Entergy Corp (ETR) — Q3 2024 Earnings Call Transcript

Good morning and thank you for joining us. We will begin today with comments from Entergy's Chair and CEO, Drew Marsh, and then Kimberly Fontan, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than two questions. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation, and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations' section of our website. And now I will turn the call over to Drew.

Thank you, Liz. Good morning, everyone. We've had a very productive quarter, and we're excited to give you an update this morning. We're reporting strong financial and business results that include important progress on our growth strategy, with a significant new capital investment plan to support customer requirements. I'll start with earnings. Today, we are reporting strong quarterly adjusted EPS of $2.99. With our results to date and three quarters behind us, we are raising the bottom of the guidance range by $0.10. We're also raising our longer-term outlook, driven by the new capital investment to support higher industrial sales and growing interest in clean energy products. Our industrial sales growth story continues to be robust. With developments since Analyst Day, we now see an industrial sales compound annual growth rate of 11% to 12% through 2028, 300 basis points higher. The change is primarily due to a large new customer in Louisiana, with whom we have executed an electric service agreement. We don't disclose specific customer details without their consent, so we can't provide additional information at this time. In addition, many large industrial customers are looking to our operating companies for clean energy products to support their decarbonization goals. We are seeing strong customer interest in renewable green tariffs and nuclear clean tariffs. We're also working with stakeholders in a broader array of clean offerings, including technologies like CCS and advanced nuclear. Collectively, this means that our preliminary capital plan through 2028 is $7 billion higher than at Analyst Day, driven by new transmission as well as incremental generation investments, including renewables. We will have more details at EEI. There are several areas where we've already made progress to support growth. For example, we continue to add renewables to our system. Entergy Arkansas' Walnut Bend Solar, a 100-megawatt project that was a build-owned transfer partnership with Invenergy is now in service. Entergy Arkansas also closed on the 180-megawatt West Memphis Solar and 250-megawatt Driver Solar projects. We now have close to 800 megawatts of sold resources in service in over 2,600 megawatts of specific projects that are in process, approved or under regulatory review. Beyond this, we continue to plan for more customer-driven renewable projects, including through a recently issued RFP aimed at Entergy Louisiana's new streamlined approval process. Since Analyst Day, we've announced four very large, efficient large-scale dispatchable generation projects, three today in Louisiana and several weeks ago in Mississippi. The 750-megawatt dual fuel combined cycle combustion turbine units will be hydrogen-ready and enable future carbon capture and storage. To support successful execution, each of these plants is expected to use a standardized design. We have a proven track record of successfully executing large projects using strong, disciplined and standardized processes. We successfully built five major generation projects over the last decade with a sixth project, the Orange County Advanced Power Station in Texas currently on track. This experience and expertise are especially important to support the tremendous growth on the horizon. Preparing for CCS is an important part of that conversation because the Clean Air Act Section 111B currently requires new gas-fired generation to have CCS in place by 2032. Additionally, we are in active discussions with customers who are interested in a variety of low-carbon generation solutions including CCS. As we previously discussed, Entergy Louisiana received a grant to complete a front-end engineering and design (FEED) study at the Lake Charles Power Station. We are also working with Crescent's Midstream to assess the technical and financial feasibility of executing carbon capture and storage at LCPS in a manner that ensures public safety and addresses the interest of our communities. Once completed, the learnings from this work will benefit future CCS projects. Ultimately, we believe CCS is a critical technology to comply with eventual federal emissions requirements to help our customers meet their decarbonization objectives and for us to achieve our 2050 net-zero movement safely and responsibly. Another critical clean and reliable energy source is nuclear. Beyond our sizable existing fleet and capabilities, we are well positioned to evaluate and ultimately pursue new nuclear options. We are actively exploring potential power upgrades at our existing facilities that could total as much as 300 megawatts. We have an early site permit that was issued by the NRC in 2007 for a potential new reactor at the Grand Gulf site. We have a memorandum of understanding with Holtec to evaluate its SMR technology for use in our service area. At the same time, we are participating in several industry working groups that are evaluating other SMR technologies and potential development opportunities. And finally, we are participating in state working groups in Texas, Louisiana, Mississippi, that are evaluating the potential for nuclear expansion in those states. Our work in this area supports ongoing customer conversations on options that could accelerate new nuclear investments. Each of these generation technologies, solar and storage, CCS and new nuclear, as well as potentially wind, is important to achieve reliability, affordability, and sustainability outcomes for our customers. We see significant potential customer value from each, and we are well positioned to help capture that value for our customers. We are working with a broad set of stakeholders to understand and we are confident we will address any safety, economic, social, or other concerns related to these technologies. And as with all investments, we will be disciplined in evaluating the risk and economic impacts before meaningful capital is deployed. Yesterday, Entergy Louisiana submitted its request to the LPSC for approval of a set of transmission and generation investments that will support the new customer in Louisiana. In order to support the customer's desired timeline, we've requested a decision in September next year. We know that many of you are interested in seeing this filing. It will not be available on the LPSC's website until closer to the time it is published in their bulletin on November 8th. Therefore, we have posted the public version of the application to the Regulatory & Other page on our Investor Relations' website. The application provides an overview and summary of the filing. We plan to submit a separate filing to request approval for renewable projects to support the customer's clean energy goals. This new customer will bring substantial benefits to the state and local communities as well as our existing customers and other key stakeholders. For example, this development will provide meaningful opportunities to grow our communities through jobs, through new sources of tax revenue and improved quality of life. And it's bringing these benefits to a region of Louisiana that has been economically disadvantaged for decades. The project will also diversify Louisiana's economy while providing significant opportunity for future development in the state. Electric sales revenue and other contributions from this customer will cover an appropriate share of the cost to serve, including the marginal costs associated with investments necessary to support this customer as well as a portion of our current costs, including investments in resilience that are so critical to Louisiana. With this approach and our ongoing focus on efficiencies, we expect to maintain competitive rates below the national average. The stakeholder engagement model that we laid out at Analyst Day was the foundation for bringing this customer to