Wolfe Research Utilities & Energy Conference Utilities - - PowerPoint PPT Presentation

Wolfe Research Utilities & Energy Conference Utilities Transition Stories discussion

October 3, 2018

1

Caution regarding forward-looking statements and Regulation G compliance

In this presentation, and from time to time, Entergy Corporation makes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among other things, statements of Entergy’s plans, beliefs or expectations included in this presentation. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events

• r otherwise.

Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including (a) those factors discussed elsewhere in this presentation and in Entergy’s most recent Annual Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q and Entergy’s

• ther reports and filings made under the Securities Exchange Act of 1934; (b) uncertainties associated with (1) rate proceedings, formula

rate plans and other cost recovery mechanisms, including the risk that costs may not be recoverable to the extent anticipated by the utilities and (2) implementation of the ratemaking effects of changes in law; (c) uncertainties associated with efforts to remediate the effects of major storms and recover related restoration costs; (d) nuclear plant relicensing, operating and regulatory costs and risks, including any changes resulting from the nuclear crisis in Japan following its catastrophic earthquake and tsunami; (e) changes in decommissioning trust fund values or earnings or in the timing or cost of decommissioning Entergy’s nuclear plant sites; (f) legislative and regulatory actions and risks and uncertainties associated with claims or litigation by or against Entergy and its subsidiaries; (g) risks and uncertainties associated with strategic transactions that Entergy or its subsidiaries may undertake, including the risk that any such transaction may not be completed as and when expected and the risk that the anticipated benefits of the transaction may not be realized; (h) effects of changes in federal, state or local laws and regulations and other governmental actions or policies, including changes in monetary, fiscal, tax, environmental or energy policies; and (i) the effects of technological changes and changes in commodity markets, capital markets or economic conditions, during the periods covered by the forward-looking statements. This presentation includes the non-GAAP financial measure of normalized ROE when describing Entergy’s results of operations and financial performance. We have prepared a reconciliation of this financial measure to the most directly comparable GAAP measure, which can be found in the appendix of this presentation. Further information can be found in Entergy’s investor earnings releases, which are posted on our website at www.entergy.com.

2

Entergy: We Power Life

Owners Deliver top-quartile returns Communities Achieve top-decile corporate social responsibility performance Customers Deliver top-quartile customer satisfaction Employees Earn top-quartile

• rganizational

health score and top-decile safety performance

3

In transition, our objective is two-fold

Steady, predictable growth at the Utility…  Earnings growth at our Utility, Parent & Other segment  Dividend growth …while managing risk  Customer-centric capital plan  Progressive regulatory constructs  Disciplined project management  Orderly wind-down of EWC

4

Successfully executing over the past few years

 $13B capital investment

• ver the last five years

 Major generation projects approved  Transmission expansion  Joined MISO in 2014  MTEP 15, 16 and 17 completed  AMI under way

Investing in the Utility

 Arkansas legislation / E-AR forward test year FRP  E-LA FRP improvements  E-MS FRP with forward- looking features  E-TX DCRF and TCRF  System Agreement termination  E-LA business combination

Constructive regulation

 Decisions to close or sell merchant nuclear plants

• FitzPatrick sale
• Agreements to sell

VY, Pilgrim and Palisades  IPEC license renewal  Revenue price risk reduction  Focus on nuclear

• perations

 Employee support

EWC wind-down

Exiting the merchant business - finishing strong at EWC

Pilgrim Planned shutdown (2019) Vermont Yankee Shutdown (2014) Planned shutdown (2020 / 2021) Indian Point Planned shutdown (2022) Palisades FitzPatrick Sold (2017) IP2 in final

• perating

cycle Agreement to sell (targeted 2019) Agreement to sell (targeted 2022)

5

Agreement to sell (targeted 2018)

6

2018E–2020E as of Analyst Day

A clear and robust Utility capital plan will fuel growth

Capital plan as of June 2018; does not reflect potential developments and/or updates since June 2018, including the Choctaw Energy Facility planned acquisition (announced 8/22/18)

