Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Entergy Corp (ETR, Financial) reported strong quarterly adjusted earnings per share of $1.92, keeping them on track to meet their 2024 guidance.
- Entergy Louisiana reached an agreement in principle with the LPSC staff and other parties on its FRP extension, resolving several open matters.
- System Energy Resources (SERI) reached an agreement in principle with the LPSC staff on long-standing litigation at FERC, removing an ongoing challenge.
- Entergy Texas submitted its future-ready resiliency plan, requesting approval for a three-year first phase estimated to cost $335 million.
- Entergy Corp (ETR) continues to make progress in expanding its clean energy capacity, including a joint development agreement to accelerate the development of up to 4.5 gigawatts of new solar generation and energy storage projects.
Negative Points
- Entergy Corp (ETR) will provide $184 million of customer credits as part of the settlement with Entergy Louisiana, impacting financials.
- Hurricane Beryl caused significant damage, affecting about half of Entergy Texas customers and resulting in an estimated cost of $75 million to $85 million for restoration.
- Higher interest expense due to increased interest rates and higher debt balances to finance investments.
- The pension plan lift-out resulted in a $1.17 settlement charge, although it reduced the remaining pension liability to 96% funded.
- The regulatory and litigation processes, including the SERI settlement, are still subject to approvals, indicating ongoing regulatory risks.
Q & A Highlights
Entergy Corp (ETR) Q2 2024 Earnings Call Highlights
Q: Drew, starting off on the regulatory progress in Louisiana and FERC. Any further updates there with the updated schedule? And more importantly, would that be a potential catalyst to maybe revisit capital allocation and the CapEx plans, especially as you settle the FRP and look at new generation deployment under the new 3 gigawatt mechanism? Thanks.
A: (Andrew Marsh, CEO) Hey, Shar, could you repeat the first part of your question you cut out for just one second.
Q: Yeah. No. Any further updates on Louisiana and FERC in that process? That's the first part. And then the second part is just as we're thinking about concluding in that -- in those processes, depending on if there's a global settlement or whatever. Is that sort of the catalyst to revisit capital allocation and the CapEx plans, especially as you settle the FRP and look at new generation deployment? Thanks.
A: (Andrew Marsh, CEO) Yeah. So I'll let Rod talk about the first part, and I'll let Kimberly talk about the second part.
A: (Roderick West, Group President - Utility Operations) It's Rod. In terms of FERC, as we did in the prior series, settlements, we actually have to file the FERC -- the series settlement. Oh, I'm having mike. Okay, thanks. Can you hear me now, Shar?
Q: Much better, Rod.
A: (Roderick West, Group President - Utility Operations) Good deal. As was the case with prior SERI settlements, we will file the proposed SERI settlement with the LPSC. And nevertheless, it will still be subject to FERC approval, there'll be subsequent filings with the FERC in that regard. So we still have work to do. All of what we've shared is still subject to approvals, but it will be a methodical process, and it will begin with what we submit to the LPSC for their consideration on the 14.
A: (Andrew Marsh, CEO) And I'll just add to that, that I think -- and it goes to what Kimberly will talk about in a second, the thing that we're pleased about is the nature of the way that these results came together and --
A: (Roderick West, Group President - Utility Operations) Yeah. And we talked about this at Analyst Day, Shar, that our stakeholder engagement strategy was far more deliberate and far more discrete in terms of the stakeholders that we brought together to put us in a position to have this settlement. The outcome was a function of each of the interested stakeholders having an opportunity for earlier in the process to weigh in on this conversation.
A: (Kimberly Fontan, CFO) And Shar, from a capital perspective, certainly, we're pleased to be at this point, we'll let the process play out. And then we would expect to give a full update in EEI in November as we typically do.
Q: I just wanted to come back here to Louisiana and could you outline more on the scope of your FRP and SERI settlements. Does this leave anything else critical to be addressed for either matter at this point?
A: (Roderick West, Group President - Utility Operations) No, as a general matter, the settlement addresses the formula rate plan extension and terms and conditions of the go-forward regulatory construct, it resolves prior issues. There are eight or so related dockets that are also cleaned up, much of them dealing with historical administrative proceedings. And the SERI settlement is a different settlement posture, but essentially, it clears the deck of the major litigation between Entergy and the commission and its stakeholders.
Q: And just moving on here for that August 14 LPSC meeting, do you expect the commission to vote on both settlements or just discuss the details or if the latter, when do you think they might vote?
A: (Roderick West, Group President - Utility Operations) So on the 14, and again, this is all subject to the commission's consideration. It is our expectation that the commission would take up the proposed settlement that the staff would put forward on the FRP. The settlement associated with SERI and its related dockets and the other, I'll call them, the other additional dockets that we were able to seek a lime on, but we expect the commission to take them all up. And let's also -- and Drew made reference in his remarks that the -- at least for the Louisiana Public Service Commission's consideration of the gas LDC sale, the staff had already issued a report recommending that the LPSC approved their portion of that sale. So that may very well be taken up on the 14 as well. So we expect pretty comprehensive docket that the commission will take up on the 14.
Q: And just real quick one to revisit, I guess, as the data center opportunity set that sits before you, any updates to provide there as far as, I guess, just what potential opportunities you see the pace of, I guess, opportunity set, if that's accelerating? Just any color would be great.
A: (Roderick West, Group President - Utility Operations) Yeah. We laid out at Analyst Day that nothing that we had presented in terms of our outlook included anything other than AWS. And as Drew alluded to, the 5 gigawatt to 10 gigawatt opportunity was not something we were speculating around. It's in our pipeline because we're having actual conversations with prospective customers in that regard, who, as we laid out. We're taking advantage of a lot of the structural advantages of the Gulf Coast, the low energy rates that we provide, certainly, the constructive regulatory environment that's been supportive of economic development and growth in our regions. So we expect that at the appropriate time, we'll be able to give details. But as was the case in prior customer additions, we're not giving out or talking about where any specific customer is in the process until such time that both we and they are prepared to go public with something. But again, we're bullish about the prospects because of all the advantages that we laid out at Analyst Day and our -- and on top of that, our stakeholder engagement strategy, making sure that all the right stakeholders are at the table quite early in the process.
Q: I was wondering just maybe on the -- well, congratulations on all the progress that you're making in these proceedings. I was curious on the SERI settlement. Is that consistent with the others -- with the other commission settlements in terms of like the allocational or proportional split to Louisiana?
A: (Roderick West, Group President - Utility Operations) The short answer is yes. The SERI settlement that's proposed is consistent with the settlement
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
