Entergy Corp (ETR) — Q3 2018 Earnings Call Transcript

Thank you. Good morning, and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Leo Denault; and then Drew Marsh, our CFO, will review results. 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. 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 Leo.

Thank you, David, and good morning, everyone. We now have three quarters behind us, and we continue to consistently execute on the initiatives that keep us on track to achieve our goals, both near term and longer term. We've completed most of the 2018 key deliverables we outlined at the beginning of the year, and we've added a few more since then. We are pleased to report strong third quarter results with Utility, Parent & Other adjusted EPS of $2.27 and consolidated operational earnings per share of $3.77. Drew will cover the numbers in more detail, but the bottom line is that we're raising our consolidated operational guidance range. For our UP&O adjusted view, we are affirming our 2018 guidance and our longer-term outlooks through 2021. With the EEI Financial Conference less than two weeks away, we are keeping today's call focused on the quarter. Before I go into our accomplishments, I'd like to address a couple of news items that while not materially impacting financial results weren't being addressed. First, on the Mississippi Attorney General complaint. This is the continuation of litigation that was filed 10 years ago. The matter was set to go to trial in early November, but as you may have heard earlier this week, the trial was continued to sometime next year. The precise date has not been set. We filed two separate motions for summary judgment, and last June, the State of Mississippi passed legislation, which clarifies that a claim of this nature should first proceed in front of the NPSE before being filed in court. This matter has been disclosed and thoroughly discussed in our 10-K and 10-Q filings to which I would point you. The important thing for you to take away is that our generation practices are scrutinized, reviewed or audited in multiple jurisdictions on a regular and continuous basis and have been for decades. Claims similar to those brought by the Attorney General were alleged in Louisiana, New Orleans and Texas. Louisiana commission and City Council both rejected those claims on their merits, and the case was dismissed in Texas for lack of jurisdiction. We feel very comfortable about our position in the litigation, and for that reason, do not believe the lawsuit poses a material risk to earnings. Second, we received the shared Gartner report on the grassroots advocacy practices in New Orleans. We recognized and appreciate the effort undertaken by the City Council to thoroughly review this matter. Nevertheless, we take exception to certain characterizations and key omissions in the report, like the Hawthorn Group's written admission that they took these actions without our knowledge. There are no facts that support the conclusion that Entergy employees knew about the hiring of crowds on demand or their payments to individuals to show support for the New Orleans power station. However, we believe that better oversight and asking the right questions could have either prevented the actions of Hawthorn and crowds on demand or discovered them and allowed us to stop them. We continue our effort to regain the trust and confidence of the citizens of New Orleans and the Council. I will now turn back to the quarter. With good clarity on our strategy, our accomplishments included a major milestone in our transition to a pure-play utility. The NRC has approved the license transfer of Vermont Yankee to NorthStar. This was a necessary condition in our agreement to sell Vermont Yankee along with its decommissioning assets and liability. The decision is also an important milestone for the nuclear decommissioning industry, and we are pleased with this outcome and encouraged by the NRC's acceptance of this transaction model. The sale of nuclear plants post-shutdown will benefit stakeholders and our industry by accelerating the decommissioning timeline, drawing on industry-leading decommissioning and site remediation expertise and experience and laying the foundation for potential future business development opportunities in the regions. We are awaiting a decision from the Vermont Public Utility Commission, which we requested by November 30. We continue to target completion of the transaction by year-end. We're also making progress on our agreement to sell Pilgrim. In September, we attended the NRC's license transfer application pre-submittal meeting with Holtec. We discussed Pilgrim's status and the proposed transaction as well as Holtec's decommissioning strategy and financial and technical qualifications. We plan to submit our filing to the NRC before the end of the