Nuclear–$1.6B Power generation–$2.6B Transmission–$2.7B Distribution and utility support–$4.2B

$11.0B

7

Goal to maintain rate advantage

Lowest customer rates

Source: S&P Global Market Intelligence Regulated Retail Price of Electricity published 7/19/18

2017 average retail price by parent company; ₵ per kWh

ETR 7.58

8

Chart reflects 2018E–2020E capital investment as of June 2018, not rate base; capital projects will be reflected in rate base when they are closed to plant; for multi-year projects there will be a timing difference; does not reflect potential developments and/or updates since June 2018, including the Choctaw Energy Facility planned acquisition (announced 8/22/18)

~90% of capital plan recovered through timely mechanisms

Efficient cost recovery mechanisms

Capital plan recovery by mechanism Illustrative

Rate cases Forward-looking FRPs Traditional FRPs Riders

9

Longer-term, we are shifting from supplier to partner

From supplier To partner

10

Technology advances make it possible

Focused on delivering tailored customer solutions

11

Building an integrated energy network

Strategic investments to further our journey

Grid infrastructure replacements / upgrades Distributed resources Enabling technologies

Generation Distribution Customer Transmission

12

Entergy is positioned to seize growth opportunities

Efficient vertical integration Low rates Efficient regulatory frameworks Clean generation Environmental and social responsibility Economic development Prepared for change Track record

• f successful

execution

13

Appendix and Regulation G reconciliations

• Electric and gas utility
• Number of customers

– Electric 1,078,000 – Gas 93,000

• Authorized ROE ranges:

– Electric 9.95% (2017 test year); 9.2%–10.4% (2018−2019 test years) – Gas 9.45%–10.45%

• Electric FRP, gas RSP
• Electric utility
• 709,000 customers
• Authorized ROE range:

9.25%–10.25%

• Forward test year FRP
• Electric utility
• 448,000 customers
• Authorized ROE: 9.8%
• Rate case
• Electric and gas utility
• Number of customers

– Electric 200,000 – Gas 106,000

• Authorized ROE ranges:

– Electric 10.7%–11.5% – Gas 10.25%–11.25%

• Rate case
• Electric utility
• 449,000 customers
• Authorized ROE range:

9.28%–11.36%

• FRP with forward-looking

features

14

Utility overview

Customer counts at the end of period 12/31/17

1 Percent of 2017 weather-adjusted GWh electric retail sales 2 Percent of owned and leased MW capability for generation portfolio as of 12/31/17

30 36 24 10 2017 electric retail sales1; % 2017 generation portfolio2; % 30 26 42 2 Nuclear Coal Legacy gas/

• il

Residential Commercial Industrial Governmental E-LA E-AR E-TX E-NO E-MS CT/CCGT/ hydro/solar

15

Entergy Arkansas

1 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments 2 The $2.2B of ADIT reflects the pre tax reform federal tax rate (35%); will continue to reflect that amount in its cost of capital calculation by

including the regulatory liability for the excess ADIT until the value of the excess ADIT has been refunded to customers

7.9 8.1 As-reported Normalized LTM 6/30/18 ROE; %

1

Metric Detail Authorized ROE 9.25%–10.25% Rate base $7.095B retail rate base (2018 test year) WACC (after-tax) 4.67% Equity ratio 31.69% (45.48% excluding $2.2B of ADIT2 at 0% cost rate) Regulatory construct Forward test year FRP (2017–2021 annual test years); result outside authorized ROE range resets to midpoint; maximum rate change 4% of filing year total retail revenue; true-up of projection to actuals netted with future projection Last rate change $71M increase effective 1/2/18 Riders MISO, capacity costs, Grand Gulf, tax adjustment, energy efficiency, fuel and purchased power

E-AR (currently in rates)

16

Annual FRP filing in process

Entergy Arkansas

* Update since second quarter 2018 teleconference

2018 evaluation report (docket 16-036-FR)

