Entergy Corp (ETR) — Q4 2021 Earnings Call Transcript

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 an effort to accommodate everyone who asks questions, we request that each person has 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. 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, Bill, and good morning, everyone. Today, we are reporting strong results for another successful year. Our adjusted earnings per share is $6.02, which is in the top half of our guidance range. This is the sixth year in a row that our results have come in above our guidance midpoint. Underlying our steady predictable results is Entergy's dedicated, robust, and resilient organization working day in and day out to create sustainable value for all our stakeholders. Because of the solid foundation that we have built and our proven track record, we are confident that we will continue to achieve success into the future by delivering meaningful outcomes. As such, we are initiating 2022 guidance and affirming our longer-term outlooks in line with our discussions at EEI. This continued success is important to all our stakeholders, including our customers. Being able to navigate through headwinds is possible only through financial discipline that allows us to continue to raise the capital needed to serve our customers. Without financial health, we could not have raised the over $4 billion needed to fund the restoration from recent storms, including Ida and Laura, two of the worst storms ever to hit Louisiana. We have managed through the revenues lost as a result of these storms and COVID-19. Without financial health, we could not consider accelerating resilience investments to better withstand future storms nor could we make the investments in clean energy that our customers, large and small, are seeking. In 2021, like 2020, we were presented with headwinds caused by the pandemic and weather events. And as in 2020, we proved we could navigate those headwinds and continue to deliver strategically, operationally, and financially. Strategically, we stood up our customer organization and appointed our first-ever Chief Customer Officer, David Ellis. David is building a team to work with our customers to find ways to meet their reliability, affordability, and decarbonization goals. They are actively working on unique and significant opportunities to help our customers reduce their carbon emissions. We created a new sustainable planning, development, and operations group led by Pete Norgeot. In order to drive greater strategic direction and collaboration in addressing stakeholders’ sustainability expectations, we aligned key internal teams to work collectively to implement strategies that will decarbonize our portfolio and respond to our customers' sustainability needs, all while maintaining affordability and reliability for customers. Guided by this holistic planning framework, we updated our long-term supply plan to significantly increase renewable capacity. We now expect 11 gigawatts of renewable capacity by the end of 2030, more than double the estimate in our previous plan. As part of this plan, we issued renewable RFPs over the last year totaling nearly 2,000 megawatts. We completed the tax equity partnership for Searcy Solar in Arkansas. We designed this unique structure to help facilitate the economics of utility ownership while better aligning the interest of the project owner and tax equity partner. This is an important step to make utility renewable ownership an economic option for our customers. We proposed the Orange County Advanced Power Station in Texas. If approved, this will be our first hydrogen-capable plant and will provide efficient power with the flexibility to utilize clean hydrogen. We sold Indian Point and received approval from the NRC to sell Palisades, which is our last remaining EWC nuclear plant. We expect the sale to be completed around midyear. We made great progress in our diversity, inclusion, and belonging initiatives, including creating the diversity and workforce strategies organization. This team, led by Taiwan Brown, is expanding our workforce development efforts and developing new standards for hiring. We concluded 2021 with gains in both female and diverse representation towards our goal of reflecting the rich diversity of the communities in which we serve. Consistent with our progress, we received many awards and recognition for multiple aspects of our business, including environmental leadership and responsibility, storm response, social responsibility, corporate citizenship, economic development, and workplace excellence. Operationally, we improved distribution reliability in 2021. For transmission, years of hard work and strategic capital investment led to system improvements as that team achieved its best reliability performance in more than 20 years. We wrapped up our AMI initiative with more than 3 million meters online. These advanced meters allow our customers to better understand and control energy usage to achieve their affordability goals. Advanced meters also represent a foundational component of other customer and grid technology investments that will further improve service and reliability. Through continued focus on improved operations, Grand Gulf achieved its highest ever generation output in 2021. In response to the historic damage caused by Hurricane IDA, we deployed the largest restoration workforce in our history. The storm presented unique challenges, and we came up with innovative solutions to restore power and help our customers and communities recover in a timely manner. We deployed portable generators for key businesses and community services. We also procured materials and supplies from non-traditional sources. For example, we used pipe from the halted Keystone pipeline to strengthen the foundation of new distribution structures in areas with soft soil conditions. Financially, our adjusted earnings results were in the top half of our guidance range. We maintained solid liquidity throughout the year. Between driving business risk improvements and progress on our ATM program, we reduced our remaining equity needs through 2024 to $700 million, roughly one-fourth of what we communicated at our Analyst Day in 2020. We made significant progress on storm cost and balance sheet recovery. We expect to receive more than $3 billion of securitization proceeds in the coming months, which includes a $1 billion down payment toward IDF costs. We filed an uncontested settlement in Louisiana, and that case is on the agenda for today's LPSC meeting. The entire Entergy team proved once again to