Q3 2023 Entergy Corp Earnings Call

Yeah.

Good morning, My name is jail and that will be your conference operator today at this time I would like to welcome everyone to the Entergy third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one.

On your telephone keypad if.

If you would like to withdraw your question Press Star one again.

Thank you I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.

Good morning, and thank you for joining US we will begin today with comments from <unk>, Chairman and CEO drew Marsh and then Kimberly on P. M. Our CFO will review results.

In an effort to accommodate everyone who has questions we would.

Request that each person ask no more than two questions in there.

Today's call management will make certain forward looking statements actual results could differ materially from these forward looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation, and our SEC filings Entergy.

Entergy does not assume any obligation to update these forward looking statements.

Management will also discuss non-GAAP financial information reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website and now I will turn the call over to drew.

Yes.

Thank you Bill and good morning, everyone.

Today, we are reporting very strong financial results for the quarter.

Well as important progress with a few recent announcements.

<unk> settlement in principle with the Arkansas Public Service Commission on theory litigation and an agreement to sell our gas distribution business.

Starting with our quarterly financial results, our adjusted earnings per share was $3 27.

We experienced record temperatures with an estimated impact of 64 cents.

Which has given us the opportunity to flex our spending plans to invest in key areas to benefit our customers Derisked 2024.

Port our goal to deliver steady predictable results.

With our results to date and our biggest quarter behind US we are raising the bottom of the guidance range by 10 cents per share.

We remain well positioned to achieve our long term, 6% to 8% growth outlooks.

Our goal to deliver steady predictable growth includes our dividend.

There was expectations our board of directors once again raised our quarterly dividend by 6% to $1 13 per share or $4.52 annually.

Okay.

Turning to the business updates our system faced extreme heat and we saw a record demand through July and August in fact, there were 13 days that surpassed the previous peak demand records.

Despite the challenging weather our system met our customers' high expectations.

Our power delivery team withstood June storms and performed well as the summer turned hot and dry for most of our service territory.

Our generation portfolio covered our customer demand and we operated well within our reserve margins.

And our nuclear fleet with online throughout the quarter with a fleet capability factor of 99%.

We continue to invest in our nuclear assets with the goal to operate safely and reliably well into the future.

Two of our plants are currently planned outages to complete work along these lines.

Water for three isn't an extended planned refueling outage that includes significant investments to drive plant and longevity.

In addition, we've ever been as a planned outage to complete minor repairs to improve reliability going forward.

We are also investing in power delivery to improve reliability and resilience.

These investments not only benefit existing customers, but also attract new economic development to our region.

Through the first three quarters of this year, we replaced approximately 21000 distribution poles.

Nearly 500, new transmission structures and service.

At 15, new Substations.

Our past investments in modern efficient generation units, our nuclear fleet and our power delivery system helped us meet this summers demand.

Yeah.

We continue to see signs of strong customer growth that helps affordability.

<unk> fixed costs over a larger customer base for example, first solar announced plans to invest up to $1 $1 billion to build the solar manufacturing facility.

<unk> industry is proposing a $2 billion low carbon clean ammonia production facility and Cora is proposing an $800 million investment into electric vehicle battery supply chain projects.

These are just a few of the projects that support our expectation for strong growth in the coming years.

We've made meaningful progress on important regulatory matters, which supports the credit required to meet customers' growing needs and to drive improved customer outcomes.

Burst.

System energy reached a $142 million global settlement in principle with the Arkansas Public Service Commission to resolve all current theory claims.

Entergy, Arkansas has already received some funds and the remaining amount will be refunded by theory once FERC approves the settlement.

This agreement is consistent with series settlement with Mississippi, which was approved by FERC.

It is also consistent with the reserve recorded last year.

With this latest settlement CRE has now resolved nearly two thirds of its litigation risk.

The series settlement follows FERC August order on rehearing for the sale leaseback renewal and uncertain tax position case.

And that water FERC agreed with certain of system Energy's arguments on the sale leaseback and depreciation refund calculations and denied rehearing request on the uncertain tax positions.

Accordingly, we submitted our compliance report on the sale leaseback in theory has recouped $40 million is the amount previously paid to Entergy, New Orleans and Entergy, Louisiana.

Shortly after FERC August order the L. P. S E filed for rehearing and clarification.

FERC denied the rehearing by operation of law and indicated intends to issue an additional order on this matter.

We believe that the August order and settlement with Arkansas provides implored important clarity that will help guide constructive discussions to resolve the remaining theory litigation matters.

A fair and reasonable settlement can provide meaningful refunds to customers in the near term and eliminate uncertainty which itself bring further benefits to customers.

Turning to retail matters.

Entergy, New Orleans, New Formula rates were approved by the City Council and went into effect in September.

This this is the last rate change under its current FRP.

In addition, the Council also approved Entergy, New Orleans request to extend its FRP for another three years.

The outcome provides regulatory clarity for Entergy New Orleans.

The enhancements that will support the company's credit and by extension its ability to make important investments for its customers.

Entergy, Louisiana, Likewise had new formula rate effective in September its last rate change under its current FRP.

In the third quarter Entergy, Louisiana also filed its rate case, and alternatively proposed to extend its FRP with some revisions to provide an opportunity to earn a fair and improved return on investment that is critical to support the Louisiana growth.

The proposal also includes new customer and community programs to support those in need.

We prefer the proposed FRP renewal to the rate case as it better supports the strong growth that is important to Louisiana.

Regardless of the past our goal is to maintain the current cadence with new rates effective next September.

In late breaking news at the L. P. S C yesterday afternoon.

We filed an unopposed stipulated settlement that resolved outstanding 2017 to 2019 formula rate plan filings and certain issues in the 2020 in 2021 filings.

This settlement, which requires L. P. S. <unk> review is consistent with our outlook and it represents continued work with our stakeholders to provide clarity on our path forward.

Separately.

Louisiana docket to implement a streamlined process for certification of up to 3000 megawatts of new solar is also progressing.

Staff testimony is supportive of enhancing the process and we will work with them to incorporate their prospectus.

It's still relatively early in the process and we're hopeful that we will ultimately reach a constructive settlement as part of our ongoing efforts to work collaboratively with our regulators to bring clean energy solutions for our customers.

In Texas.

The PUC approved our rate case settlement, new rates as well as new depreciation and amortization, our effective retroactive to December 2022.

Okay.

And also just yesterday Entergy, Arkansas filed a unanimous settlement with its annual FRP.

That allows for a rate change at the 4% cap.

We expect the commission to take up the matter before year end and new rates will be effective in January.

Last week, if you, Arkansas agreed to forgo cost recovery from the state or incidents in 2013.

As a result, this quarter Entergy, Arkansas wrote off replacement power costs and underappreciated plant there on its balance sheet.

This has been a longstanding issue and this resolution provides clarity moving forward.

Finally regarding resilience, we continue to move forward in our processes to review our accelerated resilience proposal.

In New Orleans.

<unk> town hall meetings to listen to our stakeholders input and answer their questions.

We are targeting a city council decision by year end.

In Louisiana, we received input from the staff engineer as well as staff and intervenors.

All parties agree that accelerated resilience would benefit customers.

They are however, varying opinions on how much we should pursue right now in the tiny.

As we work together to manage customer affordability.

Our focus remains on bringing as much value to customers as we can while maintaining the credit of the business.

We have significant capital needs to meet our customers' growing demand for a lot reliable resilient and clean energy.

That in we are pursuing opportunities of sorts that source that capital at lower cost.

On Monday, we announced an agreement to sell our gas distribution business for $484 million.

We will use the proceeds to reduce debt and support our capital needs.

The sale is expected to be essentially neutral to earnings.

While the gas business is a relatively small piece of our overall utility business. The more than 200 employees in that business are an important part of <unk> community and culture.

As they have been for over 100 years.

We've reached agreement with Bernhard Capital Partners, Louisiana based group in part because they understand that these employees are critical stakeholders in the gas business.

In addition, our customers will continue to receive the high level of service that they have come to expect.

The transaction is contingent on regulatory approvals and we anticipate closing around the third quarter of 2025.

Federal programs are another cost effective way to source capital.

We are pursuing both grants and loans through various programs for example.

Under the grid resilient and innovative partnerships or grip program each of our operating companies submitted applications.