Filing highlights 2019 test year 2017 test year true-up Earned ROE 7.79% 4.88% Retail rate base (ADIT incl. in WACC, not rate base) $7.547B $6.621B WACC (after-tax) 5.28% 4.64% Equity ratio (traditional equity ratio) 36.85% (46.66% excl. $1.7B ADIT at 0% cost rate) 31.61% (43.57% excl. $2.0B ADIT at 0% cost rate) Revenue requirements to midpoint $73.4M $95.6M Rate change requested $65.4M (cap) Category 2019 TY 2017 TY Cost of capital 29 8 Expense items (27) 31 Rate base 50 2 Revenue / sales shortfall 18 74 Other 3 (19) Total 73 96

Major components of revenue requirement; $M

Date Event 10/4/18 Staff/intervenor errors and objections 10/19/18 E-AR response to errors and objections 10/30/18 Stipulation or settlement deadline 11/1/18 Response to settlement 11/6–7/18 Hearing 12/13/18 Requested decision 1/2/19 Requested rate adjustment

Key dates*

17

Entergy Louisiana

* Update since second quarter 2018 teleconference

1 Pending finalization of the 2017 test year filing (docket U-34951) 2 2018 and 2019 test years will have an authorized ROE range of 9.2%–10.4% 3 50 bps dead band, 51 bps–200 bps 50% sharing, >200 bps adjust to 200 bps plus 75 bps sharing; for infrastructure costs, 100% sharing

above the band

4 Net effect of base rate increase and tax reform mechanism 5 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments

7.3 9.6 As-reported Normalized5

Metric Detail – electric1 Detail – gas Authorized ROE 9.95%2 9.45%–10.45% Last filed rate base $9.7B excl. $520M transmission plant through 8/31/18, included in the transmission rider (12/31/17 test year) $0.0645B, filed on 4/16/18 (9/30/17 test year) WACC 7.23% (after-tax) 7.25% (after-tax) Equity ratio 49.1% 49.53% Regulatory construct FRP, 2017-2019 test years; 60/40 customer/company sharing outside bandwidth RSP3 Last rate change Net base rate reduction $(18M)4 $0.85M decrease (largely tax) Riders/specific recovery Capacity, MISO, transmission, fuel Gas infrastructure

E-LA (currently in rates)*

LTM 6/30/18 ROE; %

18

Entergy Mississippi

1 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments

10.5 10.8 As-reported Normalized

1

Metric Detail Authorized ROE 10.32% performance-adjusted midpoint (9.69% + 0.63% performance factor); 9.28%–11.36% range (annual redetermination based on formula) Rate base $2.413B (2018 forward test year) WACC (after-tax) 7.13% Equity ratio 48.05% Regulatory construct FRP with forward-looking features; annual redetermination subject to performance-based bandwidth calculation and subject to annual “look-back” evaluation; maximum rate increase 4% of test year retail revenue (higher rate increase requires filing of a general rate case) Rate change None requested in 2018 FRP filing Riders Power management rider, Grand Gulf, fuel, MISO, unit power cost, storm damage, energy efficiency, ad valorem tax adjustment

E-MS (currently in rates)

LTM 6/30/18 ROE; %

19

Entergy New Orleans

1 Last filed electric rate base does not include Algiers assets transferred to E-NO from E-LA on 9/1/15; net book value of the assets at the time

• f the transfer was ~$85M

2 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments

2

Metric Detail – electric Detail – gas Authorized ROE 10.7%–11.5% 10.25%–11.25% Rate base (filed on 5/31/12)1 $0.299B (12/31/11 test year) – does not include $0.228B for Union (first year average rate base) $0.089B (12/31/11 test year) WACC (after-tax) 8.58% 8.40% Equity ratio 50.08% 50.08% Regulatory construct Rate case Rate case Riders/specific recovery Fuel, capacity (e.g., Ninemile 6, Union) Purchased gas

E-NO (currently in rates)