be highly resilient under challenging circumstances, and I cannot thank them enough. We also know that the key to continuing to achieve outcomes into the future is to ensure we are working for all of our stakeholders: customers, employees, communities, and owners. We are committed to achieving meaningful outcomes for each. This holistic approach will drive a vibrant, sustainable business for years to come. Our 3-year $12 billion capital plan will continue to benefit customers with improved reliability, resilience, customer experience, and economic development. Our plan will also support our commitment to reduce carbon emissions. These customer-centric investments, combined with our growth forecast and regulatory mechanisms, support 5% to 7% growth in adjusted EPS and a strong credit profile. Roughly one-third of the capital will go toward generation. In addition to maintaining our highly efficient gas fleet, this capital will continue to modernize and ensure the longevity of our emission-free nuclear fleet. In the planning period, we will increase our renewable portfolio to more than 2 gigawatts. That's a 300% growth in renewables. And that trend will not only continue but accelerate beyond 2024 with plans for 11 gigawatts in service by the end of 2030. With this plan, we expect to achieve our 50% carbon intensity reduction goal several years earlier than our 2030 target. Additionally, our generation capital plan includes the initial portions of the investment in the Orange County Advanced Power Station with planned hydrogen capability, which is expected to come online in 2026. As we've discussed, our region has tremendous advantages in both hydrogen and carbon capture. Our distribution and utility support capital plan totals $5.8 billion. The plan is designed to deliver improved reliability, resilience, and customer experience through projects focused on asset renewals and enhancements in grid development. We will also ensure the grid is ready for new customer connections. Our transmission plan is $2.3 billion and will drive reliability and resilience while also supporting renewables expansion. Projects will focus on asset renewal and enhancements, congestion relief, and new customer interconnections. We have clear line of sight to the base plan, but our intention is to do even better. Our future investment profile will increasingly be driven by meeting evolving customer needs. The two most significant areas of focus for our customers in the coming years are resilience and decarbonization. We have invested significantly in resilience for years, but with the potential for increasing frequency and intensity of weather events, it's time to review the speed with which we will make those investments. We've preliminarily identified between $5 billion and $15 billion of resilience investments that could be accelerated, which will help mitigate future storm damage and costs. Over the coming months, we'll map out what makes sense for our customers with a goal to share this information with our regulators, initially through technical conferences this spring, and subsequently through filings targeted for late summer so that we can, with their support, proceed to accelerate our resilience investment. Our customers have aggressive decarbonization objectives. We are doing our part today with one of the cleanest large-scale generating fleets in the country. And as I have previously mentioned, the continued operation of our large nuclear fleet and the addition of significant renewable capacity will allow us to further support their decarbonization goals to reduce Scope 2 emissions. We are working to provide our customers with the products they need, such as green tariffs, so that they can meet their environmental objectives. By meeting their clean energy needs, we can further accelerate our renewable deployment. But a reduction in Scope 2 emissions will not be enough for many of our customers. Some are also looking for ways to reduce their Scope 1 emissions. Electrification is an efficient way to lower those emissions. Given the size of our industrial base as well as their emissions levels, helping our customers reduce their carbon footprint presents an exceptional opportunity for Entergy. This is true for new and expansion customers like U.S. Steel and Sempra, who recently announced facility additions with electrified processes that will drive significant new sales. These two customers alone could add 850 megawatts of new load, which represents nearly 2,000 megawatts of renewable capacity if the new sales are supplied with 100% green energy. It is also true for existing customers who need to decarbonize their processes to meet their objectives. As we talked about at EEI, we believe the addressable market could be as much as 30 terawatt hours of additional clean energy by 2030. Understanding the importance of renewables in attracting new jobs, Entergy Mississippi developed a strategy called Edge, economic development with green energy to give Mississippi an edge in recruiting industry to the state. Entergy Mississippi is making its largest-ever commitment to renewable resources with plans to replace aging natural gas plants with 1,000 megawatts of renewable energy over the next five years. The plan has drawn praise and support from the governor and the state's public service commissioners. We continue to work with our customers to determine the size and pace of their needs. We will ensure that our resource plans and financial forecasts reflect the latest customer insights, and we'll keep you updated along the way. This is an exciting opportunity for us and one that is unique to Entergy. 2021 was another successful year for Entergy that benefited from the resilience we’ve built into our business. We delivered on our commitments, including steady predictable growth. We have a solid plan with significant certainty over the next three years. Beyond our base plan, other significant opportunities in renewable generation, clean electrification, and resilience acceleration will serve at a minimum to extend our runway of growth. This growth will deliver many benefits for all of Entergy's stakeholders, which will ensure the sustainability of our business for decades to come. Before I turn it over to Drew, I'm excited to announce that we will host our Analyst Day on June 16 in New York City. We will continue the conversation on the significant opportunities that we see ahead, and we will give you a view of our 5-year outlook. So stay tuned for more details. I'll now turn the call over to Drew, who will review our financial results and our outlooks.