We are pleased to report that the proposal from Entergy, New Orleans was selected and the federal chair of the $110 million system partnering hardening and battery micro grid project will be $55 million.

While four of our projects were not selected they did receive encouragement letters and we are able to reapply for future funding rounds.

We're also preparing to apply for federal loans through the D. O E titled 17, Clean energy financing program.

Our application will include projects that we are already planning, including renewable generation battery storage and transmission projects.

Beyond federal financing directly for our customers.

We are working with our community partners to attract other federal support for investment in our region.

A good example is louisiana's hero project that unite public private and philanthropic sectors to accelerate more affordable reliable and clean energy to protect residents of Louisiana climate change threats.

Entergy, Louisiana, and Entergy, New Orleans, where both critical team members in helping Louisiana secure the $500 million Award.

Okay.

Another example is entergy, Texas participation in the high velocity hydrogen hub, which was selected by the deal with D. O E for $1 2 billion Dollar Award.

This funding will help jumpstart additional clean energy production transportation and induce opportunities, which in turn will create jobs and economic activity in our communities.

Entergy, Texas could see additional load from blue and green hydrogen customers as a result.

Most of our community work as local boots on the ground, including economic developments.

Our teams work alongside our state and local governments to attract new business jobs and tax base to our service area.

We are honored that site selection magazine has once again recognized entergy at the top utility for economic development.

We also have program to directly help our customers in need.

With the extreme heat this past quarter, we stepped up our efforts to provide resources for Bill assistance provide education on energy efficiency arrange for payment plans and encourage customers to transition to level wise billing.

We also hosted our first.

How are your future summit with education and workforce partners across our service area to create pathways to employment for individuals from underrepresented communities.

These are just a few examples of the tremendous work our utility companies and employees put toward our community stakeholder every day.

Okay.

The EI financial conference is just a couple of weeks away.

The fundamentals underpinning underpinning our growth and value creation for each of our key stakeholders remains intact.

Our long term sales growth outlook is robust bolstered by the IRA.

Our investment plan includes incremental capital to support the growth in other customer objectives, including reliability resilience and clean energy investments.

Customer affordability remains a priority and we are actively pursuing continuous improvement efforts to expand our employee skills and capabilities.

Using technologies like artificial intelligence and robotic process automation to help us maintain a generally flat O&M trajectory, despite the inflationary environment and our incremental investments.

And while our capital plan is increasing we have a plan to manage within the current financing environment that meets our credit objective with the same level of equity we laid out at analyst day.

With all of that we are on track to deliver steady predictable earnings and dividend growth and steadily working to build the premier utility.

We look forward to continuing this conversation with you at the EI financial conference in a couple of weeks.

Now I'll turn the call over to Kimberley, who will review our financial results for the quarter.

Okay.

Thank you Gary and good morning, everyone.

As drew said, we've had a very strong quarter with results that keep us on track to meet our financial commitments.

Summarized on slide three our adjusted earnings were $3 27 per share.

With results to date, we are narrowing our guidance range. We're also affirming our 6% to 8% adjusted EPS growth through 2026.

Slides board to counter quarters variances by line item as drew mentioned, whether this quarter was one of the hottest on record.

Excluding weather retail sales volume declined roughly 1%.

For industrial sales to new and expansion customers increased mainly in the primary metals industrial gases and petrochemical sectors.

Sales to cogent customers were lower in the quarter.

You may recall, the cogent sales were elevated last year.

Sales to existing large industrial customers. After a decline primarily in the petrochemicals pulp and paper and agricultural chemical sectors, largely due to outage timing.

We continue to expect strong industrial sales in the fourth quarter from new and expansion customers, which will bring our full year industrial growth.

<unk> to 2%.

Regulatory actions positively affected results.

Entergy, Texas implemented new base rates and new formula rates were in effect at the other operating companies.

O&M with 12 cents lower compared to last year.

Drivers for the decrease were nuclear expense, including lower outage costs and compensation and benefits costs.

MISO ancillary generator service costs were also lower.

Was largely offset by lower generator ancillary revenues.

Other drivers for the quarter results included expense increases that result from our customer centric investments, primarily higher interest cost and depreciation on new assets.

Neither depreciation rates for Entergy, Texas also contributed.

Operating cash flow as shown on slide five the.

The quarter's results is $1 $4 billion, which is $412 million higher than last year.

Key drivers included the timing of fuel and purchase power payments lower O&M spending and last year's EWC severance and retention payments.

These were partially offset by lower utility customer receipts due to lower fuel revenue and the timing of pension contributions.

Turning to credit and liquidity on slide six net liquidity remained strong at $4 $9 billion.

With less than a quarter left we remain squarely on track to achieve credit metrics at or above target range by the end of this year.

Key drivers included debt repayments in the fourth quarter and roll off of SSO items from fourth quarter 2022.

Looking at slide seven our equity needs through 2024 unchanged.

We have a small amount remaining for that period that is well within the capacity of our ATM program.

Slide eight summarizes our adjusted EPS outlook as I mentioned earlier, we are once again narrowing our guidance range and affirming our long term, 6% to 8% growth outlook through 2026.

As we move into the last quarter of the year I'd like to highlight a few updates for the balance of the year.

Higher than planned revenues from whether it gives us the ability to flex up spending in areas that benefit our customers and derisk future periods.

Our full year O&M estimate reflects the impact of these flex spending levers.

For example, our 2023 spending now includes additional maintenance expense as a result of our generating units running at very high capacity.

Incremental vegetation management to improve reliability.

Couple of mental maintenance for transmission and distribution assets to them training for liability.

And bill assistance to help customers who need it.

Our flex program helps us ensure that we deliver steady predictable adjusted EPS growth year in and year out.

The Entergy management team will be in Phoenix in less than three weeks, where we will discuss the progress we've made on our long term growth strategy and provide preliminary three year capital and financing plans.

Unknown Executive: Good morning, my name is Jail, and I will be your conference operator today.

Additionally, we will provide high level consideration for 2020 fourths earnings expectations.

Unknown Executive: At this time, I would like to welcome everyone to the Entergy 3rd quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

We have a strong base plan consistent with our strategic objectives that support our growing customer base.

Unknown Executive: After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

We are excited about the opportunities before us and look forward to talking to you at EI.

And now the Entergy team is available to answer questions.

William Abler: I will now turn the call over to Bill Abler, Vice President of the Investor Relations. For Energy Corporation. Good morning, and thank you for joining us.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad well pause for just.

A moment to compile the Q&A roster.

Andrew Marsh: We will begin today with comments from Entergy's Chairman and CEO Drew Marsh, and then Kimberly Fontan, our CFL will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than two questions. In today's call, management will make certain forward looking statements. Actual results could differ materially from these forward looking statements due to a number of factors which are set forth in our earnings release, our slide presentation, and our SEC filings.

Yes.

Yes.

Your first question comes from the line of Shar.

Guggenheim Your line is open.

Andrew Marsh: Entergy does not assume any obligation to update these forward looking statements. Management will also discuss non-GAAP financial information. Reconciliation to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website.

Hey, guys good morning.

Good morning Shar.

Wondering hey, Joe.

Just a question on the <unk> earnings in the 'twenty four assumptions building up.

Obviously now have 48 tenths of positive weather impact versus normal for the year moving up the bottom end of the range, which you talked about by 10, I guess wonder what other offsets are using now embedding into 'twenty three guidance and do you see any carry forward benefits to 'twenty four specifically maybe commenting.

Andrew Marsh: And now I will turn the call over to Drew. Thank you, Bill, and good morning, everyone.

On your O&M assumption going from 85 to 2000.

For year over year, how much of a difference quarter over quarter as reinvestment for the benefit of 24. Thanks.

Andrew Marsh: Today, we are reporting very strong financial results for the quarter, as well as important progress for the few recent announcements, including a settlement in principle with the Arkansas Public Service Commission on series litigation, and an agreement to sell our gas distribution business. Starting with our quarterly financial results, our adjusted earnings per share was $3.27. We experienced record temperatures with an estimated impact of 64 cents, which has given us the opportunity to flex our spending plans to invest in key areas that benefit our customers, the risk 2024, and support our goal to deliver steady, predictable results.

Sure sure. Thanks for the question.

