entergy Arkansas filed an application with the APSC requesting approval of a special rider tariff to recover the costs of its opportunity sales payments from its retail customers over a 24-month period. In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.

In July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. The order also directs Entergy Arkansas to refund to its retail customers within 30 days of the order the FERC-determined over-collection of $ 13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the retail impacts from the opportunity sales and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail ratepayers the component of the total FERC-determined

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opportunity sales payment that was associated with increased bandwidth remedy payments of $ 13.7 million, plus interest. The refunds were issued in the August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs, including the $ 13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed a complaint in the U. S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint. Entergy Arkansas expects to file a response opposing the APSC’s motion.

Complaints Against System Energy

Return on Equity and Capital Structure Complaints

As discussed in the Form 10-K, in November 2019, in a proceeding that did not involve System Energy, the FERC issued an order addressing the methodology for determining the return on equity applicable to transmission owners in MISO. Thereafter, the procedural schedule in the System Energy proceeding was amended to allow the participants to file supplemental testimony addressing the order in the MISO transmission owner proceeding (Opinion No. 569).

In February 2020 the LPSC, the MPSC and APSC, and the FERC trial staff filed supplemental testimony addressing Opinion No. 569 and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy. For the first refund period, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of 8.44 %; the MPSC and APSC argue for an authorized return on equity of 8.41 %; and the FERC trial staff argues for an authorized return on equity of 9.22 %. For the second refund period and on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of 7.89 %; the MPSC and APSC argue that an authorized return on equity of 8.01 % may be appropriate; and the FERC trial staff argues for an authorized return on equity of 8.66 %.

In April 2020, System Energy filed supplemental answering testimony addressing Opinion No. 569. System Energy argues that the Opinion No. 569 methodology is conceptually and analytically defective for purposes of establishing just and reasonable authorized return on equity determinations and proposes an alternative approach. As its primary recommendation, System Energy continues to support the return on equity determinations in its March 2019 testimony for the first refund period and its June 2019 testimony for the second refund period. Under the Opinion No. 569 methodology, System Energy calculates a “presumptively just and reasonable range” for the authorized return on equity for the first refund period of 8.57 % to 9.52 %, and for the second refund period of 8.28 % to 9.11 %. System Energy argues that these ranges are not just and reasonable results. Under its proposed alternative methodology, System Energy calculates an authorized return on equity of 10.26 % for the first refund period, which also falls within the presumptively just and reasonable range calculated for the second refund period and prospectively.

In May 2020 the FERC issued an order on rehearing of Opinion No. 569 (Opinion No. 569-A). In June 2020 the procedural schedule in the System Energy proceeding was further revised in order to allow parties to address the Opinion No. 569-A methodology. Pursuant to the revised schedule, in June 2020, the LPSC, the MPSC and APSC, and the FERC trial staff filed supplemental testimony addressing Opinion No. 569-A and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy. For the first refund period, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argues for an authorized return on equity for System Energy of 7.97 %; the MPSC and APSC argue for an authorized return on equity of 9.24 %; and the FERC trial staff argues for an authorized return on equity of 9.49 %. For the second refund period and on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569-A methodology, the LPSC argues for an authorized return on equity for System Energy of 7.78 %; the MPSC and APSC argue that an authorized return on equity of 9.15 % may be appropriate if the second complaint

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is not dismissed; and the FERC trial staff argues for an authorized return on equity of 9.09 % if the second complaint is not dismissed.

Pursuant to the revised procedural schedule, in July 2020, System Energy filed supplemental testimony addressing Opinion No. 569-A. System Energy argues that strict application of the Opinion No. 569-A methodology produces results inconsistent with investor requirements and does not provide a sound basis on which to evaluate System Energy’s authorized return on equity. As its primary recommendation, System Energy argues for the use of a methodology that incorporates four separate financial models, including the constant growth form of the discounted cash flow model and the empirical capital asset pricing model. Based on application of its recommended methodology, System Energy argues for an authorized return on equity of 10.12 % for the first refund period, which also falls within the presumptively just and reasonable range calculated for the second refund period and prospectively. Under the Opinion No. 569-A methodology, System Energy calculates an authorized return on equity of 9.44 % for the first refund period, which also falls within the presumptively just and reasonable range calculated for the second refund period and prospectively.

The parties and FERC trial staff filed final rounds of testimony in August 2020. The hearing occurred in late-September through early-October 2020, and the initial decision is due in February 2021.

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

As discussed in the Form 10-K, in May 2018 the LPSC filed a complaint against System Energy and Entergy Services related to System Energy’s renewal of a sale-leaseback transaction originally entered into in December 1988 for an 11.5 % undivided interest in Grand Gulf Unit 1. In February 2019 the presiding ALJ ruled that the hearing ordered by the FERC includes the issue of whether specific subcategories of accumulated deferred income tax should be included in, or excluded from, System Energy’s formula rate. In March 2019 the LPSC, MPSC, APSC, and City Council filed direct testimony. The LPSC testimony sought refunds that include the renewal lease payments (approximately $ 17.2 million per year since July 2015), rate base reductions for accumulated deferred income taxes associated with uncertain tax positions, and the cost of capital additions associated with the sale-leaseback interest, as well as interest on those amounts.

In June 2019 System Energy filed answering testimony arguing that the FERC should reject all claims for refunds.  Among other things, System Energy argued that claims for refunds of the costs of lease renewal payments and capital additions should be rejected because those costs were recovered consistent with the Unit Power Sales Agreement formula rate, System Energy was not over or double recovering any costs, and customers will save costs over the initial and renewal terms of the leases.  System Energy argued that claims for refunds associated with liabilities arising from uncertain tax positions should be rejected because the liabilities do not provide cost-free capital, the repayment timing of the liabilities is uncertain, and the outcome of the underlying tax positions is uncertain.  System Energy’s testimony also challenged the refund calculations supplied by the other parties.

In August 2019 the FERC trial staff filed direct and answering testimony seeking refunds for rate base reductions for the liabilities associated with uncertain tax positions. The FERC trial staff also argued that System Energy recovered $ 32 million more than it should have in depreciation expense for capital additions. In September 2019, System Energy filed cross-answering testimony disputing the FERC trial staff’s arguments for refunds, stating that the FERC trial staff’s position regarding depreciation rates for capital additions is not unreasonable, but explaining that any change in depreciation expense is only one element of a Unit Power Sales Agreement re-billing calculation. Adjustments to depreciation expense in any re-billing under the Unit Power Sales Agreement formula rate will also involve changes to accumulated depreciation, accumulated deferred income taxes, and other formula elements as needed. In October 2019 the LPSC filed rebuttal testimony increasing the amount of refunds sought for the liabilities associated with uncertain tax positions.  The LPSC seeks approximately $ 512 million, plus interest, which is appro ximately $ 185 million through September 30, 2020. The FERC trial staff also filed rebuttal testimony in which it seeks refunds of a similar amount as the LPSC for the liabilities associated with uncertain tax

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positions.  The LPSC testimony also argued that adjustments to depreciation rates should affect rate base on a prospective basis only.

A hearing was held before a FERC ALJ in November 2019. In April 2020 the ALJ issued the initial decision. Among other things, the ALJ determined that refunds were due on three main issues. First, with regard to the lease renewal payments, the ALJ determined that System Energy is recovering an unjust acquisition premium through the lease renewal payments, and that System Energy’s recovery from customers through rates should be limited to the cost of service based on the remaining net book value of the leased assets, which is approximately $ 70 million. The ALJ found that the remedy for this issue should be the refund of lease payments (approximately $ 17.2 million per year since July 2015) with interest determined at the FERC quarterly interest rate, which would be offset by the addition of the net book value of the leased assets in the cost of service. The ALJ did not calculate a value for the refund expected as a result of this remedy. In addition, System Energy would no longer recover the lease payments in rates prospectively. Second, with regard to the liabilities associated with uncertain tax positions, the ALJ determined that the liabilities are accumulated deferred income taxes and System Energy’s rate base should have been reduced for those liabilities. If the ALJ’s initial decision is upheld, the estimated refund for this issue through September 30, 2020, is approximately $ 422 million, plus interest, which is approximately $ 106 million through September 30, 2020. The ALJ also found that System Energy should include liabilities associated with uncertain tax positions as a rate base reduction going forward. Third, with regard to the depreciation expense adjustments, the ALJ found that System Energy should correct for the error in re-billings retroactively and prospectively, but that System Energy should not be permitted to recover interest on any retroactive return on enhanced rate base resulting from such corrections. If the initial decision is affirmed on this issue, System Energy estimates refunds of approximately $ 19 million, which includes interest through September 30, 2020.

The ALJ initial decision is an interim step in the FERC litigation process, and an ALJ’s determinations made in an initial decision are not controlling on the FERC. The ALJ in the initial decision acknowledges that these are issues of first impression before the FERC. In June 2020, System Energy, the LPSC, and the FERC trial staff filed briefs on exceptions, challenging several of the initial decision’s findings. System Energy’s brief on exceptions challenged the initial decision’s limitations on recovery of the lease renewal payments, its proposed rate base refund for the liabilities associated with uncertain tax positions, and its proposal to asymmetrically treat interest on bill corrections for depreciation expense adjustments. The LPSC’s and the FERC trial staff’s briefs on exceptions each challenged the initial decision’s allowance for recovery of the cost of service associated with the lease renewal based on the remaining net book value of the leased assets, its calculation of the remaining net book value of the leased assets, and the amount of the initial decision’s proposed rate base refund for the liabilities associated with uncertain tax positions. The LPSC’s brief on exceptions also challenged the initial decision’s proposal that depreciation expense adjustments include retroactive adjustments to rate base and its finding that section 203 of the Federal Power Act did not apply to the lease renewal. The FERC trial staff’s brief on exceptions also challenged the initial decision’s finding that the FERC need not institute a formal investigation into System Energy’s tariff. In October 2020, System Energy, the LPSC, the MPSC, the APSC, and the City Council filed briefs opposing exceptions. System Energy opposed the exceptions filed by the LPSC and the FERC trial staff. The LPSC, MPSC, APSC, City Council, and the FERC trial staff opposed the exceptions filed by System Energy. Also in October 2020 the MPSC, APSC, and the City Council filed briefs adopting the exceptions of the LPSC and the FERC trial staff. The case is pending before the FERC, which will review the case and issue an order on the proceeding, and the FERC may accept, reject, or modify the ALJ’s initial decision in whole or in part. Refunds, if any, that might be required will only become due after the FERC issues its order reviewing the initial decision.

In addition, in September 2020, the IRS issued a Notice of Proposed Adjustment (NOPA) and Entergy executed it. The NOPA memorializes the IRS’s decision to adjust the 2015 consolidated federal income tax return of Entergy Corporation and certain of its subsidiaries, including System Energy, with regard to the uncertain decommissioning tax position. Pursuant to the audit resolution documented in the NOPA, the IRS allowed System Energy’s inclusion of $ 102 million of future nuclear decommissioning costs in System Energy’s cost of goods sold for the 2015 tax year, roughly 10 % of the requested deduction, but disallowed the balance of the position. In

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September 2020, System Energy filed a motion to lodge the NOPA into the record in the FERC proceeding. In October 2020, the LPSC, the APSC, the MPSC, the City Council, and the FERC trial staff filed oppositions to System Energy’s motion. As a result of the NOPA issued by the IRS in September 2020, System Energy filed, in October 2020, a new Federal Power Act section 205 filing at FERC to establish an ongoing rate base credit for the accumulated deferred income taxes resulting from the decommissioning uncertain tax position. On a prospective basis beginning with the October 2020 bill, System Energy proposes to include the accumulated deferred income taxes arising from the successful portion of the decommissioning uncertain tax position as a credit to rate base under the Unit Power Sales Agreement. Comments, protests, and interventions in this filing are due in November 2020.

LPSC Authorization of Additional Complaints and September 2020 LPSC Complaint

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 LPSC directive notes that the initial decision issued by the presiding ALJ in the Grand Gulf sale-leaseback complaint proceeding did not address, for procedural reasons, certain rate issues raised by the LPSC and declined to order further investigation of rates charged by System Energy. The LPSC directive authorizes its staff to file complaints at FERC “necessary to address these rate issues, to request a full investigation into the rates charged by System Energy for Grand Gulf power, and to seek rate refund, rate reduction, and such other remedies as may be necessary and appropriate to protect Louisiana ratepayers.” The LPSC directive further stated that the LPSC has seen “information suggesting that the Grand Gulf plant has been significantly underperforming compared to other nuclear plants in the United States, has had several extended and unexplained outages, and has been plagued with serious safety concerns.” The LPSC expressed concern that the costs paid by Entergy Louisiana's retail customers may have been detrimentally impacted, and authorized “the filing of a FERC complaint to address these performance issues and to seek appropriate refund, rate reduction, and other remedies as may be appropriate.”