Thank you, Leo. Good morning, everyone. As Leo said, today we are reporting strong 2021 results in the top half of our guidance range. We executed on key deliverables throughout the year and our results are a validation of the resilience we've built into our business. We are confident that we will continue to deliver on our commitments, and we are initiating our 2022 guidance and confirming our longer-term 2023 and 2024 outlooks. I'll begin by discussing results for 2021 and then provide an overview of the key business drivers for 2022. Starting on Slide 6. Entergy adjusted EPS for 2021 was $6.02 and $0.36 higher than 2020. Turning to Slide 7. Our earnings growth was driven by investments across our operating companies that benefit customers through improved resilience, reliability, and operational efficiency. Weather adjusted billed retail sales growth was 2% for the year as sales rebounded from COVID-19 impacts. Industrial sales were strong at around 6% higher than 2020. We saw continued growth from new and expansion customers, which helps keep rates low as well as higher-than-expected demand from cogeneration customers. Weather effect on billed sales reduced our earnings by $0.03 per share for the year. Our December temperatures were at record highs and much of those sales were not yet billed before the year-end. When you take into account the negative weather impact for the year, it was more significant at $0.11. Starting with first-quarter 2022 results, we will use our AMI infrastructure to update our weather estimates to be based on the calendar view versus the billing cycle. To help you, the appendix of our webcast presentation has updated 2021 estimated weather effects by quarter which reflects the new methodology. Coming back to drivers for 2021, our utility O&M returned to more normal levels following last year's significant reductions from our flex spending program used to mitigate the impact of lower revenues from COVID-19. We also saw higher depreciation and interest, which were largely the result of customer-centric investments. Results of EWC are summarized on Slide 8 and reflect the continued wind down of that business. We expect to close on the Palisades sale by the middle of 2022, which will complete our exit of the merchant business. On Slide 9, operating cash flow for the year was $2.3 billion, slightly lower than last year. Non-capital storm costs were a large driver of $220 million, increased fuel and purchase power payments, income tax payments, and lower EWC revenues also contributed to the decrease, while higher utility revenue provided a partial offset. Moving to Slide 10. We continue to expect to achieve credit metrics that meet or exceed rating agency expectations by the end of 2022. Solid results of business derisking efforts were reflected in Moody's upgrade of Entergy Texas long-term issuer and bond ratings on January 28. This upgrade recognizes the constructive regulation over the past several years, including riders and responsive storm cost recovery that has allowed Entergy Texas to earn a reasonable return on equity. The improved credit rating allows the company to attract capital at a lower cost, which benefits customers. At the same time, Moody's moved Entergy Arkansas and Entergy Mississippi to a positive outlook while also citing constructive regulatory factors. Take a minute to provide an update on the excellent progress we've made with storm cost recovery. Entergy Texas has received approval from both the storm cost determination and financing order; we expect to receive securitization proceeds in March or April. And in Louisiana, we have submitted a unanimous settlement to the 2020 storm proceeding, which includes support for an additional $1 billion as an early prepayment against hurricane Ida cost recovery, and the matter is on the agenda for today's Louisiana Commission meeting. Assuming the LPSC decides the matter today, we expect to issue the securitization bonds before storm season. We have also refined our estimates for Hurricane Ida, and now expect the cost to be $2.7 billion, slightly above our original expectations due to additional resilience and hardening investments as well as higher resource costs. We're completing storm invoice processing, and Entergy Louisiana is on track to submit its cost recovery filing in April, followed by Entergy New Orleans around midyear. Our goal remains to receive the balance of Entergy Louisiana's Hurricane Ida securitization proceeds by the end of this year, pending Louisiana commission's procedural schedule for the case. Another area we have successfully reduced business risk is our pension obligation. In 2021, our funded status improved by approximately $900 million or 38% as a result of our increased contributions and actions to accelerate the reduction of the liability over the last several years. In addition, slightly higher interest rates and strong pension asset returns in 2021 contributed to the improvement. We've also made progress against our near-term growth equity needs, as you can see on Slide 11. In 2021, we utilized our at-the-market equity program and sold close to $500 million of common equity. The decrease in our pension deficit further improves our Moody's cash flow metric, and we reduced our remaining equity needs by an additional $300 million. As of today, our remaining growth equity requirement through 2024 stands at $700 million, roughly one-fourth of the original expectation. Looking ahead, Slide 12 shows that the fundamentals of our industrial customers remain robust. The forward commodity spreads remain supportive of continued growth and expansion. The four sectors shown on the slide represent nearly half of our industrial sales. Our adjusted EPS guidance and outlooks shown on Slide 13 remain unchanged. Our 2022 adjusted EPS guidance range is $6.15 to $6.45 with a midpoint of $6.30. Our plan supports steady, predictable 5% to 7% annual growth. We also expect to continue our dividend growth commensurate with our adjusted EPS growth. The key drivers for 2022 guidance highlighted on Slide 14 are straightforward and in line with what you would expect. Starting with the top line, we will see revenue growth resulting from the customer-centric investments we've made as well as increases in depreciation and interest expense associated with the new assets. We also expect an increase in retail sales volume of 1.8% on a weather-adjusted basis. This reflects increases in commercial and industrial sales and a slight decline in residential sales. Consistent with our EEI disclosures, we anticipate an increase in other O&M due to typical drivers, including inflation. We also have continuous improvement efforts to achieve efficiencies and tools that help mitigate changes during the year. The appendix of the webcast presentation contains additional details on specific drivers, including quarterly considerations and earnings sensitivities. As Leo mentioned, 2021 was another successful year for our company. We delivered results in the top half of the guidance range despite significant storm disruption. We have strong fundamentals that underline our plan which supports steady, predictable growth and are working to do even better. As Leo mentioned, Entergy has a unique and significant opportunity ahead. We are focused on translating that opportunity into a reality for our customers, our employees, our communities, and our owners. We look forward to talking more about these opportunities for you now over the coming months and at our Analyst Day in June.