Entergy Louisiana. As an integrated utility, we can provide generation, transmission, and retail requirements together in one solution. Our deep stakeholder relationships and history can facilitate alignment among all parties, state and local government, communities, regulators, and the customer. And our solutions can leverage existing partnerships and regulatory mechanisms to accelerate timelines. The combination of these factors allows us and our stakeholders to successfully deliver speed-to-market, which is a critical consideration for these large projects. The four macro trends I discussed at Analyst Day: onshoring, clean energy, electrification, and technology, are in full force and driving strong growth in our service area. In addition to the growth already in our outlooks, we could see additional sales to large customers and associated capital investments within the outlook period. We're excited about our growth progress, and we look forward to talking to you about it at EEI. Moving beyond the growth update, I have a few more things that I want to cover. We talked about our storm preparedness both operationally and financially. We have developed and refined plans that are purposeful, repeatable, and sustainable, and we're seeing the benefits. This year, we've had two hurricanes in our service area. We talked about Beryl last quarter. Today, I will cover Francine, a Category 2 storm. To start, we are thankful that we had zero OSHA recordable injuries with more than 550,000 work hours. And the headline is that we restored power to 90% of our customers within just three days, keeping customers and key stakeholders well informed throughout the restoration. This outstanding outcome was due to a combination of previous resilience investments, detailed planning and preparation, methodical and safe execution and robust stakeholder communications. I thank all our employees for their hard work and dedication to restore power safely and as quickly as possible so workers could go home to their families and our customers could return to their everyday lives. Kimberly will cover the cost estimates in a moment. Our storm response efforts didn't stop with our customers. We also provided mutual assistance to neighboring utilities for Hurricanes Helene and Milton to help restore power in those communities. To that, I want to again thank our teams for the extra effort. I also want to thank the mutual assistance workers who supported our customer restoration after Francine and Beryl. Mutual assistance is unique to our industry, and it's a great example of how utilities work together for the greater good in the moments that matter. While the investments we make every day harden our system, the launch of our resilience program marks the start of a more comprehensive grid strengthening effort. After the Commission approved Entergy Louisiana's $1.9 billion accelerated resilience plan in April, we officially kicked off Phase 1 with the groundbreaking for the first project in the Lake Charles area where we will be investing $107 million to upgrade 148 miles of power lines. Many more projects are getting underway, and we expect to reach our full ramp early next year. We're making progress on establishing our formal accelerated resilience programs in other jurisdictions as well. The New Orleans City Council approved $100 million of investments over the next two years. This is in addition to the New Orleans East project selected for a DOE Grid Resilience and Innovation Partnerships or GRIP grant that the council approved earlier this year. We are excited to start on this phase of projects to bring the benefits of a more resilient system to our customers in New Orleans. We also reached a settlement on the first phase of Entergy Texas' resilience plan, which includes a $335 million investment, $200 million of which is contingent on a grant from the Texas Energy Fund. We expect the commission to take up the settlement by year-end. In addition, two of our operating companies were recently selected for federal grants that will provide resilience benefits to our customers at a lower cost. Entergy Louisiana successfully partnered with three parishes to be selected for the Building Resilient Infrastructure and Communities or BRIC grants that will provide $68 million in funding for projects. At nearly the same time, Entergy Texas received a $54 million GRIP award for a project that will protect communities around Port Arthur, including a major port that has been previously impacted by extreme weather. Along the way, we completed several large projects this year across the system that improve our resilience and serve as proof points for our resilient efforts. The Avenue C project in New Orleans, which many of you toured at Analyst Day is now completed. You may recall that it showcased several resilience-oriented distribution technologies. The Port Bolivar and Palms elevated substations in Texas were completed before Beryl and easily withstood the effects of that storm. And notably, Port Foshan in the coastal city of Grand Isle in Louisiana, maintained access to power throughout Francine after resilience investments were made there following Hurricane Ida in 2021. The progress on resilience is further evidence that a customer-first approach remains the key to achieving regulatory outcomes that benefit all stakeholders. This approach has also supported our progress on other regulatory engagements. During the past quarter, the Louisiana Public Service Commission unanimously approved several items that renewed Entergy Louisiana's formula rate plan for three years, resolved all claims against system energy, approved the sale of Louisiana's LDC business and authorized the divestiture of Louisiana's share of Grand Gulf Energy and capacity to Mississippi. Relatedly, we have requested state commission and FERC approvals to divest Louisiana's share of Grand Gulf energy and capacity to Mississippi. We are targeting a January 1st effective date. New formula rate plans were effective in September for New Orleans following its normal process and for Louisiana following the Commission's approval for the three-year formula rate plan extension. These results are the foundation for the customer growth that benefits all stakeholders, which we discussed earlier, and they have not happened by accident. They are the product of the ongoing shift in the way we approach our business by embedding customer centricity and stakeholder engagement into everything we do. We've had a very successful quarter. We made steady progress across key customer, operational, regulatory, and finance fronts. We're raising the bottom of our 2024 adjusted EPS guidance range and increasing our longer-term outlook as a result of our new customer-driven capital plan. By continuing to put our customers first, we remain focused on delivering premium value to each of our key stakeholders. Look forward to talking to all of you at EEI, about Entergy's unique and robust growth story. Before I turn the call over to Kimberly, I want to acknowledge that this call also marks a couple of important transitions for us. First, Bill Abler is moving to a new role, leading the commercial planning and operations for our utilities. And Liz Hunter, who introduced this call is stepping in. Liz comes into the role with strong experience in our treasury operations, including fixed income and rating agency interactions. We are excited for both, and both will be at EEI in a little over a week as we complete our succession plan. The second transition is personally much more bittersweet. After 25 years, the last six and a half as our Utility Group President, Rod West is retiring from Entergy and today marks his last earnings call. Rod has accomplished much over his career and recently, he has been critical to the redesign of our customer growth and stakeholder engagement efforts. He leaves us well-positioned to succeed because of the foundations he established and much of my comments today reflect those efforts. Rod will also be with us a final time at EEI. Although given his track record, I suspect we haven't seen the last of him. I'll now turn the call over to Kimberly, who will review our financial results for the quarter as well as our long-term outlook.

