ETR, §1A diff (2023 → 2024)

Table of Contents

Part I Item 1A, 1B, and 1C

Entergy Corporation, Utility operating companies, and System Energy

Item 1A. Risk Factors

See “RISK FACTORS SUMMARY” in Part I, Item 1 for a summary of Entergy’s and the Registrant Subsidiaries’ risk factors.

Investors should review carefully the following risk factors and the other information in this Form 10-K. The risks that Entergy faces are not limited to those in this section. There may be additional risks and uncertainties (either currently unknown or not currently believed to be material) that could adversely affect Entergy’s business, financial condition, results of operations, and liquidity. See “FORWARD-LOOKING INFORMATION.”

Utility Regulatory Risks

(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

The terms and conditions of service, including electric and gas rates, of the Utility operating companies and System Energy are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in delays in effecting rate changes, lengthy litigation, the risk of disallowance of recovery of certain costs, and uncertainty as to ultimate results.

The Utility operating companies are regulated on a cost-of-service and rate of return basis and are subject to statutes and regulatory commission rules and procedures. The rates that the Utility operating companies and System Energy charge reflect their capital expenditures, operations and maintenance costs, allowed rates of return, financing costs, and related costs of service. These rates significantly influence the financial condition, results of operations, and liquidity of Entergy and each of the Utility operating companies and System Energy. These rates are determined in regulatory proceedings and are subject to periodic regulatory review and adjustment, including adjustment upon the initiative of a regulator or, in some cases, affected stakeholders. Regulators in a future rate proceeding may alter the timing or amount of certain costs for which recovery is allowed or modify the current authorized rate of return. Rate refunds may also be required, subject to applicable law.

In addition, regulators have initiated and may initiate additional proceedings to investigate the prudence of costs in the Utility operating companies’ and System Energy’s base rates and examine, among other things, the reasonableness or prudence of the companies’ operation and maintenance practices, level of expenditures (including storm costs and costs associated with capital projects), allowed rates of return and rate base, proposed resource acquisitions, and previously incurred capital expenditures that the operating companies seek to place in rates. The regulators may disallow costs subject to their jurisdiction found not to have been prudently incurred or found not to have been incurred in compliance with applicable tariffs, creating some risk to the ultimate recovery of those costs. Regulatory proceedings relating to rates and other matters typically involve multiple parties seeking to limit or reduce rates. Traditional base rate proceedings, as opposed to formula rate plans, generally have long timelines, are primarily based on historical costs, and may or may not be limited in scope or duration by statute. The length of these base rate proceedings can cause the Utility operating companies and System Energy to experience regulatory lag in recovering costs through rates, such that the Utility operating companies may not fully recover all costs during the rate effective period and may, therefore, earn less than their allowed returns. Decisions are typically subject to appeal, potentially leading to additional uncertainty associated with rate case proceedings. For a discussion of such appeals and related litigation for both the Utility operating companies and System Energy, see Note 2 to the financial statements.

The Utility operating companies have large customer and stakeholder bases and, as a result, could be the subject of public criticism or adverse publicity focused on issues including, but not limited to, efforts to obtain land and secure permits for infrastructure, efforts to execute on and/or obtain regulatory approvals for generation, transmission, carbon capture and storage, or other facilities, the operation and maintenance of their assets and

Part I Item 1A, 1B, and 1C

Entergy Corporation, Utility operating companies, and System Energy

infrastructure, including with respect to climate or environmental matters, their preparedness for major storms or other extreme weather events (including accelerated resilience plans and projects, as well as executing same and/or seeking and obtaining regulatory approvals for such plans and projects) and/or the time it takes to restore service after such events, the quality of their customer service, including timely and accurate billing practices and ability to resolve customer complaints, and the reasonableness of the cost of their service. Criticism or adverse publicity of this nature could, among other things, result in project delays or cancellations or render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view the applicable operating company in a favorable light and potentially negatively affect legislative or regulatory processes or outcomes, including but not limited to failure to obtain requested approvals on infrastructure investments, as well as lead to increased regulatory oversight or more stringent legislative or regulatory requirements or other legislation or regulatory actions that adversely affect the Utility operating companies.

The Utility operating companies and System Energy, and the energy industry as a whole, have experienced a period of rising costs and investments. An upward trend in spending, especially with respect to infrastructure investments (including those that have already been approved by a regulator), is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could result in adverse cost recovery determinations and/or face resistance from customers and other stakeholders especially in a rising cost environment, whether due to inflation, increased tariffs or changes to governmental policies and programs, including tax incentives or tax credits, grants, guarantees, and other subsidies, or high fuel prices or otherwise, and/or in periods of economic decline or hardship. Significant increases in costs could increase financing needs and otherwise adversely affect Entergy, the Utility operating companies, and System Energy’s business, financial position, results of operation, or cash flows. For information regarding rate case proceedings and formula rate plans applicable to the Utility operating companies, see Note 2 to the financial statements.

Changes to state or federal legislation or regulation affecting electric generation, electric and natural gas transmission, distribution, and related activities could adversely affect Entergy and the Utility operating companies’ financial position, results of operations, or cash flows and their utility businesses.

If legislative and regulatory structures evolve in a manner that erodes the Utility operating companies’ exclusive rights to serve their regulated customers, such as through “retail open access” or otherwise, they could lose customers and sales and their results of operations, financial position, or cash flows could be materially affected. Additionally, technological advances in energy efficiency and distributed energy resources are reducing the costs of these technologies and, together with current state and federal subsidies, the increasing penetration of these technologies could result in reduced sales by the Utility operating companies. Such loss of sales, due to the methodology used to determine cost of service rates or otherwise, could put upward pressure on rates, possibly resulting in adverse regulatory actions to mitigate such effects on rates. Further, the failure of regulatory structures to evolve to accommodate the changing needs and desires of customers with respect to the sourcing and use of electricity also could diminish sales by the operating companies. Entergy and the Utility operating companies cannot predict if or when they may be subject to changes in legislation, regulation, or governmental policy, or the extent and timing of reductions of the cost of distributed energy resources, nor can they predict the impact of these changes on their results of operations, financial position, or cash flows.

The Utility operating companies recover fuel, purchased power, and associated costs through rate mechanisms that are subject to risks of delay or disallowance in regulatory proceedings, and sudden or prolonged increases in fuel and purchased power costs could lead to increased customer arrearages or bad debt expenses.

The Utility operating companies recover their fuel, purchased power, and associated costs from their customers through rate mechanisms subject to periodic regulatory review and adjustment. Because regulatory review can result in the disallowance of incurred costs found not to have been prudently incurred or not reflected in rates as permitted by approved rate schedules and accounting rules, including the cost of replacement power

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purchased when generators experience outages or when planned outages are extended, with the possibility of refunds to ratepayers, there exists some risk to the ultimate recovery of those costs, particularly when there are substantial or sudden increases in such costs, including due to inflation or increased tariffs or as a result of changes to governmental policies and programs, including tax incentives or tax credits, loans, grants, guarantees, and other subsidies. Regulators also may initiate proceedings to investigate the continued usage or the adequacy and operation of the fuel and purchased power recovery clauses of the Utility operating companies and, therefore, there can be no assurance that existing recovery mechanisms will remain unchanged or in effect at all.

The Utility operating companies’ cash flows can be negatively affected by the time delays between when gas, power, or other commodities are purchased and the ultimate recovery from customers of the costs in rates. On occasion, when the level of incurred costs for fuel and purchased power rises dramatically, some of the Utility operating companies may agree to defer recovery of a portion of that period’s fuel and purchased power costs for recovery at a later date, which could increase the near-term working capital and borrowing requirements of those companies. The Utility operating companies also may experience, and in some instances have experienced, an increase in customer bill arrearages and bad debt expenses due to, among other reasons, increases in fuel and purchased power costs, especially in a rising cost environment, whether due to inflation or increased tariffs and/or in periods of economic decline or hardship. For a description of fuel and purchased power recovery mechanisms and information regarding the regulatory proceedings for fuel and purchased power cost recovery, see Note 2 to the financial statements.

The Utility operating companies are subject to economic risks associated with participation in the MISO markets and the allocation of transmission upgrade costs. The operation of the Utility operating companies’ transmission system pursuant to the MISO RTO tariff and their participation in the MISO RTO’s wholesale markets may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.

The Utility operating companies are subject to economic risks associated with participation in the MISO markets and resource adequacy construct. MISO tariff rules and system conditions, including transmission congestion, could affect the Utility operating companies’ ability to sell capacity, energy, and/or ancillary services in certain regions and/or the economic value of such sales, or increase the cost of serving the Utility operating companies’ respective loads. MISO market rules may change or be interpreted in ways that cause additional cost and risk, including compliance risk. Additionally, each Utility operating company’s continued participation in MISO may be affected by the outcomes of proceedings at their respective retail regulators regarding the realized and expected costs and benefits associated with such Utility operating company’s ongoing participation in MISO.

The Utility operating companies participate in the MISO regional transmission planning process and are subject to risks associated with planning decisions that MISO makes in the exercise of control over the planning of the Utility operating companies’ transmission assets that are under MISO’s functional control. The Utility operating companies pay transmission rates that reflect the cost of transmission projects that the Utility operating companies do not own and are subject to the same increased costs due to factors described herein as potentially impacting other capital projects, which could increase cash or financing needs. Further, FERC policies and regulation addressing cost responsibility for transmission projects, including transmission projects to interconnect new generation facilities, may give rise to cash and financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, in turn, may result in adverse actions by the Utility operating companies’ retail regulators. In addition to the cash and financing-related risks arising from the potential additional cost allocation to the Utility operating companies from transmission projects of others or changes in FERC policies or regulation related to cost responsibility for transmission projects, there is a risk that the Utility operating companies’ business and financial position could be harmed as a result of lost investment opportunities and other effects that flow from an increased number of competitive projects being approved and constructed that are interconnected with their transmission systems.