year. We also received renewed operating licenses for Indian Point units 2 and 3, which are scheduled to shut down in 2020 and 2021, respectively. Palisades will close a year later, finalizing the orderly wind down of EWC operations. Our progress at EWC significantly advances our strategy to transition to a pure-play utility. We've also continued to make good progress towards modernizing the utilities generation portfolio. In August, Entergy Mississippi agreed to acquire Choctaw Generating Station. The plant is a clean and modern 810-megawatt combined cycle natural gas turbine. We expect to close the transaction by the end of 2019 following receipt of regulatory approvals. At Analyst Day, we noted that our 5-year capital plan assumed a new build CCGT to meet Entergy Mississippi's capacity requirements. Choctaw will now meet that need. Purchasing the Choctaw facility is more economic than a new build and frees up capital resources for other investments that will also benefit our customers. This is a good example of opportunities we continue to seek to meet our customers' needs at the most economical price point. We'll provide a preliminary update on our three year capital plan at the EEI Conference. We're also making progress on our new build generation projects. Our 3 CCGTs remain on budget and on schedule. We're awaiting an air permit from the state for the New Orleans power station before we can further proceed. We expect this to result in a 4 to 5 month delay in the plants' commercial operation date, but we still anticipate completing the project on budget. We've also made significant progress on key transmission projects. We completed the Lake Charles project, our largest transmission undertaking to date. It included construction of two new substations, expansion of two others and added approximately 25 miles of high-voltage transmission lines. The project is providing improved reliability and additional load serving capability in an area that is experiencing significant industrial growth. Also, in the quarter, Entergy Louisiana announced that it had signed a long-term agreement to serve Shintech's expanding manufacturing complex in Iberville Parish. Through the project, Shintech will create 120 new direct jobs. Louisiana economic development estimates an additional 590 new indirect jobs will result for a total of more than 700 new jobs. The expansion is also projected to create up to 3,000 construction jobs at its peak, and we expect it to come online in early 2021. We've also been busy with rate proceedings in many of our jurisdictions. In New Orleans, we refiled our rate case. The changes from the original filing related primarily to rate design and a revenue requirement request in our refiling is nearly identical to what we requested in the original filing. With next year's projected fuel savings and energy efficiency, the net rate change to our customers in 2019 is expected to be a $20 million decrease. In Texas, we filed an unopposed settlement agreement in our base rate case proceeding. The settlement is a step in the right direction. It provides certainty and will improve earnings and return and resolve tax reform issues in that jurisdiction. We expect the commission to take it up at an upcoming open meeting. Nevertheless, the settlement is less than we requested, and we will continue to work collaboratively with the commission, the legislature, and other stakeholders to explore ways to improve the regulatory construct in Texas. Specifically, we'll ask the commission to review its rules and associated procedures to include appropriate post-test year adjustments. Regulatory mechanisms that better align the timing of cost and investments with their recovery are beneficial for credit ratings, access to capital at a lower cost to customers, and infrastructure investments that drive economic development and job creation. Yesterday, parties filed a partial settlement agreement in the Arkansas FRP proceedings resolving all outstanding revenue requirement issues for 2019. The agreement recommends a rate adjustment of approximately $67 million consistent with EAI's initial filings. The rate adjustment is based upon a revenue requirement of approximately $163 million capped at 4% of total filing year revenue. We still expect a decision from the commission by year-end. This continued progress on regulatory proceedings improves clarity and solidifies our financial commitments. At Entergy, safety is a core value, and we recently achieved an important milestone. Our transmission group of nearly 1,000 employees achieved 397 days of injury-free performance. This milestone demonstrates that zero injuries are achievable on a sustained basis. We're proud of this accomplishment. We're thankful to our employees for the focus, commitment, and care they have demonstrated in achieving this