As you noted we did have significant weather that enables us to pull forward. Some O&M spending some of that is as I noted related to that vegetation management spending that is coming into 'twenty. Three there is also been additional spending in the transmission and distribution space around maintenance on those assets all of that does help de risk <unk>.

24, and then we did have higher spending 23 in the third quarter and it will slow a bit into the fourth as we continue to maintain the unit for Dre mentioned that ran so well to support those higher volumes. So all of those contribute to that change in the O&M space and that helped de risk future periods.

Andrew Marsh: With our results to date, and our biggest quarter behind us, we are raising the bottom of the guidance range by 10 cents per share. We remain well positioned to achieve our long-term 6 to 8 percent growth outlook.

Okay got it and then just I guess.

In light of just the asset sale announcement, you guys did on the gas side I guess why keep the reiterated equity needs, especially as we're thinking about 25% to 26 and does.

Andrew Marsh: Our goal to deliver steady, predictable growth includes our dividend, consistent with expectations, our board of directors once again raised our quarterly dividend by 6 percent to $1.13 per share, or $4.52 annually. Turning to the business update, our system faced extreme heat, and we saw record demand through July and August. In fact, there were 13 days that surpassed previous peak demand records. Despite the challenging weather, our system met our customers' high expectations.

Capex step up require incremental equity there is as we're heading into the <unk>.

Sure the gas sale does help support the incremental capital that Jerry mentioned going into our 'twenty.

<unk> 24 to 26 outlooks. We also have strong sales that support that and we do not have incremental equity in that period and supported by those two items and we will go through more details on the financing plan for that at <unk> and a couple of weeks.

Andrew Marsh: Our power delivery team with good June storms performed well as the summer turned hot and dry for most of our service territory. Our generation portfolio covered our customer demand and we operated well within our reserve margins, and our nuclear fleet was online throughout the quarter with a fleet capability factor of 99 percent. We continue to invest in our nuclear assets with a goal to operate safely and reliably well into the future.

Okay Perfect and then just lastly on this unnecessary complaint proceedings I mean, obviously you noted the settlement in principle in Arkansas.

Debate has been somewhat compensation, especially as we're thinking about Louisiana.

Was the impetus of the settlement in Arkansas and do you guys think it's sort of repeatable with the other jurisdictions. Thanks.

Well.

Andrew Marsh: Two of our plans are currently in planned outages to complete work along these lines. Water for three is an extended planned refueling outage that includes significant investments to drive plant longevity. In addition, we are then as in a planned outage to complete minor repairs to improve reliability going forward. We are also investing in power delivery to improve reliability and resilience. These investments not only benefit existing customers, but also attract new economic development to our region.

Good morning, it's rod the impetus for that.

Yes, good morning, the impetus for the timing of the settlement I think.

Stemmed from the August.

FERC ruling that in our view lowered.

The risk.

Of uncertainty around.

Further refunds due from the <unk>.

From an uncertain tax position in sale leaseback. So it was an opportunity for us to revisit.

Negotiations given given the clarity from in August.

Andrew Marsh: Through the first three-quarters of this year, we replaced approximately 21,000 distribution poles, placed nearly 1500 new transmission structures in service and completed 15 new substations. Our past investments in modern efficient generation units are nuclear flea, and our power delivery system helped us meet this summer's demand. We continue to see signs of strong customer growth that helps affordability by spreading fixed costs over a larger customer base. For example, first solar announced plans to invest up to $1.1 billion to build a solar manufacturing facility. CF Industries is proposing a $2 billion low-carbon, clean ammonia production facility, and Cora is proposing an $800 million investment in two electric vehicle battery supply chain projects.

This decision.

Got it and then how do you think the.

Or read through I guess too.

Yes.

Yes, Louisiana for sure.

Yes from our vantage point.

We view it as constructive obviously, we won't we won't talk about comment on <unk>.

The specific timing or progress with Louisiana, or New Orleans, but we are comfortable saying we remain inactive.

<unk> of settlement under the <unk>.

On December the terms with the point being obviously as long as we're able to reach constructive settlement that's fair.

And reasonable and certainly consistent with the way in which we approach the.

Arkansas.

In Mississippi, We think we have a fair shot.

Obviously, we need the counterparties to to align with us and that's that's the work that remains.

Andrew Marsh: These are just a few of the projects that support our expectation for strong growth in the coming years. We have made meaningful progress on important regulatory matters, which supports the credit required to meet customers growing needs to drive improved customer outcomes.

Perfect. Thanks, Thanks, guys I appreciate it thanks Rod.

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

Andrew Marsh: First, system energy reached a $142 million global settlement in principle with the Arkansas Public Service Commission to resolve all current theory claims. Energy Arkansas has already received some funds, and the remaining amount will be refunded by Siri once FERC approved the settlement. This agreement is consistent with Siri settlement with Mississippi, which was approved by FERC. It is also consistent with the reserve recorded last year. With this latest settlement, Siri has now resolved nearly two-thirds of its litigation risk.

Great. Good morning, Hey, drew he can't really run.

Good morning, good morning, good morning.

Thanks for taking my questions wondering if you could elaborate a bit on what youre seeing in the industrial sales backdrop, just seeing the weather normal.

Sales down for this quarter, what are you seeing in terms of activity around projects and major industrial customer expansions that they've been working on.

Yes Big picture David.

As I noted we are seeing.

We continue to see a strong pipeline around new and expansion customers and Ron can talk on that is more specifically for the quarter.

Andrew Marsh: The Siri settlement follows FERC's August order on rehearing for the sale, lease, back renewal, and uncertain tax position case. In that order, FERC agreed with certain system energy arguments on the sale, lease, back, and appreciation refund calculations, and denied rehearing requests on the uncertain tax positions. Accordingly, we submitted our compliance report on the sale, lease, back, and Siri has recouped $40 million of the amount previously paid to Energy New Orleans and Energy, Louisiana.

Had some outages in our existing customers to drive to what our results our year to date and our pipeline continues to be strong yes.

Short story, there is that the pipeline of projects to your question has continued to grow.

We'll provide a little more insight around that.

But our confidence in our growth prospects are reflecting.

The actual growing number of projects.

Andrew Marsh: Shortly after FERC's August order, the LPSC filed to rehearing and clarification. FERC denied the rehearing by operation of law and indicated it intends to issue an additional order on this matter. We believe that the August order and settlement with Arkansas provides important clarity that will help guide constructive discussions to resolve the remaining Siri litigation matters. A fair and reasonable settlement can provide meaningful refunds to customers in the near term and eliminate uncertainty, which itself brings further benefits to customers.

Coming into the service territory. So robust is the operative word there.

Okay got it thanks for that and so at the end of the day no change to your your projections in terms of what you. What you had been expecting industrial sales growth to look like going forward.

That is correct no change.

Okay.

Okay. Thanks.

And then I was wondering if you could just.

Comment on your competitiveness in renewable Rfps from just any progress there.

Andrew Marsh: Starting to retail matters, Entergy New Orleans, new formula rates were approved by the city council and went into effect in September.

Thinking ahead to the potential opportunity in Louisiana with the enhanced renewable RFP three gigawatts just how are you.

Andrew Marsh: This is the last rate change under ENO's current FRP. In addition, the council also approved Entergy New Orleans request to extend its FRP for another three years. The outcome provides regulatory clarity for Entergy New Orleans and includes enhancements that will support the company's credit and by extension its ability to make important investments for its customers.

As that comes closer.

Okay.

Yes, the pipeline continues from our perspective on our on our cellular self development continues to develop well we have developed the capabilities to be competitive in that space and we are continuing to plan to support customer growth and desire for clean energy.

In the renewable space as well as other clean energy they may want, but our team is continuing to ramp up and continuing to be quite competitive in that space. So we're excited to see that and see that support our customers' growth.

Andrew Marsh: Entergy Louisiana, likewise, had new formula rates affected in September, its last rate change under its current FRP. In the third quarter, Entergy Louisiana also filed its rate case and alternatively proposed to extend its FRP with some revisions to provide an opportunity to earn a fair and improve return on investment that is critical to support the Louisiana growth. The proposal also includes new customer and community programs to support those in need. We prefer the proposed FRP renewal to the rate case as it better supports the strong growth as important to Louisiana.

Sure.

Perfect. Thanks for the color I appreciate it.