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Further, the terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets, the allocation of transmission upgrade costs, the MISO-wide allowed base rate of return on equity, and any required MISO-related charges and credits are subject to regulation by the FERC. The operation of the Utility operating companies’ transmission system pursuant to the MISO tariff and their participation in the MISO wholesale markets, and the resulting costs, may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.

The MISO tariff provisions governing the rights and obligations associated with the resource adequacy construct provided under the MISO tariff are subject to change and have recently undergone significant changes, some of which are the subject of pending litigation and/or appeals. Due to their magnitude and, with respect to the changes already made, the speed with which they have been implemented, these changes carry risk, including compliance risk, and may result in material additional costs being passed through to the Utility operating companies’ customers in retail rates, including but not limited to additional capacity costs incurred in the annual MISO Planning Resource Auction, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities. Also, by virtue of the Utility operating companies’ participation in MISO and the design and terms of the MISO resource adequacy construct, other load-serving entities served by the Utility operating companies’ transmission assets, which are under MISO’s functional control, may be able to circumvent reasonable resource planning obligations and avoid, in whole or in part, the full cost of procuring the resources reasonably needed to reliably supply their respective loads. As a result, there are a variety of risks to the Utility operating companies and their customers, including the risk of bearing additional costs for resources needed to ensure reliable service, the risk of reduced reliability and the enhanced risk of outages and lost sales which, because of the methodology for establishing cost of service rates, presents the risk of upward pressure on the Utility operating companies’ rates, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities.

In addition, a large volume of parties and individual generation resources are presently seeking to interconnect to the transmission system MISO administers and over which MISO exercises functional control. Due to the resources and time required to study and evaluate these numerous interconnection requests, including the effects of speculative requests and requests that are withdrawn at late stages of the process, the current MISO interconnection queue to review new requests is subject to significant delays or periods in which MISO does not accept new interconnection requests. These delays present risks to the Utility operating companies and their ability to develop and procure new generation resources to serve their respective loads, and these risks may be exacerbated by significant new load additions.

For additional information on MISO regulation and the Utility operating companies’ membership in MISO, see “Federal Regulation of the Utility – Transmission and MISO Markets” section of Part I, Item 1.

(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)

A delay or failure in recovering amounts for storm restoration costs incurred as a result of severe weather, the impact on customer bills of permitted storm cost recovery, or the inability to securitize future storm restoration costs could have material effects on Entergy and its Utility operating companies.

Entergy’s and its Utility operating companies’ results of operations, liquidity, and financial condition can be materially affected by the destructive effects of severe weather. Severe weather can also result in significant outages for the customers of the Utility operating companies and, therefore, reduced revenues for the Utility operating companies during the period of the outages. A delay or failure in recovering amounts for storm restoration costs incurred, inability to securitize future storm restoration costs, or loss of revenues as a result of severe weather could have a material effect on Entergy and those Utility operating companies affected by severe weather, including lower credit ratings and, thus, higher costs for future debt issuances, as well as limitations on the

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ability to fund other investments to address customer needs, which limitations could have an adverse impact on the Utility operating companies’ financial results and/or customers and impede economic development opportunities that would benefit the Utility operating companies and their customers and communities. The inability to recover losses either excluded by insurance or in excess of the insurance limits that can be secured economically also could have a material effect on Entergy and its Utility operating companies. In addition, the recovery of major storm restoration costs from customers could effectively limit our ability to make planned capital or other investments due to the impact of such storm cost recovery on customer bills, especially in a rising cost environment due to factors described herein as potentially impacting other capital projects, and impede the ability to support economic development opportunities in the areas served by the Utility operating companies.

Weather, economic conditions, technological developments, and other factors may have a material impact on electricity and gas sales and otherwise materially affect the Utility operating companies’ results of operations and system reliability.

Temperatures above normal levels in the summer tend to increase electric cooling demand and revenues, and temperatures below normal levels in the winter tend to increase electric and gas heating demand and revenues. As a corollary, mild temperatures in either season tend to decrease energy usage and resulting revenues. Higher consumption levels coupled with seasonal pricing differentials typically cause the Utility operating companies to report higher revenues in the third quarter of the fiscal year than in the other quarters. Changing weather patterns and extreme weather conditions, including hurricanes or tropical storms, droughts, wildfires, flooding events, or ice storms, the frequency or intensity of which may be exacerbated by climate change, may stress the Utility operating companies’ generation facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on their ability to meet peak customer demand, increased regulatory oversight, criticism or adverse publicity, and reduced customer satisfaction. These extreme conditions could have a material effect on the Utility operating companies’ financial condition, results of operations, and liquidity.

Entergy’s electricity sales volumes are affected by a number of factors including weather and economic conditions, trends in energy efficiency, new technologies, and self-generation alternatives, including the willingness and ability of large industrial customers to develop co-generation facilities that greatly reduce their grid demand. In addition, changes to regulatory policies, such as those that allow customers to directly access the market to procure wholesale energy or those that incentivize development and utilization of new, developing, or alternative sources of generation, could, and in some instances, have already reduced sales, and other non-traditional procurements, such as virtual purchase power agreements or “behind the meter” generation solutions, could, and in some instances have already limited growth opportunities or reduced sales at the Utility operating companies. Some of these factors are inherently cyclical or temporary in nature, such as the weather or economic conditions, and typically do not have a long-lasting effect on Entergy’s operating results. Others, such as the organic turnover of appliances and lighting and their replacement with more efficient ones and adoption of newer technologies, including smart thermostats, new building codes, distributed energy resources, energy storage, demand side management, and rooftop solar, are having a more permanent effect by reducing sales growth rates from historical norms. As a result of these emerging efficiencies and technologies, the Utility operating companies may lose customers or experience lower average use per customer in the residential and commercial classes, and continuing advances have the potential to further limit sales or sales growth in the future.

The Utility operating companies also may face competition from other companies offering products and services to Entergy’s customers. Advances in technology and changes in laws or regulations offer alternative methods of producing and/or consuming energy, some potentially at a reduced cost. The Utility operating companies’ future success will depend, in part, on our ability to anticipate and successfully adapt to technological developments and to offer services that meet customer demand. Failure to keep pace or manage the related costs of such changes or additional technology investments may limit customer growth and have an adverse effect on the Utility operating companies’ operations or could make the Utility operating companies less competitive and

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negatively impact Entergy’s and the Utility operating companies’ financial condition, results of operations, and cash flows.

Electricity sales to industrial customers, in particular, benefit from steady economic growth and favorable commodity markets; however, industrial sales are or may be sensitive to changes in laws, regulations, trade-related governmental actions, including tariffs and other measures, or conditions in the markets in which its customers operate. Negative changes in any of these or other factors, particularly sustained economic downturns or sluggishness, have the potential to result in slower sales growth or sales declines and increased bad debt expense, which could materially affect Entergy’s and the Utility operating companies’ results of operations, financial condition, and liquidity.

The Utility operating companies also may not realize anticipated or expected growth in industrial sales, such as from large data center customers or electrification opportunities to help such customers achieve their environmental sustainability goals. This could occur because of changes in customers’ goals or business priorities, changes in environmental policies and priorities of federal, state, and local officials and other stakeholders, competition from other companies, or decisions by such customers to seek to achieve such objectives or goals through methods not offered by Entergy.

Nuclear Operating, Shutdown, and Regulatory Risks

(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)

Certain of the Utility operating companies and System Energy are expected to consistently operate their nuclear power plants at high capacity factors in order to be successful, and lower capacity factors could materially affect Entergy’s and their results of operations, financial condition, and liquidity.

Nuclear capacity factors significantly affect the results of operations of certain Utility operating companies and System Energy. Nuclear plant operations involve substantial fixed operating costs. Consequently, there is pressure on plant owners to operate nuclear power plants at higher capacity factors, though such operations always must be consistent with safety, reliability, and nuclear regulatory requirements. For the Utility operating companies that own nuclear plants, lower nuclear plant capacity factors can increase production costs by requiring the affected companies to generate additional energy, sometimes at higher costs, from their owned or contractually controlled facilities or purchase additional energy in the spot or forward markets in order to satisfy their supply needs.

Certain of the Utility operating companies and System Energy periodically shut down their nuclear power plants to replenish fuel. Plant maintenance and upgrades are often scheduled during such refueling outages. If refueling outages last longer than anticipated or if unplanned outages arise, Entergy’s and their results of operations, financial condition, and liquidity could be materially affected.

Outages at nuclear power plants to replenish fuel require the plant to be “turned off.” Refueling outages generally are planned to occur once every 18 to 24 months. Plant maintenance and upgrades are often scheduled during such planned outages, which may extend the planned outage duration beyond that required for only refueling activities. When refueling outages last longer than anticipated or a plant experiences unplanned outages, capacity factors decrease, and maintenance costs may increase.

Certain of the Utility operating companies and System Energy face risks related to the purchase of uranium fuel (and its conversion, enrichment, and fabrication). These risks could materially affect Entergy’s and their results of operations, financial condition, and liquidity.