Thank you, Drew and good morning everyone. As Drew said, we've had a strong quarter, and with the bulk of the year behind us, we are raising the bottom of our guidance range by $0.10. We've also increased our capital plan in response to stronger customer growth and continued demand for renewables. As a result, we are raising our long-term outlook starting in 2026. As you can see on Slide 5, our adjusted EPS for the quarter was $2.99. This is lower than last year as last year's results included impacts from extremely hot weather. Excluding the effects of weather, earnings for the quarter increased. Results included regulatory actions across the jurisdictions net of expense increases from our customer-centric investments, primarily higher interest and depreciation expenses. Weather-adjusted retail sales growth was 5%, with our largest increase from industrials at 10%, while residential and commercial also contributed. O&M was also a benefit this quarter, mainly due to increased flex spending in 2023. This quarter's O&M result was in line with expectations that we provided on the last call. Turning to Slide 6. Our operating cash flow remains healthy at nearly $1.6 billion, which is $157 million higher than last year. Key drivers for the increase include the timing of fuel and purchase power payments and the timing of pension contributions. Turning to credit and liquidity on Slide 7, our credit metric outlooks remain at or above agency expectations. In August, S&P upgraded SERI's senior secured credit rating from BBB to BBB+ and maintained its positive outlook as a result of the progress we made resolving outstanding litigation at SERI. S&P noted that SERI's ratings could be further upgraded when SERI's settlement with the LPSC receives FERC approval. In September, S&P changed Entergy New Orleans outlook to stable from developing as a result of several constructive regulatory orders. As Drew mentioned, our teams had an exceptional response to Hurricane Francine, including from a cost perspective. Our current estimate is approximately $220 million to $240 million, roughly 85% of which is in Louisiana. We have begun engaging with regulators to ensure timely and efficient cost recovery. We don't expect to utilize securitization for this level of storm cost. Just as a reminder, we have $254 million in storm escrows available in Louisiana and $83 million in New Orleans. Turning to outlook. As Drew mentioned, our 2024 to 2028 capital plan has increased by $7 billion since Analyst Day to support higher industrial sales and continued customer interest in renewables. The new capital will be financed through a combination of higher operational cash flows and incremental debt and equity. We have submitted applications for $2.4 billion of loans from the DOE. These funding requests are currently in the second phase of the process and can lower our cost of debt for the benefit of our customers. Our previous plan called for $1.4 billion of equity in 2025 and 2026. We use forward contracts under the ATM to source the full amount of that need in just 10 months. Those contracts are expected to be settled and cash proceeds received in 2025 and 2026. With our latest capital plan, net of the contracted forwards, we expect our remaining equity needs to be $3 billion in 2026 to 2028. More than 80% of this is expected to close in 2027 and 2028. We can easily satisfy this need with the ATM, which remains an effective and cost-efficient tool. As I said earlier, we narrowed our 2024 adjusted EPS guidance range by raising the floor $0.10. Updated assumptions are provided on our progress against guidance slide in the appendix of our webcast presentation. We've discussed how we flex spending to benefit customers and produce steady predictable results. As a result of third quarter weather and other changes we will once again flex our spending for the remainder of the year in areas like vegetation maintenance, which improves customer experience and reduces risk. As a result of the new capital plan, we raised our adjusted EPS outlook, which are detailed on Slide 9. This year, we are giving a four-year outlook to provide a better understanding of the new sales growth, incremental capital and resulting impacts. As you can see, the out-year adjusted EPS has stepped up meaningfully with a $0.35 to $0.85 annual increase between 2026 and 2028. The Board recently approved a 6% dividend increase. We expect to maintain that growth rate throughout the outlook period. As we do this, the payout ratio will decline as we support the strong growth in the business. We believe this is a good balance of supporting growth and returning capital to our owners. Also, consistent with the higher growth we are seeing, Entergy's Board recently approved a 2-for-1 stock split. Trading on a split-adjusted basis will begin on December 13. The outlook we have shown you today is on a pre-split basis. We will begin reporting on a post-split basis starting on the fourth quarter call. Entergy's management team will be in EEI in less than two weeks, where we will give a comprehensive update that will include more details on our capital plan, our outlooks and the preview of 2025 drivers. We continue to highlight our unique and robust growth story, and evidence of our success capturing growth continues to play out. We are excited about the opportunities ahead of us and look forward to seeing you at EEI. And now, the Entergy team is available to answer questions.