Yeah.

Our next question comes from the line of Jeremy Tonet of Jpmorgan. Your line is open hi.

Hi, good morning.

Good morning, Jeremy.

Just wanted to follow up on the U S. Gulf Coast industrial activity, if I could just curious I guess in your investor conversations or do you feel the market fully appreciates, given where <unk> has moved up versus relative to gas and what the spread is on a btu basis for oil and oil byproducts versus gas and natural gas byproducts, how much of a mix.

Andrew Marsh: Regardless of the path, our goal is to maintain the current cadence with new rates effective next September.

Andrew Marsh: In late breaking news, at the LPSC yesterday afternoon, we filed an unopposed stipulate settlement to resolve outstanding 2017-2019 formula rate plan filings and certain issues in the 2020 and 2021 filings. This settlement, which requires LPSC review, is consistent with our outlooks and it represents continued work with our stakeholders to provide clarity on our past forward.

<unk> advantage that is for the U S Gulf coast, both as the feedstock for the <unk> industry as well as power costs for our industrial businesses down there and I guess the.

The very long multiyear trend of growth that that could underpin.

Yes, Jeremy.

Those economic indicators or things that we track closely as you mentioned theyre important to some of our industrial customers.

Yes, both the the spread between <unk>.

Andrew Marsh: Separately, Louisiana's docket to implement a streamlined process for certifications of up to 3,000 megawatts of new solar is also progressing. Staff testimony is supportive of enhancing the process and we will work with them to incorporate their perspectives. It is still relatively early in the process and we are hopeful that we will ultimately reach a constructive settlement as part of our ongoing efforts to work collaboratively with our regulators to bring clean energy solutions for our customers.

Natural gas and some of the oil products those that as you pointed out it has widened.

And been very supportive of.

The Gulf Coast here, particularly as European gas prices have gone up in the last month or so as everybody knows so that has made it.

It's continuing what we already know, it's a big macro trends around.

Yeah.

Global geopolitical uncertainty and that has.

Andrew Marsh: In Texas, the PUCT approved our rate case settlement, new rates as well as new depreciation and amrizations are effective retroactive December 2022. And also just yesterday, Energy Arkansas filed a unanimous settlement with its annual FRP that allows for a rate change of the 4 percent cap.

Led to as you continue to be the case broken global supply chains and that brings a lot of investment to the U S and when they look at the U S. Gulf coast, So whether youre talking about geographic spreads or commodity spreads.

They are.

All very very strongly supporting our industrial customers in the industrial growth along the Gulf Coast, and particularly in our service territory.

Andrew Marsh: We expect the commission to take up the matter before you're in and new rates will be effective in January. Last week, Energy Arkansas agreed to forego cost recovery from the state or incident in 2013. As a result, this quarter, Entergy Arkansas Road offered placement power costs and unappreciated plant through on its bounce sheet.

Got it very clear to us thank you.

Maybe just following up.

On some of your prepared remarks, there with New Orleans, Louisiana Resiliency filing comments you.

You mentioned that there are varying options and opinions as how to how much resiliency to do right now.

Andrew Marsh: This has been a long-standing issue in this resolution, provides clarity moving forward. Finally, regarding resilience, we continue to move forward in the process as to review our accelerated resilience proposals. In New Orleans, we are holding town hall meetings to listen to our stakeholders' input and answer their questions.

Any sense as to how much variability you could see in the outcomes of these filings other than affordability concerns what are the other kind of big moving pieces here that are involved in these resiliency discussions.

It's rod.

If you recall there were two primary areas, where we got initial feedback.

<unk> engineer and the other was the commission staff.

Andrew Marsh: We are targeting a city council decision by year end. In Louisiana, we received input from the staff engineer, as well as staff and interveners. All parties agree that accelerated resilience with benefit customers. They are, however, varying opinions on how much we should pursue right now and the timing, as we work together to manage customer affordability. Our focus remains on bringing as much value to customers as we can while maintaining the credit of the business. We have significant capital needs to meet our customers growing demand for reliable resilience and clean energy. To that end, we are pursuing opportunity to source that capital at lower cost.

Had strong alignment on the need for resilience. So so we're not arguing about whether or not this is something we ought to be doing there were two dynamics around the staff testimony that I think it's instructive one was the reference there support for rider recovery for retired assets that gave us a lot.

A lot of comfort that we could come to a a constructive resolution once we sort of decide.

The scope and they also recommended transparency and accountability features but I think the work really for US is going to continue to align around scope pace and ultimately cost when we when we ultimately decide on what could be a settled outcome. Our objective is making sure on the back.

Andrew Marsh: On Monday, we announced an agreement to sell our gas distribution business for $484 million. We will use the proceeds to reduce that and support our capital needs. The sale is expected to be essentially neutral to earnings.

In that the recovery mechanism continues to support credit.

And our access access to capital, but those those sort of swim lanes or where the lion's share of the debate is going to be as the commissioner who rightfully be looking to answer the resiliency bell, but around affordable affordability for customers.

Andrew Marsh: While the gas business is a relatively small piece of our overall utility business, the more than 200 employees in that business are an important part of industry's community and culture, as they have been for over 100 years. We have reached agreement with Bernhardt Capital Partners, a Louisiana-based group, and part because they understand that these employees are critical stakeholders in the gas business. In addition, our customers will continue to receive the high level of service that they have come to expect.

Got it that makes a lot of sense.

And just one last one if I could given that you reaffirmed your 6% to 8% EPS CAGR through 26 in line with the Investor Day commentary.

Is it reasonable to assume rate base growth will also continue at a similar 7% to 8% CAGR through 2008, how would accelerated resiliency impact this semi Howard hi renewables.

Andrew Marsh: The transaction is contingent on regulatory approvals and we anticipate closing around the third quarter of 2025. Federal programs are another cost-effective way to source capital. We are pursuing both brands and loans through various programs. For example, under the grid resilience and innovative partnerships or grip program, each of our operating companies submitted applications. We are pleased to report that the proposal from Energy New Orleans was selected in the federal share of the $110 million system hardening and battery microgrid project will be $55 million.

When rate impact this.

The other side of the coin do you see pressures against this such as.

FRP caps as far as inflation is concerned just trying to see both sides. How you see this playing out.

Sure.

Rate base, we would expect to continue to grow consistent with growing capital investment is those investments are made to support our customers and the objectives that we have to support them from a pressure perspective, certainly there are opportunities for additional capital.

Round resilience for example, we've assumed.

Andrew Marsh: While four of our projects were not selected, they did receive encouragement letters and we are able to reapply for future funding rounds. We are also preparing to apply for federal loans through the DOE Title 17 Clean Energy Financing Program. Our application will include projects that we are already planning, including renewable generation, battery storage, and transmission projects. The on-federal financing directly for our customers. Optimers. We are working with our community partners to attract other federal support for investment in our region.

The base level of resilience as we discussed previously but with accelerated mechanisms. For example, there is more resilience that could be placed and if customers are interested in renewables at a faster pace that certainly could be additional capital that will drive additional spending as well and then.

It really is about making sure that we are supporting our customers growth and continuing to provide them services and.

The reliable power that we offer.

And I'll just add that as we get the EIA, we plan some additional disclosures around that potential capital increase above what we already have.

Andrew Marsh: A good example is Louisiana's HERO project that unites public, private, and philanthropic sectors to accelerate more affordable, reliable, and clean energy to protect residents of Louisiana from climate change threats. Entergy Louisiana and Entergy New Orleans were both critical team members in helping Louisiana to cure the $500 million award. Another example is Entergy Texas' participation in the high velocity hydrogen hum, which was selected by the DOE for $1.2 billion award. This funding will help jumpstart additional clean energy production, transportation, and end use opportunities, which in turn will create jobs and economic activity in our communities. Entergy Texas could see additional load from blue and green hydrogen customers as a result.

Got it thank you for that and just real quick the Frp's.

Any issues as far as caps against inflation that are something that we should be thinking about.

Jeremy we pay attention to customer affordability, and we certainly monitor the caps that we have to make sure that we are making investments, but staying with an affordability for our customers.

We've had constructive regulatory mechanisms in all of our jurisdictions and continue to expect to have that as we go forward.

And.

We always are talking about our continuous improvement efforts those are the things that helped us manage against things like inflation.