Based upon currently planned fuel cycles, Entergy’s nuclear units have a diversified portfolio of contracts and inventory that provides substantially adequate nuclear fuel materials and conversion and enrichment services at what Entergy believes are reasonably predictable prices through the end of 2027. Entergy’s ability to purchase

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nuclear fuel at reasonably predictable prices, however, depends upon the performance reliability of uranium miners. While there are a number of possible alternate suppliers that may be accessed to mitigate any supplier performance failure, the pricing of any such alternate uranium supply from the market will be dependent upon the market for uranium supply at that time. Entergy buys uranium from a diversified mix of sellers located in a diversified mix of countries, and from time to time purchases from nearly all qualified reliable major market participants worldwide that sell into the U.S. Market prices for nuclear fuel have been extremely volatile from time to time in the past and may be subject to increased volatility due to the imposition of tariffs, domestic purchase requirements, supply chain disruptions, limitations or bans on importation of uranium or uranium products from foreign countries, evolving geopolitical conditions such as the wars between Russia and Ukraine and Israel and Hamas, the Nigerien coup, or shifting trade arrangements or sanctions between countries. Although Entergy’s nuclear fuel contract portfolio provides a degree of hedging against market risks for several years, costs for nuclear fuel in the future cannot be predicted with certainty due to inherent market uncertainties, as well as uncertainties arising from the factors described in the immediately preceding sentence, and price changes could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies and System Energy.

Entergy’s ability to assure uninterrupted nuclear fuel supply also depends upon the performance and reliability of conversion, enrichment, and fabrication services providers. These service providers are fewer in number than uranium suppliers. For conversion and enrichment services, Entergy diversifies its supply by supplier and country and may take special measures to ensure a reliable supply of enriched uranium for fabrication into nuclear fuel. For fabrication services, each plant is dependent upon the performance of the fabricator of that plant’s nuclear fuel; therefore, Entergy relies upon additional monitoring, inspection, and oversight of the fabrication process to assure reliability and quality of its nuclear fuel. Certain of the suppliers and service providers are located in or dependent upon foreign countries, such as Russia, and international sanctions, bans, retaliatory actions, or tariffs impacting trade with such countries could further restrict the ability of such suppliers or service providers to continue to supply fuel or provide such services at acceptable prices or at all. While such suppliers have performed as expected to date, the future inability of suppliers to perform such obligations could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies and System Energy.

Certain of the Utility operating companies and System Energy face the risk that the NRC will change or modify its regulations, suspend or revoke their licenses, or increase oversight of their nuclear plants, which could materially affect Entergy’s and their results of operations, financial condition, and liquidity.

Under the Atomic Energy Act and Energy Reorganization Act, the NRC regulates the operation of nuclear power plants. The NRC may modify, suspend, or revoke licenses, shut down a nuclear facility and impose civil penalties for failure to comply with the Atomic Energy Act, related regulations, or the terms of the licenses for nuclear facilities. Interested parties may also intervene in pending proceedings, which could result in prolonged proceedings. A change in the Atomic Energy Act, other applicable statutes, or the applicable regulations or licenses, or the NRC’s interpretation thereof, may require a substantial increase in capital expenditures or may result in increased operating or decommissioning costs and could materially affect the results of operations, liquidity, or financial condition of Entergy, certain of the Utility operating companies, or System Energy. A change in the classification of a plant owned by one of these companies under the NRC’s Reactor Oversight Process, which is the NRC’s program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response, also could cause the owner of the plant to incur material additional costs as a result of the increased oversight activity and potential response costs associated with the change in classification. For additional information concerning the current classification of the plants owned by Entergy Arkansas, Entergy Louisiana, and System Energy, see “Regulation of Entergy’s Business - Regulation of the Nuclear Power Industry - NRC Reactor Oversight Process” in Part I, Item 1.

Events at nuclear plants owned by one of these companies, as well as those owned by others, may lead to a change in laws or regulations or the terms of the applicable licenses, or the NRC’s interpretation thereof, or may cause the NRC to increase oversight activity or initiate actions to modify, suspend, or revoke licenses, shut down a nuclear facility, or impose civil penalties. As a result, if an incident were to occur at any nuclear generating unit,

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whether an Entergy nuclear generating unit or not, it could materially affect the financial condition, results of operations, and liquidity of Entergy, certain of the Utility operating companies, or System Energy.

Certain of the Utility operating companies and System Energy are exposed to risks and costs related to operating and maintaining their nuclear power plants, and their failure to maintain operational efficiency at their nuclear power plants could result in a plant shutdown or operation at less than full capacity and could materially affect Entergy’s and their results of operations, financial condition, and liquidity.

The nuclear generating units owned by certain of the Utility operating companies and System Energy began commercial operations in the 1970s-1980s. Older equipment may require more capital expenditures to keep each of these nuclear power plants operating safely and efficiently. This equipment is also likely to require periodic upgrading and improvement. Any unexpected failure, including failure associated with breakdowns, forced outages, or any unanticipated capital expenditures, could result in increased costs, some of which costs may not be fully recoverable by these Utility operating companies and System Energy in regulatory proceedings should there be a determination of imprudence. Operations at any of the nuclear generating units owned and operated by Entergy’s subsidiaries could degrade to the point where the affected unit needs to be shut down or operated at less than full capacity. If this were to happen, identifying and correcting the causes may require significant time and expense. A decision may be made to close a unit rather than incur the expense of restarting it or returning the unit to full capacity. For these Utility operating companies and System Energy, this could result in certain costs being stranded and potentially not fully recoverable in regulatory proceedings. In addition, the operation and maintenance of Entergy’s nuclear facilities require the commitment of substantial human resources that can result in increased costs.

Moreover, Entergy is becoming more dependent on fewer suppliers for key parts of Entergy’s nuclear power plants that may need to be replaced or refurbished, and in some cases, parts are no longer available and have to be reverse-engineered for replacement. In addition, certain major parts have long lead-times to manufacture if an unplanned replacement is needed. This dependence on a reduced number of suppliers and long lead-times on certain major parts for unplanned replacements could result in delays in obtaining qualified replacement parts and, therefore, greater expense for certain of the Utility operating companies and System Energy.

The costs associated with the storage of the spent nuclear fuel of certain of the Utility operating companies and System Energy, as well as the costs of and their ability to fully decommission their nuclear power plants, could be significantly affected by the timing of the opening of a spent nuclear fuel disposal facility, as well as interim storage and transportation requirements.

Certain of the Utility operating companies and System Energy incur costs for the on-site storage of spent nuclear fuel. The approval of a license for a national repository for the disposal of spent nuclear fuel, such as the one proposed for Yucca Mountain, Nevada, or any interim storage facility, and the timing of such facility opening, will significantly affect the costs associated with on-site storage of spent nuclear fuel. For example, while the DOE is required by law to proceed with the licensing of the Yucca Mountain repository and, after the license is granted by the NRC, to construct the repository and commence the receipt of spent fuel, the NRC licensing of the Yucca Mountain repository is effectively at a standstill. These actions are prolonging the time before spent fuel is removed from Entergy’s plant sites. Because the DOE has not accomplished its objectives, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts, and Entergy has sued the DOE for such breaches, and has won and collected on judgments against the government totaling approximately $1.2 billion through 2024, and continues to be involved in litigation to recover damages. Furthermore, Entergy is uncertain as to when the DOE will commence acceptance of spent fuel from its facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at the companies’ nuclear sites and maintenance costs on existing storage facilities, including aging management of fuel storage casks, may increase. The costs of on-site storage are also affected by regulatory requirements for such storage. In addition, the availability of a repository or other off-site storage facility for spent nuclear fuel may affect the ability to fully decommission the nuclear units and the costs relating to decommissioning. For further information regarding spent fuel storage, see the “Critical Accounting Estimates – Nuclear Decommissioning Costs – Spent

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Fuel Disposal” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy and Note 8 to the financial statements.

Certain of the Utility operating companies and System Energy may be required to pay substantial retrospective premiums imposed under the Price-Anderson Act and/or by Nuclear Electric Insurance Limited (NEIL) in the event of a nuclear incident, and losses not covered by insurance could have a material effect on Entergy’s and their results of operations, financial condition, or liquidity.

Accidents and other unforeseen problems at nuclear power plants have occurred both in the United States and elsewhere. As required by the Price-Anderson Act, the Utility operating companies and System Energy carry the maximum available amount of primary nuclear off-site liability insurance with American Nuclear Insurers, which is $500 million for each operating site. Claims for any nuclear incident exceeding that amount are covered under Secondary Financial Protection. The Price-Anderson Act limits each reactor owner’s public liability (off-site) for a single nuclear incident to the payment of retrospective premiums into a secondary insurance pool, which is referred to as Secondary Financial Protection, up to approximately $165.9 million per reactor. With 95 reactors currently participating, this translates to a total public liability cap of approximately $15.8 billion per incident. The limit is subject to change to account for the effects of inflation, a change in the primary limit of insurance coverage, and changes in the number of licensed reactors. As a result, in the event of a nuclear incident that causes damages (off-site) in excess of the primary insurance coverage, each owner of a nuclear plant reactor, including Entergy’s Utility operating companies and System Energy, regardless of fault or proximity to the incident, will be required to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary insurance level, up to a maximum of approximately $165.9 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is approximately $830 million). The retrospective premium payment is currently limited to approximately $25 million per year per incident per reactor until the aggregate public liability for each licensee is paid up to the $165.9 million cap.

NEIL is a utility industry mutual insurance company, owned by its members, including the Utility operating companies and System Energy. NEIL provides onsite property and decontamination coverage. All member plants could be subject to an annual assessment (retrospective premium of up to 10 times current annual premium for all policies) should the NEIL surplus (reserve) be significantly depleted due to insured losses. The current maximum annual assessment amounts total approximately $72.2 million per occurrence for the Utility nuclear plants. The retrospective premium assessments are subject to change based on results of NEIL underwriting.

