Entergy Louisiana LLC Q3 FY2024 earnings call

Growth Strategy

• Raised the bottom of the 2024 adjusted EPS guidance range by $0.10 and enhanced the longer-term outlook owing to new capital investment supporting industrial sales and clean energy products.
• Industrial sales are projected to have a compound annual growth rate of 11% to 12% through 2028, which is 300 basis points higher than previous expectations, primarily due to a large new customer in Louisiana.

Renewable Energy and Generation Projects

• Added renewables to the system. Entergy Arkansas has several solar projects in service and in the pipeline. The preliminary capital plan through 2028 has increased by $7 billion, driven by transmission and generation investments including renewables.

Storm Preparedness and Resilience

• Achieved a remarkable restoration of power to 90% of customers within three days after Hurricane Francine, with storm response costs estimated at $220 million to $240 million. Launched resilience programs, such as a $1.9 billion accelerated resilience plan in Louisiana and settlements in other states, and received federal grants for resilience projects.

Regulatory Engagements

• The Louisiana Public Service Commission approved multiple items, including the renewal of the formula rate plan, the sale of the LDC business, and the divestiture of the Grand Gulf Energy share to Mississippi. New formula rate plans became effective in September for Louisiana and New Orleans.

Entergy reported a strong quarterly adjusted EPS of $2.99. Operating cash flow remained healthy at nearly $1.6 billion, which was $157 million higher than the previous year. Weather-adjusted retail sales growth stood at 5%, with industrials experiencing a 10% increase. Regulatory actions across jurisdictions, net of expense increases from customer-centric investments, influenced the overall results.

• Raised the bottom of the 2024 adjusted EPS guidance range by $0.10.
• Increased the long-term outlook because of new capital investment supporting higher industrial sales and clean energy products.
• The 2024-2028 capital plan has been increased by $7 billion since the Analyst Day.
• The Board approved a 6% dividend increase and a 2-for-1 stock split, with trading on a split-adjusted basis starting on December 13.

• Project execution risk due to the size and complexity of large generation and transmission projects.
• Regulatory approval risk for capital investments and divestitures.
• Risk associated with new technologies like CCS and nuclear, including safety, economic, and social concerns.

Q: Can you provide color on the major change in 2026 EPS growth?

A: The step-up in 2026 is supported by incremental capital from significant customer growth, including a large new customer in Louisiana who will cover marginal costs and a portion of fixed costs.

Q: Does the deal to transfer SERI from Louisiana to Mississippi create additional capacity needs for Louisiana?

A: We think we can manage capacity needs for Louisiana as well as Mississippi going forward, with the transfer of 200 megawatts easily manageable within Entergy Louisiana's portfolio.

Q: Is the investment from the new large customer fully covered under rate agreements?

A: The customer will cover their marginal costs and a portion of fixed costs, with investments expected to be fully recoverable under rate mechanisms.

Q: What are the long-term drivers for 8%-9% EPS growth past 2026?

A: Underlying drivers include onshoring, clean energy, electrification, and technology, with ongoing conversations with large potential high load factor customers in various industries.

Q: Is the nuclear structure ownership or build-own-transfer?

A: We are looking at various structures, with ownership being an expectation due to long-term contracts and balance sheet implications, but specific structure not yet landed on.

Q: Is the framework for the new customer in Louisiana replicable?

A: The framework of ensuring new customers support their fair share is replicable, with a guiding principle around stakeholder engagement and customers covering their share of costs.

Q: How long will nuclear uprate evaluation take?

A: It varies by plant and upgrade, with some projects already in progress and others needing more customer support, mostly in Arkansas and Louisiana.