Hi, good morning Leo and team. It's actually Constantine here for Shar. Congrats on a great quarter and the closeout to the year. I appreciate the comments on potential upsides from resiliency spending in the prepared remarks. And I believe Mississippi has received an independent consultant recommendation on resiliency. Do you have any early indications on what the governing factors are including some of the spending? Is it bills, regulatory constructs, financing needs? Any color on the early discussions that you may have?

Yes. This is Rod. Good morning. I think the early discussions are going to be focused on the state-by-state cost-benefit analysis. If you think about our desire to accelerate resiliency, Leo alluded to it. You've got four dimensions that we talked about, one of them being storm intensity, the frequency, the duration, and the location. We're in the early stages right now of doing the statistical analysis around various scenarios. Each of those scenarios is going to play out differently in each of our jurisdictions. We think the lion's share of the work, as you might expect, is going to show up in Louisiana. That's the subject of the technical conference when we kind of zero in on the scenarios and the planning assumptions where the regulator, along with the customers, would be in a better position to make a decision on what direction they want to go in. But as Leo alluded to, the technical conference is the prelude to the filings later in the year when we start to actually show the public what we have to believe in order to put a specific acceleration plan in place. The nuances being a state-by-state play if that's helpful, but it's early in the process, which is why you're hearing us framing it up in general terms.

Okay. That's helpful color. And just with the FEMA applications for resiliency funding of the $450 million, does that kind of play a factor? And how those plans get developed? And are those projects included in the CapEx plan? Or would you kind of fund those projects yourself if the FEMA applications don't go through?

As we stated before, anything that comes from the Feds helps to offset what would otherwise be borne by customers. And so we're going to remain actively involved ensuring we could maximize whatever input the Feds might be able to provide. That said, we still have to go forward with our regulators assuming that the Feds don't contribute, whether it's offsetting existing storm costs or putting federal funds toward future resiliency spending. But our plans are assuming from a scenario planning perspective, both dynamics, but it's not dependent upon federal funds.