As mentioned above, as an owner of nuclear power plants, Entergy participates in industry self-insurance programs and could be liable to fund claims should a plant owned by a different company experience a major event. Any resulting liability from a nuclear accident may exceed the applicable primary insurance coverage and require contribution of additional funds through the industry-wide program that could significantly affect the results of operations, financial condition, or liquidity of Entergy, certain of the Utility operating companies, or System Energy.

The decommissioning trust fund assets for the nuclear power plants owned by certain of the Utility operating companies and System Energy may not be adequate to meet decommissioning obligations if market performance and other changes decrease the value of assets in the decommissioning trusts, if one or more of Entergy’s nuclear power plants is retired earlier than the anticipated shutdown date, if the plants cost more to decommission than estimated, or if current regulatory requirements change, which then could require significant additional funding.

Owners of nuclear generating plants have an obligation to decommission those plants. Certain of the Utility operating companies and System Energy maintain decommissioning trust funds for this purpose. Certain of the Utility operating companies and System Energy collect funds from their customers, which are deposited into the trusts covering the units operated for or on behalf of those companies. Those rate collections, as adjusted from time to time by rate regulators, are generally based upon operating license lives and trust fund balances as well as

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estimated trust fund earnings and decommissioning costs. Assets in these trust funds are subject to market fluctuations, will yield uncertain returns that may fall below projected return rates, and may result in losses resulting from the recognition of impairments of the value of certain securities held in these trust funds.

Under NRC regulations, nuclear plant owners are permitted to project the NRC-required decommissioning amount, based on an NRC formula or a site-specific estimate, and the amount that will be available in each nuclear power plant’s decommissioning trusts combined with any other decommissioning financial assurances in place. The projections are made based on the operating license expiration date and the mid-point of the subsequent decommissioning process, or the anticipated actual completion of decommissioning if a site-specific estimate is used. If the projected amount of each individual plant’s decommissioning trusts exceeds the NRC-required decommissioning amount, then its NRC license termination decommissioning obligations are considered to be funded in accordance with NRC regulations. If the projected costs do not sufficiently reflect the actual costs required to decommission these nuclear power plants, or if funding is otherwise inadequate, or if the formula, formula inputs, or site-specific estimate is changed to require increased funding, additional resources or commitments would be required. Furthermore, depending upon the level of funding available in the trust funds, the NRC may not permit the trust funds to be used to pay for related costs such as the management of spent nuclear fuel that are not included in the NRC’s formula. The NRC may also require a plan for the provision of separate funding for spent fuel management costs.

Further, federal or state regulatory changes, including mandated increases in decommissioning funding or changes in the methods or standards for decommissioning operations, may also increase the funding requirements of, or accelerate the timing for funding of, the obligations related to the decommissioning of the nuclear generating plant owned by certain of the Utility operating companies or System Energy or may restrict the decommissioning-related costs that can be paid from the decommissioning trusts. Such changes also could result in the need for additional contributions to decommissioning trusts, or the posting of parent guarantees, letters of credit, or other surety mechanisms. As a result, under any of these circumstances, the results of operations, liquidity, and financial condition of Entergy, certain of the Utility operating companies, or System Energy could be materially affected.

An early plant shutdown (either generally or relative to current expectations), poor investment results, or higher than anticipated decommissioning costs (including as a result of changing regulatory requirements) could cause trust fund assets to be insufficient to meet the decommissioning obligations, with the result that certain of the Utility operating companies or System Energy may be required to provide significant additional funds or credit support to satisfy regulatory requirements for decommissioning, which, with respect to these Utility operating companies or System Energy, may not be recoverable from customers in a timely fashion or at all.

For further information regarding nuclear decommissioning costs, see the “Critical Accounting Estimates - Nuclear Decommissioning Costs” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy, and Notes 9 and 16 to the financial statements.

New or existing safety concerns regarding operating nuclear power plants and nuclear fuel could lead to restrictions upon the operation and decommissioning of Entergy’s nuclear power plants.

New and existing concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel. These concerns have led to, and may continue to lead to, various proposals to federal regulators and governing bodies in some localities where Entergy’s subsidiaries own nuclear generating units for legislative and regulatory changes that might lead to the shutdown of nuclear units, additional requirements or restrictions related to spent nuclear fuel on-site storage and eventual disposal, or other adverse effects on owning, operating, and decommissioning nuclear generating units. Entergy vigorously responds to these concerns and proposals. If any of the existing proposals, or any proposals that may arise in the future with respect to legislative and regulatory changes, become effective, they could have a material effect on Entergy’s results of operations and financial condition.

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Business Risks

(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy and its Registrant Subsidiaries depend on access to the capital markets and, at times, may face potential liquidity constraints, which could make it more difficult to handle future contingencies such as natural disasters or substantial increases in gas and fuel prices. Disruptions in the capital and credit markets may adversely affect Entergy’s and its subsidiaries’ ability to meet liquidity needs, or to access capital to operate and grow their businesses, and the cost of capital.

Entergy’s business is capital intensive and dependent upon its ability to access capital at reasonable rates and other terms. At times there are also spikes in the price for natural gas and other commodities that increase the liquidity requirements of the Utility operating companies. In addition, Entergy’s and the Registrant Subsidiaries’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster similar to that experienced in Entergy’s service area with Hurricane Katrina and Hurricane Rita in 2005, Hurricane Gustav and Hurricane Ike in 2008, Hurricane Isaac in 2012, Hurricane Laura, Hurricane Delta, and Hurricane Zeta in 2020, and Winter Storm Uri and Hurricane Ida in 2021. The occurrence of one or more contingencies, including an adverse decision or a delay in regulatory recovery of fuel or purchased power costs or storm restoration costs, an acceleration of payments or decreased credit lines, less cash flow from operations than expected, changes in regulation, governmental policy (including tax and trade policy, such as increased tariffs) or governmental programs (including tax incentives or tax credits, loans, grants, guarantees, and other subsidies), or other unknown or unforeseen events, could cause the financing needs of Entergy and its subsidiaries to increase. In addition, accessing the debt capital markets more frequently in these situations may result in an increase in leverage. Material leverage increases could negatively affect the credit ratings of Entergy, the Utility operating companies, and System Energy, which in turn could negatively affect access to the capital markets.

The inability to raise capital on favorable terms, particularly during times of high interest rates and inflation, and uncertainty or reduced liquidity in the capital markets, could negatively affect Entergy and its subsidiaries’ ability to maintain and to expand their businesses. Access to capital markets could be restricted and/or borrowing costs could be increased due to certain sources of debt and equity capital being unwilling to invest in offerings to fund fossil fuel projects or companies that are impacted by extreme weather events or other catastrophes, that rely on fossil fuels, or that are impacted by risks related to climate change, or such sources of capital de-emphasizing their interest in investing in clean or renewable energy projects. Additionally, shifts in governmental policy surrounding tax incentives or tax credits, loans, grants, guarantees, and other subsidies may increase borrowing costs. Factors beyond Entergy’s control may create uncertainty that could increase its cost of capital or impair its ability to access the capital markets, including the ability to draw on its bank credit facilities. These factors include depressed economic conditions, a recession, increasing interest rates, inflation, sanctions, trade restrictions, political instability, war, terrorism, and extreme volatility in the debt, equity, or credit markets. Entergy and its subsidiaries are unable to predict the degree of success they will have in renewing or replacing their credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If Entergy and its subsidiaries are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities, and/or bear an unfavorable cost of capital, which, in turn, could impact their ability to grow their businesses, decrease earnings, significantly reduce financial flexibility, and/or limit Entergy Corporation’s ability to sustain its current common stock dividend level.

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A downgrade in Entergy’s or its Registrant Subsidiaries’ credit ratings could negatively affect Entergy’s and its Registrant Subsidiaries’ ability to access capital or the cost of such capital and/or could require Entergy or its subsidiaries to post collateral, accelerate certain payments, or repay certain indebtedness.

There are a number of factors that rating agencies evaluate to arrive at credit ratings for each of Entergy and the Registrant Subsidiaries, including each Registrant Subsidiary’s regulatory framework, ability to recover costs and earn returns, storm or climate risk exposure, diversification, and financial strength and liquidity. If one or more rating agencies downgrade Entergy’s or any of the Registrant Subsidiaries’ ratings, particularly below investment grade, borrowing costs would increase, the potential pool of investors and funding sources would likely decrease, and cash or letter of credit collateral demands may be triggered by the terms of a number of commodity contracts, leases, and other agreements.

Most of Entergy’s and its subsidiaries’ suppliers and counterparties require sufficient creditworthiness to enter into transactions. If Entergy’s or the Registrant Subsidiaries’ ratings decline, particularly below investment grade, or if certain counterparties believe Entergy or the Utility operating companies are losing creditworthiness and demand adequate assurance under fuel, gas, and purchased power contracts, the counterparties may require posting of collateral in cash or letters of credit, prepayment for fuel, gas or purchased power or accelerated payment, or counterparties may decline business with Entergy or its subsidiaries.

Entergy’s and the Utility operating companies’ business, results of operations, and financial condition could be adversely affected by events beyond their control, such as public health crises, natural disasters, wildfires, geopolitical tensions, or other catastrophic events.