outstanding performance. Before I turn the call over to Drew, I'd like to take a moment to acknowledge Wayne Leonard who passed away in September. Wayne was a friend and a mentor to many and he was also a true leader. He led our employees and our communities through transformational events like Hurricane Katrina. He took a leadership role in key industry issues, including sustainability and corporate responsibility. He advocated for low-income customers who couldn't speak for themselves and demanded that we do a better job serving the poor. He was a visionary on issues of climate change and the environment. Although he retired more than 5 years ago, Wayne's legacy remains deeply woven into the fabric of our company. We set out to drive sustainable long-term growth by delivering strong financial results to our owners, investing in our employees to create a workforce for the future, and proactively establishing policies to be an environmentally and socially responsible growth engine for our communities, while working to break the cycle of poverty experienced by many of the customers we serve. We never wanted individuals to have to choose between paying for electricity or necessities like groceries or medications. For us, that starts with controlling electric rates. S&P Global Market Intelligence studies show that in 2016 and 2017, Entergy provided power to retail customers at the lowest average price of the major investor-owned in the United States. In addition, we advocate for additional and fair funding for our customers from the Federal Low Income Home Energy Assistance Program. LIHEAP helps customers in dire financial circumstances pay their utility bills. With the help of our senators and congressmen, in 2018 an incremental $47 million was directed to eight residents in the states where we serve. And we've recently learned that the U.S. Senate is recommending an additional $50 million for the program in 2019 with customers in our service territory getting their fair share. Today, we operate as one of the cleanest large-scale generating fleets in the United States. Over the last three years, our emissions rate across our entire fleet has been more than 40% below the national average and the EPA standard for a new highly efficient combined cycle natural gas unit. This year, we were named to the 2018 Dow Jones Sustainability North America Index. We earned top scores in the areas of policy influence, climate strategy, water-related risks, and corporate citizenship and philanthropy. Only companies that excel in developing and implementing long-term economic, environmental, and social strategies and actions are included on the index. And we're the only U.S. electric utility to be named to the world or North American index or both for 17 straight years. It is no coincidence that this recognition goes back to the time when Wayne's and Entergy's greenhouse emissions commitment may have seemed an unrealistic goal. Our investors are increasingly aware of the importance of environmental and sustainability responsibilities. Financial results are inexplicably tied to good corporate citizenship, acting with concern for safety, the environment, employees, communities, customers, and owners is what makes Entergy a sound investment. We're proud of our legacy of leadership in these areas. We have made a lot of progress, but there is still a lot to do. To further our goal of improving communities, we have incorporated the UN sustainable development goals into our social responsibility, business plan, and strategy. We will also continue to work with our local partners, such as the United Way to help families achieve economic stability, Jobs for America's Graduates to create a skilled, ready and diverse workforce for the communities we serve, to have resources to fund coastal restoration and the power to care to provide bill payment assistance for elderly and disabled customers. I encourage you to learn more about our efforts and track record on ESG issues through our integrated report, which we publish annually. The fundamentals of our business are strong. 2018 has already been another year of significant accomplishments, including major milestones to keep us on track to achieve our strategic, operational, and financial objectives. Our accomplishments this quarter are in many ways simply a continuation of the path Wayne set out for us many years ago, a path to become a world-class utility that prospers by creating sustainable value for all its stakeholders, a path where our success is not only measured in delivering shareholder returns but also in leaving behind a better world, where doing good is good business. I'll now turn the call over to Drew, who'll provide more details on our financial results and also a preview of what we are planning for EEI. We look forward to seeing you at the conference.