Okay. That's great color. And just a quick follow-up on the equity needs and kudos to the whole team for materially mitigating the needs from the Analyst Day. Curious on your thoughts on the timing for the remaining $700 million in plan. Is there a threshold or event that could accelerate? Or do you have some cushion to defer given the progress made in '21, maybe a continuation of the ATM at a modest level.

Yes. This is Drew. We are still mindful that we would like to get this done. And so we are continuing to work through with the ATM that we put in place before. I think you'll continue to see us use that, and we could knock this out fairly quickly with that framework. We'll be mindful of any other opportunities that if the right market conditions come along that allow us to go ahead and finish it off through a block. So we're paying close attention to that. But as you can tell, the number has gotten much smaller. And so the end is sort of in sight for us overall.

Thanks. That’s very helpful and thank you for taking the questions and congrats on the FY21.

Thanks Constantine.

Hi, good morning.

Good morning, Jeremy.

Just wanted to start on load growth, if I could. Just if you could provide a little bit more detail on the significant growth on the industrial side. You provided some commentary there in the slides. But just wondering how you see that trending, I guess, relative to pre-pandemic levels and I guess, expectations to kind of exceed that? And then you talked a bit about green demand. Just wondering if you could update us a little bit more on where does the green tariff demand stand now across this customer base versus where it was 12 months ago? And how you see that kind of evolving over time?

So this is Drew. I'll take the first piece on the load growth, and I'll let Rod talk about the green tariff. So I mean, overall, our load growth for the industrial side continues to be robust. I went through some of the drivers for our main industries in my prepared remarks, those are in really good places than we do with the announcements that we talked about with U.S. Steel and Sempra, and we are continuing to see demand. But the nature of it is evolving. You see that in what's happening there. I mean, those customers are looking for clean, green options at a low cost, and we are well situated for that. And as a result, that's sort of our opportunity from a generation perspective. A lot of the other fundamentals that we've had all along are still there, proximity to the Gulf Coast, proximity to the Mississippi River, an available workforce, supportive communities, all of that is still there. It continues to attract investment from our customers and for others from outside the area today. So relative to the pre-pandemic, I would say that's pretty good. But post-pandemic, we're seeing that shift to wanting that clean electrification opportunity. And that is what we are seeing this year, as you go into '22, it's a little bit lower. But as you look out to '24 and beyond, we certainly expect it to continue to ramp up on that clean electrification opportunity.

And I'll simply add. Leo alluded to the 30 terawatt hours of an addressable market through 2030, and the efforts that we've taken internally to engage differently with those customers to identify how this demand might play out. What we saw with U.S. Steel and Sempra we think underscores the thesis that the opportunity for growth is there. We'll share far more details about how we see the next five years playing out at Analyst Day. But the early indicators are that we're pretty confident that our industrial customers, in particular, and we're seeing it kind of flow down into the smaller commercial sector. They've already made public their plans to reduce their carbon emissions, and we think we have a unique opportunity to play a role in helping them get there. That does foreshadow for us, a great demand for our green products, also underscoring, as Leo alluded to in his comments, the significance of our low emitting and efficient gas generation as well as our nuclear fleet, not to mention the up to 11 gigs through 2030 for solar. But more to come at Analyst Day, but so far, early indications are looking really good for our ability to help our customers meet their sustainability objectives.

That’s helpful. Thanks for that. And kind of picking up on the point there, without front-running the Analyst Day, are there any broad strokes that you could provide for us as far as themes or other topics that we might expect at the Analyst Day update-wise?

Well, I think as I mentioned, Jeremy, we're going to go a couple of extra years as we always do at Analyst Day and those opportunities that Rod talked about, even if you think about U.S. Steel and Sempra, for example, in service dates. So this acceleration really picks up as you get out of '24 and beyond. So I think that will be the major themes. We'll talk a little bit about what we may be seeing in that regard. So more detail.

All right. So I don't know, Leo, if you want to respond to the previous comment.