Entergy and the Utility operating companies could be adversely affected by various events beyond their control, including, without limitation, public health crises, natural disasters, wildfires, geopolitical tensions and other political instability, or other catastrophic events. Any of the foregoing, whether occurring locally, nationally, or globally, and the resulting effects thereof could lead to disruption of the general economy, impacts on the customers of the Utility operating companies, and disruption of the operations of Entergy’s subsidiaries, due to, among other things:

•supply chain, vendor, and contractor disruptions or other impacts, including those relative to any trade or tariff issues, as well as any shortages or delays in the availability of key components, parts, and supplies such as electronic components, steel, aluminum, and solar panels;

•delays in completion of capital or other construction projects, maintenance, and other operations activities, including prolonged or delayed refueling and maintenance outages;

•adverse impacts on liquidity and cash flows, including through declining sales, reduced revenues, delays in receipts of customer payments, or increased bad debt expense;

•delays in regulatory proceedings;

•regulatory outcomes that require the Utility operating companies to postpone planned investments and otherwise reduce costs due to, for example, the impact of a public health crises or such other catastrophic events on their customers;

•workforce availability challenges, including, for example, from infections, health, or safety issues resulting from a public health crisis;

•increased storm recovery costs;

•increased cybersecurity risks as a result of many employees telecommuting and working partially remotely or geopolitical risks;

•volatility in the credit or capital markets (and any related increased cost of capital or any inability to access the capital markets or draw on available credit facilities on favorable terms), which could in turn, cause a decrease in the value of its defined benefit pension and welfare benefit plan trusts or decommissioning trust funds;

•litigation;

•adverse impacts on Entergy’s credit metrics or ratings;

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•governmental mandates in response to any such event; or

•other adverse impacts on their ability to execute on business strategies and initiatives.

To the extent any of these events occur, the business, results of operations, and financial condition of Entergy and the Utility operating companies could be adversely affected.

The reputation of Entergy or its Registrant Subsidiaries may be materially adversely affected by negative publicity or the inability to meet its stated goals or commitments, among other potential causes.

As with any company, Entergy’s and its Registrant Subsidiaries’ reputations are an important element of their ability to effectively conduct their businesses. Entergy’s and its Registrant Subsidiaries’ reputations could be harmed by a variety of factors, including: failure of a generating asset or supporting infrastructure; failure to restore power after a hurricane or other severe weather event or catastrophe in a manner perceived as timely by regulators or customers; the incurrence of storm restoration costs perceived as excessive by regulators or customers; failure to effectively manage land and other natural resources; failure to obtain land and secure permits for infrastructure investments; failure to execute on and/or obtain regulatory approvals for generation, transmission, or other facilities; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues surrounding the safety or environmental concerns regarding carbon capture and storage; real or perceived issues with Entergy’s safety culture; challenges or negative reaction to Entergy’s diversity, inclusion, and belonging efforts, or work culture and environment; challenges or negative reaction to Entergy’s climate goals; inability to meet their climate goals, including as a result of increased sales growth, or to achieve their human capital strategies, or failure to demonstrate meaningful progress toward such goals or strategies; deterioration in relations with bargaining employees and labor unions representing them; inability to effectively prepare for major storms and other weather events, including accelerated resilience planning and projects and challenges in execution thereof, including obtaining necessary regulatory approvals for scope and timing of such plans and projects; inability to keep their electricity rates stable; inability to provide quality customer service, including timely and accurate billing; involvement in a class-action or other high-profile lawsuit; significant delays in, or termination of, construction projects, including as a result of or in connection with changes in regulation or governmental policy (such as tax and trade policy, including increased tariffs and supply chain challenges) or governmental programs (such as tax incentives or tax credits, loans, grants, guarantees, and other subsidies); occurrence of or responses to cyber attacks, data breaches or physical- or cyber- security vulnerabilities; acts or omissions of Entergy management or acts or omissions of a contractor or other third party working with or for Entergy or its Registrant Subsidiaries, which actually or perceivably reflect negatively on Entergy or its Registrant Subsidiaries; measures taken to offset reductions in demand or to supply rising demand; a significant dispute with one of Entergy’s or its Registrant Subsidiaries’ customers or other stakeholders; or negative political and public sentiment resulting in a significant amount of adverse press coverage and other adverse statements affecting Entergy or its Registrant Subsidiaries.

Addressing any adverse publicity or regulatory scrutiny is time consuming and expensive and, regardless of the factual basis for the assertions being made (or lack thereof), can have a negative impact on the reputations of Entergy or its Registrant Subsidiaries, on the morale and performance of their employees, and on their relationships with their respective regulators, customers, investors, and commercial counterparties. Adverse publicity or regulatory scrutiny may also have a negative impact on Entergy or its Registrant Subsidiaries’ ability to take timely advantage of various business or market opportunities.

Deterioration in Entergy’s or its Registrant Subsidiaries’ reputations may harm Entergy’s or its Registrant Subsidiaries’ relationships with their customers, regulators, and other stakeholders, may increase their cost of doing business, may interfere with their ability to attract and retain a qualified, inclusive, and diverse workforce with a wide variety of backgrounds, experiences, and perspectives, may impact Entergy’s or its Registrant Subsidiaries’ ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way Entergy or its Registrant Subsidiaries conduct their business, or may have a material adverse effect on their financial condition and results of operations.

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Recent U.S. tax legislation may materially adversely affect Entergy’s financial condition, results of operations, and cash flows.

The Tax Cuts and Jobs Act of 2017 significantly changed the U.S. Internal Revenue Code, including taxation of U.S. corporations, by, among other things, reducing the federal corporate income tax rate, limiting interest deductions, and altering the expensing of capital expenditures. The Inflation Reduction Act of 2022 further significantly changed the U.S. Internal Revenue Code by, among other things, enacting a new corporate alternative minimum tax and expanding federal tax credits for clean energy production. The interpretive guidance issued by the IRS and state tax authorities may be inconsistent with Entergy’s own interpretation and the legislation could be subject to amendments, which could lessen or increase certain impacts of the legislation. Further, changes in tax legislation or guidance, or uncertainties regarding the repeal, continuation, or interpretation of such tax legislation or guidance, could impact interpretation of and negotiations around certain contractual arrangements with counterparties, which could result in unfavorable changes to such arrangements or delays. In addition, the retail regulatory treatment of the expanded tax credits and corporate alternative minimum tax included in the Inflation Reduction Act of 2022, or any other changes to or repeal of such tax credits, could materially impact Entergy’s future cash flows, and this legislation and pending interpretive guidance could result in unintended consequences not yet identified that could have a material adverse impact on Entergy’s financial results and future cash flows.

Based on current IRS guidance and current internal forecasts, Entergy and the Registrant Subsidiaries may become subject to the corporate alternative minimum tax included in the Inflation Reduction Act of 2022 beginning in the next two to four years.

The tax rate decrease included in the Tax Cuts and Jobs Act required Entergy to record a regulatory liability for income taxes payable to customers. Such regulatory liability for income taxes is described in Note 3 to the financial statements.

See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act on 2024, 2023, and 2022 results of operations and financial condition, the provisions of the Tax Cuts and Jobs Act, and Note 2 to the financial statements for discussion of the regulatory proceedings that have considered the effects of the Tax Cuts and Jobs Act. For further discussion of the effects of the Inflation Reduction Act of 2022, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.

Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity.

Entergy and its subsidiaries make judgments regarding the potential tax effects of various transactions and results of operations to estimate their obligations to taxing authorities, which judgment may prove to be incorrect or may be disputed by regulators or taxing authorities. These tax obligations include income, franchise, real estate, sales and use, and employment-related taxes. These judgments include provisions for potential adverse outcomes regarding tax positions that have been taken. Entergy and its subsidiaries also estimate their ability to utilize tax benefits, including those in the form of carryforwards for which the benefits have already been reflected in the financial statements. Changes in federal, state, or local tax laws or interpretive guidance relating thereto, adverse tax audit results or adverse tax rulings on positions taken by Entergy and its subsidiaries could negatively affect Entergy’s and the Registrant Subsidiaries’ results of operations, financial condition, and liquidity. The intended and unintended consequences of recently enacted legislation could have a material adverse impact on Entergy’s financial results and future cash flows. For further information regarding Entergy’s income taxes, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.

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Entergy and its subsidiaries’ ability to successfully execute on their business strategies, including their ability to execute on their growth strategies and to complete strategic transactions, is subject to significant risks, and, as a result, they may be unable to achieve some or all of the anticipated results of such strategies.

Entergy and its subsidiaries’ future prospects and results of operations significantly depend on their ability to successfully implement their business strategies, including executing on their growth strategy and achieving Entergy’s climate goals and commitments, which are subject to business, regulatory, economic, shareholder activism and other risks and uncertainties, many of which are beyond their control. As a result, Entergy and its subsidiaries may be unable to fully achieve the anticipated results of such strategies.

Entergy and its subsidiaries anticipate a high level of load growth in their industrial and large commercial customer segments, including from large data centers owned by a small number of large customers. Entergy and its subsidiaries may be unsuccessful in capturing such opportunities or the opportunities to serve these new large customers may not materialize to the degree currently expected. Entergy and its subsidiaries also may not have access to the capital needed to finance the incremental growth on terms and conditions satisfactory to Entergy or its subsidiaries and consistent with the maintenance of satisfactory credit ratings. Entergy and its subsidiaries may fail to execute within currently expected time frames or within currently expected costs, due to a number of factors, including failure to obtain, or any delay in obtaining, regulatory approval, shortages of qualified labor, supply chain constraints, other cost pressures, or inadequate project management and execution. Entergy and its subsidiaries may not be able to adequately protect contractually against the risks inherent in relying on such rapid growth within a small number of large customers concentrated in a single industry. These customers may represent a high percentage of total sales, revenues, and cash flow with respect to the applicable Utility operating company and thereby create business and credit concentration risks which Entergy and its subsidiaries may not be able to fully mitigate.