And it has.

It's been a tough bear the last couple of years, but we do believe that we can.

Really hold the line as I as I mentioned in my remarks against inflation in an <unk>.

Andrew Marsh: Most of our community work is local, boots on the ground, including economic developments. Our teams work alongside our state and local governments to attract new business, jobs, and tax base to our service area.

All the other capital that we're putting to work.

Which also drives cost as our can drive costs as well.

So that's our objective so we don't see it impacting.

Our rates as much as just all the incremental investment really is.

Andrew Marsh: We are honored that site selection magazine has once again recognized Entergy as a top utility for economic development. We also have programs to directly help our customers in need. With the extreme heat this past quarter, we stepped up our efforts to provide resources for bill assistance, provide education on energy efficiency, arrange for payment plans, and encourage customers to transition to levelized billing.

Okay.

Understood appreciate the time thank you.

Okay.

Our next question comes from the line of Paul Zimbardo of Bank of America. Your line is open.

Hi, Good morning, Thank you Tim.

Good morning.

And our first well done on the latest series settlement progress very nice to say.

Andrew Marsh: We also hosted our first Power Your Future Summit with education and workforce partners across our service area to create pathways to employment for individuals from underrepresented communities. These are just a few examples of the tremendous work our utility companies and employees put toward our community stakeholder every day.

And I was hoping I could kind of emerge David Jeremy's question and kind of combine.

What's the quantum of incremental capital opportunities across the renewables efforts as well as the hardening and resiliency programs I know, there's been a lot of numbers and timeframe. Just if you could help kind of frame the opportunity set relative to the outlook that'd be helpful.

Yes.

Yes, Paul we won't get into all the specifics of the EI I don't have the details in front of me, but there is I think we've talked historically about $900 million of resilience in the base and the incremental resilience on top of that.

Andrew Marsh: The ETI Financial Conference is just a couple weeks away. The fundamentals underpinning our growth and value creation for each of our key stakeholders remains intact. Our long-term sales growth outlook is robust, boltered by the IRA. Our investment plan includes incremental capital to support the growth and other customer objectives, including reliability, resilience, and clean energy investments. Customer affordability remains a priority, and we are actively pursuing continuous improvement efforts to expand our employee skills and capabilities, and using technologies like artificial intelligence and robotic process automation to help us maintain a generally flat owned interjectory despite the inflationary environment and our incremental investments. And while our capital plan is increasing, we have a plan to manage within the current financing environment that meets our credit objectives with the same level of equity we laid out at Analyst Day.

Andrew Marsh: With all of that, we are on track to deliver steady, predictable earnings and dividend growth, instead of working to build the premier utility.

That's available and assuming we get or when and if we get accelerated recovery, but we'll get into all the specifics on.

The puts and takes around capital and a couple of weeks.

Okay.

Alright.

Eagerly anticipating it'll be good update.

And then the other one just on <unk>.

Louisiana with the rate case slash. The FRP extension is this the kind of major preceding that you think needs to be more fully litigated or as a settlement and opportunity there.

Yes from our vantage point.

A subtle mode is one opportunity and to desired but to be specific.

Settlement in favor of continuing on with the FRP regime provides clarity for both us and customers certainly promote certainty.

Andrew Marsh: Emily. We look forward to continuing this conversation with you at the E.E.I Financial Conference in a couple of weeks.

Around recovery, given the growing investment needs to support growth in Louisiana.

And certainly a smoother transition as we began to pick up.

Kimberly Fontan: Now I'll turn the call over to Kimberly, who will review our financial results for the quarter.

On the putting capital to work for both resiliency and to fund the growth and so from our vantage point.

Kimberly Fontan: Thank you Drew and good morning everyone. As Drew said, we've had a very strong quarter with results to keep us on track to meet our financial commitments. Summarized on slide three are adjusted earnings with $3.20 27 cents per share. With results to date, we are narrowing our guidance range. We are also affirming our 6 to 8% adjusted EPS growth through 2026. Slides forward to tails of quarters variances by line item. As Drew mentioned, whether this quarter was one of the hottest on records.

Having the flexibility that an FRP.

Provides for both us and our customers and regulators.

<unk> is the optimal outcome, there and avoiding the litigation certainly an expense to stakeholders of mitigating a great cases something.

The stakeholders, who have chosen to aboard in Louisiana. So yes. The FRP is definitely the path that we are.

We're working towards.

Okay understood and then just.

Clarify quickly just setting expectations on timing should we think about the settlement potentials. After intervenor testimony I think March 26 of next year or could we potentially see something faster than that yeah. It's a great question, but I think it's a little early.

Kimberly Fontan: Excluding leather, retail sales volume declined roughly 1%. For industrial sales to new and expansion customers increased mainly in the primary metals, industrial gases, and petrochemical sectors. Sales to cogent customers were lower in the quarter. You may recall that cogent sales were elevated last year. Sales to existing large industrial customers also declined, primarily in the petrochemicals, pulp and paper, and agricultural chemical sectors. We continue to expect strong industrial sales in the fourth quarter from new and expansion customers, which will bring the full year industrial growth to close to 2%.

For us at this point to deem them the feedback to be meaningful around timing because discovery really has just gotten underway and we had a procedural order that was set last week that I think set the set the hearing for August of next year, a couple of things that might be helpful. As you think about mouse.

Films in the coming months.

The procedural schedule.

Set forth technical conferences in December January February I think that framework those technical conferences will give some insight as to the initial positioning of the parties and give us some some daylight as to.

Kimberly Fontan: Regulatory actions positively affected results. Entry G Texas implemented new base rates, and new formula rates were in effect at the other operating companies. O and M was 12 cents lower compared to last year. Drivers for the decrease were nuclear expense, including lower outage cost, and compensation and benefits cost. My so ancillary generator service costs were also lower. This was largely offset by lower generator ancillary revenues. Other drivers for the quarter results included expense increases that result from our customer centric investments, primarily higher interest cost and depreciation on new assets.

The path forward around potential so.

Okay, great. Thanks for that that's.

That's very helpful.

CODI.

Andy.

Our next question comes from the line of Michael <unk> of Evercore. Your line is open.

Thank you good morning, Thanks for taking my question.

So on the utility O&M outlook for the year you talked about.

Pulling forward spending to de risk 2024.

Delighted to some of the category.

Presumably also given our record temperatures in peak demand you had to spend more O&M for additional work crews and overtime pay.

Kimberly Fontan: New depreciation rates for Entry G Texas also contributed. Operating cash flow is shown on slide 5. The quarter's result is $1.4 billion, which is $412 million higher than last year. Key drivers included the timing of fuel and purchase power payments, lower O and M spending, and last year's EWC severance and retention payments. These were partially offset by lower utility customer receipts due to lower fuel revenue and the timing of pension contributions.

Maintaining reliability given the stress on the grid just wondering if you could break out how much of that spending was pull forward to de risk versus the amount to maintain reliability on your grid.

Okay.

Thanks, Michael you are right, we did have to spend more to support.

The the hot summer and the volumes in the power Gen team performed really well I don't have the breakout specifically between that piece as well as the pull out pull forwards.

Kimberly Fontan: Turning to credit and liquidity on slide 6, net liquidity remained strong at $4.9 billion. With less than a quarter left, we remain squarely on track to achieve credit metrics at or above target ranges by the end of this year. Key drivers include debt repayments in the fourth quarter and roll-off of FFO items from fourth quarter 2022. Looking at slide seven, our equity needs through 2024 unchanged. We have a small amount remaining for that period that is well within the capacity of our ATM program. Slide eight summarizes our adjusted EPS outlooks. As I mentioned earlier, we are once again narrowing our guidance range and affirming our long-term 6 to 8% rose outlooks through 2026.

But certainly we have been able to pull forward.

Inefficient spending around reliability, and the transmission and distribution space and in the.

<unk> space as well.

Okay, great. Thank you for the color.

I'll see you at EI.

Thank you.

Okay.

Our next question comes from the line of Anthony <unk> of.

Mizuno, sorry, Mizuho your line is open.

Yes. Thank you I think mizuno sell sporting goods.

Excuse me just.

I guess Joe.

Two quick ones.

The approval of the gas system sale.

I can take that <unk> 25.

Close.

Almost two years just curious on the length.