I don't know if you got the last answer. I know Jeremy, you had asked about the Analyst Day. And I was mentioning that we'll go a couple of years out farther than the 2024 current outlook. And that will be interesting because what we're starting to see from these electrification opportunities and these growth opportunities, if that's about the time things can start to show up is 2024 and beyond. You can think about U.S. Steel and Sempra, those two announcements, those are 2024 and 2027 service dates for those facilities. So the opportunity that we're talking about does start to show up really outside the balance of the current capital plan. So that will be probably the biggest pieces that we'll be talking about.

Got it. That's helpful. And just one more, if I could. With regards to Grand Gulf, given stronger operations in 2021. Just wondering if you could update us, I guess, how things are looking right now, operations-wise in '22 expectations. And has this improved performance and really kind of come through when needed improved stakeholder conversations? Just wondering if you could provide any update there.

Well, Grand Gulf has improved operations, as I mentioned in my prepared remarks, achieved its highest generation output ever in 2021. And it's our expectation to continue to have that performance going into the future, all the while better as we continue through outages, upgrade the equipment associated with the facility. Our nuclear plants are going to be very, very important to the economic development of our jurisdictions. And as we talk about electrification, I think one thing that goes unnoticed is the already clean nature of our fleet. As one of the cleanest generating fleets in the country with some of the lowest rates, some of these decarbonization objectives can be met by electrifying processes just using the grid power that we have today, even before we build out the renewables because it already meets Scope 2 needs that some of our customers have. The objectives of the majority of our customers are decarbonization. So we have a lot of dialogue with them about the nuclear fleet being an important part of the decarbonization. I think the dialogue around nuclear has changed significantly in terms of its importance in the future of the economy of the states in which we operate. So it's a holistic approach. It's an important part not only of the reliability of the system, but the sustainability of the system. As more and more customers demand carbon-free energy that follows their load, we're going to be an advantage in the jurisdictions that have nuclear power.

Got it. Actually, one last one, if I could. Just any updated thoughts that you have on advanced nuclear small modular reactors and if you think that this could start to enter the Entergy plans towards the end of the decade here.

Well, certainly, we have folks who are following the development of all different kinds of technologies in the nuclear space. And should we get to a point where some form of SMR is economically viable, we'd certainly make it part of the mix because, as I mentioned, nuclear is the most reliable way to produce a lot of energy without emitting carbon through nuclear power. So we're following those developments across the board. To the extent they become economically viable, we would certainly pursue it. And as history has proven, our jurisdictions are typically open to the development of new assets that create jobs, have high energy intensity, and really benefit economic development. So it's too early to say how quickly those will become part of the resource mix. Certainly, there's a lot of development left to be done. But given the focus on carbon reduction, people are spending a lot of time and effort as the federal government is on making sure that we're supporting that sort of R&D.

Got it. That’s very helpful. I leave it there. Thank you.

Thank you, Jeremy.

Hey, guys, thank you for taking my question. I actually have a couple, and they're kind of unrelated to each other. First of all, on the Orange County project, seems like it's a long construction timeframe, four years, right, if you get approval in May, June timeframe, but in service not till May of '26? Is that due to the hydrogen capability being added? Or is there some other driver? Normally, combined cycle is a little bit quicker than that?

No, there's nothing really. I mean, by the time we get the regulatory approval, and get into the process, there's a little bit more work done at this stage on the hydrogen side, but it's not a significant cost driver or anything like that at these early stages to get to the 30% blended capability. So nothing out of the ordinary. It's a big plant.

And I would say that, Michael, given our history of construction around CCGTs, we would come in underneath the expected timeline in pretty much every instance. So I wouldn't expect that we would end up in June of ‘26 unless there was some other kind of weather-related issue or something else going on.

Got it. Okay. And then an unrelated topic, the FERC put out its policy statement about gas infrastructure projects and GHG emissions. And it obviously matters to you; you're not building pipelines of material size at all or anything, but lots of companies in your service territory who are major customers trying to build new pipelines or trying to build new LNG facilities or other petchem-related energy-related infrastructure. Just curious how you see this process changing the permitting for new gas infrastructure and what that means for your Louisiana and Texas service territories longer-term?

Yes, Michael, it's Rod. As you might imagine, we're closely aligned with our industrial customer base in terms of what it might portend for the future. It fits into our point of view that perhaps this might be a catalyst for the acceleration of decarbonization efforts, all of which fuels our point of view around our ability to help them achieve their objectives, whether it's through the Scope 2 resources from our electrical supply or any opportunity we have to electrify their processes. But just extrapolating from that FERC ruling for us, we're viewing it through the lens of what's the implication for the customers, them moving faster as a condition of permitting to take advantage of the other market advantages of locating and expanding in our service territory. So it is unclear how it will ultimately play out. But as you might imagine, we are giving thought to how that applies to other potential customers like Sempra, most recently as they're working through their permitting process. And we are stakeholders in those proceedings for that very reason.