11.1 11.2 As-reported Normalized LTM 6/30/18 ROE; %

20

Base rate case filing re-submitted 9/21/18*

Entergy New Orleans

* Update since second quarter 2018 teleconference

Base rate case (docket TBD)

Category $M

AMI 8 Rate base 8 Depreciation expense 7 Other O&M (3) Income tax expense (5) Other revenue changes (4) Base rate change (net of realignment from riders) 10 2019 projected fuel savings and energy efficiency (31) Net rate change (20)

Major drivers of proposed rate change Highlights

• ROE: earned 8.73%, requested 10.50% (electric),

10.75% (gas)

• Rate base: $0.9B (12/31/18 test year with known

and measurable plant closings through 12/31/19)

• WACC (after-tax): 7.79% (electric), 7.92% (gas)
• Equity ratio: 52.2%
• 21% federal tax rate incorporated as a known and

measurable change

• Requested mechanisms:

− Electric and gas FRPs (2019–2021 test years), electric with ±25 bps reliability performance adj. − Riders for gas infrastructure, grid modernization, incremental capacity and LTSA

• Also includes community solar, green pricing
• ptions and other new customer offerings

Date Event 6/10-14/19 Hearing (tentative)

Key dates (tentative)

21

Entergy Texas

1 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments

7.7 7.8 As-reported Normalized

1

E-TX (currently in rates)

Metric Detail Authorized ROE 9.8% Rate base $1.634B (3/31/13 adjusted test year), filed on 9/25/13 – does not include ~$0.331B for rate base being recovered through DCRF and TCRF WACC (after-tax) 8.22% Equity ratio 48.6% Regulatory construct Rate case Last rate changes DCRF increase: ~$9.6M effective 9/1/17 Riders Fuel, capacity, DCRF, TCRF, RPCE payments, rate case expenses, AMI surcharge, among others

LTM 6/30/18 ROE; %

22

Base rate case filing

Entergy Texas

* Update since second quarter 2018 teleconference

1 Limited-term Tax Cuts and Jobs Act of 2017 rider that is designed to return ~$201.7M of unprotected excess ADIT over a period of two years

Base rate case – PUCT docket 48371 Highlights

• ROE: earned 6.54%, requested 10.65%
• Rate base: $2.572B (based on 12/31/17

test year, known and measurable adjustments and a post test year adjustment for capital projects closed to plant through 6/30/18)

• WACC (after-tax): 8.23%
• Equity ratio: 50.9%
• 21% federal tax rate incorporated as a

known and measurable change

• Proposed new riders to return $201.7M of

unprotected excess ADIT over two years and to recover certain wholesale tariff costs

Category Annual $M Rate base differences 77 Depreciation changes 60 Other O&M 56 Income tax expense changes (22) Other revenue changes (5) Base rate change 166 Roll riders into base rates (48) Net base rate change 118 Limited-term Tax Cuts and Jobs Act rider1 ~(101) Net rate change 17

Major drivers of proposed rate change Key dates

Procedural schedule suspended to allow for settlement discussions*

23

System Energy Resources, Inc.

1 Sale leaseback obligation excluded from capital structure, treated as an operating lease and recovered as an O&M cost 2 Reflects percentages under SERI’s Unit Power Sales Agreement

Energy and capacity allocation2; %

36 14 33 17 E-NO E-AR E-MS E-LA

Grand Gulf Nuclear Station

Metric Detail

Principal asset An ownership and leasehold interest in Grand Gulf Authorized ROE 10.94% Last calculated rate base $1.373B (6/30/18) WACC (after-tax) 8.85% Equity ratio 65%1 Regulatory construct Monthly cost of service

SERI – generation company

24

FERC proceedings (1 of 2)

System Energy Resources, Inc.