Kimberly Fontan: As we move into the last quarter of the year, I'd like to highlight a few updates for the balance of the year. Higher than planned revenue from weather gives us the ability to flex up spending in areas that benefit our customers and de-risk future periods. Our full-year O&M estimate reflects the impacts of these flex spending levers. For example, our 2023 spending now includes additional maintenance expense as a result of our generating units running at very high capacity, incremental vegetation management to improve reliability, supplemental maintenance for transmission and distribution assets to improve reliability and build assistance to help customers who need it. Our Flex program helps us ensure that we deliver steady, predictable, adjusted EPS growth year in and year out.

What causes that long long closure any important milestones along the way we should keep an eye up one.

Yes. This is rod.

The.

We have and certainly the advice of of initial stakeholder suggested that process. Given the fact that you have both Louisiana Public Service Commission.

Northern City Council and the Baton Rouge Metro Council, all having a partner process.

Give us an outlook of that 2018 to 21 months time frame.

That's really what sort of sets our expectation thats not any singular.

Jurisdiction, it's just the process of getting those approvals and if we're able to.

To do something sooner, then clearly we'd be working to achieve that objective.

And I'll just add that our buyer is new to this particular business and while all the operations and everything is all going to be good to go and transfer right over they do need to we're going to work with them to set up to get out some of the back office pieces of this.

Kimberly Fontan: The Entry G Management team will be in Phoenix in less than three weeks where we will discuss the progress we've made on our long-term growth strategy and provide preliminary three-year capital and financing plans. Additionally, we will provide high-level consideration for 2020-24s earnings expectations. We have a strong-based plan consistent with our strategic objectives that support our growing customer base. We are excited about the opportunities before us and look forward to talking to you at EEI.

And that might take a little bit longer than it normally would if it was a strategic buyer for example.

Got it and then.

Again I appreciate the clarity you guys have given on CRE and the progress you made earlier this week.

But just.

And I know, we don't want to just thank the negative outcome, but if the company continued to struggle with the Louisiana and New Orleans.

Unknown Executive: And now, the Entry G Team is available to answer questions. At this time, I would like to remind everyone in order to ask a question, press stars and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Is there a period of time that management would just maybe view that when you look at the book value of CRE versus maybe what the liability could be if Louisiana and New Orleans hold out that they would just look at Navy.

And ending the venture I am just curious if like trying to maybe gauge like how long until just management as we've tried really hard to know.

Sharra Paraza: Your first question comes from the line of Sharra Paraza of Guggenheim. Your line is open. Hey, guys. Good morning. Good morning, Sharra. Good morning, Hitu. Just a question on the 23 earnings and the 24 assumptions building up. Obviously, now have 48 cents of positive weather impact versus normal for the year, moving up the bottom end of the range, which you talked about by 10 cents. I guess what other offsets are you now embedding in the 23 guidance and do you see any carry-forward benefits to 24?

Given up on the weekend.

Yeah, well I mean, I'll tell you that we.

We're always looking at every potential outcome.

Option. So that is always part of the calculation.

But at this point, we think we've made good progress with that.

The settlement and Mississippi and now the settlement in Arkansas, such that it de risks roughly two thirds of the overall <unk>.

The exposure there so we feel like we're making good progress and that we don't really need to go down that particular path at this time.

Sharra Paraza: Specifically, maybe commenting on your ONM assumption going from 85 cents to 20 cents for a year or a year. How much of the difference? Quarter of a quarter is reinvestment for the benefit of 24. Thanks. Sure, Sharra. Thanks for the question. As you noted, we did have significant weather that enables us to pull forward some OEM spending. Some of that is, as I noted, related to that vegetation management spending that is coming into 23.

But that is something that we're always staying close attention to and looking at various options.

And so that's something we'll keep considering in the future.

Great. Thanks for taking my questions guys I appreciate it.

Thank you.

Okay.

Our next question comes from the line of Nick Campanella of Barclays. Your line is open.

Sharra Paraza: There's also been additional spending in the transmission and distribution space around maintenance on those assets. All of that does help the risk, 2024. And then we did have just higher spending in 23 in the third quarter, and it'll flow a bit into the fourth as we continue to maintain the unit that Drew mentioned that ran so well to support this higher budget. James, so all of those helped contribute to that change in the O&M space and then helped de-risk future periods. Okay, guys, and I guess it is in light of just the asset sale announcement you guys did on the gas side.

Okay.

Hey, good morning, Thanks, a lot and taking the time just just one for me today, a lots been answered but on the credit.

I think youre doing 12, 4% trailing 12 month and Youre, obviously signaling you can get back to the 14% by year end and within.

The appropriate minimums can you just confirm that's more just lapping and roll off of items and there's nothing else required.

On the regulatory standpoint of approvals at this point.

Sure Nick Thats right. The there is a significant amount of debt that will roll off in the fourth quarter.

Roderick West: I guess why keep the reiterated equity needs, especially as we're thinking about 25 and 26 and does a cap-back step-up require incremental equity there as we're heading into the EI. Thanks. Sure, the gas sale does help support the incremental capital that Drew mentioned going into our 24 to 26 outlooks. We also have strong sales that support that and we do not have incremental equity in that period and supported by those two items and we'll go through more details of the financing plan for that at EI in a couple weeks.

Large part related to Louisiana securitization from earlier in the year and then there are some items from fourth quarter of 2022, including the Mississippi settlement with CRE that was paid out in November that will roll off in the in the 12 months ended 2023.

Okay.

Okay.

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

Hi, everybody.

What's yours fictions, you see having the biggest opportunity for incremental resilient spending and does the current equity issuance plan have built in buffer for some of this capex upside highlighted already on the call.

Roderick West: Okay. Perfect. And then just last year on this, on this Surrey complaint proceedings, I mean, obviously you noted the settlement and principal and Arkansas, but the debate has been somewhat confrontational, especially as we're thinking about Louisiana. What was the impetus of the settlement and for Arkansas? And do you guys think it's sort of repeatable with the other jurisdictions? Thanks. Well, good morning. It's Rod. The impetus. Good morning. The impetus for the timing of the settlement, I think, stem from the August perk ruling that in our view lowered the risk of uncertainty around further refunds due from the, from answer and tax position and fail these facts.

Yes.

Thanks, Ryan as you know we have opened filings in New Orleans and in Louisiana.

And in between those two has much more spending in New Orleans, we also anticipate a filing in Texas in 2024 as the <unk>.

Condition right the rules coming out of the legislature as far as the equity in the amount of investment we've assumed a base level of investment associated with resilience and depending on what is approved out of that we'll be looking at how to finance that.

But we have a significant amount of capital in our plan, including that base level of investments so more to come as those decisions come out of the jurisdictions.

Okay. Appreciate it thank you.

Roderick West: So it was an opportunity for us to revisit negotiations given, given the clarity from the August, that August decision. Got it. And then just Rod, how do you think the reads were, I guess, to the, I guess, Louisiana for sure? Yeah, from our vantage point, we view it as as constructive. Obviously, we won't, we won't talk about a comment on on specific timing or progress with Louisiana or New Orleans. But, you know, we are comfortable saying we remain an active pursuit of settlement under the, under similar terms with the point being, obviously, as long as we're able to reach constructive settlements that's fair.

Our next question comes from the line of Paul Patterson of Glen Rock Associates. Your line is open.

Hey, good morning.

Good morning, Paul.

Just.

This is plainly with.

Most of my questions have been answered but with them.

With respect to the.

Theory leaseback litigation.

Congratulations on the settlement and stuff, but if Louisiana I guess I'm wondering is from a fully litigated.

Respective whether we get closure on those if if this if there isn't a settlement I guess with Louisiana.

I want to make sure I'm understanding. The question is the question when would we likely get settlement in Louisiana on the remaining issues that.

Roderick West: And, and reasonable and certainly consistent with the way in which we approached Arkansas and in Mississippi, we think we have a fair shot. But, obviously, we need the counterparties to, to align with us. And that's, that's the work that remains. Perfect. Thanks. Thanks, guys. Appreciate it. Thanks, Rod.

I guess I guess I'm not asking you to predict that I think you sort of answered that I guess my question wasn't.

If there isn't a settlement.

How long does the litigation when would you expect the litigation, yes to come back.

It's long lived if you think about this through the FERC process.