Got it. Thank you, Rod. Much appreciated, guys.

Thanks, Michael.

Hi, good morning, everyone. I have a quick question about long-term financing. Drew, you mentioned that you plan to be finished after completing the reduced equity raise for 2022 to 2024. What are your thoughts on the period following 2024? Is it reasonable to assume you'll maintain a similar run rate, or could it be that you won’t need to raise capital for several years as you have in the past?

That's a good question. Jonathan, obviously, we've talked a lot about the types of financings that are available to us and what would be good in certain situations. And the financing with the equity capital markets is useful because it gives you a firm idea of what you're going to get, and it's a liquid market, and you can close quickly. And so that's what we've been doing here recently because we have a very near-term need. And if you're talking about needs out beyond 2024, there are different options that become available because it is such long-term thinking. And so it's not just capital markets; some of the other things that are out there that we've talked about before might be available to you from a strategic perspective rather than a capital markets perspective. But that's longer-term; that's not anything that we would be thinking about necessarily right this minute. But as you look out beyond our horizon period, there are other options available too.

Okay. Just to clarify, the $300 million raised through the ATM hasn't been settled yet, so those shares aren't included in the share count, correct?

That's correct.

Okay. Thank you. And then just on one other thing. Can you remind us or maybe tell us what went on with the Liberty County solar project, and were there any lessons learned around that for a better outcome next time around? Or just some reflections there?

Yes. This is Rod. The Liberty County project was pulled not because the commission didn't recognize the benefits of the actual project. That particular one, and again, it was unique to Liberty County, had more to do with where the Texas Commission was in terms of how they viewed the Liberty County project and its implications inside of ERCOT. And so I don't want to send a signal that there was anything necessarily untoward with the project. We pulled it because we wanted to come back to the commission when they actually had a full commission. I will share with you that the lack of a full commission was also influential in their reticence to approve the deal. And so it was a short-term timing play for us. We had greater needs for capital, and we also recognized that there was a robust response to additional RFPs and decided to pull it. But it does not in any way thwart our belief, or in our view, the Texas staff's belief, in the viability of those projects. So we expect to come back with more, but I don't want you to over-read anything into it.

No. Do you expect to come back with that particular project, or it was just with other things?

Well, the timing of that particular one, there might be more to come there, but there are more than a robust opportunity for us to fill our needs with the other projects. So I won't give any signal into that specific one, but the pipeline is quite robust.

I want to follow up on some of the potential storm hardening acceleration where you talked about some of those data points leading up to the Analyst Day. Should we think of that as purely incremental capital? Or could that kind of mitigate some of the capital already in the plan as you don't need to do some other work around storm hardening?

It's really an acceleration of initiatives we've identified as feasible. For instance, in our current three-year outlook, we have approximately $2.7 billion in T&D investments that could be considered resilience investments. About $1.7 billion of that is allocated to the T Space, and roughly $1 billion to the D Space. We have been engaging in resilience spending through a mix of new projects and storm hardening measures after storms as we adapt to new standards. What we are examining with the resilience expenditures is whether we can implement some actions sooner than originally scheduled. This would allow us to expedite timelines instead of delaying projects by five years or more.

Yes, it does. Now that's clear. And then the other question I had was just given some of the broad inflationary pressures, how are you thinking and comfort level about your ability to execute in Arkansas relative to the 4% rate cap?

Yes, this is Drew. I'll start and maybe Rod can add to it. Obviously, we're not immune from whatever inflation issues that are out there. And so we're monitoring it closely. There are different pieces to it. There's the fuel piece, which gets collected through a separate fuel rider in Arkansas. And that might move the 4% cap up a little bit, but that's not going to hinder our investment there. On the O&M side, we haven't seen the kind of pressures that we've been hearing about setting in other sectors. That doesn't mean that we haven't been dealing with it on more of a spot basis. And ramping up our continuous improvement to help manage against the potential for acceleration of inflation more broadly in our business. And then on the capital side, we are seeing some pressure on the capital side, particularly when talking about some of the solar projects. But in the RFPs that we've been conducting recently and that we expect to conduct, we're still in the very early innings of our renewable investments. And while we've seen some pressure on some of the projects that we've already have sort of underway, the bulk of it is to come, and all those expectations already have built-in understandings of the inflation environment and the supply chain that we're dealing with and everything else. And those projects are still very robust. They have strong NPVs for the customer. And so we'd expect them to get support from the retail regulators as well. And that kind of offset with fuel costs and other things, we think will fit into the caps in Arkansas, in particular. So right now, we don't see any real challenges. I mean, we're obviously monitoring inflation very closely and adjusting our business and ramping up continuous improvement in order to manage it, but we don't see anything immediately in our way.