The first of the additional complaints was filed at the FERC by the LPSC, the APSC, the MPSC, and the City Council in September 2020. The new 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. Several of the filed rate allegations overlap with the previous complaints. The filed rate allegations not previously raised are that System Energy: failed to provide a rate base credit to customers for the “time value” of sale-leaseback lease payments collected from customers in advance of the time those payments were due to the owner-lessors; improperly included certain lease refinancing costs in rate base as prepayments; improperly included nuclear decommissioning outage costs in rate base; failed to include categories of accumulated deferred income taxes as a reduction to rate base; charged customers based on a higher equity ratio than would be appropriate due to excessive retained earnings; and did not correctly reflect money pool investments and imprudently invested cash into the money pool. The elements of the Unit Power Sales Agreement that the complaint alleges are unjust and unreasonable include: incentive and executive compensation, lack of an equity re-opener, lobbying, and private airplane travel. The new complaint also requests a rate investigation into the Unit Power Sales Agreement and System Energy’s billing practices pursuant to Section 206 of the Federal Power Act, including any issue relevant to the Unit Power Sales Agreement and its inputs. System Energy will file its answer opposing the new complaint in November 2020.

The operational prudence-related complaint has not been filed as of this date, and the LPSC directive did not set a date for the filing.

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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,
			2020																		2019
			(In Millions, Except Per Share Data)
			Income						Shares						$/share						Income						Shares						$/share
Basic earnings per share
Net income attributable to Entergy Corporation			$ 521.1						200.2						$ 2.60						$ 365.2						198.9						$ 1.84
Average dilutive effect of:
Stock options									0.4						—												0.7						( 0.01 )
Other equity plans									0.5						( 0.01 )												0.9						( 0.01 )
Diluted earnings per share			$ 521.1						201.1						$ 2.59						$ 365.2						200.5						$ 1.82

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 0.5 million for the three months ended September 30, 2020.

			For the Nine Months Ended September 30,
			2020																		2019
			(In Millions, Except Per Share Data)
			Income						Shares						$/share						Income						Shares						$/share
Basic earnings per share
Net income attributable to Entergy Corporation			$ 1,000.4						200.1						$ 5.00						$ 856.2						193.9						$ 4.42
Average dilutive effect of:
Stock options									0.4						( 0.01 )												0.5						( 0.01 )
Other equity plans									0.5						( 0.01 )												0.7						( 0.02 )
Equity forwards									—						—												0.6						( 0.01 )
Diluted earnings per share			$ 1,000.4						201.0						$ 4.98						$ 856.2						195.7						$ 4.38

The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was approximately 0.5 million for the nine months ended September 30, 2020 and approximately 0.2 million for the nine months ended September 30, 2019.

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

Dividends declared per common share were $ 0.93 for the three months ended September 30, 2020 and $ 0.91 for the three months ended September 30, 2019. Dividends declared per common share were $ 2.79 for the nine months ended September 30, 2020 and $ 2.73 for the nine months ended September 30, 2019.

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Treasury Stock

During the nine months ended September 30, 2020, Entergy Corporation issued 1,082,834 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, 2020.

Retained Earnings

On October 30, 2020, Entergy Corporation’s Board of Directors declared a common stock dividend of $ 0.95 per share, payable on December 1, 2020, to holders of record as of November 12, 2020.

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, 2020 by component:

			Cash flow hedges net unrealized gain (loss)						Pension and other postretirement liabilities						Net unrealized investment gain (loss)						Total Accumulated Other Comprehensive Income (Loss)
			(In Thousands)
Beginning balance, July 1, 2020			$ 37,090						($ 485,949 )						$ 60,255						($ 388,604 )
Other comprehensive income (loss) before reclassifications			( 4,964 )						—						181						( 4,783 )
Amounts reclassified from accumulated other comprehensive income (loss)			( 11,594 )						17,437						( 2,876 )						2,967
Net other comprehensive income (loss) for the period			( 16,558 )						17,437						( 2,695 )						( 1,816 )
Ending balance, September 30, 2020			$ 20,532						($ 468,512 )						$ 57,560						($ 390,420 )

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The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the three months ended September 30, 2019 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, 2019			$ 51,736						($ 508,876 )						$ 26,736												($ 430,404 )
Other comprehensive income (loss) before reclassifications			( 5,190 )						—						8,350												3,160
Amounts reclassified from accumulated other comprehensive income (loss)			( 14,913 )						25,464						( 3,079 )												7,472
Net other comprehensive income (loss) for the period			( 20,103 )						25,464						5,271												10,632
Ending balance, September 30, 2019			$ 31,633						($ 483,412 )						$ 32,007												($ 419,772 )

The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2020 by component:

			Cash flow hedges net unrealized gain (loss)						Pension and other postretirement liabilities						Net unrealized investment gain (loss)						Total Accumulated Other Comprehensive Income (Loss)
			(In Thousands)
Beginning balance, January 1, 2020			$ 84,206						($ 557,072 )						$ 25,946						($ 446,920 )
Other comprehensive income (loss) before reclassifications			42,256						34,349						40,439						117,044
Amounts reclassified from accumulated other comprehensive income (loss)			( 105,930 )						54,211						( 8,825 )						( 60,544 )
Net other comprehensive income (loss) for the period			( 63,674 )						88,560						31,614						56,500
Ending balance, September 30, 2020			$ 20,532						($ 468,512 )						$ 57,560						($ 390,420 )

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The following table presents changes in accumulated other comprehensive income (loss) for Entergy for the nine months ended September 30, 2019 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)
Ending balance, December 31, 2018			($ 23,135 )						($ 531,922 )						($ 2,116 )												($ 557,173 )
Implementation of accounting standards			( 7,685 )						—						879												( 6,806 )
Beginning balance, January 1, 2019			($ 30,820 )						($ 531,922 )						($ 1,237 )												($ 563,979 )
Other comprehensive income (loss) before reclassifications			122,481						—						37,724												160,205
Amounts reclassified from accumulated other comprehensive income (loss)			( 60,028 )						48,510						( 4,480 )												( 15,998 )
Net other comprehensive income (loss) for the period			62,453						48,510						33,244												144,207
Ending balance, September 30, 2019			$ 31,633						($ 483,412 )						$ 32,007												($ 419,772 )

The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the three months ended September 30, 2020 and 2019:

						Pension and Other Postretirement Liabilities
						2020						2019
						(In Thousands)
Beginning balance, July 1,						$ 13,084						($ 8,091 )
Amounts reclassified from accumulated other comprehensive income (loss)						( 800 )						( 969 )
Net other comprehensive income (loss) for the period						( 800 )						( 969 )
Ending balance, September 30,						$ 12,284						($ 9,060 )

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The following table presents changes in accumulated other comprehensive income (loss) for Entergy Louisiana for the nine months ended September 30, 2020 and 2019:

						Pension and Other Postretirement Liabilities
						2020						2019
						(In Thousands)
Beginning balance, January 1,						$ 4,562						($ 6,153 )
Other comprehensive income (loss) before reclassifications						10,050						—
Amounts reclassified from accumulated other comprehensive income (loss)						( 2,328 )						( 2,907 )
Net other comprehensive income (loss) for the period						7,722						( 2,907 )
Ending balance, September 30,						$ 12,284						($ 9,060 )

Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) into income for Entergy for the three months ended September 30, 2020 and 2019 were as follows:

			Amounts reclassified from AOCI												Income Statement Location
			2020						2019
			(In Thousands)
Cash flow hedges net unrealized gain (loss)
Power contracts			$ 14,724						$ 18,925						Competitive business operating revenues
Interest rate swaps			( 48 )						( 48 )						Miscellaneous - net
Total realized gain (loss) on cash flow hedges			14,676						18,877
Income taxes			( 3,082 )						( 3,964 )						Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)			$ 11,594						$ 14,913
Pension and other postretirement liabilities
Amortization of prior-service credit			$ 5,682						$ 5,325						(a)
Amortization of loss			( 27,620 )						( 20,919 )						(a)
Settlement loss			( 196 )						( 16,630 )						(a)
Total amortization			( 22,134 )						( 32,224 )
Income taxes			4,697						6,760						Income taxes
Total amortization (net of tax)			($ 17,437 )						($ 25,464 )
Net unrealized investment gain (loss)
Realized gain (loss)			$ 4,550						$ 4,872						Interest and investment income
Income taxes			( 1,674 )						( 1,793 )						Income taxes
Total realized investment gain (loss) (net of tax)			$ 2,876						$ 3,079
Total reclassifications for the period (net of tax)			($ 2,967 )						($ 7,472 )

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(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 for the nine months ended September 30, 2020 and 2019 were as follows:

			Amounts reclassified from AOCI												Income Statement Location
			2020						2019
			(In Thousands)
Cash flow hedges net unrealized gain (loss)
Power contracts			$ 134,233						$ 76,129						Competitive business operating revenues
Interest rate swaps			( 145 )						( 145 )						Miscellaneous - net
Total realized gain (loss) on cash flow hedges			134,088						75,984
Income taxes			( 28,158 )						( 15,956 )						Income taxes
Total realized gain (loss) on cash flow hedges (net of tax)			$ 105,930						$ 60,028
Pension and other postretirement liabilities
Amortization of prior-service credit			$ 15,083						$ 15,977						(a)
Amortization of loss			( 82,561 )						( 58,888 )						(a)
Settlement loss			( 196 )						( 18,685 )						(a)
Total amortization			( 67,674 )						( 61,596 )
Income taxes			13,463						13,086						Income taxes
Total amortization (net of tax)			($ 54,211 )						($ 48,510 )
Net unrealized investment gain (loss)
Realized gain (loss)			$ 13,963						$ 7,088						Interest and investment income
Income taxes			( 5,138 )						( 2,608 )						Income taxes
Total realized investment gain (loss) (net of tax)			$ 8,825						$ 4,480
Total reclassifications for the period (net of tax)			$ 60,544						$ 15,998

(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, 2020 and 2019 were as follows:

						Amounts reclassified from AOCI												Income Statement Location
						2020						2019
						(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit						$ 1,695						$ 1,837						(a)
Amortization of loss						( 417 )						( 526 )						(a)
Settlement loss						( 196 )						—						(a)
Total amortization						1,082						1,311
Income taxes						( 282 )						( 342 )						Income taxes
Total amortization (net of tax)						800						969
Total reclassifications for the period (net of tax)						$ 800						$ 969

(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, 2020 and 2019 were as follows:

						Amounts reclassified from AOCI												Income Statement Location
						2020						2019
						(In Thousands)
Pension and other postretirement liabilities
Amortization of prior-service credit						$ 4,479						$ 5,511						(a)
Amortization of loss						( 1,137 )						( 1,578 )						(a)
Settlement loss						( 196 )						—						(a)
Total amortization						3,146						3,933
Income taxes						( 818 )						( 1,026 )						Income taxes
Total amortization (net of tax)						2,328						2,907
Total reclassifications for the period (net of tax)						$ 2,328						$ 2,907

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

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

Entergy Corporation has in place a credit facility that has a borrowing capacity of $ 3.5 billion and expires in September 2024.  The facility includes fronting commitments for the issuance of letters of credit against $ 20 million

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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, 2020 was 2.50 % on the drawn portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of September 30, 2020.

Capacity						Borrowings						Letters of Credit						Capacity Available
(In Millions)
$ 3,500						$ 150						$ 6						$ 3,344

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

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $ 2 billion.  As of September 30, 2020, Entergy Corporation had approximately $ 1,398 million of commercial paper outstanding.  The weighted-average interest rate for the nine months ended September 30, 2020 was 1.66 %.

Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each had credit facilities available as of September 30, 2020 as follows:

Company						Expiration Date						Amount of Facility						Interest Rate (a)						Amount Drawn as of September 30, 2020						Letters of Credit Outstanding as of September 30, 2020
Entergy Arkansas						April 2021						$ 25 million (b)						1.27 %						$ —						$ —
Entergy Arkansas						September 2024						$ 150 million (c)						1.27 %						$ —						$ —
Entergy Louisiana						September 2024						$ 350 million (c)						1.27 %						$ —						$ —
Entergy Mississippi						April 2021						$ 37.5 million (d)						1.65 %						$ —						$ —
Entergy Mississippi						April 2021						$ 35 million (d)						1.65 %						$ —						$ —
Entergy Mississippi						April 2021						$ 10 million (d)						1.65 %						$ —						$ —
Entergy New Orleans						November 2021						$ 25 million (c)						1.42 %						$ —						$ 0.8 million
Entergy Texas						September 2024						$ 150 million (c)						1.65 %						$ —						$ 1.3 million

(a) The interest rate is the estimated interest rate as of September 30, 2020 that would have been applied to outstanding borrowings under the facility.

(b) Borrowings under the Entergy Arkansas credit facility may be secured by a security interest in its accounts receivable at Entergy Arkansas’s option.

(c) The credit facility includes fronting commitments for the issuance of letters of credit against a portion of the borrowing capacity of the facility as follows: $ 5 million for Entergy Arkansas; $ 15 million for Entergy Louisiana; $ 10 million for Entergy New Orleans; and $ 30 million for Entergy Texas.

(d) Borrowings under the Entergy Mississippi credit facilities may be secured by a security interest in its accounts receivable at Entergy Mississippi’s option.