* Update since second quarter 2018 teleconference

1 FERC initially consolidated the APSC / MPSC ROE complaint with SERI’s depreciation and decommissioning filing (docket ER17-2219);

parties subsequently reached a settlement on the depreciation and decommissioning issues which FERC approved on 8/24/18

Date Event Date Event 10/18/18 Complainants and intervenors testimony 6/3-6/19 Hearing 12/5/18 SERI answering testimony 7/22/19 Initial briefs 1/23/19 Staff direct and answering testimony 9/6/19 Reply briefs 3/7/19 SERI respondent testimony 11/5/19 Initial decision 4/22/19 Complainants and intervenors rebuttal testimony

Key dates (ROE complaints)*

APSC / MPSC ROE complaint (docket EL17-41) LPSC ROE complaint (docket EL18-142)

• 1/23/17 – Complaint alleged that SERI’s ROE is

unjust and unreasonable; APSC / MPSC argue for an ROE range of 8.37% to 8.67%

• 9/29/17 – FERC set the matter for hearing and

settlement; refund effective date 1/23/171

• 6/18/18 – SERI filing indicated that parties were

unable to settle ROE issue

• 7/26/18 – Hearing judge appointed
• 8/29/18 – Chief ALJ order consolidating APSC / MPSC

ROE complaint with LPSC ROE complaint for hearing*

• 4/27/18 – Complaint alleged that SERI’s ROE is

unjust and unreasonable; LPSC argues for 7.08% ROE; LPSC also requests that SERI’s equity component be capped at 49% for ratemaking (see docket EL 18-204 on next slide)

• 8/24/18 – FERC order setting ROE issue for hearing

and settlement; refund effective date 4/27/18*

• 8/29/18 – Chief ALJ order waiving settlement process

and consolidating LPSC ROE complaint with APSC / MPSC ROE complaint for hearing*

25

FERC proceedings (2 of 2)

System Energy Resources, Inc.

* Update since second quarter 2018 teleconference

LPSC complaint re. GGNS sale-leaseback renewal (docket EL18-152)

• 5/14/18 – Complaint alleges that (1) SERI was imprudent in renewing the sale-leaseback, (2) SERI violated

the filed rate when it included the cost of capital additions associated with the sale-leaseback interest in UPSA billings and (3) SERI is double-recovering costs by including both the lease payments and the capital additions in UPSA billings

• 6/28/18 – SERI filed a motion to dismiss and answer in opposition to the LPSC’s claims
• 9/20/18 – FERC order setting LPSC sale-leaseback complaint for hearing and settlement*
• Next steps – Assignment of settlement judge and first settlement conference*

LPSC complaint re. SERI equity component (docket EL18-204)

• In its 4/27/18 ROE complaint, the LPSC also requested that SERI’s equity component be capped at 49% for

ratemaking (docket EL 18-142)

• 8/24/18 – FERC issued an order dismissing LPSC request for cap on equity component*
• 9/25/18 – LPSC request for rehearing on cap on equity component and new/updated LPSC complaint on

equity component*

26

Retail filings on tax reform

1 Represents grossed up amounts 2 See also APSC docket 18-006-U, the generic investigation docket for tax reform issues

Key milestones Retail filings summary

Event E-AR (16-036-FR) E-AR (18-014-TF) E-LA E-MS E-NO E-TX

Initial filing 3Q18 2/27/18 4/12/18 3/15/18 3/26/18 5/15/18 Decision/guidance 4Q18 Approved 3/27/18 Approved 4/18/18 Approved 6/5/18 6/21/18 4Q18

OpCo Docket Lower federal tax rate in rates Return of unprotected excess ADIT1

E-AR 16-036-FR/ 18-014-TF Tax rate change as part of the 2018 test year true-up2 $466M returned to customers ($360M in 2018, remainder in 2019) E-LA U-34316 In base rates effective 9/1/18;

• reg. liability for Jan–Aug 2018 benefit

$212M returned to customers (~half in 2018, remainder 2019–2022) E-MS 2014-UN- 132 Reflected in 2018 FRP $165M ($25M returned to customers in 3Q18, $140M to recover rate base items) E-NO 18-38 Assume base rates effective Aug 2019;

