The Entergy Corporation held a conference call to discuss their second quarter 2023 earnings. During the call, CEO Drew Marsh and CFO Kimberly Fontan discussed the company's progress and their plans for the future. They reported adjusted earnings per share of $1.84 and are on track to achieve 2023 results in line with their guidance. The company is investing in resilience and reliability and expanding their clean energy footprint in order to meet customer demands.

Entergy's power delivery team is upgrading legacy assets to new, more robust wind and flooding standards through new construction projects, storm restoration, and asset renewal. These improvements will support more than 120 megawatts of growth and their nuclear plants are running well with a 99% capability factor for the first half of 2023. Additionally, their geographic footprint is allowing for major projects such as ExxonMobil's CCUS project to capture, transport, and store up to 800,000 metric tons of CO2 per year from the Nucor iron plant in Convent, Louisiana.

Shell Catalysts & Technologies has made a final investment decision on a $120 million expansion project in Port Allen, Louisiana, which is already the largest refining catalyst plant in the world. Despite some weakness in national industrial output indicators, their industrial sales were up about 1%, with sales to small industrial customers and large, new and expanding industrial customers increasing by 90 and 100 gigawatt hours respectively. They are expanding their clean energy portfolio by adding 6,000 megawatts of renewable capacity, with 2,400 of those megawatts currently in construction, permitting, regulatory review or negotiations.

Entergy is making progress on their self-build capabilities and have achieved at least 50% ownership through their competitive RFPs. They are making meaningful progress on important regulatory matters to support the credit required to meet customers' needs and drive improved customer outcomes. Entergy Louisiana plans to file a base rate case this month, including a request for a new 3-year formula rate plan, which will allow them to recover their investments and maintain their credit.

Entergy Texas is expecting a decision from the commission at tomorrow's open meeting, and any change in revenue and depreciation expense will be retroactive to December of last year. The Texas Resiliency Act and the Distribution Cost Recovery Factor legislation will allow for more timely recovery of significant distribution investments. The Expedited Transmission CCM will reduce the time for commission approval by half to 6 months. Lastly, the ALJ ruled against the complainants on several issues, but recommended approximately $250 million refunds associated with accumulated deferred tax issues going back to 1996.

Entergy is awaiting a response from FERC regarding a compliance filing related to a sale leaseback and uncertain tax position case. Additionally, they have been recognized by the Civic 50 and Forbes Magazine for their commitment to their communities and diversity. They are also taking measures to help low-income and senior customers through bill payment assistance, weatherization events, and distribution and energy efficiency kits.

Entergy is continuing to make progress on their strategy to deliver for their stakeholders, with a focus on meeting customers' demands through operational excellence, resilience and clean energy investments. They are also maintaining their financial discipline and working closely with their stakeholders to ensure they have the financial strength to drive economic development in their communities. In the quarter, they have seen benefits from their customer-centric investments, regulatory actions, higher depreciation, taxes other than income taxes and interest expense, as well as a significant reduction in other O&M.

The settlement from the rate case was credit positive and had a neutral effect on earnings. Retail sales growth was down 0.9%, with the residential segment having a slightly positive contribution from customer growth and the commercial and industrial sales being lower. Operating cash flow was $588 million higher than last year due to lower payments for fuel and purchase power. Net liquidity remained strong at $4.7 billion, and Entergy is on track to meet its credit outlook. S&P and Moody's downgraded SIRI due to pending litigation.

This paragraph highlights the progress made in resolving SIRI litigation, the company's equity needs through 2024, and their updated guidance range and adjusted EPS outlook. It also mentions the impact of warmer-than-normal temperatures and lower-than-expected residential sales on earnings per share, as well as the decrease in O&M costs and flex spending plans. Finally, the paragraph mentions the remaining EWC ownership interest in two nonnuclear generation facilities.

Entergy has had success with the Louisiana Public Service Commission (LPSC) since the end of 2022, receiving support for their securitization, Lake Charles Transmission system, and gas business rate decisions. The addition of the newest commissioner, Davante Lewis, has created an opportunity for Entergy to engage differently in educating the commissioner on the historic relationships between the company and its stakeholders. Entergy has reacted consistently to any comments from individual commissioners.

Entergy is planning to file a rate case and FRP to ensure that their capital plan is aligned with the regulatory mechanisms, as well as a strong renewables portfolio to fuel the growth of the state. The company is expecting the commission to be receptive to the case they are making for why an FRP is in the best interest of customers long term. Additionally, Entergy is currently in the midst of a settlement impasse with a prudence complaint in July, with a rehearing pending.

Kimberly Fontan and Drew Marsh discussed the financial plans for SIRI, including the Mississippi settlement, and the potential liability from the last complaint. Roderick West stated that it was difficult to determine how the Louisiana resiliency process would unfold once the staff engineered report is filed this month, but that it could potentially be tied together with the RFP, the rate case, and other processes.

The objective is to make the compliance filings required by the commission and then attempt to find a path to settlement without going through the expense of litigation. The company is working to improve customer response and address local stakeholder concerns with over 100 people in a large conference room in Texas working on the issue. There were some system glitches earlier in the spring that did not work as intended and the company is working through the issues.

Drew Marsh is discussing initiatives that have been pursued to lower costs and build up the renewable development pipeline. These initiatives have been successful in competing in RFPs and making progress in terms of being competitive in the solar RFP front.

The Texas Public Utility Commission has been consistent in its view that the challenge of having a large pipeline of projects to support is not a surprise. Roderick West and Drew have discussed the progress they have made in building up their portfolio, with a current development pipeline of 4 gigawatts and an expectation of adding another half gigawatt by the end of the year. They have also been securing additional sites for renewables development, including generation sites and transmission interconnects, which is improving their competitiveness. However, the challenges their peer utility is having in getting a few renewables projects over the finish line in Texas is not impacting their strategy in the state.

Drew Marsh explains that the EEI refresh will include more details about the industrial growth expected in 2025 and beyond. He states that the movement of projects from 2024 to 2025 is normal as large industrial projects are difficult to complete. He also mentions that there is potential for capital investment opportunities in hydrogen and CCS if the commission has a change in policy regarding renewables.

The Texas legislation includes a number of favorable elements, such as a resilience filing, a biannual filing for the DCRF, and executive compensation recovery in a rate case. These changes could lead to improved earnings, decreased lag in investments, and better system resilience.

Entergy's quarterly report on Form 10-Q is due to the SEC on August 9th and will provide more details and disclosures about their financial statements. They maintain a web page as part of their Investor Relations website which provides key updates of regulatory proceedings and important milestones on their strategic execution. This call is concluded.

This summary was generated with AI and may contain some inaccuracies.