Hey guys.

Morning Shar.

Morning Drew. Congrats obviously on a great quarter and a lot of updates. Obviously, big news on the 2026 inflection to 8% to 9% EPS growth. Can you provide color on kind of what drove such a major change? The Northern Louisiana customer deal looks huge, the 2.2 gigs of new generation and associated agreements. But have you changed kind of your probability of other load interconnections? Do you see more deals coming soon? And is the investment fully covered on the rate agreement, or does it rely on the FRP as well? Thanks.

Thank you for the question. The increase in 2026 is supported by the additional capital that facilitates significant customer growth, and we already have a considerable amount of growth anticipated in our plans based on probability. Additionally, as mentioned previously, we do not add certain customers until we have signed Energy Service Agreements, which Drew mentioned earlier. This is contributing to that growth and the increase in earnings per share. I believe you had a second question that I may have overlooked.

I guess is the investment fully covered under the rate agreement, or does it rely on the FRP as well?

Yes, we can't talk specifically about that particular customer, but our investments, we expect to be fully recoverable under our rate mechanisms that we have in place that continue to show progress against. Drew mentioned our Louisiana moved forward the FRP for the next three years, and we expect that to be a good use to continue to recover our investments.

And Shar, the punchline for that is that this customer will be covering their marginal costs. And of course, they'll pick up a portion of the fixed cost for the overall Entergy Louisiana company, which includes some of the overheads for storms and resilience investments and things like that. So, they're picking up their fair share, and other customers should benefit from this new customer coming in.