• reg. liability for Jan 2018 – Aug 2019

benefit ($7M over high-bill months, $7M Energy Smart, $1M grid modernization) $35M ($14M returned to customers, $12M grid modernization funding, $6M Energy Smart, $3M Smart City pilot) E-TX 48371 Reflected in recent rate case filing $200M returned to customers over two years

27

Generation projects

* Update since second quarter 2018 teleconference

1 Includes transmission interconnection and other related costs 2 Council approval is on appeal and is being challenged in a lawsuit alleging violations of the Open Meetings Law

Project Location OpCo MW Estimated cost Estimated in service Status

• St. Charles

Power Station Montz, LA E-LA ~980 CCGT $869M1 2019 Under construction New Orleans Power Station New Orleans, LA E-NO ~128 RICE $210M1 2020 Issued notice to proceed2 Lake Charles Power Station Westlake, LA E-LA ~994 CCGT $872M1 2020 Under construction Montgomery County Power Station Willis, TX E-TX ~993 CCGT $937M1 2021 Issued full notice to proceed Washington Parish Energy Center Bogalusa, LA E-LA ~361 CT $261M1 2021 Received regulatory approval Choctaw Energy Facility* French Camp, MS E-MS ~810 CCGT $314M 2019 Announced

28

Jurisdictional rate filing guidelines

* Update since second quarter 2018 teleconference

1 Not required to be filed per FERC order 2 May be suspended for an additional 150 days

E-AR E-LA E-MS E-NO* E-TX SERI Latest filing FRP filed 7/6/18 FRP filed 6/30/18 FRP filed 3/15/18 Rate case filed 9/21/18 2018 rate case filed 5/15/18 Monthly cost

• f service

calculation1 Next filing date FRP: July 2019 FRP: by 5/31/19 FRP: by 3/15/19 FRP: in 2019 (proposed) TBD Every month Rate effective date January following filing September following filing June following filing 1 year + 15 days after filing 35 days after filing2 Immediate Evaluation period Forward test year ended 12/31 Historical test year ended 12/31 except new generation and transmission closed to plant above baseline through 8/31 of filing year Historical test year ended 12/31 plus certain items from forward test year ended 12/31 Historical and forecasted test years ended 12/31 12-month historical test year with available updates Actual current month expense and prior month- end balance sheet FRP term/ post FRP framework FRP: 5 years (2017–2021 test years); option to request FRP extension, file rate case or do nothing FRP: 3 years (2017−2019 test years) FRP: no stated term; review scheduled in 2019 FRP: 3 years (2019–2021 test years) (proposed) n/a Monthly cost

• f service

continues until terminated by mutual agreement

29

EWC overview

1 ARO liability balances are based on most recent estimates and are subject to change 2 Includes $39M for Big Rock Point

Region breakdown; % MW as of 12/31/17 Generation portfolio; % MW as of 12/31/17 90 5 5

Nuclear Gas and oil Other Indian Point 1 Indian Point 2 Indian Point 3 Palisades Pilgrim VY Planned closing date Shut down 4/30/20 4/30/21 5/31/22 5/31/19 Shut down Net MW n/a 1,028 1,041 811 688 n/a Energy market (closest hubs) n/a NYISO (Zone G) NYISO (Zone G) MISO (Indiana) NEPOOL (Mass Hub) n/a Net book value of plant and related assets (6/30/18) – $113M $144M $71M $48M – NDT bal. (6/30/18) $491M $621M $801M $460M $1,055M $585M ARO liability bal. (6/30/18)1 $223M $738M $723M $528M2 $676M $344M

EWC non-nuclear plants

ISES 2 Nelson 6 RS Cogen COD 1983 1982 2002 Fuel / technology Coal Coal CCGT cogen Net MW owned 121 60 213 Market MISO MISO MISO

52 18 30

NYISO NEPOOL MISO

EWC nuclear plants

30

IPEC license renewal approved

* Update since second quarter 2018 teleconference

NRC license renewal application (NRC dockets 50-247 (IP2) and 50-286 (IP3)) Highlights