Additionally, Entergy and its subsidiaries have pursued and may continue to pursue strategic transactions including merger, acquisition, divestiture, joint venture, restructuring, or other strategic transactions. For example, each of Entergy Louisiana and Entergy New Orleans have entered into purchase and sale agreements to sell their respective regulated natural gas local distribution company businesses to a third-party. Also, a significant portion of Entergy’s utility business plan over the next several years includes the construction and/or purchase of several natural gas plants and solar facilities. These or other transactions and plans are or may become subject to regulatory approval and other material conditions or contingencies, including increased costs or delays resulting from supply chain disruptions, import tariffs, and other issues. The failure to complete these transactions or plans or any future strategic transaction successfully or on a timely basis could have an adverse effect on Entergy’s or its subsidiaries’ financial condition or results of operations and the market’s perception of Entergy’s ability to execute its strategy. Further, these transactions, and any completed or future strategic transactions, involve substantial risks, including the following:

•acquired businesses or assets may not produce revenues, earnings, or cash flow at anticipated levels;

•acquired businesses or assets could have environmental, permitting, or other problems for which contractual protections prove inadequate;

•Entergy and/or its subsidiaries may assume liabilities that were not disclosed to them, that exceed their estimates, or for which their rights to indemnification from the seller are limited;

•Entergy may experience issues integrating businesses into its internal controls over financial reporting;

•the acquisition or disposition of a business could divert management’s attention from other business concerns;

•Entergy and/or its subsidiaries may be unable to obtain the necessary regulatory or governmental approvals to close a transaction, such approvals may be granted subject to terms that are unacceptable, or Entergy or its subsidiaries otherwise may be unable to achieve anticipated regulatory treatment of any such transaction or acquired business or assets;

•shifting governmental policies may impact government support for capital projects, including tax incentives or tax credits, grants, guarantees, or other subsidies; and

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•Entergy or its subsidiaries otherwise may be unable to achieve the full strategic and financial benefits that they anticipate from the transaction, or such benefits may be delayed or may not occur at all.

Entergy and its subsidiaries may not be successful in managing these or any other significant risks that they may encounter in acquiring or divesting a business, or engaging in other strategic transactions, which could have a material effect on their business, financial condition, or results of operations.

The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of customers, the continued demand for electricity to power data centers, and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results, and financial condition of Entergy and these Utility operating companies.

Subject to pending regulatory approvals, certain Utility operating companies are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of customer representing significant new load to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities. The Utility operating companies continue to explore similar opportunities and may engage in additional similar transactions in the future.

This concentration of business with a small number of customers in an industry based on emerging technologies, including artificial intelligence and machine learning, presents several risks for these Utility operating companies. These technologies and their related business applications have developed rapidly in recent years and continue to develop. Entergy cannot predict the rate at which or the extent to which these emerging technologies will be broadly adopted and successful as business models. Changes in industry practice or advances in these technologies could reduce the demand for electricity to power data centers. Additionally, these customers may experience business downturn, which may cause the loss of these customers or may weaken their financial condition. Similarly, customers may reduce their investment in these new technologies or abandon them entirely.

Any of these situations may result in the early termination or non-renewal of these customers’ electric service agreements or renewal on terms less favorable to the Utility operating company. Our electric service agreements with these customers include provisions for early termination payments in certain circumstances, but they do not fully protect against these risks. In the event a customer does not renew its electric service agreement, the Utility operating companies are also subject to the risk that they may not be able to enter into services agreements with new customers or that the terms of any new agreements may be less favorable to the Utility operating companies. While the assets constructed to serve these customers may otherwise be useful in the Utility operating companies’ business, there is a risk that the Utility operating companies may not be able to fully recover their investment in or a return on those assets, either through retail or wholesale rates. The small number of such customers and scale of the investment required to support those customers exacerbates this risk.

The success of these Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on the successful completion of large capital projects to provide electricity to these data centers. As discussed elsewhere in this report, the ability to complete large capital projects is dependent upon several factors, including, among others, the ability to obtain financing of such projects on satisfactory terms and conditions, secure regulatory permits, secure sufficient land for the siting of solar panels and power generation facilities, obtain and maintain MISO interconnection queue positions and otherwise obtain necessary interconnection or transmission service in MISO, and hire qualified labor, as well as levels of public support or opposition to these projects, and suppliers’ and contractors’ performance and ability to fulfill their obligations under contracts. Successful completion of these projects may be further influenced by changes in law or regulation, such as environmental compliance requirements or MISO tariff rules and processes, direct and indirect

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trade and tariff issues, including those associated with imported solar panels, as well as supply chain delays or disruptions, workforce challenges, and other events beyond the control of these Utility operating companies. The occurrence of any of these events may materially affect the schedule, cost, and performance of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-offs of their investments in these projects or incur other costs or risks, including MISO market risks or charges. For additional information concerning these Utility operating companies’ investments in new generation to support large-scale data centers, see “Utility - Property and Other Generation Resources - Provision of Service to Large-Scale Data Center Customers” in Part I, Item 1.

The business, results of operations and financial condition of Entergy and these Utility operating companies could be materially adversely affected as a result of any or all of these factors.

The completion of capital projects, including the construction of power generation facilities, and other capital improvements, involve substantial risks. Should such efforts be unsuccessful, the financial condition, results of operations, or liquidity of Entergy and the Utility operating companies could be materially affected.

Entergy’s and the Utility operating companies’ ability to complete capital projects, including the construction of power generation facilities, or make other capital improvements, such as transmission and distribution infrastructure replacements or upgrades, in a timely and cost-effective manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, project management expertise, escalating costs for materials, labor, and environmental compliance, reliance on suppliers for timely and satisfactory performance, delays and cost increases, and supply chains and material constraints, including those that may result from major storm events, both within and outside of Entergy’s service area. Certain events may occur that may materially affect the schedule, cost, and performance of these projects. These events may relate to the actual siting and construction process, such as facing public opposition; delays in obtaining permits; challenges in securing sufficient land for the siting of solar panels, power generation facilities, and large transmission projects; shortages in materials and qualified labor; suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit their ability to fulfill their obligations under contracts; supply chain delays or disruptions; and changes in the scope and timing of projects. Various economic and financial factors may include poor quality initial cost estimates from contractors; the inability to raise capital on favorable terms; changes in commodity prices affecting revenue, fuel costs, or materials costs; and downward changes in the economy. Regulatory and legal issues include items such as changes in law or regulation, including environmental compliance requirements; and further direct and indirect trade and tariff issues, including those associated with imported solar panels or other goods or products required to complete major capital projects. Additionally, other events beyond the control of the Utility operating companies may occur that may materially affect the schedule, cost, and performance of these projects.

If these projects or other capital improvements are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-off of the investment in the project. In addition, the Utility operating companies could be exposed to higher costs and market volatility, which could affect cash flow and cost recovery, should their respective regulators decline to approve the construction of the project or new generation needed to meet the reliability needs of customers at the lowest reasonable cost.

For further information regarding capital expenditure plans and other uses of capital in connection with capital projects, including the potential construction and/or purchase of additional generation supply sources within the Utility operating companies’ service areas, see the “Capital Expenditure Plans and Other Uses of Capital” section of Management’s Financial Discussion and Analysis for Entergy and each of the Registrant Subsidiaries.

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Failure to attract, retain and manage an appropriately qualified workforce could negatively affect Entergy or its subsidiaries’ results of operations.

Entergy relies on a large and changing workforce, including employees, contractors, and temporary staffing. Certain factors, such as an aging workforce, mismatching of skill sets for current and future needs, failing to appropriately anticipate future workforce needs, workforce impacts from public health concerns, challenges competing with other employers offering fully remote or more flexible work options, rising salary and other labor costs, unavailability of contract resources, and labor disputes and work disruptions may lead to operating challenges and increased costs. The challenges include inability to attract or retain talent, lack of resources, loss of knowledge base, and the time required for skill development. Costs, including costs for contractors to replace employees, productivity costs, and safety costs, may increase. Failure to hire and adequately train replacement employees, or the future availability and cost of contract labor, may adversely affect the ability to manage and operate the business, especially considering the specialized workforce needs associated with nuclear generation facilities and new skills required to develop and operate a modernized, technology-enabled, and lower carbon power grid. If Entergy and its subsidiaries are unable to successfully attract, retain, and manage an appropriately qualified workforce and/or retain sufficient skilled contract labor resources to supplement the workforce, their results of operations, financial position, and cash flows could be negatively affected.

Entergy and its subsidiaries, including the Utility operating companies and System Energy, may incur substantial costs to fulfill their obligations related to environmental and other matters.

The businesses in which Entergy’s subsidiaries, including the Utility operating companies and System Energy, operate are subject to extensive existing environmental regulation by local, state, and federal authorities. These laws and regulations affect the manner in which the Utility operating companies and System Energy conduct their operations and make capital expenditures. These laws and regulations also affect how Entergy’s subsidiaries, including the Utility operating companies and System Energy, manage air emissions, discharges to water, wetlands impacts, solid and hazardous waste storage and disposal, cooling and service water intake, the protection of threatened and endangered species, certain migratory birds and eagles, hazardous materials transportation, and similar matters. Federal, state, and local authorities continually revise these laws and regulations, and the laws and regulations are subject to judicial interpretation and to the implementing agencies’ permitting and enforcement decisions. Developing and implementing plans for facility compliance with these requirements can lead to capital, personnel, and operation and maintenance expenditures. Violations of these requirements can subject the Utility operating companies and System Energy to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, remediation and clean-up costs, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. In addition, Entergy and its subsidiaries, including the Utility operating companies and System Energy, are subject to potential liability under these laws for the costs of remediation of environmental contamination of property now or formerly owned or operated by the Utility operating companies and System Energy and of property potentially contaminated by hazardous substances they generate. The Utility operating companies currently are involved in proceedings relating to sites where hazardous substances have been released and may be subject to additional proceedings in the future. Entergy’s subsidiaries, including the Utility operating companies and System Energy, have incurred and expect to incur significant costs related to environmental compliance.