Got it. Does the deal to transfer SERI to Mississippi create an additional capacity need for Louisiana? Can that be covered with the 3 gigawatts of solar, or is there a need for a resource adequacy backstop? What are your thoughts on consolidating SERI into a single asset in Mississippi?

Yes. Regarding your first question, we continuously monitor capacity in relation to expected sales growth, and we take all of this into account. We believe we can effectively manage the capacity requirements for both Louisiana and Mississippi moving forward. Therefore, we don't anticipate any additional needs beyond what is already planned. Concerning consolidation, we expect the FERC to approve the transfer of the Louisiana share to Mississippi, along with that extra capacity for Mississippi, and we will proceed from there. However, there are no new changes at this time.

Yes. It's about 200 megawatts that's moving over, and that's easily managed within Entergy Louisiana's overall portfolio. There are lots of opportunities from, as you mentioned, solar, there's potential for nuclear up rates in Louisiana. And of course, there's other investments that we can make in existing assets and new generating assets that will cover maybe even the balance. But it shouldn't be that big of a lift for Entergy Louisiana.

Got it. Perfect. And just before I sign off, I just want to take a second and obviously congratulate Rod. I know we know none of what we're seeing today could have kind of been done without his leadership and he's been such an integral part of Entergy's success. I mean, he coined the phrase stakeholder engagement. So, I'm personally looking forward to seeing him kind of transfer his skills to another utility, God knows some could really use his skills. And obviously, big congrats to Abler he knows what it means to us, hopefully, one day, I tell them over time, I can hit this Peloton output, but that's all I ask. See you guys soon.

Hey Shar, it's Rod. You're very kind, and I look forward to seeing you and others at EEI. Thank you.

Hey, thank you and first off, I'll echo Shar's comments, what a way to pass the torch and congrats to Bill and Rod, been great working with you guys. So, I just wanted to ask quickly, you kind of mentioned the growth rate is stepping up here post 2025. Can you talk about that 8% to 9% being sustainable past 2020? And what are the long-term drivers that maybe allow for that?

That's a great question. The key factors driving this growth include various areas of onshoring, clean energy, electrification, and technology. These trends are very much active, and we anticipate that they will accelerate as we move into the next decade, especially in clean energy and electrification, as society shifts towards electrification and as our customers work to advance their decarbonization efforts. Many of them are expected to really ramp up their initiatives in the coming years. We are still engaging with large, potential high-load factor customers across a range of industries beyond just data centers, including our traditional industrial sectors. This is quite promising for us, as the scale of these facilities increases with their focus on electrification. We have several large traditional industrial clients who are also expanding and refining their energy mix. This landscape is what we foresee driving our growth into the future, coupled with the advantages we've maintained over the past dozen years due to our Gulf Coast location and the commodity benefits it offers compared to other global regions. We expect this trend to persist and continue to grow as we prepare for these opportunities to materialize.

All right, well, thank you for that. And then just secondly, I can't help but notice when you talked about some of the drivers here. You mentioned that you're looking at advanced nuclear. Can you just kind of expand on some of your comments? Would this all kind of be within the regulated cohort? And regarding the working group that you talked about with nuclear crews in that group? And would that kind of are you kind of pointing to something more of like a large-scale multi-state effort on like an AP1000 or otherwise? Thank you.

Not necessarily pointing to any specific thing. Interesting question of nuclear, certainly, that's something that we believe in. We've believed in for a long time. It hasn't always been a popular belief, but we still think that it is going to be critical for us to meet our ultimate requirements, not just for us as a company but for us as a society to meet our carbon objectives out in the future. So, we've been excited about nuclear for a long time, and we are having ongoing conversations. And I went through a long list of things that we're doing. I won't repeat those. And we obviously don't have anything to announce specifically today, but we are working towards that. Our group of stakeholders that I mentioned, I guess, I could broaden that piece out. It's vendors, it's communities, it's elected leaders, it's our commissioners in some cases. It's a wide group of folks that have similar interest. All of them recognize all of the, what I call, the policy benefits associated with nuclear, things like, of course, clean energy, but a large number of jobs, a large number, a big tax base, big community contributors from a volunteer perspective. And from the grid's perspective, of course, they are very good, stable assets that really hold up the grid in important ways. So, there's a lot of policy reasons why you would like nuclear. And of course, there are a lot of challenges with getting past first of a kind, and that's the kind of stuff that we're talking about, how do we manage through those things to get through those first hurdles to get to where we all want to be, which is all those policy objectives that we think will help us get to net-zero in the future.