Thank you, Leo, and good morning, everyone. As Leo mentioned, our accomplishments this quarter directly support our strategic, operational, and financial objectives. Our results were strong with consolidated operational earnings of $3.77 per share and Utility, Parent & Other adjusted earnings of $2.27 per share. At the Utility, the fundamentals of our business are healthy. We are seeing the effects of productive investment on behalf of our customers and the lower tax rate. We also had positive effects of weather year-over-year. At EWC, we saw good returns on the nuclear decommissioning trust funds in the third quarter and as we've communicated, favorable tax benefits. Overall, operational earnings to date are better than we expected. Therefore, we are raising our 2018 Entergy operational guidance while our core Utility, Parent & Other business is firmly on track to achieve its 2018 guidance and longer-term outlooks. Breaking down the results, starting with Utility, Parent & Other on Slide 5. Adjusted earnings, which normalized weather and taxes, were $0.12 higher than the prior year. Setting aside offsetting line items, we saw a lower retail sales volume in the unbilled period. This was partially offset by higher-than-expected weather adjusted bill sales and positive rate actions at Entergy Arkansas and Entergy Texas. Finally, non-fuel O&M was higher as planned due largely to fossil spending and contract costs. Moving to EWC's results on Slide 6. Operational earnings were $1.42. Excluding this quarter's tax items, the key driver was higher returns on the nuclear decommissioning trust funds. Lower nuclear pricing as well as nuclear sales volume partially offset the increase. This quarter's reported earnings included a $110 million upward revision to Pilgrim's asset retirement obligation from an updated decommissioning study. The revision resulted in an asset impairment, which is treated as a special item and excluded from our operational earnings. Before leaving EWC, I would like to update our cash expectation. We expect EWC to provide positive net cash to parent from 2019 through 2022. This remains a key focus area as we transition to a pure-play utility. Turning back to the quarter, Slide 7, shows operating cash flow totaling $780 million, $113 million lower than a year ago. The decrease was primarily due to the return of $266 million of unprotected excess ADIT to customers, which we expected. At this point, all of our customers are seeing the positive effects from tax reform in their bills. Roughly half of this was offset by solid weather as well as increased collections for fuel and purchase power cost recovery at the utility. In addition, lower net revenue at EWC and planned spending on Vermont Yankee decommissioning activities contributed to the decrease. Now turning to Slide 8 and 9. Because of our strong results to date, we're updating our consolidated operational guidance range of $6.75 to $7.25. This reflects a midpoint increase of $0.45 and a narrowing of the range. The primary drivers are strong weather to date and better-than-planned income tax outcomes. We're also assuming a tax item at the utility, which we expect to materialize in the fourth quarter. But to date, this quarter, the tax item is essentially offset by mark-to-market returns on the EWC nuclear decommissioning trusts. We're also affirming our Utility, Parent & Other adjusted guidance range, which we still expect to come around the midpoint. There are a few key drivers that I'd like to highlight. We've seen stronger-than-expected sales year-to-date, and as a result, we now expect positive growth for the year of about 0.5% versus our previous assumption of negative 0.7%. Nevertheless, we expect this to be partially offset by our settlement in the Texas rate case, which includes a $0.10 per share refund to customers from the lower tax rate, retroactive to January of this year. Because Entergy Texas has a historical test year and has been under earning, we did not assume this outcome when we set our guidance earlier this year. We expect this refund to affect 2018 results and is reflected in our current midpoint expectations for Utility, Parent & Other adjusted EPS. And to the extent, Entergy Arkansas and Entergy Mississippi continue to perform above our expectations, such that future true-ups would result in amounts due back to customers, we would accrue those this year. We're also affirming our long-term Utility, Parent & Other outlook through 2021. You'll see that our outlook is unchanged from Analyst Day just a few months ago. Switching gears a bit regarding our outlooks. For the past few years, we have focused on two earnings measures, Entergy operational EPS and Utility, Parent & Other adjusted EPS. Our Utility, Parent & Other adjusted view has helped us reinforce our focus on transitioning to a pure-play utility and has held us accountable to the quarterly results of the utility business. However, now that we've been successful with our strategy, having two measures may no longer be warranted. Over the next few months, we'll be evaluating our earnings measures and disclosures to address feedback we've received from the investment community, including the volatility from large tax items and EWC reporting. While at this point, we can't treat EWC as discontinued operations from a GAAP perspective, we recognize that the time is right to guide you on a simpler measure that better reflects our current business profile. We plan to provide a further update on the fourth quarter call. Moving to our credit metrics, shown on Slide 10. Our FFO to debt percentage is lower at 13.1% and our parent debt to total debt has increased to 24.5%. In the third quarter, our customers continue to receive the significant benefits of tax reform, including the $266 million of unprotected excess ADIT I mentioned earlier. This brings the year-to-date total to $342 million. We expect FFO to debt to improve over the next few quarters as we continue to return an estimated $640 million of remaining unprotected excess ADIT cash to customers. But beginning next quarter, we project an improvement in parent debt to total debt as we complete incremental debt issuances at utility and settle a portion of the equity forward. As I mentioned last quarter, we remain committed to our FFO to debt target at or above 15% by 2020 and our parent debt to total debt at or below 25%. Before we turn to Q&A, I want to reinforce that the fundamentals of our business are strong, and we are firmly on track to achieve our 2018 guidance and longer-term outlooks. We have executed on the majority of our business objectives for the year, including major milestones in the wind down of EWC. At the EEI, we plan to provide a preview of a few key considerations for 2019. We also plan to provide a preliminary three-year capital plan. We're excited about where we stand as a company, and we're looking forward to continuing this conversation at EEI.