Emissions of nitrogen and sulfur oxides, mercury, particulates, greenhouse gases, and other regulated emissions from generating plants potentially are subject to increased regulation, controls, and mitigation expenses. In addition, existing environmental regulations and programs promulgated by the EPA often are challenged legally, or are revised or withdrawn by the EPA, sometimes resulting in large-scale changes to anticipated regulatory regimes and the resulting need to shift course, both operationally and economically, depending on the nature of the changes. Risks relating to global climate change, initiatives to regulate, or otherwise compel reductions of greenhouse gas emissions, and water availability issues are discussed below.

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Entergy and its subsidiaries may not be able to obtain or maintain all required environmental regulatory approvals. If there is a delay in obtaining any required environmental regulatory approvals, or if Entergy and its subsidiaries fail to obtain, maintain, or comply with any such approval, the operation of its facilities could be stopped or become subject to additional costs. For further information regarding environmental regulation and environmental matters, including Entergy’s response to climate change, see the “Regulation of Entergy’s Business – Environmental Regulation” section of Part I, Item 1.

Environmental and regulatory obligations intended to combat the effects of climate change, including by compelling greenhouse gas emission reductions or reporting, increasing clean or renewable energy requirements, or placing a price on greenhouse gas emissions, or the achievement of voluntary climate commitments could materially affect the financial condition, results of operations, and liquidity of Entergy and Entergy’s subsidiaries, including the Utility operating companies and System Energy.

In an effort to address climate change concerns, some federal, state, and local authorities have been calling for additional laws and regulations aimed at known or suspected causes of climate change. For example, the EPA, various environmental interest groups, and other organizations have focused considerable attention on CO2 emissions from power generation facilities and their potential role in climate change. The EPA has promulgated regulations controlling greenhouse gas emissions from certain vehicles, and has proposed regulations for new, existing, and significantly modified stationary sources of emissions, including electric generating units. Such regulations continue to evolve. Various states and regions of the U.S. have taken action to establish greenhouse gas limitations and trading programs. In Louisiana, the former Office of the Governor announced in 2020 the creation of a Climate Initiatives Task Force and issued an executive order that established a path to net-zero emissions by 2050, while in 2021, the City Council of New Orleans passed a renewable and clean portfolio standard that sets a goal of net-zero emissions by 2040 and absolute zero emissions by 2050. The impact that continued changes in the governmental response to climate change risk and any judicial interpretation thereof will have on existing and pending environmental laws and regulations related to greenhouse gas emissions currently is unclear.

Developing and implementing plans for compliance with greenhouse gas emissions reduction or reporting or clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital, personnel, and operation and maintenance expenditures and could significantly affect the economic position of existing facilities and proposed projects. The operations of low or non-emitting generating units (such as nuclear units and solar facilities) at lower than expected capacity factors could require increased generation from higher emitting units, thus increasing Entergy’s greenhouse gas emission rate. Similarly, increased load growth and the natural gas generation required to meet that increased demand could result in an increase in Entergy’s absolute greenhouse gas emissions. Moreover, long-term planning to meet environmental requirements can be negatively impacted and costs may increase to the extent laws and regulations change prior to full implementation. These requirements could, in turn, lead to changes in the planning or operations of balancing authorities or organized markets in areas where Entergy’s subsidiaries, including the Utility operating companies or System Energy, do business. Violations of such requirements may subject the Utility operating companies to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. Further, real or perceived violations of environmental regulations, including those related to climate change, or inability to meet Entergy’s voluntary climate commitments, could negatively impact Entergy’s reputation or inhibit Entergy’s ability to pursue its decarbonization objectives. To the extent Entergy believes any of these costs are recoverable in rates, however, additional material rate increases for customers could be resisted by Entergy’s regulators and, in extreme cases, Entergy’s regulators might attempt to deny or defer timely recovery of these costs.

Future changes in regulation or policies governing the reporting or emission of, or government programs relating to, CO2 and other greenhouse gases or mix of generation sources could (i) result in significant additional costs to Entergy’s Utility operating companies, their suppliers, or customers; (ii) make some of Entergy’s electric generating units uneconomical to maintain or operate; (iii) result in the early retirement of generation facilities and

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stranded costs if Entergy’s Utility operating companies are unable to fully recover the costs and investment in generation; (iv) increase the difficulty that Entergy and its Utility operating companies have with obtaining or maintaining required environmental regulatory approvals; and (v) cause the financing needs of Entergy and its subsidiaries to increase should such changes result in a repeal or limitation on government tax credits, loans, grants, guarantees, or other subsidies incentivizing the development or utilization of alternative sources of generation , each of which could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries. In addition, lawsuits have occurred or are reasonably expected against emitters of greenhouse gases alleging that these companies are liable for personal injuries and property damage caused by climate change. These lawsuits may seek injunctive relief, monetary compensation, and punitive damages.

In March 2019, Entergy voluntarily set a climate goal to achieve a 50 percent reduction in its carbon emission rate from the year 2000 by 2030. In September 2020, Entergy voluntarily committed to achieving net zero carbon emissions by 2050. In November 2022, Entergy voluntarily set a climate goal to achieve 50 percent carbon-free energy capacity by 2030. Due to stronger than initially expected sales growth, likely necessitating the development of new generation capacity that is not carbon-free, Entergy expects that achievement of the 50% carbon-free energy generating capacity goal will be delayed for a period beyond 2030 that has not yet been determined. In addition, achievement of the 2030 emission rate goal could also be challenged as a result of the forecasted and future sales growth. Further risks to achieving the 2030 and 2050 goals include, among other things, the ability to execute on renewable resource plans, regulatory approvals, customer demand for carbon-free energy that exceeds Entergy’s or its Utility operating companies’ ability to add lower carbon or carbon-free capacity, load growth, potential tariffs, carbon policy and regulation at the federal or state level, including mandates related to reliability standards, and supply chain costs and constraints. Technology research and development, innovation, and advancements in carbon-free generation are also critical to Entergy’s ability to achieve its 2050 commitment. Entergy cannot predict the ultimate impact of achieving these objectives, or the various implementation aspects, on its system reliability, or its results of operations, financial condition, or liquidity.

The physical effects of climate change could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries.

Potential physical risks from climate change include an increase in sea level, wind and storm surge damages, more frequent or intense hurricanes and wildfires, wetland and barrier island erosion, flooding and changes in weather conditions (such as increases in precipitation, drought, or changes in average temperatures), and potential increased impacts of extreme weather conditions or storms. Entergy’s subsidiaries own assets in, and serve, communities that are at risk from sea level rise, changes in weather conditions, storms, floods, and loss of the protection offered by coastal wetlands. A significant portion of the nation’s oil and gas infrastructure is located in these areas and susceptible to storm damage that could be aggravated by the physical impacts of climate change, which could give rise to fuel supply interruptions and price spikes. Entergy and its subsidiaries also face the risk that climate change could impact the availability and quality of water supplies necessary for operations.

Due in part to the recent increase in frequency and intensity of major storm activity along the Gulf Coast, Entergy has and continues to pursue and execute on plans to accelerate investments that would enhance the resilience of the electric systems of the Utility operating companies to enable them to better withstand major storms or other significant events, to mitigate the cost of restoration of the electric system after major storms or other significant events, to enable more rapid restoration of electricity after major storm or other significant adverse events, and to deliver electricity to critical customers more immediately after such events. These plans are generally subject to approval by the Utility operating companies’ retail regulators and may not be approved in full or at all. Certain accelerated resilience plans of the Utility operating companies have received regulatory approval for a limited scope and duration, generally at levels less than those proposed to the regulators. The Utility operating companies may not be able to successfully execute such plans and projects in the time and manner planned and there are risks regarding the ability to demonstrate the efficacy of the accelerated resilience investments in mitigating storm impacts, as well as in seeking and obtaining regulatory approval for additional accelerated resilience plans and projects that may be necessary. The need for this investment and these expenditures could give

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rise to execution, liquidity, capital or other financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, particularly when combined with upward pressure resulting from the recovery of the costs of recent and future storms, may result in adverse actions by the Utility operating companies’ retail regulators or effectively limit the ability to make other planned capital or other investments.

Additionally, prolonged drought conditions and shifting weather patterns resulting from climate change as well as, among other things, buildup of dry vegetation in areas severely impacted by drought may increase the risk of severe wildfire events within the Utility operating companies’ service areas. Catastrophic wildfires occurring in the Utility operating companies’ service areas could give rise to large damage claims against Entergy or its subsidiaries for fire-related losses alleged to be the result of utility practices and/or the failure of electric and other utility equipment and could also cause Entergy or its subsidiaries to suffer reputational harm or face a more challenging operating, political and regulatory environment.

These and other physical changes could result in, among other things, changes in customer demand, increased costs associated with repairing and maintaining generation facilities and transmission and distribution systems resulting in increased maintenance and capital costs (and potential increased financing needs), limits on the Entergy system’s ability to meet peak customer demand, more frequent and longer lasting outages, increased regulatory oversight, criticism or adverse publicity, and lower customer satisfaction. Also, to the extent that climate change adversely impacts the economic health of a region or results in energy conservation or demand side management programs, it may adversely impact customer demand and revenues. Such physical or operational risks could have a material effect on Entergy’s and its subsidiaries’ financial condition, results of operations, and liquidity.