All right. Thanks so much.

Thank you, Nick.

Hey, good morning team and seriously, congratulations to all. Rod, Bill, team. I mean, just kudos all around, that culminates things very nicely here, honestly. Look, maybe just following up on what Nick was just saying a second ago here. I mean, as you think about the resource mix here, I mean, you mentioned a lot about solar and solar in storage hybrid resources. But again, going back to this SMR conversation that's been front and center here. I mean, is there a potential of a nuclear structure that would be ownership? Or is it more of a build on transfer? I don't want to be holding too much, but obviously, with the amount of load growth that you guys are looking at, all the seriously considering it, I imagine.

Yes. We are exploring various structures, keeping in mind the size of a nuclear project compared to some of our operating companies. The risk involved in asking Entergy Mississippi to build a project that could cost $10 billion is significant, as it exceeds their entire asset base. These challenges are serious, and we must navigate them to succeed. We have not settled on a specific structure yet, but ownership seems likely since a long-term contract for our nuclear unit would likely impact our balance sheet significantly. This could present a credit challenge for us. Consequently, an ownership role appears important, and we have experience in that area, so we are not worried about this aspect.

Excellent. Given the current situation, it appears you are successfully attracting large industrial resources and now seem to be effectively transitioning that success into the data center sector. How likely is it that you will continue to announce transformational customers? Is there more potential across your various states? I am hesitant to say that this is the end, especially considering how much you have adapted to serving these larger loads over the years.

Yes, we don't think this is it. At Analyst Day, we laid out some pretty large numbers, multiple gigawatts in several different spaces where we do believe there is opportunity for us. And that conversation was based on actual customer conversations. That wasn't us in the back room trying to do some math to figure out what the possible was; those were actual conversations that we're having with customers today. So, we do think more is possible. It doesn't mean it's all going to arrive right away. Some of these projects take years to get off the ground. But we do think it's going to happen eventually, otherwise, we wouldn't have brought it up.

All right. Fair enough guys. Thank you very much. I'll leave it there.

Thanks Julien.

Thanks. Morning. And Rod and Bill, congratulations to both look forward to seeing you both at EEI. So, just a couple of questions. One on nuclear side, the recent Nuclear Summit hosted by the Mississippi Public Service Commission, that highlighted a lot of regulatory support for nuclear in the state. And would you say other states and jurisdictions across your service territory aligned with that? Or how should I think about it?

Yes, I would say there is a lot of interest in each jurisdiction about new nuclear because of all those policy things that I was talking about a minute ago. There are formal processes and groups set up in Texas, Mississippi, and Louisiana to explore. Each of them has multiple stakeholders involved, and we're excited about that. That's the way we like to operate. We like to operate with a lot of stakeholder engagement. So, that's all good. And so we're continuing to participate in those opportunities and those conversations going forward.

Okay. Thank you. And then maybe on the industrial project in Northern Louisiana, which you are bringing a lot more detail here a little bit over a week at EEI, but it looks like from the filing, they're going to pay for about 1.5 gigs of solar. And then can you just let us know, is this a data center or not a data center? And is this involved with the Holly Ridge East site with the Northeast site? Or is that another site up there that could be further developed? Thanks.

Yes, like with most large projects, we typically do not disclose the type or scope of the customer until they are ready to reveal that information. Therefore, we are unable to provide any further details beyond what Drew mentioned in his opening statements.

Okay, I'll wait for EEI. Thanks guys.

Thanks Ross.

Thanks Ross.

Thank you for the Halloween treat. Rob, I wish you all the best, and I hope we will cross paths in the future. I would like to clarify the guidance change. Is the change in CapEx and sales entirely attributed to this one customer and the related spending, or is it really just focused on that one customer?

There is more to it, Steve, it's not just one customer. We have significant additional solar investment. We have incremental transmission investment to support our customers for. Obviously, a big chunk of the sales, as I said, is related to the one customer. But the capital is not just related to one customer.

Okay. So, it's the capital. But I mean, is the spending on the capital related to preparing the system for that additional load, or is there just a bit of other stuff on the outskirts?

Yes, there is. It's not just a little bit. It's a significant amount of other stuff when it comes to the capital, but most of that I would say, is related to that.

You previously announced some new gas plants in Texas, CCGT there. Is the cost roughly similar since it seems that the engineering will be quite comparable to these other CCGTs?