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

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In addition, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas each entered into one or more uncommitted standby letter of credit facilities primarily as a means to post collateral to support its obligations to MISO. Following is a summary of the uncommitted standby letter of credit facilities as of September 30, 2020:

Company

Amount of Uncommitted Facility

Letter of Credit Fee

MISO Letters of Credit Issued as of September 30, 2020 (a) (b)

Entergy Arkansas

$ 25 million

0.78 %

$ 3 million

Entergy Louisiana

$ 125 million

0.78 %

$ 21.2 million

Entergy Mississippi

$ 65 million

0.78 %

$ 1 million

Entergy New Orleans

$ 15 million

1.00 %

$ 1 million

Entergy Texas

$ 50 million

0.70 %

$ 27.2 million

(a) As of September 30, 2020, letters of credit posted with MISO covered financial transmission rights exposure of $ 1.9 million for Entergy Arkansas, $ 2.2 million for Entergy Louisiana, $ 0.7 million for Entergy Mississippi, and $ 0.2 million for Entergy New Orleans. See Note 8 to the financial statements herein for discussion of financial transmission rights.

(b) As of September 30, 2020, in addition to the $ 1 million MISO letter of credit, Entergy Mississippi has $ 1 million of non-MISO letters of credit outstanding under this facility.

The short-term borrowings of the Registrant Subsidiaries are limited to amounts authorized by the FERC.  The current FERC-authorized limits for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are effective through July 14, 2022. In addition to borrowings from commercial banks, these companies may also borrow from the Entergy System money pool and from other internal short-term borrowing arrangements.  The money pool and the other internal borrowing arrangements are inter-company borrowing arrangements designed to reduce the Utility subsidiaries’ dependence on external short-term borrowings.  Borrowings from internal and external short-term borrowings combined may not exceed the FERC-authorized limits. The following were the FERC-authorized limits for short-term borrowings and the outstanding short-term borrowings as of September 30, 2020 (aggregating both internal and external short-term borrowings) for the Registrant Subsidiaries:

			Authorized						Borrowings
			(In Millions)
Entergy Arkansas			$ 250						$ —
Entergy Louisiana			$ 450						$ —
Entergy Mississippi			$ 175						$ —
Entergy New Orleans			$ 150						$ 5
Entergy Texas			$ 200						$ 54
System Energy			$ 200						$ —

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

See Note 17 to the financial statements in the Form 10-K for a discussion of the consolidation of the nuclear fuel company variable interest entities (VIEs). To finance the acquisition and ownership of nuclear fuel, the nuclear fuel company VIEs have credit facilities and three of the four VIEs have commercial paper programs in place. Following is a summary as of September 30, 2020:

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Company						Expiration Date						Amount of Facility						Weighted Average Interest Rate on Borrowings (a)						Amount Outstanding as of September 30, 2020
												(Dollars in Millions)
Entergy Arkansas VIE						September 2022						$ 80						1.97 %						$ 9.1
Entergy Louisiana River Bend VIE						September 2022						$ 105						2.07 %						$ 30.9
Entergy Louisiana Waterford VIE						September 2022						$ 105						1.94 %						$ 51.4
System Energy VIE						September 2022						$ 120						1.63 %						$ 75.7

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

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

The nuclear fuel company variable interest entities had notes payable that were included in debt on the respective balance sheets as of September 30, 2020 as follows:

Company

Description

Amount

Entergy Arkansas VIE

3.65 % Series L due July 2021

$ 90 million

Entergy Arkansas VIE

3.17 % Series M due December 2023

$ 40 million

Entergy Louisiana River Bend VIE

2.51 % Series V due June 2027

$ 70 million

Entergy Louisiana Waterford VIE

3.92 % Series H due February 2021

$ 40 million

Entergy Louisiana Waterford VIE

3.22 % Series I due December 2023

$ 20 million

System Energy VIE

3.42 % Series J due April 2021

$ 100 million

In October 2020, System Energy VIE issued $ 90 million of 2.05 % Series K secured notes due September 2027. System Energy VIE expects to use the proceeds to redeem $ 100 million of 3.42 % Series J secured notes due April 2021.

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

Debt Issuances and Retirements

(Entergy Corporation)

In May 2020, Entergy Corporation issued $ 600 million of 2.80 % Series senior notes due June 2030 and $ 600 million of 3.75 % Series senior notes due June 2050. Entergy Corporation used the proceeds, together with other funds, to repay, prior to maturity, its $ 450 million of 5.125 % Series senior notes due September 2020, a portion of its outstanding commercial paper, a portion of outstanding borrowings on its $ 3.5 billion credit facility, and for general corporate purposes.

In August 2020, Entergy Corporation issued $ 800 million of 0.90 % Series senior notes due September 2025. Entergy Corporation used the proceeds, together with other funds, to repay a portion of its outstanding

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commercial paper, to repay a portion of outstanding borrowings on its $ 3.5 billion credit facility, and for general corporate purposes.

(Entergy Arkansas)

In March 2020, Entergy Arkansas issued $ 100 million of 4.00 % Series mortgage bonds due June 2028. Entergy Arkansas used the proceeds for general corporate purposes.

In September 2020, Entergy Arkansas issued $ 675 million of 2.65 % Series mortgage bonds due June 2051. Entergy Arkansas used a portion of the proceeds to repay, prior to maturity, $ 200 million of 4.90 % Series mortgage bonds due December 2052 and $ 125 million of 4.75 % Series mortgage bonds due June 2063, and expects to use a portion of the remaining proceeds to repay, at maturity, some or all of its $ 350 million of 3.75 % Series mortgage bonds due February 2021 and for general corporate purposes.

(Entergy Louisiana)

In March 2020, Entergy Louisiana issued $ 350 million of 2.90 % Series mortgage bonds due March 2051. Entergy Louisiana used the proceeds, together with other funds, to repay borrowings of $ 100 million on its $ 350 million credit facility and for general corporate purposes.

In March 2020, Entergy Louisiana issued $ 300 million of 4.20 % Series mortgage bonds due September 2048. Entergy Louisiana used the proceeds, together with other funds, to repay, prior to maturity, its $ 250 million of 3.95 % Series mortgage bonds due October 2020 and for general corporate purposes.

(Entergy Mississippi)

In May 2020, Entergy Mississippi issued $ 170 million of 3.50 % Series mortgage bonds due June 2051. Entergy Mississippi used the proceeds for general corporate purposes.

(Entergy New Orleans)

In March 2020, Entergy New Orleans issued $ 62 million of 3.75 % Series mortgage bonds due March 2040 and $ 78 million of 3.00 % Series mortgage bonds due March 2025. Entergy New Orleans used the proceeds to repay short-term debt, to finance a portion of the construction of the New Orleans Power Station, and for general corporate purposes.

(Entergy Texas)

In March 2020, Entergy Texas issued $ 175 million of 3.55 % Series mortgage bonds due September 2049. Entergy Texas used the proceeds, together with other funds, to finance a portion of the construction of the Montgomery County Power Station, to repay borrowings of $ 100 million on its $ 150 million credit facility, and for general corporate purposes.

In October 2020, Entergy Texas issued $ 600 million of 1.75 % Series mortgage bonds due March 2031. Entergy Texas used a portion of the proceeds to repay, prior to maturity, its $ 135 million of 5.625 % Series mortgage bonds due June 2064, and expects to use a portion of the remaining proceeds to repay, at or prior to maturity, some or all of its $ 125 million of 2.55 % Series mortgage bonds due June 2021, and for general corporate purposes.

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Fair Value

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of September 30, 2020 were as follows:

			Book Value of Long-Term Debt						Fair Value of Long-Term Debt (a)
			(In Thousands)
Entergy			$ 20,662,679						$ 22,925,661
Entergy Arkansas			$ 4,280,229						$ 4,648,483
Entergy Louisiana			$ 7,651,976						$ 8,756,480
Entergy Mississippi			$ 1,780,310						$ 1,997,431
Entergy New Orleans			$ 674,832						$ 663,388
Entergy Texas			$ 2,047,749						$ 2,318,713
System Energy			$ 592,611						$ 615,602

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

The book value and the fair value of long-term debt for Entergy Corporation and the Registrant Subsidiaries as of December 31, 2019 were as follows:

			Book Value of Long-Term Debt						Fair Value of Long-Term Debt (a)
			(In Thousands)
Entergy			$ 17,873,655						$ 19,059,950
Entergy Arkansas			$ 3,517,208						$ 3,747,914
Entergy Louisiana			$ 7,303,669						$ 7,961,168
Entergy Mississippi			$ 1,614,129						$ 1,709,505
Entergy New Orleans			$ 560,906						$ 523,846
Entergy Texas			$ 1,922,956						$ 2,090,215
System Energy			$ 548,107						$ 565,209

(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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Stock Options

Entergy granted options on 530,716 shares of its common stock under the 2019 Omnibus Incentive Plan during the first quarter 2020 with a fair value of $ 11.45 per option.  As of September 30, 2020, there were options on 2,424,013 shares of common stock outstanding with a weighted-average exercise price of $ 89.66 .  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, 2020.  The aggregate intrinsic value of the stock options outstanding as of September 30, 2020 was $ 38.7 million.

The following table includes financial information for outstanding stock options for the three months ended September 30, 2020 and 2019:

			2020						2019
			(In Millions)
Compensation expense included in Entergy’s net income			$ 1.0						$ 0.9
Tax benefit recognized in Entergy’s net income			$ 0.3						$ 0.2
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 0.4						$ 0.4

The following table includes financial information for outstanding stock options for the nine months ended September 30, 2020 and 2019:

			2020						2019
			(In Millions)
Compensation expense included in Entergy’s net income			$ 3.0						$ 2.9
Tax benefit recognized in Entergy’s net income			$ 0.8						$ 0.7
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 1.2						$ 1.0

Other Equity Awards

In January 2020 the Board approved and Entergy granted 313,805 restricted stock awards and 134,853 long-term incentive awards under the 2019 Omnibus Incentive Plan.  The restricted stock awards were made effective as of January 30, 2020 and were valued at $ 131.72 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. For the 2020-2022 performance period, performance will be measured based eighty percent on relative total shareholder return and twenty percent on a cumulative adjusted earnings per share metric.  The performance units were granted as of January 30, 2020 and eighty percent were valued at $ 169.74 per share based on various factors, primarily market conditions; and twenty percent were valued at $ 131.72 per share, the closing price of Entergy’s common stock on that date.  Performance units have the same dividend rights as shares of Entergy common stock and are considered issued and outstanding shares of Entergy upon vesting. Performance units are expensed ratably over the three-year vesting period and compensation cost for the portion of the award based on cumulative adjusted earnings per share will be adjusted based on the number of units that ultimately vest. See Note 12 to the financial statements in the Form 10-K for a description of the Long-Term Performance Unit Program.

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The following table includes financial information for other outstanding equity awards for the three months ended September 30, 2020 and 2019:

			2020						2019
			(In Millions)
Compensation expense included in Entergy’s net income			$ 8.9						$ 8.4
Tax benefit recognized in Entergy’s net income			$ 2.2						$ 2.1
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 3.6						$ 3.0

The following table includes financial information for other outstanding equity awards for the nine months ended September 30, 2020 and 2019:

			2020						2019
			(In Millions)
Compensation expense included in Entergy’s net income			$ 27.9						$ 25.6
Tax benefit recognized in Entergy’s net income			$ 7.1						$ 6.5
Compensation cost capitalized as part of fixed assets and materials and supplies			$ 10.8						$ 8.8

Components of Qualified Net Pension Cost

Entergy’s qualified pension cost, including amounts capitalized, for the third quarters of 2020 and 2019, included the following components:

			2020						2019
			(In Thousands)
Service cost - benefits earned during the period			$ 40,366						$ 33,553
Interest cost on projected benefit obligation			59,930						73,261
Expected return on assets			( 103,534 )						( 103,751 )
Amortization of net loss			87,516						60,395
Settlement charges			32,429						16,291
Net pension costs			$ 116,707						$ 79,749

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Entergy’s qualified pension cost, including amounts capitalized, for the nine months ended September 30, 2020 and 2019, included the following components:

			2020						2019
			(In Thousands)
Service cost - benefits earned during the period			$ 121,124						$ 100,766
Interest cost on projected benefit obligation			181,528						221,114
Expected return on assets			( 310,664 )						( 311,494 )
Amortization of net loss			262,034						177,233
Settlement charges			32,429						17,591
Net pension costs			$ 286,451						$ 205,210

The Registrant Subsidiaries’ qualified pension cost, including amounts capitalized, for their employees for the third quarters of 2020 and 2019, included the following components:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 6,580						$ 8,788						$ 2,015						$ 663						$ 1,529						$ 1,970
Interest cost on projected benefit obligation						11,054						12,614						3,234						1,457						2,686						2,753
Expected return on assets						( 19,531 )						( 22,415 )						( 5,783 )						( 2,627 )						( 5,483 )						( 4,687 )
Amortization of net loss						17,092						16,663						4,747						2,005						3,295						4,277
Settlement charges						19,708						6,527						2,299						—						3,895						—
Net pension cost						$ 34,903						$ 22,177						$ 6,512						$ 1,498						$ 5,922						$ 4,313

2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 5,260						$ 7,284						$ 1,629						$ 568						$ 1,350						$ 1,549
Interest cost on projected benefit obligation						14,175						15,882						4,068						1,873						3,613						3,364
Expected return on assets						( 20,177 )						( 22,651 )						( 5,969 )						( 2,696 )						( 5,862 )						( 4,678 )
Amortization of net loss						11,840						11,643						3,104						1,529						2,334						2,850
Net pension cost						$ 11,098						$ 12,158						$ 2,832						$ 1,274						$ 1,435						$ 3,085

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The Registrant Subsidiaries’ qualified pension cost, including amounts capitalized, for their employees for the nine months ended September 30, 2020 and 2019, included the following components:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 19,712						$ 26,376						$ 6,061						$ 1,989						$ 4,621						$ 5,900
Interest cost on projected benefit obligation						33,920						38,296						9,914						4,369						8,250						8,381
Expected return on assets						( 58,775 )						( 67,219 )						( 17,297 )						( 7,881 )						( 16,455 )						( 14,013 )
Amortization of net loss						50,886						49,917						14,243						6,015						9,825						12,835
Settlement charges						19,708						6,527						2,299						—						3,895						—
Net pension cost						$ 65,451						$ 53,897						$ 15,220						$ 4,492						$ 10,136						$ 13,103

2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 15,782						$ 21,852						$ 4,887						$ 1,706						$ 4,050						$ 4,649
Interest cost on projected benefit obligation						42,525						47,646						12,204						5,621						10,837						10,091
Expected return on assets						( 60,529 )						( 67,955 )						( 17,905 )						( 8,089 )						( 17,586 )						( 14,032 )
Amortization of net loss						35,522						34,929						9,313						4,588						7,002						8,550
Net pension cost						$ 33,300						$ 36,472						$ 8,499						$ 3,826						$ 4,303						$ 9,258

Non-Qualified Net Pension Cost

Entergy recognized $ 4.5 million and $ 4.6 million in pension cost for its non-qualified pension plans in the third quarters of 2020 and 2019, respectively. Reflected in the pension cost for non-qualified pension plans in the third quarter of 2019 were settlement charges of $ 955 thousand related to the payment of lump sum benefits out of the plan. Entergy recognized $ 13.6 million and $ 16.3 million in pension cost for its non-qualified pension plans for the nine months ended September 30, 2020 and 2019, respectively. Reflected in the pension cost for non-qualified pension plans for the nine months ended September 30, 2019 were settlement charges of $ 4.6 million related to the payment of lump sum benefits out of the plan.