Okay. Thank you very much for that.

Hi, good morning.

Good morning.

Good morning.

I wanted to follow up on Jeremy's questions just on nuclear operations, and it looks like there's been good improvement there. And just wondered if you could speak to just dialogue with the NRC. You're not on Column four and looks like operations are improving. But is there any additional color you can give in terms of the dialogue with the NRC on nuclear operations?

We continue to have a lot of dialogue at all levels from the resident inspector to the regions, to the headquarters in Washington, certainly around not only operations, but license transfers, et cetera. So I'd say our relationship with the NRC is strong and it's open. I meet with resident inspectors when I'm on site. I meet with the region on a regular basis and all the commissioners when I can. We had to do a lot of it virtually over the course of the last couple of years, but we continue to have a very robust and open dialogue with the NRC, and it's a very constructive relationship.

Understood. And has there been sort of recognition of the improvements in operational performance of your nuclear fleet?

Yes. Absolutely.

Okay. Great. And then just one last one for me. This is a common question kind of across many utilities. But just given the commodity cost outlook, could you just speak a bit to the outlook for customer billing? Because you especially residential customer bill increases across your footprint? I know residential is a smaller percentage for you all than some utilities, but I'm just curious, given the commodity outlook, what the sort of bill increase outlook is for you.

Yes, Stephen. It's Drew. So there's a couple of things going on in our bills, and it depends on the jurisdiction in particular. I already talked about inflation and what that means. Going back to the fuel piece of that, when you talked about Louisiana and Texas, Winter Storm Uri in 2021, raised the fuel costs quite a bit in those two jurisdictions for 2021. So now as the fuel curve has come up a bit, it's not as much of an impact, frankly, on customers in those jurisdictions because we already had some high fuel prices because of Winter Storm Uri. And then as you look forward, the fuel curve is, of course, a bit backward dated. And our expectations are typically above the forward curve once you get out a few years, and that's still the case. Obviously, there's a lot of other things besides inflation going on in the price of natural gas today. But we think we're pretty well situated from a customer perspective there. And then also in Louisiana and Texas, you have the securitization thesis coming on in the next probably 18 months or – well, hopefully, by the end of the year, frankly, to get all the securitizations done in Louisiana. So that would probably be by the beginning of next year, you'd see the full effects of those. That's a pretty big step up, particularly in Louisiana. But once we get past that, I think the growth rate in the bills should be fairly reasonable. And we've historically said at or below inflation. Obviously, that means something different today. But our expectation is probably going to still be true based on historical expectation for inflation less than 3%. So that's what we'd expect to see once we got past sort of the securitization and the current higher costs associated with fuel.

Very good. Thank you very much.

Thanks, Stephen.

Assuming all goes well at the Louisiana Public Service Commission, what are the steps for getting storm recovery that you'll have? There's the securitization that you touched on just a minute ago. Can you walk through the steps in the amounts that you expect to be coming in?

Sure. So in Texas, we've already got the orders. And so we're in the process of setting up the actual sourcing of securitization funds, which should take place in March or April. I think in the neighborhood of $290 million is the expectation for that and assuming we get the outcome in Louisiana today, there’s approval by the LPSC in the next few months, we would set up the transaction for that. That would be around $3.2-ish billion, including the $1 billion of Ida funds. That's going to be a little bit different than the Texas transaction; that’s going through the state effectively. We have already approval from the State Bond Commission to get that done. On the first piece, we'll be setting that up here hopefully very soon. And then, of course, the remainder of the Ida costs would be hopefully by the end of the year in a similar process.

Okay. Thanks.

Thank you.

Thank you, Chris, and thanks to everyone for participating this morning. Our annual report on Form 10-K is due to the SEC on February 25 and provides more details and disclosures about our financial statements. Events that occurred prior to the date of the 10-K 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 on 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.