Yes. As Drew mentioned, we anticipate that all designs will be standardized. The costs in Texas will vary by site due to the specific transmission requirements and financing arrangements, as well as their locations. However, generally, they are comparable.

And the regulatory fees, such as those in Mississippi, allowed us to secure cash CWIP, unlike in Texas. Additionally, we anticipate some variations in Louisiana that we will discuss later.

The incremental equity needed to fund the additional CapEx appears to be relatively modest. You had a considerable amount, not very different from the $3 billion already. Is this due to improving cash flows and other factors?

Yes, Steve, we had about $1.7 billion previously in 2027 and 2028. And the way we have structured both the addition of this customer as well as the funding of the capital that we've added, the renewables, for example, go under the green tariffs that are in place in many of our jurisdictions, it enables incremental cash flow that helps support the financing and then enables us to put in that moderate amount of equity, as you noted.

Okay. And then the metrics, are you comfortably above the 14%. And have you started including the nuclear PTC and some of that stuff yet, or is that still not included?

Yes, we are comfortably above 14%. We are working towards reaching 15% during the outlook period. We have not included the nuclear PTCs that we believe will qualify, and we think they will positively impact our credit, as we have previously mentioned. Louisiana, in their settlement, agreed to amortize those over time, which provides a credit boost. We did include the corporate minimum tax that we initially planned to use with the PTCs to assume those offsets. So, in our forecast where we are aiming for 15%, we have accounted for the minimum tax, but not the PTC, which we expect would offer additional uplift.

Okay. Last question since you mentioned new nuclear. I understand you can't share many details as things are still being developed, but Drew, could you discuss how you're approaching the risk associated with developing new nuclear? Also, considering these projects typically require substantial capital, how are you managing project risk?

Yes, that's a good question, Steve. I can't provide specific details since we're still in discussions about these matters. However, as I mentioned earlier, we need to consider the company's size in relation to the investment size. Ultimately, we must ensure that we have customers who can afford this level of investment, which means it will be driven by customer needs. There are many stakeholders involved, including us, communities, states, and customers. The focus will be on how we can collectively manage the various risks to facilitate the construction of one or possibly multiple projects. As we approach the first-of-a-kind projects, the conversations will be about sharing those risks. Once we move toward subsequent projects, the discussions may shift regarding how to distribute the risk, but initially, there will be extensive conversations about risk-sharing.

Got it. Thank you very much.

Thank you.

Hi, good morning.

Good morning, Jeremy.

Rod, thank you very much for saving this great update for the end. We appreciate it and will miss you. Bill will miss you from your currency as well, so thank you. Moving to the business, could you revisit the tariff commentary for this new customer? Do you see this as a framework that can be replicated in the future, or is it more of a one-time situation? I wanted to get your thoughts on the outlook.

Good morning, Jeremy. Thanks for the question. As we discussed earlier, our approach ensures that new customers contribute their fair share. We implemented this in Mississippi with the help of the governor and the legislature, ensuring they contribute not only for their own additions but also support the broader customer base. This principle continues to guide us as we think about these customers, although I won't go into specifics about the tariff. We believe this framework is replicable and aligns well with the stakeholder engagement that Drew mentioned, allowing us to ensure that all business partners, state, and community partners recognize the benefits these customers bring to everyone involved.

Wonderful. Thank you. And then just moving back to the nuclear side real quick here. Just wanted to see, I guess, as you think about the uprates here specifically, how long do you expect this evaluation to take? Is this about having new customers that cover the upgrade cost in their tariff or just thinking about gating items or timeline to moving forward on the uprate specifically?

It depends on the specific plant and the upgrade. There are multiple projects that can provide different megawatts. Some of these are relatively easy to pursue, and we are actively working on them now. Others are much more challenging and costly and would require additional customer support. The potential varies greatly. Most of these upgrades are located in Arkansas and Louisiana, with no real opportunities at Grand Gulf since we completed a significant upgrade there about 15 years ago.

Got it. That's helpful. And again, Rob, we'll miss you. Thanks.

Thanks, Jeremy.

Thank you.

Hi, great. Thank you. Just a question, just to clarify, is all of the CapEx from this new large customer reflected in this update today?

I'm sorry, say that again, Bill. Just to make sure I heard it correctly.

Is all the potential CapEx from the new large customer reflected in the update today?

Yes. Yes, it is.

Okay. And then you talked a little bit about it, but maybe what's the customer bill impact relative to the outlook at the Analyst Day? If this new customer is willing to pay a little bit more, it sounds like, in terms of the variable costs. How does that outlook change?