The Registrant Subsidiaries recognized the following pension cost for their employees for their non-qualified pension plans for the third quarters of 2020 and 2019:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Thousands)
2020			$ 83						$ 37						$ 90						$ 7						$ 118
2019			$ 67						$ 38						$ 69						$ 5						$ 119

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The Registrant Subsidiaries recognized the following pension cost for their employees for their non-qualified pension plans for the nine months ended September 30, 2020 and 2019:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Thousands)
2020			$ 249						$ 111						$ 270						$ 21						$ 354
2019			$ 211						$ 122						$ 257						$ 16						$ 365

Reflected in Entergy Mississippi’s non-qualified pension costs for the nine months ended September 30, 2019 were settlement charges of $ 40 thousand related to the payment of lump sum benefits out of the plan.

Components of Net Other Postretirement Benefit Cost (Income)

Entergy’s other postretirement benefit cost (income), including amounts capitalized, for the third quarters of 2020 and 2019, included the following components:

			2020						2019
			(In Thousands)
Service cost - benefits earned during the period			$ 6,231						$ 4,675
Interest cost on accumulated postretirement benefit obligation (APBO)			6,888						11,975
Expected return on assets			( 10,182 )						( 9,562 )
Amortization of prior service credit			( 8,985 )						( 8,844 )
Amortization of net loss			1,005						358
Net other postretirement benefit income			($ 5,043 )						($ 1,398 )

Entergy’s other postretirement benefit cost (income), including amounts capitalized, for the nine months ended September 30, 2020 and 2019, included the following components:

			2020						2019
			(In Thousands)
Service cost - benefits earned during the period			$ 18,263						$ 14,025
Interest cost on accumulated postretirement benefit obligation (APBO)			21,708						35,925
Expected return on assets			( 30,692 )						( 28,686 )
Amortization of prior service credit			( 23,892 )						( 26,532 )
Amortization of net loss			2,478						1,074
Net other postretirement benefit cost income			($ 12,135 )						($ 4,194 )

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The Registrant Subsidiaries’ other postretirement benefit cost (income), including amounts capitalized, for their employees for the third quarters of 2020 and 2019, included the following components:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 933						$ 1,524						$ 372						$ 114						$ 306						$ 321
Interest cost on APBO						1,164						1,497						372						186						477						276
Expected return on assets						( 4,260 )						—						( 1,287 )						( 1,344 )						( 2,403 )						( 735 )
Amortization of prior service credit						( 396 )						( 1,695 )						( 444 )						( 228 )						( 939 )						( 282 )
Amortization of net (gain) loss						162						( 81 )						48						9						231						33
Net other postretirement benefit cost (income)						($ 2,397 )						$ 1,245						($ 939 )						($ 1,263 )						($ 2,328 )						($ 387 )

2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 591						$ 1,160						$ 262						$ 92						$ 236						$ 243
Interest cost on APBO						1,807						2,666						670						395						854						476
Expected return on assets						( 3,991 )						—						( 1,199 )						( 1,237 )						( 2,276 )						( 697 )
Amortization of prior service credit						( 1,238 )						( 1,837 )						( 439 )						( 171 )						( 561 )						( 363 )
Amortization of net (gain) loss						144						( 174 )						181						58						121						89
Net other postretirement benefit cost (income)						($ 2,687 )						$ 1,815						($ 525 )						($ 863 )						($ 1,626 )						($ 252 )

The Registrant Subsidiaries’ other postretirement benefit cost (income), including amounts capitalized, for their employees for the nine months ended September 30, 2020 and 2019, included the following components:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 2,694						$ 4,471						$ 1,095						$ 333						$ 915						$ 936
Interest cost on APBO						3,545						4,717						1,166						599						1,536						859
Expected return on assets						( 12,846 )						—						( 3,881 )						( 4,043 )						( 7,241 )						( 2,218 )
Amortization of prior service credit						( 1,453 )						( 4,479 )						( 1,209 )						( 532 )						( 2,428 )						( 783 )
Amortization of net (gain) loss						379						( 361 )						125						( 20 )						674						86
Net other postretirement benefit cost (income)						($ 7,681 )						$ 4,348						($ 2,704 )						($ 3,663 )						($ 6,544 )						($ 1,120 )

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2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
						(In Thousands)
Service cost - benefits earned during the period						$ 1,773						$ 3,480						$ 786						$ 276						$ 708						$ 729
Interest cost on APBO						5,421						7,998						2,010						1,185						2,562						1,428
Expected return on assets						( 11,973 )						—						( 3,597 )						( 3,711 )						( 6,828 )						( 2,091 )
Amortization of prior service credit						( 3,714 )						( 5,511 )						( 1,317 )						( 513 )						( 1,683 )						( 1,089 )
Amortization of net (gain) loss						432						( 522 )						543						174						363						267
Net other postretirement benefit cost (income)						($ 8,061 )						$ 5,445						($ 1,575 )						($ 2,589 )						($ 4,878 )						($ 756 )

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 2020 and 2019:

2020						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 5,739						($ 57 )						$ 5,682
Amortization of net loss						( 26,462 )						( 327 )						( 831 )						( 27,620 )
Settlement loss						( 196 )						—						—						( 196 )
						($ 26,658 )						$ 5,412						($ 888 )						($ 22,134 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 1,695						$ —						$ 1,695
Amortization of net gain (loss)						( 497 )						81						( 1 )						( 417 )
Settlement loss						( 196 )						—						—						($ 196 )
						($ 693 )						$ 1,776						($ 1 )						$ 1,082

2019						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 5,375						($ 50 )						$ 5,325
Amortization of net gain (loss)						( 20,686 )						308						( 541 )						( 20,919 )
Settlement loss						( 16,257 )						—						( 373 )						( 16,630 )
						($ 36,943 )						$ 5,683						($ 964 )						($ 32,224 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 1,837						$ —						$ 1,837
Amortization of net gain (loss)						( 699 )						174						( 1 )						( 526 )
						($ 699 )						$ 2,011						($ 1 )						$ 1,311

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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, 2020 and 2019:

2020						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 15,255						($ 172 )						$ 15,083
Amortization of net loss						( 79,387 )						( 680 )						( 2,494 )						( 82,561 )
Settlement loss						( 196 )						—						—						( 196 )
						($ 79,583 )						$ 14,575						($ 2,666 )						($ 67,674 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 4,479						$ —						$ 4,479
Amortization of net gain (loss)						( 1,495 )						361						( 3 )						( 1,137 )
Settlement loss						( 196 )						—						—						( 196 )
						($ 1,691 )						$ 4,840						($ 3 )						$ 3,146

2019						Qualified Pension Costs						Other Postretirement Costs						Non-Qualified Pension Costs						Total
						(In Thousands)
Entergy
Amortization of prior service (cost) credit						$ —						$ 16,125						($ 148 )						$ 15,977
Amortization of net gain (loss)						( 58,156 )						923						( 1,655 )						( 58,888 )
Settlement loss						( 17,557 )						—						( 1,128 )						( 18,685 )
						($ 75,713 )						$ 17,048						($ 2,931 )						($ 61,596 )
Entergy Louisiana
Amortization of prior service credit						$ —						$ 5,511						$ —						$ 5,511
Amortization of net gain (loss)						( 2,096 )						522						( 4 )						( 1,578 )
						($ 2,096 )						$ 6,033						($ 4 )						$ 3,933

Accounting for Pension and Other Postretirement Benefits

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

Other Postretirement Benefits

In March 2020, Entergy announced changes to its other postretirement benefits. Effective January 1, 2021, certain retired, former non-bargaining employees age 65 and older who are eligible for Entergy-sponsored retiree welfare benefits, and their eligible spouses who are age 65 and older (collectively, Medicare-eligible participants), will be eligible to participate in a new Entergy-sponsored retiree health plan, and will no longer be eligible for retiree coverage under the Entergy Corporation Companies’ Benefits Plus Medical, Dental and Vision Plans. Under the new Entergy retiree health plan, Medicare-eligible participants will be eligible to participate in a health

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reimbursement arrangement which they may use towards the purchase of various types of qualified insurance offered through a Medicare exchange provider and for other qualified medical expenses. In accordance with accounting standards, the effects of this change have been reflected in the March 31, 2020 other postretirement obligation. The changes affecting active bargaining unit employees will be negotiated with the unions prior to implementation, where necessary, and to the extent required by law.

Qualified Pension Settlement Cost

In the third quarter of 2020, year-to-date lump sum benefit payments from the Entergy Corporation Retirement Plan for Bargaining Employees exceeded the sum of the Plan’s 2020 service and interest cost, resulting in a settlement cost of $ 32.4 million. 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, and Entergy Texas participate in the Entergy Corporation Retirement Plan for Bargaining Employees and incurred settlement costs of $ 19.7 million, $ 6.5 million, $ 2.3 million, and $ 3.9 million, respectively. 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, and Entergy Mississippi 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, for the difference between the amount recorded for pension and other postretirement benefits expense under generally accepted accounting principles during 2019, the first year that rates from Entergy Texas’s last general rate proceeding were in effect, and the annual amount of actuarially determined pension and other postretirement benefits chargeable to Entergy Texas’s expense. The reserve amount will be evaluated in the next scheduled PUCT rate case and a reasonable amortization period will be determined by the PUCT at that time.

Employer Contributions

Based on current assumptions, Entergy expects to contribute $ 416.3 million to its qualified pension plans in 2020.  As of September 30, 2020, Entergy had contributed $ 189.5 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 2020:

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas						System Energy
			(In Thousands)
Expected 2020 pension contributions			$ 73,905						$ 74,572						$ 15,664						$ 6,301						$ 6,901						$ 20,406
Pension contributions made through September 2020			$ 43,032						$ 30,988						$ 8,691						$ 2,353						$ 2,517						$ 10,635
Remaining estimated pension contributions to be made in 2020			$ 30,873						$ 43,584						$ 6,973						$ 3,948						$ 4,384						$ 9,771

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Entergy Corporation

Entergy’s reportable segments as of September 30, 2020 were Utility and Entergy Wholesale Commodities.  Utility includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, and natural gas utility service in portions of Louisiana.  Entergy Wholesale Commodities includes the ownership, operation, and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers.  Entergy Wholesale Commodities also includes the ownership of interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.  “All Other” includes the parent company, Entergy Corporation, and other business activity.