David Arcaro: Our next question comes from the line of David, our carrow of Market Stanley. Your name is, your line is open.

Addressing those remaining issues could take you will two plus two plus years and it goes back to what we were suggesting around why.

David Arcaro: A great good morning. Hey, Drew. Hey, Kimberly. Hey, Rod. Good morning. Morning. Thanks for taking my questions. I wonder if you could elaborate a bit on what you're seeing in the industrial sales backdrop. Just seeing the weather normal sales down for this quarter. We're seeing in terms of activity around projects and major industries. Israel customer expansions that they've been working on. Yeah, big picture, David. You know, as I as I noted, we are seeing we continue to see a strong pipeline around new and expanding customers and Rod can talk on those more specifically.

We're continuing to pursue settlement and the opportunity to provide benefits and value to customers sooner.

And later in a settlement provides both us and now potentially Louisiana and New Orleans, the opportunity to do that versus the uncertainty that comes with the couple of years or so before there's any resolution.

Okay, great. Thanks for the clarity.

And just to say full resolution not any resolution because we imposed as a whole right that's right.

Yes.

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

David Arcaro: For the quarter, you know, we had some outages in our existing customers that drove to what our results are here today, but our pipeline continues to be strong. Yeah, the short story there is that the pipeline of projects to your question has continued to grow, we'll provide a little more insight around that at E.I. But our confidence in our growth prospects are reflecting on the actual growing number of projects of customers coming into the service territory.

Yeah.

Okay.

Travis perhaps your line is on mute.

Yes.

It appears there are no further questions at this time, Mr. Taylor I will now turn the call back over to you.

Thank you Jill and thanks to everyone for participating this morning, our quarterly report on Form 10-Q is due to the SEC on November nine and provides more details and disclosures about our financial statements events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet.

David Arcaro: So robust is the operative word there. Okay, got it. Thanks for that. And so at the end of the day, no change to your projections in terms of what you have been expecting industrial sales growth to look like going forward. That is correct. No change. Okay, okay, thanks.

Would be reflected in our financial statements in accordance with generally accepted accounting principles.

Also as a reminder, we maintain a web page as part of <unk> Investor Relations website called regulatory and other information.

Andrew Marsh: And I was wondering if you could just comment on your competitiveness in renewable RFP and just any progress there. You know, thinking about thinking ahead to the potential opportunity in Louisiana with the enhanced renewable RFP three gigawatts, just how are you situated as that comes closer. Yes, the pipeline continues from our perspective on our on our solar self development continues to develop well. We have developed the capabilities to be competitive in that space.

Which provides key updates of regulatory proceedings and important milestones on <unk>.

Our strategic execution.

Some of this information may be considered material information you should not rely exclusively on this page for all relevant company information and this concludes our call. Thank you very much.

[music].

Andrew Marsh: And we are continuing to plan to support customer growth and desire for clean energy in the renewable space as well as, you know, other clean men or energy they may want. But our team is continuing to ramp up and continuing to be quite competitive in that space. So we're excited to see that and and see that support our customers growth.

David Arcaro: Okay, perfect. Thanks for the call. I appreciate it.

Jeremy Tonet: Our next question comes from line of Jeremy Tonnet of JP Morgan. Your line is open. Hi, good morning. Good morning, Jeremy. Just want to follow up on US Gulf Coast industrial activity. I could just curious, I guess in your investor conversations or do you feel the market fully appreciates given where WTI has moved up versus relative to gas and what the spread is on a BTU basis for oil and oil byproducts versus gas and natural gas byproducts.

Yes.

[music].

Jeremy Tonet: How much of a material advantage that is for the US Gulf Coast both as a feedstock for the tech industry as well as power cost for industrial businesses down there in, I guess, the, you know, the very long multi-yard trend of growth that that could underpin. Yeah, Jeremy, you know, those economic indicators are things that we track closely. As you mentioned, they're important to some of our industrial customers, you know, both the spread between natural gas and and some of the oil products.

Jeremy Tonet: You know, that is as you point out is widening out and very supportive of the Gulf Coast here, particularly as European gas prices have gone up in the last month or so as everybody knows. So that has made, you know, it's continuing what we already know is the big macro trends around, you know. Global Geopolitical Uncertainty, and that has led to, as you continue to be the case, broken global supply chains, and that brings a lot of investment to the US, and when they look at the US, they look at the Gulf Coast. So, whether you're talking about geographic spreads or commodity spreads, they are all very, very strongly supporting our industrial customers and the industrial growth along Gulf Coast, and in particular our service territory.

Okay.

[music].

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

Roderick West: It's right. If you recall, there are two primary areas where we got initial feedback, one was the staff engineer, and the other was the commission staff. We had strong alignment on the need for resilience, so we're not arguing about whether or not this is something we ought to be doing. There were two dynamics around the staff testimony that I think is instructive. One was they referenced their support for rider recovery for retired assets.

Roderick West: That gave us a lot of comfort that we could come to a constructive resolution once we sort of decide the scope, and they also recommended transparency and accountability features. But I think the work really for us is going to continue to align around scope pace and ultimately cost. When we ultimately decide on what could be a subtle outcome, our objective is making sure on the back end that the recovery mechanism continues to support credit and our access to capital. But those sort of swim lanes are where the lion's share of the debate is going to be, as the commission will rightfully be looking to answer the resiliency bell, but around affordability for customers.

Roderick West: Got it. That makes a lot of sense. Just one last one, if I could. Given that you reaffirmed your six to eight percent EPS Kager through 26 in line with the investor day commentary. Is it reasonable to assume rate base growth will also continue at a similar seven to eight percent Kager through 28? How would accelerate resiliency impact this? Similarly, how would higher renewables win rate impact this? On the other side of the coin, do you see pressures against this such as FRP caps as far as inflation is concerned, just trying to, you know, see both sides, I see this playing out.

Roderick West: Sure. The rate base we would expect to continue to grow consistent with growing capital investment as those investments are made to support our customers and the objectives that we have to support them. From a pressure perspective, certainly there aren't opportunities for additional capital around resilience. For example, we've assumed a base level of resilience as we've discussed previously, but with accelerated mechanisms, for example, there is more resilience that could be placed in.

Roderick West: If customers are interested in renewables at a faster pace, that certainly could be additional capital that would drive additional spending as well. And then, you know, it really is about making sure that we are supporting our customers growth and continuing to provide them the services and the reliable power that we offer. And I'll just add that as we get to E.E.I., we plan to additional disclosures around that potential capital increase above what we already have.

Roderick West: Got it. Thank you for that. Just real quick, the FRPs, any issues as far as caps against inflation that are something that we should be thinking about? Jeremy, we pay attention to customer affordability, and we certainly monitor the caps that we have to make sure that we are making investments but staying within affordability for our customers. So, you know, we've had constructive regulatory mechanisms in all of our jurisdictions and continue to expect to have that as we go forward.

Roderick West: And we always are talking about our continuous improvement efforts. You know, those are the things that help us manage against things like inflation. And it has been a tough bear the last couple of years, but we do believe that we can really hold the line as I mentioned in my remarks against inflation and on all the other capital that we're putting to work, which also drives costs, or can drive costs as well. So that's our objective. So we don't see it impacting, you know, our rates as much as just all the incremental investment really is.

Roderick West: Understood. Appreciate the time. Thank you.

Paul Zimbardo: Our next question comes from line of Paul Zimbardo of Bank of America. Your line is open. Hi, good morning. Thank you, team. Good morning. It offers well done on the latest series settlement progress, very nice to say. And I was hoping I could kind of merge David and Jeremy's question and kind of combine. What's the quantum of incremental capital opportunities across the renewable effort as well as the hardening and resiliency programs?

Paul Zimbardo: I know there's been a lot of numbers and time frame just if you could help kind of frame the opportunity set relative to the outlook that be helpful. Yeah, Paul, we'll get into all the specifics of EI. I don't have the details in front of me, but there is. I think we've talked historically about 900 million of resilience in the base and then incremental resilience on top of that. That's available and assuming we get to or win.

Paul Zimbardo: And if we get accelerated recovery, but we'll get into all the specifics on the puts and takes around capital in a couple of weeks. Okay. Great. You know, you're going to be anticipating EI. It'll be a good update. And then the other one just on the Louisiana with the rate case slash the FRP extension. Is this the kind of major proceeding that you think needs to be more fully litigated or as a settlement and opportunity there?