• On 2/8/17, Entergy filed with NRC:

− Notice of intent to shut down in 2020 / 2021 and − Amendment to license application to shorten license life to 2024 / 2025

• On 9/17/18, the NRC issued renewed operating licenses for IP2 and IP3*

− Plants still expected to close in 2020 (IP2) and 2021 (IP3)

31

Vermont Yankee transaction

* Update since second quarter 2018 teleconference

1 Timing of regulatory decisions could impact transaction closing

Transaction highlights

Item Details Structure Equity sale of ENVY Purchaser NorthStar Decommissioning Holdings, LLC Transaction close Targeted by year-end 20181 Conditions to close include

• Regulatory approvals: VPUC certificate of public good; NRC license transfer approval
• Minimum NDT balance
• Spent fuel in independent spent fuel storage installation

Status

• VPUC fully briefed, including settlement agreement addressing financial assurances and

site restoration standards; certificate of public good decision pending and will follow NRC license transfer decision

• Responses to all NRC staff requests for additional information and NorthStar commingled

fund exemption submitted; pending decision on license transfer approval and commingled fund exemption

• Transfer of all spent fuel to ISFSI completed on 8/1/18*

VPUC NRC

Docket 8880 50-271 (ADAMS ML17045A140) Decision Targeted 4Q18 Expected mid-October 2018

Next steps

32

Pilgrim and Palisades transactions

Transaction highlights

Item Pilgrim Palisades Structure Equity sale of ENGC Equity sale of ENP Purchaser Nuclear Asset Management Co., LLC (Holtec International subsidiary) Nuclear Asset Management Co., LLC (Holtec International subsidiary) Conditions to close include

• Permanent shutdown and reactor defuel
• NRC approval
• FERC approval (switchyard change of

control)

• Minimum NDT balance
• Palisades agreement has not been

terminated due to breach by purchaser

• Permanent shutdown and reactor

defuel

• NRC approval
• Minimum NDT balance
• Pilgrim transaction close

Status Executed purchase and sale agreement Executed purchase and sale agreement Pilgrim Palisades NRC filing 4Q18 TBD FERC filing TBD n/a Targeted close By the end of 2019 By the end of 2022

Targeted timeline

33

Regulation G reconciliations

Calculations may differ due to rounding

1 Utility does not equal the sum of the operating companies due primarily to SERI (as-reported income ~$85M, normalized income ~$91M and

average common equity ~$736M) and preferred dividend requirements of Entergy Utility Holding Co.

2 Represents a weighted average rate over last twelve months 3 Excludes special items and normalizes weather and income taxes; does not reflect regulatory ROE, which includes other adjustments

Table 1: Normalized ROE Reconciliation of GAAP to Non-GAAP measures LTM ending June 30, 2018

($ in millions) E-AR E-LA E-MS E-NO E-TX Utility1 As-reported earnings available to common stock (a) 204.4 393.4 124.7 47.5 92.4 943.9 Add back: Preferred dividend requirement (b) 1.4

• 1.0

0.4

• 11.5

Income taxes (c) (14.0) 352.3 (62.7) 26.2 46.4 377.2 As-reported income before income taxes (d) = (a)+(b)+(c) 191.8 745.7 63.0 74.1 138.8 1,332.7 Less certain items (pre-tax): Weather (e) (15.4) 6.6 (3.1) 2.0 4.8 (5.1) Special item (f)

• 55.5
• 55.5

Unprotected excess ADIT (g) (107.6) (31.5) (127.2)

• (278.1)

Normalized income taxes before taxes (h) = (d)-(e)-(f)-(g) 314.8 715.1 193.3 72.1 133.9 1,560.3 Affiliated preferred (i)