Entergy’s segment financial information for the third quarters of 2020 and 2019 was as follows:

						Utility						Entergy Wholesale Commodities						All Other						Eliminations						Entergy
						(In Thousands)
2020
Operating revenues						$ 2,689,186						$ 214,371						$ 25						($ 14 )						$ 2,903,568
Income taxes						$ 143,622						$ 12,321						($ 6,499 )						$ —						$ 149,444
Consolidated net income (loss)						$ 555,583						$ 30,773						($ 28,758 )						($ 31,899 )						$ 525,699
2019
Operating revenues						$ 2,840,222						$ 300,363						$ 9						($ 19 )						$ 3,140,575
Income taxes						$ 71,698						($ 30,855 )						($ 11,642 )						$ —						$ 29,201
Consolidated net income (loss)						$ 581,964						($ 140,501 )						($ 40,105 )						($ 31,899 )						$ 369,459

Entergy’s segment financial information for the nine months ended September 30, 2020 and 2019 was as follows:

						Utility						Entergy Wholesale Commodities						All Other						Eliminations						Entergy
						(In Thousands)
2020
Operating revenues						$ 6,996,876						$ 746,629						$ 54						($ 25 )						$ 7,743,534
Income taxes						$ 164,383						$ 6,249						($ 3,266 )						$ —						$ 167,366
Consolidated net income (loss)						$ 1,228,333						$ 5,523						($ 124,056 )						($ 95,695 )						$ 1,014,105
Total assets as of September 30, 2020						$ 53,825,473						$ 3,743,167						$ 519,264						($ 2,017,653 )						$ 56,070,251
2019
Operating revenues						$ 7,392,641						$ 1,023,757						$ 11						($ 42 )						$ 8,416,367
Income taxes						$ 81,283						$ 25,763						($ 33,616 )						$ —						$ 73,430
Consolidated net income (loss)						$ 1,150,863						($ 68,804 )						($ 117,725 )						($ 95,695 )						$ 868,639
Total assets as of December 31, 2019						$ 49,557,664						$ 4,154,961						$ 514,020						($ 2,502,733 )						$ 51,723,912

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

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As discussed in Note 13 to the financial statements in the Form 10-K, Entergy management has undertaken a strategy to manage and reduce the risk of the Entergy Wholesale Commodities business, which includes taking actions to shut down and sell all of the remaining plants in the merchant nuclear fleet. These decisions and transactions resulted in asset impairments; employee retention and severance expenses and other benefits-related costs; and contracted economic development contributions.

Total restructuring charges for the third quarters of 2020 and 2019 were comprised of the following:

			2020																		2019
			Employee retention and severance expenses and other benefits-related costs						Contracted economic development costs						Total						Employee retention and severance expenses and other benefits-related costs						Contracted economic development costs						Total
			(In Millions)
Balance as of July 1,			$ 153						$ 14						$ 167						$ 181						$ 14						$ 195
Restructuring costs accrued			19						—						19						14						—						14
Cash paid out			1						—						1						86						—						86
Balance as of September 30,			$ 171						$ 14						$ 185						$ 109						$ 14						$ 123

In addition, Entergy Wholesale Commodities incurred $ 4 million in the third quarter 2020 and $ 8 million in the third quarter 2019 of impairment and other related charges associated with these strategic decisions and transactions.

Total restructuring charges for the nine months ended September 30, 2020 and 2019 were comprised of the following:

			2020																		2019
			Employee retention and severance expenses and other benefits-related costs						Contracted economic development costs						Total						Employee retention and severance expenses and other benefits-related costs						Contracted economic development costs						Total
			(In Millions)
Balance as of January 1,			$ 129						$ 14						$ 143						$ 179						$ 14						$ 193
Restructuring costs accrued			57						—						57						70						—						70
Cash paid out			15						—						15						140						—						140
Balance as of September 30,			$ 171						$ 14						$ 185						$ 109						$ 14						$ 123

In addition, Entergy Wholesale Commodities incurred $ 16 million in the nine months ended September 30, 2020 and $ 98 million in the nine months ended September 30, 2019 of impairment and other related charges associated with these strategic decisions and transactions.

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Going forward, Entergy Wholesale Commodities expects to incur employee retention and severance expenses associated with management’s strategy to exit the merchant power business of approximately $ 70 million in 2020, of which $ 57 million has been incurred as of September 30, 2020, and a total of approximately $ 55 million from 2021 through 2022.

Registrant Subsidiaries

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

Market Risk

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

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

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

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

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Derivatives

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

Entergy enters into derivatives to manage natural risks inherent in its physical or financial assets or liabilities.  Electricity over-the-counter instruments and futures contracts that financially settle against day-ahead power pool prices are used to manage price exposure for Entergy Wholesale Commodities generation.  The maximum length of time over which Entergy Wholesale Commodities is currently hedging the variability in future cash flows with derivatives for forecasted power transactions at September 30, 2020 is approximately 6 months.  Planned generation currently under contract from Entergy Wholesale Commodities nuclear power plants is 97 % for the remainder of 2020, of which approximately 62 % is sold under financial derivatives and the remainder under normal purchase/normal sale contracts.  Total planned generation for the remainder of 2020 is 3.5 TWh.

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

Certain of the agreements to sell the power produced by Entergy Wholesale Commodities power plants contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations depending on the mark-to-market values of the contracts. The primary form of credit support to satisfy these requirements is an Entergy Corporation guarantee.  As of September 30, 2020, there were no derivative contracts with counterparties in a liability position. In addition to the corporate guarantee, $ 1 million in cash collateral was required to be posted by the Entergy subsidiary to its counterparties and $ 22 million in letters of credit were required to be posted by its counterparties to the Entergy subsidiary. As of December 31, 2019, there were no derivative contracts with counterparties in a liability position. In addition to the corporate guarantee, $ 11 million in cash collateral was required to be posted by the Entergy subsidiary to its counterparties and $ 1 million in cash collateral and $ 98 million in letters of credit were required to be posted by it counterparties to the Entergy subsidiary. If the Entergy Corporation credit rating falls below investment grade, Entergy would have to post collateral equal to the estimated outstanding liability under the contract at the applicable date.

Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy had executed natural gas swaps and options as of September 30, 2020 was 3.5 years for Entergy Louisiana and the maximum length of time over which Entergy had executed natural gas swaps as of September 30, 2020 was 6 months for Entergy Mississippi and 6 months for Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of September 30, 2020 was 38,070,000 MMBtu for Entergy, including 25,560,000 MMBtu for Entergy Louisiana, 11,506,000 MMBtu for Entergy Mississippi, and 1,004,000 MMBtu for Entergy New

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Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.

During the second quarter 2020, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2020 through May 31, 2021. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy Wholesale Commodities are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of September 30, 2020 was 92,491 GWh for Entergy, including 22,239 GWh for Entergy Arkansas, 43,454 GWh for Entergy Louisiana, 10,353 GWh for Entergy Mississippi, 4,243 GWh for Entergy New Orleans, and 11,889 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy Wholesale Commodities is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy Wholesale Commodities as of September 30, 2020 and December 31, 2019. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans as of September 30, 2020 and for Entergy Mississippi as of December 31, 2019.

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The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of September 30, 2020 are shown in the table below.  Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.

Instrument

Balance Sheet Location

Gross Fair Value (a)

Offsetting Position (b)

Net Fair Value (c) (d)

Business

(In Millions)

Derivatives designated as hedging instruments

Assets:

Electricity swaps and options

Prepayments and other (current portion)

$ 29

($ 2 )

$ 27

Entergy Wholesale Commodities

Liabilities:

Electricity swaps and options

Other current liabilities (current portion)

$ 1

($ 1 )

$ —

Entergy Wholesale Commodities

Derivatives not designated as hedging instruments

Assets:

Electricity swaps and options

Prepayments and other (current portion)

$ 1

$ —

$ 1

Entergy Wholesale Commodities

Natural gas swaps and options

Prepayments and other (current portion)

$ 3

$ —

$ 3

Utility

Natural gas swaps and options

Other deferred debits and other assets (non-current portion)

$ 1

$—

$ 1

Utility

Financial transmission rights

Prepayments and other

$ 17

$—

$ 17

Utility and Entergy Wholesale Commodities

Liabilities:

Natural gas swaps and options

Other non-current liabilities (non-current portion)

$ 1

$ —

$ 1

Utility

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The fair values of Entergy’s derivative instruments in the consolidated balance sheet as of December 31, 2019 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)						Business
												(In Millions)
Derivatives designated as hedging instruments
Assets:
Electricity swaps and options						Prepayments and other (current portion)						$ 92						($ 1 )						$ 91						Entergy Wholesale Commodities
Electricity swaps and options						Other deferred debits and other assets (non-current portion)						$ 17						$ —						$ 17						Entergy Wholesale Commodities
Liabilities:
Electricity swaps and options						Other current liabilities (current portion)						$ 1						($ 1 )						$ —						Entergy Wholesale Commodities
Derivatives not designated as hedging instruments
Assets:
Electricity swaps and options						Prepayments and other (current portion)						$ 11						($ 1 )						$ 10						Entergy Wholesale Commodities
Natural gas swaps and options						Other deferred debits and other assets (non-current portion)						$ 1						$ —						$ 1						Utility
Financial transmission rights						Prepayments and other						$ 10						$ —						$ 10						Utility and Entergy Wholesale Commodities
Liabilities:
Electricity swaps and options						Other current liabilities (current portion)						$ 2						($ 2 )						$ —						Entergy Wholesale Commodities
Natural gas swaps and options						Other current liabilities (current portion)						$ 5						$ —						$ 5						Utility
Natural gas swaps and options						Other non-current liabilities (non-current portion)						$ 2						$ —						$ 2						Utility

(a) Represents the gross amounts of recognized assets/liabilities

(b) Represents the netting of fair value balances with the same counterparty

(c) Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheet

(d) Excludes cash collateral in the amount of $ 1 million posted as of September 30, 2020 and $ 11 million posted and $ 1 million held as of December 31, 2019. Also excludes letters of credit in the amount of $ 5 million posted and $ 22 million held as of September 30, 2020 and $ 98 million held as of December 31, 201 9.

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The effects of Entergy’s derivative instruments designated as cash flow hedges on the consolidated income statements for the three months ended September 30, 2020 and 2019 were as follows:

Instrument

Amount of gain (loss) recognized in other comprehensive income

Income Statement location

Amount of gain (loss) reclassified from accumulated other comprehensive income into income (a)

(In Millions)

(In Millions)

2020

Electricity swaps and options

($ 6 )

Competitive businesses operating revenues

$ 15

2019

Electricity swaps and options

($ 7 )

Competitive businesses operating revenues

$ 19

(a) Before taxes of $ 3 million and $ 4 million for the three months ended September 30, 2020 and 2019, respectively

The effects of Entergy’s derivative instruments designated as cash flow hedges on the consolidated income statements for the nine months ended September 30, 2020 and 2019 were as follows:

Instrument

Amount of gain (loss) recognized in other comprehensive income

Income Statement location

Amount of gain (loss) reclassified from accumulated other comprehensive income into income (a)

(In Millions)

(In Millions)

2020

Electricity swaps and options

$ 54

Competitive businesses operating revenues

$ 134

2019

Electricity swaps and options

$ 145

Competitive businesses operating revenues

$ 76

(a) Before taxes of $ 28 million and $ 16 million for the nine months ended September 30, 2020 and 2019, respectively

Based on market prices as of September 30, 2020, unrealized gains (losses) recorded in accumulated other comprehensive income on cash flow hedges relating to power sales totaled $ 27 million of net unrealized gains.  Approximately $ 27 million is expected to be reclassified from accumulated other comprehensive income to operating revenues in the next twelve months.  The actual amount reclassified from accumulated other comprehensive income, however, could vary due to future changes in market prices.

Entergy may effectively liquidate a cash flow hedge instrument by entering into a contract offsetting the original hedge, and then de-designating the original hedge in this situation.  Gains or losses accumulated in other

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comprehensive income prior to de-designation continue to be deferred in other comprehensive income until they are included in income as the original hedged transaction occurs. From the point of de-designation, the gains or losses on the original hedge and the offsetting contract are recorded as assets or liabilities on the balance sheet and offset as they flow through to earnings.

The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended September 30, 2020 and 2019 were as follows:

Instrument

Income Statement location

Amount of gain (loss) recorded in the income statement

(In Millions)

2020

Natural gas swaps

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

(a)

($ 1 )

Financial transmission rights

Purchased power expense

(b)

$ 33

Electricity swaps and options (c)

Competitive business operating revenues

$ 2

2019

Natural gas swaps

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

(a)

($ 2 )

Financial transmission rights

Purchased power expense

(b)

$ 25

Electricity swaps and options (c)

Competitive business operating revenues

$ 1

The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the nine months ended September 30, 2020 and 2019 were as follows:

Instrument

Income Statement location

Amount of gain (loss) recorded in the income statement

(In Millions)

2020

Natural gas swaps and options

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

(a)

($ 3 )

Financial transmission rights

Purchased power expense

(b)

$ 61

Electricity swaps and options (c)

Competitive business operating revenues

$ —

2019

Natural gas swaps

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

(a)

($ 9 )

Financial transmission rights

Purchased power expense

(b)

$ 78

Electricity swaps and options (c)

Competitive business operating revenues

$ 4

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(a) Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability.  The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms.

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

(c) There were no gains (losses) recognized in accumulated other comprehensive income from electricity swaps and options.

The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of September 30, 2020 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.