So perhaps, first just to kick it off, good progress on the nuclear plan thus far. Curious on where you stand with respect to any end point, recognizing that there is still some time before you actually shut down these units. How are negotiations and progress going there? And how also at the same time are you thinking about cash flow and the net cash flow comment in light of some of the mark-to-market improvements in the last few months in Northeast more broadly?

Julien, this is Drew. Regarding your first question about Indian Point, as we have mentioned before, our plan is to follow a strategy similar to that of Pilgrim, Palisades, and Vermont Yankee. The positive aspect is that we have plenty of time since it will be some time before those plants are decommissioned. We're seeing increased interest due to our success with Vermont Yankee in front of the NRC. Therefore, we will utilize this timeframe to negotiate the best deal possible, and we likely won’t disclose specific details about the process or our current status as we move forward. As for your second question about mark-to-market, our consideration of the cash measure was based on the potential contributions to our decommissioning trust funds, and our current market expectations have been integrated into our forecast of positive cash flow from 2019 to 2022.

Got it, excellent. And then, quick as a follow-up, good success on the regulated front as well. How are you thinking about execution against the higher equity ratios across your service territories as well? It seems like you've had some of the settlements coming already?

I think if you look at Texas, it was close to 51%, the New Orleans request is above 50%, Louisiana is around 49%. The ones that we're still working on moving up are in Arkansas and Mississippi. I think Arkansas is the lowest at about 46% or so, so we are working on moving those up, but it'll take a little bit more time.

I appreciate, Leo, the update on the legal topics proactively, so appreciate that. On the quarter, I wanted to firstly talk on load growth. The load growth year-to-date you mentioned is about 0.5%, but your guidance assumption was more like negative 0.7%. So just wanted to understand what's driving the improvement year-to-date? And is that more sustainable do you think? Or is that more 2018 specific?

It's Rod. I think driving the year, we saw continued strong industrial growth. But what was different was the residential and commercial sector being stronger than we anticipated. But to your question about how we think about that in the outlooks, our outlooks haven't changed given the guidance we gave you through, I believe, 2022. So we're not making any adjustments to our long-term outlook.

And just real I'll add that, we're expecting AMI as we deploy that will give our customers better information and that will actually put some pressure on residential and commercial sales as we go forward, and we are over that.

Got you, fair enough. And Drew maybe for you, the second question more on finance and then like the credit side. Looks like your FFO to debt, obviously, has gone below 15% target that you have, and the debt to cap has gone above the 65%. Wanted to understand are the rating agencies allowing you some time to deal with this ADIT credit and kind of allow that lower than 15% for a couple of years? How is that pressure or discussion with the agency going?

Yes, Praful, they are fully informed about our current situation and our strategy related to the excess ADIT. We have committed to maintaining a Funds From Operations to debt ratio of 15% or higher starting in 2020, and they are aware of this commitment. If you exclude the excess ADIT, you will find that we still meet the 15% target; there is a reconciliation included in the back of the materials. Regarding the debt to total capital ratio, I am not sure that they emphasize that as much. The primary focus for Moody's, in particular, is the parent debt to total debt ratio, and we are keeping that at or below 25%. This figure should begin to decrease over the next few quarters as we reduce our equity.

I'm curious about when we will meet at EEI to discuss your capital plan. A significant part of your capital plan focuses on developing medium to large CCGTs combustion turbines, such as the RISE plant in New Orleans. How should we anticipate your capital spending evolving in relation to renewables, battery storage, and energy efficiency technologies as we enter a period of technological change that other regions and utilities are either compelled to adopt or are proactively embracing?

Yes, Greg, I'll begin and then Drew can add. During Analyst Day, we discussed the ongoing need for new generation, which is when we identified the need in Mississippi. Considering our current generation, we will need to continue updating it over time. We have a substantial amount of legacy generation that can be replaced with newer, more efficient options that have a better environmental impact. We also mentioned the emergence of renewables and battery storage becoming economically viable and competitive with traditional generation. That's why we announced that we have 1,000 megawatts of renewable energy in development right now, and we're exploring battery storage solutions, such as at our New Orleans solar facility or other areas where it’s beneficial. This isn’t just for backup generation but also addresses the transmission and distribution needs of the system. As noted during Analyst Day, we're focusing heavily on grid modernization and customer-facing investments, which we anticipate will increase, especially after implementing advanced metering infrastructure. We plan to invest significantly in technologies that enhance our insight into the grid, improve remote capabilities, and enhance troubleshooting. In addition, we are focused on better managing information, data, and analytics that benefit our customers. Overall, we have substantial traditional investments, especially given the growth in our service area, but you will increasingly see our investments in the transmission and distribution side as we develop a comprehensive grid modernization strategy. We are actively seeking ideas for capital expenditures, aiming to maximize value for our customers while maintaining our position as the lowest-priced utility in the U.S. and improving our reliability. We are also mindful of our environmental footprint; each new power plant we add offers a more environmentally friendly resource compared to what it replaces. Focusing on renewables and battery storage will further enhance our environmental impact. As Drew indicated, advanced metering infrastructure and similar technologies will help us guide customer usage towards lower emissions. There are numerous opportunities for win-win improvements as technology progresses.