Yes. Bill trajectory from Analyst Day to now is actually down. And to the point that you made that as you increase sales growth, you're spreading fixed cost over more sales. And so we're able to moderates our bill trajectory a little bit. It's down to about 3.5% versus Analyst Day was closer to 4%. So that bears out what we continue to focus on that these customers pay their fair share and they contribute and help all other customers.

Okay. And then just one last question. You mentioned about the potential for nuclear clean tariffs. I guess how does that interplay with some of the development, but is that more around just existing nuclear energy and what customers are willing to pay for that? And how would that sort of impact the rate design?

Yes, I think it's more around the existing. Once we get to the advanced stage, that's a whole different conversation because there's a lot more different risk elements that are moving into that. So, it's in the existing and particularly around some of the upgrades.

Okay. All right, great. Thank you very much.

Thank you.

Hi, good morning. Thank you for the great update today. Just a couple of questions to clarify. I don't know if you can sort of provide granularity on the step-up in EPS and the capital. Obviously, you said some of these from the one large new customer and some of these other like how much of that is from that one large customer? Is there a way to kind of help us think about that?

We haven't separated that information, Sophie. However, I would consider that there has been an increase in sales, and our investments are spread across generation, transmission, and both dispatchable and solar resources, catering to both this customer and others who are interested in achieving their renewable energy goals. So it's a combination of all these factors, and we haven't detailed it specifically for this customer.

Got it. So, it seems that you didn't need to request any new tariff for this investment, and the customer will cover their portion of the fixed costs. Are the current tariffs adequate to maintain the arrangements with future customers? Is that correct?

Without going into too much detail because, again, our objective is to respect the customers' desire that we not provide too much detail. Like with any other customer, we have the option to take advantage of existing tariffs and to the extent that there is a need for a new tariff or we do a special contract with a specific customer to reflect their ability to cover their marginal costs and any other aspect of the deal that might be unique to that customer, we have the flexibility to do that. We're not disclosing those details yet for the reasons that we outlined. I know it's going to be a little frustrating, but we hope to be able to provide more clarity once the customer has gone public with their project.

Got it. Got it. Thank you. And then on the transfer of SERI or Louisiana share to Mississippi, does the Mississippi have to approve it, or have they already approved it?

No. Mississippi has to approve it along with the FERC as well.

And we expect both of those by the end.

I'm curious if there's anything specific you need to see in nuclear development before you're ready to proceed with your own project. I understand this is a long-term and slow process, but would you feel comfortable being one of the first movers in this space if the risks are sufficiently minimized? Or would you prefer to wait and see some successful project completions by others before entering?

Yes, that's a good question. It really depends on how those risks are distributed. The risk associated with a first-of-its-kind project is quite different from that of subsequent projects. We wouldn’t feel comfortable taking on a lot of risk, especially considering the size of our operating companies at the outset of a first-of-its-kind initiative. However, we would be open to participating in that area, as long as we can establish a suitable risk profile with our partners and other stakeholders involved in any project that comes our way. We're still a bit away from fully addressing this issue, but it is something we are actively discussing with others.

Got it. Thank you. Appreciate the comments.

Thank you.

Hi, thanks for taking my questions and congrats to Rod, Bill, and Liz. So, given the favorable weather versus normal, you talked about flexing O&M again this year, but you maintained 2025 EPS guidance. Would you say you're planning conservatively for next year? Or are there new offsets you are contemplating? I know you're going to give more detailed preliminary drivers at EEI for 2025, but maybe you could give a little bit of a preview into why you maintain that guidance?

Yes. We flex within a given year, and there's not been a significant change in the business to have a change to the outlook for 2025. We do generally use conservative planning principles in order to ensure that we continue to provide steady predictable results. But there's not a driver like we had for the step change for 2026 to 2028 that suggests that 2025 would move. So, we've continued on the path of 6% to 8% that we've continued to deliver for some period and expect to do that again next year.

Great. Thanks. And then secondly for me, on the dividend, you're still targeting 6% dividend growth that you mentioned at the Analyst Day obviously, the higher longer-term EPS outlook implies a continued reduction in the payout ratio. Do you have an ultimate stabilized target for the payout ratio over the longer term?

We haven't given a specific target. We previously were at 60% to 65%. If you do the math, this will float down a little south of 60%, but we haven't set a specific target, but we continue to target that 6% dividend growth, which continues to return good value to our owners.

Great. Thanks for taking my questions.

Thank you, Michael.

Thank you, Greg, and thanks to everyone for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on November 11th 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 webpage as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of our 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.