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						$ 2.2						$ —						$ 2.2						Entergy Louisiana
Natural gas swaps and options						Other deferred debits and other assets (non-current portion)						$ 0.9						$ —						$ 0.9						Entergy Louisiana
Natural gas swaps						Prepayments and other						$ 1.1						$ —						$ 1.1						Entergy Mississippi
Financial transmission rights						Prepayments and other						$ 6.4						($ 0.1 )						$ 6.3						Entergy Arkansas
Financial transmission rights						Prepayments and other						$ 7.1						($ 0.1 )						$ 7.0						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 0.8						$ —						$ 0.8						Entergy Mississippi
Financial transmission rights						Prepayments and other						$ 0.3						($ 0.2 )						$ 0.1						Entergy New Orleans
Financial transmission rights						Prepayments and other						$ 2.3						$ —						$ 2.3						Entergy Texas
Liabilities:
Natural gas swaps and options						Other non-current liabilities						$ 1.3						$ —						$ 1.3						Entergy Louisiana

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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, 2019 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						Other deferred debits and other assets						$ 0.8						$ —						$ 0.8						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 3.4						($ 0.1 )						$ 3.3						Entergy Arkansas
Financial transmission rights						Prepayments and other						$ 4.5						$ —						$ 4.5						Entergy Louisiana
Financial transmission rights						Prepayments and other						$ 0.8						$ —						$ 0.8						Entergy Mississippi
Financial transmission rights						Prepayments and other						$ 0.3						$ —						$ 0.3						Entergy New Orleans
Financial transmission rights						Prepayments and other						$ 1.0						($ 0.1 )						$ 0.9						Entergy Texas
Liabilities:
Natural gas swaps and options						Other current liabilities						$ 2.4						$ —						$ 2.4						Entergy Louisiana
Natural gas swaps and options						Other non-current liabilities						$ 2.2						$ —						$ 2.2						Entergy Louisiana
Natural gas swaps						Other current liabilities						$ 2.3						$ —						$ 2.3						Entergy Mississippi
Natural gas swaps						Other current liabilities						$ 0.2						$ —						$ 0.2						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, 2020, letters of credit posted with MISO covered financial transmission rights exposure of $ 1.9 million for Entergy Arkansas, $ 2.2 million for Entergy Louisiana, $ 0.7 million for Entergy Mississippi, and $ 0.2 million for Entergy New Orleans. As of December 31, 2019, letters of credit posted with MISO covered financial transmission rights exposure of $ 0.2 million for Entergy Mississippi .

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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, 2020 and 2019 were as follows:

Instrument

Income Statement Location

Amount of gain (loss) recorded in the income statement

Registrant

(In Millions)

2020

Natural gas swaps and options

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

$ 1.4

(a)

Entergy Louisiana

Natural gas swaps

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

($ 1.5 )

(a)

Entergy Mississippi

Natural gas swaps

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

($ 0.5 )

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 5.2

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 3.1

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 1.3

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 0.1

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 22.8

(b)

Entergy Texas

2019

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

($ 0.3 )

(a)

Entergy Mississippi

Natural gas swaps

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

($ 0.1 )

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 3.5

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 14.4

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 1.9

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

($ 0.3 )

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 5.5

(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, 2020 and 2019 were as follows:

Instrument

Income Statement Location

Amount of gain (loss) recorded in the income statement

Registrant

(In Millions)

2020

Natural gas swaps and options

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

$ 1.4

(a)

Entergy Louisiana

Natural gas swaps

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

($ 4.0 )

(a)

Entergy Mississippi

Natural gas swaps

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

($ 0.5 )

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 14.7

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 13.9

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 0.7

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 0.8

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 30.5

(b)

Entergy Texas

2019

Natural gas swaps and options

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

($ 3.6 )

(a)

Entergy Louisiana

Natural gas swaps

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

($ 5.5 )

(a)

Entergy Mississippi

Natural gas swaps

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

$ 0.1

(a)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 15.4

(b)

Entergy Arkansas

Financial transmission rights

Purchased power expense

$ 40.9

(b)

Entergy Louisiana

Financial transmission rights

Purchased power expense

$ 5.3

(b)

Entergy Mississippi

Financial transmission rights

Purchased power expense

$ 2.2

(b)

Entergy New Orleans

Financial transmission rights

Purchased power expense

$ 13.6

(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

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estimates of fair value.  Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange.  Gains or losses realized on financial instruments other than those instruments held by the Entergy Wholesale Commodities business are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments.

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

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

The three levels of the fair value hierarchy are:

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

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

– quoted prices for similar assets or liabilities in active markets;

– quoted prices for identical assets or liabilities in inactive markets;

– inputs other than quoted prices that are observable for the asset or liability; or

– inputs that are derived principally from or corroborated by observable market data by correlation or other means.

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

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

The values for power contract assets or liabilities are based on both observable inputs including public market prices and interest rates, and unobservable inputs such as implied volatilities, unit contingent discounts, expected basis differences, and credit adjusted counterparty interest rates.  They are classified as Level 3 assets and

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liabilities.  The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight and the Entergy Wholesale Commodities Accounting group.  The primary related functions of the Office of Corporate Risk Oversight include: gathering, validating and reporting market data, providing market risk analyses and valuations in support of Entergy Wholesale Commodities’ commercial transactions, developing and administering protocols for the management of market risks, and implementing and maintaining controls around changes to market data in the energy trading and risk management system.  The Office of Corporate Risk Oversight is also responsible for managing the energy trading and risk management system, forecasting revenues, forward positions and analysis.  The Entergy Wholesale Commodities Accounting group performs functions related to market and counterparty settlements, revenue reporting and analysis, and financial accounting. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer while the Entergy Wholesale Commodities Accounting group reports to the Chief Accounting Officer.

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

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

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

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

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assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer.  The Entergy Wholesale Commodities Accounting group reports to the Chief Accounting Officer.

The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 1,196						$ —						$ —						$ 1,196
Decommissioning trust funds (a):
Equity securities						959						—						—						959
Debt securities (b)						1,091						2,036						—						3,127
Common trusts (c)																								2,702
Power contracts						—						—						28						28
Securitization recovery trust account						47						—						—						47
Escrow accounts						420						—						—						420
Gas hedge contracts						3						1						—						4
Financial transmission rights						—						—						17						17
						$ 3,716						$ 2,037						$ 45						$ 8,500
Liabilities:
Gas hedge contracts						$ —						$ 1						$ —						$ 1

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 391						$ —						$ —						$ 391
Decommissioning trust funds (a):
Equity securities						905						—						—						905
Debt securities						1,139						1,824						—						2,963
Common trusts (c)																								2,536
Power contracts						—						—						118						118
Securitization recovery trust account						47						—						—						47
Escrow accounts						459						—						—						459
Gas hedge contracts						—						1						—						1
Financial transmission rights						—						—						10						10
						$ 2,941						$ 1,825						$ 128						$ 7,430
Liabilities:
Gas hedge contracts						$ 5						$ 2						$ —						$ 7

(a) The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 to the financial statements herein for additional information on the investment portfolios.

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(b) The decommissioning trust funds fair value presented herein does not include the recognition of a credit loss valuation allowance of $ 0.6 million on debt securities due to the adoption of ASU 2016-13. See Note 9 to the financial statements herein for additional information on the allowance for expected credit losses.

(c) Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date.

The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended September 30, 2020 and 2019:

			2020												2019
			Power Contracts						Financial transmission rights						Power Contracts						Financial transmission rights
			(In Millions)
Balance as of July 1,			$ 49						$ 22						$ 72						$ 29
Total gains (losses) for the period (a)
Included in earnings			2						1						1						—
Included in other comprehensive income			( 6 )						—						( 7 )						—
Included as a regulatory liability/asset			—						27						—						12
Settlements			( 17 )						( 33 )						( 18 )						( 25 )
Balance as of September 30,			$ 28						$ 17						$ 48						$ 16

(a) Change in unrealized gains or losses for the period included in earnings for derivatives held at the end of the reporting period was ($ 3.7 ) million for the three months ended September 30, 2020 and ($ 1.2 ) million for the three months ended September 30, 2019.

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, 2020 and 2019:

			2020												2019
			Power Contracts						Financial transmission rights						Power Contracts						Financial transmission rights
			(In Millions)
Balance as of January 1,			$ 118						$ 10						($ 31 )						$ 15
Total gains (losses) for the period (a)
Included in earnings			—						1						4						—
Included in other comprehensive income			54						—						145						—
Included as a regulatory liability/asset			—						44						—						44
Issuances of financial transmission rights			—						23						—						35
Settlements			( 144 )						( 61 )						( 70 )						( 78 )
Balance as of September 30,			$ 28						$ 17						$ 48						$ 16

(a) Change in unrealized gains or losses for the period included in earnings for derivatives held at the end of the reporting period was ($ 0.2 ) million for the nine months ended September 30, 2020 and ($ 4.7 ) million for the nine months ended September 30, 2019.

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The following table sets forth a description of the types of transactions classified as Level 3 in the fair value hierarchy and significant unobservable inputs to each which cause that classification as of September 30, 2020:

Transaction Type

Fair Value

Significant Unobservable Inputs

Range from Average %

Effect on Fair Value

(In Millions)

(In Millions)

Power contracts - electricity swaps

$ 28

Unit contingent discount

+/-

4.75 %

$ 3

The values of financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO.

The following table sets forth an analysis of each of the types of unobservable inputs impacting the fair value of items classified as Level 3 within the fair value hierarchy, and the sensitivity to changes to those inputs:

Significant Unobservable Input

Transaction Type

Position

Change to Input

Effect on Fair Value

Unit contingent discount

Electricity swaps

Sell

Increase (Decrease)

Decrease (Increase)

The following table sets forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019.  The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.

Entergy Arkansas

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 597.8						$ —						$ —						$ 597.8
Decommissioning trust funds (a):
Equity securities						15.1						—						—						15.1
Debt securities						105.6						327.6						—						433.2
Common trusts (b)																								720.5
Financial transmission rights						—						—						6.3						6.3
						$ 718.5						$ 327.6						$ 6.3						$ 1,772.9

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Decommissioning trust funds (a):
Equity securities						$ 0.6						$ —						$ —						$ 0.6
Debt securities						108.7						304.1						—						412.8
Common trusts (b)																								687.9
Securitization recovery trust account						4.0						—						—						4.0
Financial transmission rights						—						—						3.3						3.3
						$ 113.3						$ 304.1						$ 3.3						$ 1,108.6

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Entergy Louisiana

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 251.8						$ —						$ —						$ 251.8
Decommissioning trust funds (a):
Equity securities						9.4						—						—						9.4
Debt securities						162.8						463.6						—						626.4
Common trusts (b)																								1,014.6
Escrow accounts						256.7						—						—						256.7
Securitization recovery trust account						9.6						—						—						9.6
Gas hedge contracts						2.2						0.9						—						3.1
Financial transmission rights						—						—						7.0						7.0
						$ 692.5						$ 464.5						$ 7.0						$ 2,178.6
Liabilities:
Gas hedge contracts						$ —						$ 1.3						$ —						$ 1.3

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 1.5						$ —						$ —						$ 1.5
Decommissioning trust funds (a):
Equity securities						4.3						—						—						4.3
Debt securities						180.8						420.7						—						601.5
Common trusts (b)																								958.0
Escrow accounts						295.9						—						—						295.9
Securitization recovery trust account						3.7						—						—						3.7
Gas hedge contracts						—						0.8						—						0.8
Financial transmission rights						—						—						4.5						4.5
						$ 486.2						$ 421.5						$ 4.5						$ 1,870.2
Liabilities:
Gas hedge contracts						$ 2.4						$ 2.2						$ —						$ 4.6

Entergy Mississippi

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 43.0						$ —						$ —						$ 43.0
Escrow accounts						80.3						—						—						80.3
Gas hedge contracts						1.1						—						—						1.1
Financial transmission rights						—						—						0.8						0.8
						$ 124.4						$ —						$ 0.8						$ 125.2

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2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 51.6						$ —						$ —						$ 51.6
Escrow accounts						80.2						—						—						80.2
Financial transmission rights						—						—						0.8						0.8
						$ 131.8						$ —						$ 0.8						$ 132.6
Liabilities:
Gas hedge contracts						$ 2.3						$ —						$ —						$ 2.3

Entergy New Orleans

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Securitization recovery trust account						$ 6.2						$ —						$ —						$ 6.2
Escrow accounts						83.0						—						—						83.0
Financial transmission rights						—						—						0.1						0.1
						$ 89.2						$ —						$ 0.1						$ 89.3

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 6.0						$ —						$ —						$ 6.0
Securitization recovery trust account						2.0						—						—						2.0
Escrow accounts						82.6						—						—						82.6
Financial transmission rights						—						—						0.3						0.3
						$ 90.6						$ —						$ 0.3						$ 90.9
Liabilities:
Gas hedge contracts						$ 0.2						$ —						$ —						$ 0.2

Entergy Texas

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets :
Securitization recovery trust account						$ 30.9						$ —						$ —						$ 30.9
Financial transmission rights						—						—						2.3						2.3
						$ 30.9						$ —						$ 2.3						$ 33.2

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets :
Temporary cash investments						$ 12.9						$ —						$ —						$ 12.9
Securitization recovery trust account						37.7						—						—						37.7
Financial transmission rights						—						—						0.9						0.9
						$ 50.6						$ —						$ 0.9						$ 51.5

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System Energy

2020						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 11.8						$ —						$ —						$ 11.8
Decommissioning trust funds (a):
Equity securities						8.5						—						—						8.5
Debt Securities						179.1						241.7						—						420.8
Common trusts (b)																								685.2
						$ 199.4						$ 241.7						$ —						$ 1,126.3

2019						Level 1						Level 2						Level 3						Total
						(In Millions)
Assets:
Temporary cash investments						$ 68.4						$ —						$ —						$ 68.4
Decommissioning trust funds (a):
Equity securities						13.3						—						—						13.3
Debt securities						176.3						209.9						—						386.2
Common trusts (b)																								654.6
						$ 258.0						$ 209.9						$ —						$ 1,122.5

(a) The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices.  Fixed income securities are held in various governmental and corporate securities.  See Note 9 to the financial statements herein for additional information on the investment portfolios.