I'll just finish that up, and I don't have a lot to add. In the operational IT kind of area where we talk about AMI and our new systems and distribution automation that kind of stuff, we're anticipating spending around $1.8 billion, $1.9 billion associated with that through the entire program. Now a little bit of that has been spent in '18. A lot of the meters, which probably make up $700 million, $800 million of it are going to start to roll out in January and be through '21. And then, we're going to also start to pick up distribution automation in that same time frame. So we have a significant amount of spending that we have identified. And then we also have some of the build on transfers like the new 800 megawatts of solar that we have proposed in New Orleans and so forth. So there is some of it in our capital plan right now, but as we have said, there is a lot more to go.

One question and a follow-up on a different topic. I appreciate your effort to simplify your earnings disclosures. They are currently very comprehensive and new, but simplification may be beneficial moving forward. For many years, you have successfully generated earnings through tax strategies, which, although it has introduced some volatility, has also created value. How much potential do you believe you still have in this area? There must be a limited opportunity for you to revisit and improve your tax positions with the IRS and state agencies. Considering your success over the years in making this a profitable area, how long do you think this can continue?

Certainly, we view that similarly to other aspects of our operations, and as long as we can enhance our customers' experience, we will continue to seek out opportunities. This approach will remain unchanged, and we plan to pursue it for the foreseeable future. We believe there may be additional opportunities, but they are still in the early stages, so we cannot specify what they might be or when they could materialize.

Just a question. I believe when you recently announced Holtec deal, you indicated that you felt that they would be quicker to get through the NRC process second time around and you put some parameters around that. So I'm just curious having completed Vermont Yankee, do you still feel that's the case? And can you remind us sort of what you're thought process around giving Palisades and Pilgrim done would be time-wise?

Sure. This is Drew. And as you remember, Jonathan, the Vermont Yankee deal is kind of a first of a kind deal, so everybody was learning through that process, and certainly, the NRC was learning through the process, and we would expect that there would be some kind of learning curve associated with it. And so our current anticipation is that we would complete the Pilgrim process by the end of next year. The Palisades process, of course, won't commence until 2022. But if we would expect some time second half of 2022 is whenever we would be able to close that particular half of the transaction.

I guess, you mentioned sort of a commitment to an improved FFO to debt ratio by 2020. Can you just elaborate on how you go from the current level to a committed higher level that you've promised for the rating agencies?

Yes, Paul, it's Drew. The main difference is the lack of returning assets that provide cash flow. I estimate a top line deficit of $342 million year-to-date. Once we add that back in, it should show improvement. Additionally, our business will also get better. For example, the Choctaw transaction has been viewed positively by Moody's because once we close, we'll start collecting on new rates immediately, with no delay, and it's a substantial investment. This should enhance our cash coverage ratios.

Okay. So you don't expect to need any equity over the next several years?

Yes. It's no difference in what we said at Analyst Day, which is nothing expect until 2021 or beyond.

Of course, condolences on Wayne. I know he meant a lot to people at your end. He certainly was a well-respected executive among the analyst community.

Thank you, Charles. Appreciate it.

Slide 37 on the special items, just had a couple questions on that. Fourth line down, the gain loss on sale of assets, that line is driven by the performance of MVP. Is that correct?

The ARO for Pilgrim changed this quarter as the decommissioning cost estimate was updated. This adjustment affected the loss we would have recorded next year in 2019, bringing it forward to this quarter and resulting in a slight decrease related to the Pilgrim transaction. Additionally, we have been focusing on some deferred tax assets in our project companies. If we can find ways to utilize those assets, we can avoid writing them off.

Thank you, and thanks to everyone for participating this morning. Our annual report on Form 10-Q is due to the SEC on November 9 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 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. And this concludes our call. Thank you very much.