Paul Zimbardo: Yeah, from our vantage point. A settlement is one and up an opportunity and to desire it, but to be specific. A settlement in favor of continuing on with the FRP regime provides clarity for both us and customers, certainly promotes certainty around recovery given the growing investment needs to support growth in Louisiana. And certainly a smoother transition as we begin to pick up on the putting capital to work for both resiliency and to fund the growth.

Paul Zimbardo: And so from our vantage point, having the flexibility that an FRP provides for both us and our customers and regulators is the optimal outcome there. And avoiding the litigation, certainly inexpensive to our stakeholders of litigating a rate case is something we and other stakeholders have chosen to avoid in Louisiana. So yeah, the FRP is definitely the path that we're working on, in Tours. And then to clarify quickly, just in setting expectations on timing, should we think about the settlement potentials after intervener testimony, I think March 26 of next year, or could we potentially see something faster than that?

Paul Zimbardo: Yeah, it's a great question, but I think it's a little early, you know, for us at this point to deem the feedback to be meaningful around timing, because discovery really has just got an under way, and we had a procedural order that was set last week that I think set the hearing for August of next year. A couple of things that might be helpful, as you think about milestones in the coming months, the procedural schedule set forth technical conferences in December, January, February, I think that framework, those technical conferences will give some insight as to the initial positioning of the parties, and give us then some daylight as to the path forward around potential settlement.

Roderick West: Okay, great, and I'll thank you, that's very helpful. TDI. And then.

Michael Lonegan: Our next question comes from a line of Michael Lonegan of Evercore, your line is open. Thank you. Good morning, thanks for taking my question. So, on the utility O&M outlook for the year, you talked about, you know, pulling forward spending to DRIS 2024, you know, you highlighted some of the categories. Presumably also, you know, given the record temperatures and peak demand, you had to spend more O&M for, you know, additional work crews and overtime pay, you know, to maintain reliability, given the stress on the grid.

Michael Lonegan: Just wondering if you could, you know, break out, you know, how much of that spending was pulled forward to DRIS, you know, versus the amount to, you know, maintain reliability on your grid. Thanks, Michael. You're right. We did have to spend more to support the, the hot summer and the volumes and the power gene team performed really well. I don't have the breakout specifically between that piece as well as the pull forward, but certainly we have been able to pull forward significant spending around reliability and the transmission distribution space and in the vegetation space as well.

Unknown Executive: Okay, great. Thank you for the call. I'll see you at EI. Thank you.

Anthony Crowdell: Our next question comes from line of Anthony Crowdell of Mizuno, sorry, Mizuhu. Your line is open. Thank you.

Roderick West: I think Mizuno sells sporting goods. Excuse me, just some, I guess two, two quick ones. Approval of the gas system sale, it, I think you're gotten to like a three to 25 clothes. It's, you know, almost two years, just curious on the length. What causes that long, long closure and any important milestones along the way we keep an eye off. Thank you. Yeah, it's Rod. The experience we have, and certainly the advice of the initial stakeholder suggests that that process, given the fact that you have both Louisiana Public Service Commission, the New Orleans City Council, and the Baton Rouge Metro Council, you know, all having a partner process, gives us an outlook of that 2018 to 21 month time frame.

Roderick West: And that's really what sort of sets our expectation. It's not any singular jurisdiction. It's just the process of getting those approvals. And if we're able to, to do something sooner, then clearly we'd be working to achieve that objective. Now, I'll just add that, you know, our buyer is new to this particular business. And while all the operations and everything is all going to be good to go and transfer right over, they do need to.

Roderick West: We're going to work with them to set up, you know, some of the back office pieces of this. And that might take a little bit longer than it normally would if it was a strategic buyer, for example. Got it. And then I appreciate the clarity you guys are giving on Siri in the progress you made earlier this week. But just, and I know we don't want to just think the negative outcome, but if the company continued to struggle with Louisiana and New Orleans, if they're a period of time that management would just maybe view that, you know, when you look at the book value of Siri versus maybe what the liability could be if Louisiana and New Orleans hold out that they would just look at maybe, you know, and ending the venture.

Roderick West: I'm just curious if like trying to maybe gauge like how long until just management says we've tried really hard to get it up on the weekend. Well, I mean, I'll say anything that we are always looking at every potential outcome and an option. So, you know, that is always part of the calculation. But at this point, you know, we think, you know, we've made good progress with the settlement in Mississippi and now the settlement in Arkansas, such that it de-risked roughly two thirds of the overall exposure there.

Roderick West: So we feel like we're making good progress in that we don't really need to go down that particular path at this time. But, you know, that is something that we're always paying close attention to and looking at various options. And so that's something we could keep considering in the future. Great.

Unknown Executive: Thanks for my questions, guys. I appreciate it. Thank you.

Nick Campanella: Our next question comes from the line of Nick Campanola of Barclays. Your line is open. Okay.

Kimberly Fontan: Good morning. Thanks a lot for taking the time. Just just one for me today. A lot's been answered but I'm on the credit. I think you you're doing 12.24% trailing 12 months and you're obviously signaling you can get back to the 14% by year end and within the appropriate minimums. Can you just confirm that's more just lapping and roll off the items and there's nothing else required from the regulatory standpoint of a free rules for this point.

Kimberly Fontan: Sure, next that's right. There is a significant amount of debt that will roll off in the fourth quarter, a large part related to Louisiana Securitization from earlier in the year. And then there are some items from fourth quarter of 2022, including the Mississippi settlement with Siri that was paid out in November. That will roll off in the in the 12 months ended 2023.

Unknown Executive: All right.

Ryan Levine: Our next question comes from the line of Ryan Levine of City. Your line is open. Hi, everybody.

Roderick West: What's your restrictions you see having the biggest opportunity for incremental resilience, spending, and does the current equity issuance plan have built in buffer for some of this cat backside highlighted already on the call. Thanks, Ryan. As you know, we have open filings in New Orleans and in Louisiana, Louisiana between those two has much more spending than New Orleans does. We also anticipate a filing in Texas in 2024 as the commission writes the rules coming out of the legislature, as far as the equity and the amount of investment.

Roderick West: We've assumed a base level of investment associated with resilience and depending on what is approved of that, we'll be looking at how to finance that. But we have a significant amount of capital in our plan, including that base level of investment. So we're to come as those decisions come out of the jurisdiction. I appreciate it. Thank you.

Paul Patterson: Our next question comes from line of Paul Patterson of Glen Rock Associates. Your line is open. Hey, good morning. Morning, Paul. Just finally with most questions been answered, but with respect to the theory, we stack litigation.

Roderick West: Congratulations on the settlement and stuff, but if Louisiana, I guess what I'm wondering is from a fully allocated perspective, when will we get closure on this, if there isn't a settlement, I guess, with Louisiana. I want to make sure I'm understanding the question is the question, when would we likely get settlement in Louisiana on the remaining issues that? I guess I guess I'm not asking you to predict that. I think if you sort of answered that, I guess what my question was is, if there isn't a settlement, how long does litigation, when would you expect the litigation to come through?

Roderick West: Yeah, it's, it's, it's long lived. If you think about this, the, the FERC process addressing those remaining issues could take you well, two plus, two plus years. And it goes back to what we were suggesting around why we're continuing to pursue settlement and the opportunity to provide benefits and value to customers sooner. Rather, rather than later, and a settlement provides both us and now, particularly Louisiana and New Orleans, the opportunity to do that versus the uncertainty that comes with the couple of years or so before there's any resolution.

Roderick West: Okay, great. Thanks for the party. And just to say, full resolution, not any resolution, because we've pulled the whole resolution. That's your right point. Thank you.

Travis Miller: Our next question, personal line of Travis Miller of Morningstar. Your line is open. Travis, perhaps your line is on mute.

William Abler: It appears there are no further questions at this time. Mr. Abler, I will now turn the call back over to you. Thank you, Jail. Thanks to everyone for participating this morning.

William Abler: Our quarterly report on Form 10Q is due to the SEC on November 9th and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also as a reminder, we maintain a web page as part of Entergy's Investor Relations website called regulatory and other information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information.

William Abler: And this concludes our call. Thank you very much.