(b) Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date .

The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended September 30, 2020.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of July 1,			$ 6.1						$ 12.5						$ 1.1						($ 0.2 )						$ 2.6
Gains (losses) included as a regulatory liability/asset			5.4						( 2.4 )						1.0						0.4						22.5
Settlements			( 5.2 )						( 3.1 )						( 1.3 )						( 0.1 )						( 22.8 )
Balance as of September 30,			$ 6.3						$ 7.0						$ 0.8						$ 0.1						$ 2.3

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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, 2019.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of July 1,			$ 8.2						$ 15.6						$ 2.8						$ 2.0						$ 0.6
Gains (losses) included as a regulatory liability/asset			( 0.8 )						7.9						0.6						( 1.6 )						6.2
Settlements			( 3.5 )						( 14.4 )						( 1.9 )						0.3						( 5.5 )
Balance as of September 30,			$ 3.9						$ 9.1						$ 1.5						$ 0.7						$ 1.3

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, 2020.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of January 1,			$ 3.3						$ 4.5						$ 0.8						$ 0.3						$ 0.9
Issuances of financial transmission rights			6.5						13.2						1.4						( 0.1 )						2.4
Gains (losses) included as a regulatory liability/asset			11.2						3.2						( 0.7 )						0.7						29.5
Settlements			( 14.7 )						( 13.9 )						( 0.7 )						( 0.8 )						( 30.5 )
Balance as of September 30,			$ 6.3						$ 7.0						$ 0.8						$ 0.1						$ 2.3

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, 2019.

			Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of January 1,			$ 3.4						$ 8.3						$ 2.2						$ 1.3						($ 0.5 )
Issuances of financial transmission rights			9.6						18.7						3.9						2.7						0.1
Gains (losses) included as a regulatory liability/asset			6.3						23.0						0.6						( 1.1 )						15.3
Settlements			( 15.4 )						( 40.9 )						( 5.2 )						( 2.2 )						( 13.6 )
Balance as of September 30,			$ 3.9						$ 9.1						$ 1.5						$ 0.7						$ 1.3

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

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2020 on equity securities still held as of September 30, 2020 were $ 250 million and $ 142 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, 2020 and December 31, 2019 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2020
Debt Securities (a)						$ 2,581						$ 201						$ 2
2019
Debt Securities (a)						$ 2,456						$ 96						$ 6

(a) Debt securities presented herein do not include the $ 546 million and $ 507 million of debt securities held in the wholly-owned registered investment company as of September 30, 2020 and December 31, 2019, respectively, which are not accounted for as available-for-sale.

The unrealized gains/(losses) above are reported before deferred taxes of $ 31 million as of September 30, 2020 and $ 13 million as of December 31, 2019 for debt securities. The amortized cost of available-for-sale debt securities was $ 2,382 million as of September 30, 2020 and $ 2,366 million as of December 31, 2019.  As of September 30, 2020, available-for-sale debt securities had an average coupon rate of approximately 3.09 %, an average duration of approximately 7.13 years, and an average maturity of approximately 10.41 years.

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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, 2020 and December 31, 2019:

						September 30, 2020												December 31, 2019
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 206						$ 2						$ 404						$ 5
More than 12 months						2						—						38						1
Total						$ 208						$ 2						$ 442						$ 6

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2020 and December 31, 2019 were as follows:

			2020						2019
			(In Millions)
Less than 1 year			$ 24						$ 128
1 year - 5 years			718						807
5 years - 10 years			761						666
10 years - 15 years			347						125
15 years - 20 years			135						126
20 years+			596						604
Total			$ 2,581						$ 2,456

During the three months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 156 million and $ 407 million, respectively.  During the three months ended September 30, 2020 and 2019, gross gains of $ 9 million and $ 11 million, respectively, and gross losses of $ 0.2 million and $ 0.4 million, respectively, related to available-for-sale securities were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 832 million and $ 1,133 million, respectively.  During the nine months ended September 30, 2020 and 2019, gross gains of $ 38 million and $ 20 million, respectively, and gross losses of $ 4 million and $ 3 million, respectively, related to available-for-sale securities were reclassified out of other comprehensive income or other regulatory liabilities/assets into earnings.

The fair values of the decommissioning trust funds related to the Entergy Wholesale Commodities nuclear plants as of September 30, 2020 were $ 588 million for Indian Point 1, $ 742 million for Indian Point 2, $ 986 million for Indian Point 3, and $ 538 million for Palisades. The fair values of the decommissioning trust funds related to the Entergy Wholesale Commodities nuclear plants as of December 31, 2019 were $ 556 million for Indian Point 1, $ 701 million for Indian Point 2, $ 930 million for Indian Point 3, and $ 498 million for Palisades. The fair values of the decommissioning trust funds for the Registrant Subsidiaries’ nuclear plants are detailed below.

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Entergy Arkansas

Entergy Arkansas holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale securities held as of September 30, 2020 and December 31, 2019 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2020
Debt Securities						$ 433.2						$ 29.5						$ 0.2
2019
Debt Securities						$ 412.8						$ 9.9						$ 2.6

The amortized cost of available-for-sale debt securities was $ 403.8 million as of September 30, 2020 and $ 405.4 million as of December 31, 2019.  As of September 30, 2020, available-for-sale debt securities had an average coupon rate of approximately 2.60 %, an average duration of approximately 6.91 years, and an average maturity of approximately 8.21 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2020 on equity securities still held as of September 30, 2020 were $ 57.2 million and $ 27 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, 2020 and December 31, 2019:

						September 30, 2020												December 31, 2019
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 26.8						$ 0.2						$ 104.8						$ 2.5
More than 12 months						—						—						7.7						0.1
Total						$ 26.8						$ 0.2						$ 112.5						$ 2.6

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The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2020 and December 31, 2019 were as follows:

			2020						2019
			(In Millions)
Less than 1 year			$ 13.6						$ 44.1
1 year - 5 years			102.0						109.1
5 years - 10 years			177.5						156.0
10 years - 15 years			75.8						31.3
15 years - 20 years			26.7						23.8
20 years+			37.6						48.5
Total			$ 433.2						$ 412.8

During the three months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 14.6 million and $ 45.5 million, respectively.  During the three months ended September 30, 2020 and 2019, gross gains of $ 1.7 million and $ 2 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2020, gross losses of $ 3.6 thousand were reclassified out of other regulatory liabilities/assets into earnings. During the three months ended September 30, 2019, there were no gross losses.

During the nine months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 80.9 million and $ 78.7 million, respectively.  During the nine months ended September 30, 2020 and 2019, gross gains of $ 7.5 million and $ 2.1 million, respectively, and gross losses of $ 0.2 million and $ 0.1 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

Entergy Louisiana

Entergy Louisiana holds equity securities and available-for-sale debt securities in nuclear decommissioning trust accounts. The available-for-sale securities held as of September 30, 2020 and December 31, 2019 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2020
Debt Securities						$ 626.4						$ 50.5						$ 0.5
2019
Debt Securities						$ 601.5						$ 29.3						$ 0.8

The amortized cost of available-for-sale debt securities was $ 576.5 million as of September 30, 2020 and $ 573 million as of December 31, 2019.  As of September 30, 2020, the available-for-sale debt securities had an average coupon rate of approximately 3.73 %, an average duration of approximately 7.30 years, and an average maturity of approximately 12.97 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2020 on equity securities still held as of September 30, 2020 were $ 80.2 million and $ 40.2 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, 2020 and December 31, 2019:

						September 30, 2020												December 31, 2019
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
						(In Millions)
Less than 12 months						$ 43.7						$ 0.5						$ 71.2						$ 0.8
More than 12 months						0.8						—						7.9						—
Total						$ 44.5						$ 0.5						$ 79.1						$ 0.8

The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2020 and December 31, 2019 were as follows:

			2020						2019
			(In Millions)
Less than 1 year			$ 7.7						$ 40.7
1 year - 5 years			122.9						142.0
5 years - 10 years			147.8						132.4
10 years - 15 years			95.1						39.8
15 years - 20 years			61.8						49.2
20 years+			191.1						197.4
Total			$ 626.4						$ 601.5

During the three months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 30.6 million and $ 59.7 million, respectively.  During the three months ended September 30, 2020 and 2019, gross gains of $ 1.4 million and $ 2.5 million, respectively, and gross losses of $ 1.3 thousand and $ 29 thousand, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 132.1 million and $ 155.4 million, respectively.  During the nine months ended September 30, 2020 and 2019, gross gains of $ 6.3 million and $ 4.2 million, respectively, and gross losses of $ 0.7 million and $ 0.2 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

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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, 2020 and December 31, 2019 are summarized as follows:

						Fair Value						Total Unrealized Gains						Total Unrealized Losses
						(In Millions)
2020
Debt Securities						$ 420.8						$ 31.6						$ 0.4
2019
Debt Securities						$ 386.2						$ 15.1						$ 0.3

The amortized cost of available-for-sale debt securities was $ 389.7 million as of September 30, 2020 and $ 371.4 million as of December 31, 2019.  As of September 30, 2020, available-for-sale debt securities had an average coupon rate of approximately 2.93 %, an average duration of approximately 7.50 years, and an average maturity of approximately 11.20 years.

The unrealized gains/(losses) recognized during the three and nine months ended September 30, 2020 on equity securities still held as of September 30, 2020 were $ 54.4 million and $ 25.7 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, 2020 and December 31, 2019:

						September 30, 2020												December 31, 2019
						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
			(In Millions)
Less than 12 months						$ 28.7						$ 0.4						$ 56.9						$ 0.3
More than 12 months						—						—						0.3						—
Total						$ 28.7						$ 0.4						$ 57.2						$ 0.3

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The fair value of available-for-sale debt securities, summarized by contractual maturities, as of September 30, 2020 and December 31, 2019 were as follows:

			2020						2019
			(In Millions)
Less than 1 year			($ 1.6 )						$ 8.5
1 year - 5 years			163.1						154.6
5 years - 10 years			107.0						92.3
10 years - 15 years			27.5						13.4
15 years - 20 years			4.9						14.4
20 years+			119.9						103.0
Total			$ 420.8						$ 386.2

During the three months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 24.1 million and $ 108.6 million, respectively.  During the three months ended September 30, 2020 and 2019, gross gains of $ 1.6 million and $ 1.7 million, respectively, and gross losses of $ 9.9 thousand and $ 0.2 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

During the nine months ended September 30, 2020 and 2019, proceeds from the dispositions of available-for-sale securities amounted to $ 189.7 million and $ 238.4 million, respectively.  During the nine months ended September 30, 2020 and 2019, gross gains of $ 8.6 million and $ 3.6 million, respectively, and gross losses of $ 0.4 million and $ 0.6 million, respectively, related to available-for-sale securities were reclassified out of other regulatory liabilities/assets into earnings.

Allowance for expected credit losses

Entergy implemented ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. In accordance with the new standard, Entergy estimates the expected credit losses for its available for sale securities based on the current credit rating and remaining life of the securities.  To the extent an individual security is determined to be uncollectible it is written off against this allowance.  Entergy’s available-for-sale securities are held in trusts managed by third parties who operate in accordance with agreements that define investment guidelines and place restrictions on the purchases and sales of investments.  Specifically, available-for-sale securities are subject to credit worthiness restrictions, with requirements for both the average credit rating of the portfolio and minimum credit ratings for individual debt securities.  As of September 30, 2020, Entergy’s allowance for expected credit losses related to available-for-sale securities was $ 0.6 million. Entergy did not record any impairments of available-for-sale debt securities for the three and nine months ended September 30, 2020.

Other-than-temporary impairments and unrealized gains and losses

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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 commissions. Return of the unprotected excess accumulated deferred income taxes results in a reduction in the regulatory liability for income taxes and a corresponding reduction in income tax expense. This manner of regulatory accounting affects the effective tax rate for the period as compared to the statutory tax rate. The return of unprotected excess accumulated deferred income taxes reduced Entergy’s and the Registrant Subsidiaries’ regulatory liability for income taxes as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
			(In Millions)
Entergy			$ 17						$ 96						$ 61						$ 219
Entergy Arkansas			($ 2 )						$ 41						$ 9						$ 99
Entergy Louisiana			$ 8						$ 17						$ 24						$ 31
Entergy New Orleans			$ 1						$ 7						$ 6						$ 9
Entergy Texas			$ 10						$ 31						$ 22						$ 73
System Entergy			$ —						$ —						$ —						$ 7

Other Tax Matters

In accordance with ASC 718, “Compensation - Stock Compensation,” Entergy and the Registrant Subsidiaries recognized excess tax deductions as a reduction of income tax expense in the first quarter 2020. Due to the vesting and exercise of certain Entergy stock-based awards, Entergy recorded a permanent tax reduction of approximately $ 24.7 million, including $ 4.8 million for Entergy Arkansas, $ 8.6 million for Entergy Louisiana, $ 2.7 million for Entergy Mississippi, $ 1.5 million for Entergy New Orleans, $ 2.7 million for Entergy Texas, and $ 1.3 million for System Energy.