• 127.6
• 127.6

Normalized income before income taxes, adjusted for affiliate preferred (j) = (h)-(i) 314.8 587.5 193.3 72.1 133.9 1,432.7 State-specific standard income tax rate2 (k) 33.48% 34.00% 32.93% 32.77% 29.43% 33.30% Income tax at state-specific standard rate (l) = (j)*(k) 105.4 199.8 63.6 23.6 39.4 477.1 Normalized earnings (m) = (h)-(l)-(b) 208.0 515.3 128.7 48.1 94.5 1,071.7 Average common equity (n) 2,575.2 5,376.3 1,189.1 429.2 1,204.6 11,265.8 As-reported ROE (a)/(n) 7.9% 7.3% 10.5% 11.1% 7.7% 8.4% Normalized ROE3 (m)/(n) 8.1% 9.6% 10.8% 11.2% 7.8% 9.5%

34

Abbreviations and acronyms

Abbreviations and acronyms

ADIT Accumulated deferred income taxes AMI Advanced metering infrastructure APSC Arkansas Public Service Commission ARO Asset retirement obligation Bps Basis points CCGT Combined cycle gas turbine CCNO Council of the City of New Orleans, Louisiana COD Commercial operation date CT Simple cycle combustion turbine DCRF Distribution cost recovery factor E-AR Entergy Arkansas, Inc. E-LA Entergy Louisiana, LLC E-MS Entergy Mississippi, Inc. E-NO Entergy New Orleans, LLC E-TX Entergy Texas, Inc. ENVY Entergy Nuclear Vermont Yankee, LLC ESI Entergy Services, Inc. ETR Entergy Corporation EWC Entergy Wholesale Commodities FERC Federal Energy Regulatory Commission FitzPatrick James A. FitzPatrick Nuclear Power Plant (nuclear, sold March 31, 2017)

Abbreviations and acronyms

FRP Formula rate plan GAAP U.S. generally accepted accounting principles Grand Gulf or GGNS Unit 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by SERI Indian Point 1 Unit 1 of Indian Point Energy Center (shut down in 1974) Indian Point 2 or IP2 Unit 2 of Indian Point Energy Center (nuclear) Indian Point 3 or IP3 Unit 3 of Indian Point Energy Center (nuclear) Indian Point or IPEC Indian Point Energy Center (nuclear) ISES 2 Unit 2 of Independence Steam Electric Station (coal) LPSC Louisiana Public Service Commission LTM Last twelve months LTSA Long term service agreement MISO Midcontinent Independent System Operator, Inc. Moody’s Moody’s Investors Service MPSC Mississippi Public Service Commission MTEP MISO Transmission Expansion Planning NDT Nuclear decommissioning trust Nelson 6 Unit 6 of Roy S. Nelson plant (coal)

35

Abbreviations and acronyms (continued)

Abbreviations and acronyms

TCRF Transmission cost recovery factor Union Union Power Station (CCGT) UPSA Unit power sales agreement VPUC Vermont Public Utility Commission VY / Vermont Yankee Vermont Yankee Nuclear Power Station (nuclear) Waterford Waterford Steam Electric Station, Unit

• No. 3 (nuclear)

WACC Weighted-average cost of capital

Abbreviations and acronyms

NEPOOL New England Power Pool Ninemile 6 Ninemile Point Unit 6 (CCGT) NOPS New Orleans Power Station (reciprocating internal combustion engine/natural gas) NorthStar NorthStar Decommissioning Holdings, LLC NRC Nuclear Regulatory Commission NYISO New York Independent System Operator, Inc. O&M Operation and maintenance expense OCF Net cash flow provided by operating activities OpCo Utility operating company Palisades Palisades Power Plant (nuclear) Pilgrim Pilgrim Nuclear Power Station (nuclear) PUCT Public Utility Commission of Texas RICE Reciprocating internal combustion engine ROE Return on equity River Bend River Bend Station (nuclear) RPCE Rough production cost equalization RS Cogen RS Cogen facility (CCGT cogeneration) RSP Rate stabilization plan S&P S&P Global Ratings SERI System Energy Resources, Inc.