In the first quarter 2020, Entergy and the IRS agreed upon and settled on the treatment of funds received by Entergy Louisiana in conjunction with the Act 55 financing of Hurricane Isaac storm costs, which resulted in a net reduction of income tax expense of approximately $ 32 million.  As a result of the settlement, the position was partially sustained and Entergy Louisiana recorded a reduction of income tax expense of approximately $ 58 million primarily due to the reversal of liabilities for uncertain tax positions in excess of the agreed-upon settlement.  Entergy recorded an increase to income tax expense of $ 26 million primarily resulting from the reduction of the deferred tax asset, associated with utilization of the net operating loss as a result of the settlement. This adjustment recorded by Entergy also accounted for the tax rate change of the Tax Cuts and Jobs Act.  As a result of the IRS settlement, Entergy Louisiana recorded a $ 29 million ($ 21 million net-of-tax) regulatory charge and a corresponding regulatory liability to reflect its obligation to customers pursuant to the LPSC Hurricane Isaac Act 55 financing order.

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Tax Accounting Methods

As discussed in Note 3 to the financial statements in the Form 10-K, in 2015, System Energy and Entergy Louisiana 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. The new method resulted in a reduction of taxable income of $ 1.2 billion for System Energy and $ 2.2 billion for Entergy Louisiana in 2015. In the third quarter 2020 the IRS issued Notices of Proposed Adjustment concerning this uncertain tax position allowing System Energy to include $ 102 million of its decommissioning liability in cost of goods sold, and Entergy Louisiana to include $ 221 million of its decommissioning liability in cost of goods sold. The Notices of Proposed Adjustment will not be appealed.

As a result of System Energy being allowed to include part of its decommissioning liability in cost of goods sold, System Energy and Entergy recorded a deferred tax liability of $ 26 million. System Energy also recorded federal and state taxes payable of $ 402 million; on a consolidated basis, however, Entergy utilized tax loss carryovers to offset the federal taxable income adjustment and accordingly did not record federal taxes payable as a result of the outcome of this uncertain tax position.

As a result of Entergy Louisiana being allowed to include part of its decommissioning liability in cost of goods sold, Entergy Louisiana and Entergy recorded a deferred tax liability of $ 60 million. Both Entergy Louisiana and Entergy utilized tax loss carryovers to offset the taxable income adjustment and accordingly did not record taxes payable as a result of the outcome of this uncertain tax position.

The partial disallowance of this uncertain tax position to include the decommissioning liability in cost of goods sold resulted in a $ 1.5 billion decrease in the balance of unrecognized tax benefits related to federal and state taxes for Entergy. Additionally, both System Energy and Entergy Louisiana recorded a reduction to their balances of unrecognized tax benefits for federal and state taxes of $ 461 million and $ 1.1 billion, respectively.

The tax treatment of Entergy Louisiana’s accrued regulatory liabilities associated with the Vidalia purchased power agreement and business combination guaranteed customer credits, which are discussed in Note 2 to the financial statements in the Form 10-K, has been resolved in a manner that results in a $ 190 million increase to previously reported taxable income. Entergy Louisiana and Entergy utilized tax loss carryovers to offset the taxable income adjustment, however, which allowed both Entergy Louisiana and Entergy to reduce their balances of federal and state unrecognized tax benefits by $ 74 million.

Coronavirus Aid, Relief, and Economic Security Act

In response to the economic impacts of the COVID-19 pandemic, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law on March 27, 2020. The CARES Act provisions that result in the most significant opportunities for tax relief to Entergy and the Registrant Subsidiaries are permitting a five-year carryback of 2018-2020 net operating losses, removing the 80 percent limitation on the carryback of 2018-2020 net operating losses, increasing the limitation on interest expense deductibility for 2019 and 2020, accelerating available refunds for minimum tax credit carryforwards, modifying limitations on charitable contributions during 2020, and delaying the payment of employer payroll taxes. Based on current estimates, Entergy could defer approximately $ 64 million of 2020 payroll tax payments, which would be payable in two installments of $ 32 million on December 31, 2021 and December 31, 2022.

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Construction Expenditures in Accounts Payable

Construction expenditures included in accounts payable at September 30, 2020 were $ 1.4 billion for Entergy, $ 50.4 million for Entergy Arkansas, $ 1.1 billion for Entergy Louisiana, $ 24.1 million for Entergy Mississippi, $ 6.4 million for Entergy New Orleans, $ 204.3 million for Entergy Texas, and $ 18.0 million for System Energy.  Construction expenditures included in accounts payable at December 31, 2019 were $ 406 million for Entergy, $ 67.9 million for Entergy Arkansas, $ 115.1 million for Entergy Louisiana, $ 34.2 million for Entergy Mississippi, $ 18.4 million for Entergy New Orleans, $ 88.1 million for Entergy Texas, and $ 23.2 million for System Energy. See Note 2 to the financial statements herein for discussion of construction expenditures related to Hurricane Laura recorded as of September 30, 2020.

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

System Energy is considered to hold a variable interest in the lessor from which it leases an undivided interest representing approximately 11.5 % of the Grand Gulf nuclear plant. System Energy is the lessee under this arrangement, which is described in more detail in Note 5 to the financial statements in the Form 10-K. System Energy made payments under this arrangement, including interest, of $ 8.6 million in the three months ended September 30, 2020 and in the three months ended September 30, 2019. System Energy made payments under this arrangement, including interest, of $ 17.2 million in the nine months ended September 30, 2020 and in the nine months ended September 30, 2019.

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

Operating Revenues

See Note 19 to the financial statements in the Form 10-K for a discussion of revenue recognition. Entergy’s total revenues for the three months ended September 30, 2020 and 2019 were as follows:

						2020						2019
						(In Thousands)
Utility:
Residential						$ 1,153,220						$ 1,154,455
Commercial						647,119						722,334
Industrial						589,648						686,122
Governmental						56,710						61,697
Total billed retail						2,446,697						2,624,608
Sales for resale (a)						145,187						63,082
Other electric revenues (b)						69,122						115,352
Revenues from contracts with customers						2,661,006						2,803,042
Other revenues (c)						5,799						9,892
Total electric revenues						2,666,805						2,812,934
Natural gas						22,357						27,269
Entergy Wholesale Commodities:
Competitive businesses sales from contracts with customers (a)						195,184						282,420
Other revenues (c)						19,222						17,952
Total competitive businesses revenues						214,406						300,372
Total operating revenues						$ 2,903,568						$ 3,140,575

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Entergy’s total revenues for the nine months ended September 30, 2020 and 2019 are as follows:

						2020						2019
						(In Thousands)
Utility:
Residential						$ 2,742,118						$ 2,727,367
Commercial						1,712,179						1,871,416
Industrial						1,723,367						1,928,857
Governmental						156,251						172,280
Total billed retail						6,333,915						6,699,920
Sales for resale (a)						251,674						222,834
Other electric revenues (b)						288,009						326,771
Revenues from contracts with customers						6,873,598						7,249,525
Other revenues (c)						34,401						30,158
Total electric revenues						6,907,999						7,279,683
Natural gas						88,829						112,916
Entergy Wholesale Commodities:
Competitive businesses sales from contracts with customers (a)						586,906						923,288
Other revenues (c)						159,800						100,480
Total competitive businesses revenues						746,706						1,023,768
Total operating revenues						$ 7,743,534						$ 8,416,367

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The Registrant Subsidiaries’ total revenues for the three months ended September 30, 2020 and 2019 were as follows:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 274,496						$ 413,442						$ 161,031						$ 83,242						$ 221,009
Commercial						137,764						248,276						109,432						50,565						101,082
Industrial						138,037						316,876						34,062						7,219						93,454
Governmental						5,133						17,449						10,917						17,187						6,024
Total billed retail						555,430						996,043						315,442						158,213						421,569
Sales for resale (a)						64,494						81,843						29,535						9,057						67,643
Other electric revenues (b)						17,677						35,097						9,612						2,403						5,685
Revenues from contracts with customers						637,601						1,112,983						354,589						169,673						494,897
Other revenues (c)						6,788						( 2,766 )						1,907						( 161 )						25
Total electric revenues						644,389						1,110,217						356,496						169,512						494,922
Natural gas						—						9,805						—						12,552						—
Total operating revenues						$ 644,389						$ 1,120,022						$ 356,496						$ 182,064						$ 494,922

2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 253,627						$ 426,012						$ 177,785						$ 81,468						$ 215,563
Commercial						162,564						277,071						131,596						56,430						94,673
Industrial						156,024						376,595						44,054						8,613						100,836
Governmental						5,907						18,731						12,551						19,030						5,478
Total billed retail						578,122						1,098,409						365,986						165,541						416,550
Sales for resale (a)						58,953						81,664						9,569						6,876						16,704
Other electric revenues (b)						47,085						37,521						20,499						2,537						9,177
Revenues from contracts with customers						684,160						1,217,594						396,054						174,954						442,431
Other revenues (c)						3,366						4,280						2,678						1,784						446
Total electric revenues						687,526						1,221,874						398,732						176,738						442,877
Natural gas						—						9,803						—						17,466						—
Total operating revenues						$ 687,526						$ 1,231,677						$ 398,732						$ 194,204						$ 442,877

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The Registrant Subsidiaries’ total revenues for the nine months ended September 30, 2020 and 2019 were as follows:

2020						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 665,355						$ 974,407						$ 400,495						$ 187,561						$ 514,300
Commercial						355,112						659,641						295,823						132,470						269,133
Industrial						345,378						974,419						106,327						17,632						279,611
Governmental						13,508						50,984						31,043						43,512						17,204
Total billed retail						1,379,353						2,659,451						833,688						381,175						1,080,248
Sales for resale (a)						142,590						243,071						62,383						27,245						89,459
Other electric revenues (b)						82,811						120,209						45,448						7,166						36,426
Revenues from contracts with customers						1,604,754						3,022,731						941,519						415,586						1,206,133
Other revenues (c)						13,314						1,628						6,853						12,256						319
Total electric revenues						1,618,068						3,024,359						948,372						427,842						1,206,452
Natural gas						—						37,962						—						50,867						—
Total operating revenues						$ 1,618,068						$ 3,062,321						$ 948,372						$ 478,709						$ 1,206,452

2019						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
						(In Thousands)
Residential						$ 621,208						$ 980,443						$ 423,395						$ 192,165						$ 510,156
Commercial						412,697						715,983						331,785						156,152						254,799
Industrial						396,515						1,108,193						120,490						24,353						279,306
Governmental						15,776						53,547						33,108						53,916						15,933
Total billed retail						1,446,196						2,858,166						908,778						426,586						1,060,194
Sales for resale (a)						213,038						248,827						19,377						25,680						48,251
Other electric revenues (b)						107,599						130,269						47,887						8,093						37,329
Revenues from contracts with customers						1,766,833						3,237,262						976,042						460,359						1,145,774
Other revenues (c)						9,434						15,564						7,671						4,414						1,157
Total electric revenues						1,776,267						3,252,826						983,713						464,773						1,146,931
Natural gas						—						44,498						—						68,418						—
Total operating revenues						$ 1,776,267						$ 3,297,324						$ 983,713						$ 533,191						$ 1,146,931

(a) Sales for resale and competitive businesses sales include day-ahead sales of energy in a market administered by an ISO. These sales represent financially binding commitments for the sale of physical energy the next day. These sales are adjusted to actual power generated and delivered in the real time market. Given the short duration of these transactions, Entergy does not consider them to be derivatives subject to fair value adjustments, and includes them as part of customer revenues.

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(b) Other electric revenues consist primarily of transmission and ancillary services provided to participants of an ISO-administered market and unbilled revenue.

(c) Other revenues include the settlement of financial hedges, occasional sales of inventory, alternative revenue programs, provisions for revenue subject to refund, and late fees.

Allowance for doubtful accounts

The allowance for doubtful accounts reflects Entergy’s best estimate of expected losses on its accounts receivable balances. Due to the essential nature of utility services, Entergy has historically experienced a low rate of default on its accounts receivables. Due to the effect of the COVID-19 pandemic on customer receivables, however, Entergy recorded an increase in its allowance for doubtful accounts, as shown below:

			Entergy						Entergy Arkansas						Entergy Louisiana						Entergy Mississippi						Entergy New Orleans						Entergy Texas
			(In Millions)
Balance as of December 31, 2019			$ 7.4						$ 1.2						$ 1.9						$ 0.6						$ 3.2						$ 0.5
Provisions (a)			66.9						10.6						26.3						11.0						8.8						10.2
Write-offs			( 8.6 )						( 1.8 )						( 3.5 )						( 1.2 )						( 1.0 )						( 1.1 )
Recoveries			7.7						2.2						2.5						1.0						1.0						1.0
Balance as of September 30, 2020			$ 73.4						$ 12.2						$ 27.2						$ 11.4						$ 12.0						$ 10.6

(a) Provisions include estimated incremental bad debt expenses resulting from the COVID-19 pandemic of $ 51 million for Entergy, $ 6.1 million for Entergy Arkansas, $ 20.9 million for Entergy Louisiana, $ 8.4 million for Entergy Mississippi, $ 7.7 million for Entergy New Orleans, and $ 7.9 million for Entergy Texas that have been deferred as regulatory assets. See Note 2 to the financial statements herein for discussion of the COVID-19 orders issued by retail regulators.

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