A decline in the continued and future availability and quality of water for cooling, process, and sanitary uses could materially affect the financial condition, results of operations, and liquidity of Entergy and its subsidiaries.

Water is a vital natural resource that is also critical to Entergy and its subsidiaries. Entergy’s and its subsidiaries’ facilities use water for cooling, boiler make-up, sanitary uses, potable supply, and many other uses. Entergy’s Utility operating companies also own and/or operate hydroelectric facilities. Accordingly, water availability and quality are critical to Entergy’s and its subsidiaries’ business operations. Impacts to water availability or quality could negatively impact both operations and revenues.

Entergy and its subsidiaries secure water through various mechanisms (ground water wells, surface waters intakes, municipal supply, etc.) and operate under the provisions and conditions set forth by the provider and/or regulatory authorities. Entergy and its subsidiaries also obtain and operate in substantial compliance with water discharge permits issued under various provisions of the Clean Water Act and/or state water pollution control provisions. Regulations and authorizations for both water intake and use and for waste discharge can become more stringent in times of water shortages, low flows in rivers, low lake levels, low groundwater aquifer volumes, and similar conditions. The increased use of water by industry, agriculture, and the population at large, population growth, saltwater intrusion, and the potential impacts of climate change on the availability of water resources may cause water use restrictions that affect Entergy and its subsidiaries.

The Utility operating companies, System Energy, and Entergy’s non-utility operations may incur substantial costs related to reliability standards.

Entergy’s business is subject to extensive and mandatory reliability standards. Such standards, which are established by the NERC, the SERC, and other regional enforcement entities, are approved by the FERC and frequently are reviewed, amended, and supplemented. Failure to comply with such standards could result in the imposition of fines or civil penalties, and potential exposure to third party claims for alleged violations of such standards. The standards, as well as the laws and regulations that govern them, are subject to judicial interpretation and to the enforcement discretion vested in the implementing agencies. In addition to exposure to civil penalties

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and fines, the Utility operating companies have incurred and expect to incur significant costs related to compliance with new and existing reliability standards, including costs associated with the Utility operating companies’ transmission system and generation assets. In addition, the retail regulators of the Utility operating companies possess the jurisdiction, and in some cases have exercised such jurisdiction, to impose standards governing the reliable operation of the Utility operating companies’ distribution systems, including penalties if these standards are not met. The changes to the reliability standards applicable to the electric power industry are ongoing, and Entergy cannot predict the ultimate effect that the reliability standards will have on its Utility and Entergy’s non-utility operations.

Entergy and its subsidiaries may not be adequately hedged against changes in commodity prices, which could materially affect Entergy’s and its subsidiaries’ results of operations, financial condition, and liquidity.

To manage near-term and medium-term financial exposure related to commodity price fluctuations, Entergy and its subsidiaries, including the Utility operating companies, may enter into contracts to hedge portions of their purchase and sale commitments, fuel requirements, and inventories of natural gas, uranium and its conversion and enrichment, coal, refined products, and other commodities, within established risk management guidelines. As part of this strategy, Entergy and its subsidiaries may utilize fixed- and variable-price forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. However, Entergy and its subsidiaries normally cover only a portion of the exposure of their assets and positions to market price volatility, and the coverage will vary over time. In addition, Entergy also elects to leave certain volumes during certain years unhedged. To the extent Entergy and its subsidiaries have unhedged positions, fluctuating commodity prices can materially affect Entergy’s and its subsidiaries’ results of operations and financial position.

Although Entergy and its subsidiaries devote a considerable effort to these risk management strategies, they cannot eliminate all the risks associated with these activities. As a result of these and other factors, Entergy and its subsidiaries cannot predict with precision the impact that risk management decisions may have on their business, results of operations, or financial position.

The Utility operating companies and Entergy’s non-utility business are exposed to the risk that counterparties may not meet their obligations, which may materially affect the Utility operating companies and Entergy’s non-utility business.

The risk management practices of the Utility operating companies and Entergy's non-utility business are exposed to the risk that counterparties that owe Entergy and its subsidiaries performance of certain obligations, money, energy, or other commodities will not perform their obligations. If counterparties to these arrangements, such as counterparties to large customer electric service agreements or hedging arrangements, fail to perform, Entergy or its subsidiaries may seek to enforce its contractual protections, but may be unsuccessful, such as in recovering proceeds adequate to cover the related obligations, which could materially affect the applicable Utility operating company or Entergy’s non-utility business, despite any contractual protections.

Market performance and other changes may decrease the value of benefit plan assets, which then could require additional funding and result in increased benefit plan costs.

The performance of the capital markets affects the values of the assets held in trust under Entergy’s pension and postretirement benefits plans. A decline in the market value of the assets may increase the funding requirements relating to Entergy’s benefit plan liabilities and also result in higher benefit costs. As the value of the assets decreases, the “expected return on assets” component of benefit costs decreases, resulting in higher benefits costs. Additionally, asset losses are incorporated into benefit costs over time, thus increasing benefits costs. Volatility in the capital markets has affected the market value of these assets, which has affected and may affect Entergy’s planned levels of contributions in the future. Additionally, changes in interest rates affect the liabilities under Entergy’s pension and postretirement benefits plans; as interest rates decrease, the liabilities

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increase, potentially requiring additional funding and recognition of higher liability carrying costs. The funding requirements of the obligations related to the pension benefit plans can also increase as a result of changes in, among other factors, retirement rates, life expectancy assumptions, or federal regulations. For further information regarding Entergy’s pension and other postretirement benefits plans, refer to the “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” section of Management’s Financial Discussion and Analysis for Entergy and each of its Registrant Subsidiaries and Note 11 to the financial statements.

The litigation environment in the states in which the Registrant Subsidiaries operate poses a significant risk to those businesses.

Entergy and its subsidiaries and related entities are involved in the ordinary course of business in a number of lawsuits involving employment, commercial, asbestos, hazardous material and customer matters, and injuries and damages issues, among other matters. The states in which Entergy and the Registrant Subsidiaries operate have proven to be unusually litigious environments. Judges and juries in these states have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy and its subsidiaries use legal and appropriate means to contest litigation threatened or filed against them, but the litigation environment in these states poses a significant business risk.

Terrorist attacks and sabotage, physical attacks, cyber attacks, system failures, data breaches or other disruptions of Entergy’s and its subsidiaries’ or their suppliers’ infrastructure or technology systems, including disruptions affecting other third parties ultimately connected to Entergy and its subsidiaries or their suppliers through the transmission grid, may adversely affect Entergy’s business and results of operations.

As an operator of critical infrastructure, Entergy and its subsidiaries face a heightened risk of physical attacks or acts or threats of terrorism, cyber attacks, including ransomware and phishing attacks, business email compromises, viruses, malicious code, and data breaches, whether as a direct or indirect act against one of Entergy’s generation, transmission or distribution facilities, operations centers, infrastructure, or information technology systems used to manage, monitor, and transport power to customers and perform day-to-day business functions as well as against the systems of critical suppliers and contractors or other third parties interconnected through the grid. Like many businesses and operators of critical infrastructure, Entergy and its subsidiaries and their third-party suppliers have in the past and, will in the future, continue to be subject to cyber attacks, cybersecurity threats and attempts to compromise and penetrate the information technology systems of Entergy and its subsidiaries and disrupt their operations.

Entergy and its subsidiaries operate in a business that requires evolving and advanced information technology systems that include sophisticated data collection, processing systems, software, network infrastructure, and other technologies that are becoming more complex and may be subject to mandatory and prescriptive reliability and security standards. The functionality of Entergy’s technology systems depends on its own and its suppliers’ and their contractors’ technology. Suppliers’ and their contractors’ technology systems to which Entergy is connected directly or indirectly support a variety of business processes and activities to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of customers, employees, and others, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply-chain activities. Any significant failure, misconfiguration, or malfunction of such information technology systems could result in loss of or inappropriate access to data or disruptions of operations.

There have been attacks and threats of attacks on energy infrastructure by cyber actors, including those associated with foreign governments. Further, attacks may become more frequent in the future as technology becomes more prevalent and sophisticated in energy infrastructure. An attack could affect Entergy’s or its subsidiaries’ ability to operate, including its ability to operate the information technology systems and network infrastructure on which it relies to conduct business.

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Given the fraught geopolitical landscape and rapid technological advancements of existing and emerging threats, including threats fueled by artificial intelligence, Entergy’s technology systems remain inherently vulnerable despite implementations and enhancements of the multiple layers of security and controls. In addition, the prevalent use of smartphones, tablets, and other wireless devices, as well as ongoing remote or hybrid work-from-home arrangement for a significant portion of Entergy’s employees and those of its contractors and vendors may also heighten these risks. If Entergy’s or its subsidiaries’ technology systems, or those of critical suppliers or contractors or other third parties interconnected through the grid or otherwise, were compromised and unable to detect or recover in a timely fashion to a normal state of operations, Entergy or its subsidiaries could be unable to perform critical business functions that are essential to the company’s well-being and could result in a loss of or inappropriate access to its confidential, sensitive, and proprietary information, including personal information of its customers, employees, suppliers, and others in Entergy’s care. We cannot anticipate, detect, or implement fully preventive measures against all cybersecurity threats.

Any such attacks, failures, or data breaches could have a material effect on Entergy’s and the Registrant Subsidiaries’ business, financial condition, results of operations or reputation. Although Entergy and the Registrant Subsidiaries purchase insurance for cyber attacks and data breaches, such insurance prices have increased substantially, and coverage may not be adequate to cover all losses that might arise in connection with these incidents. Such incidents may also expose Entergy to an increased risk of litigation (and associated damages and fines). For information on our cybersecurity risk management, strategy, and governance, see “Item 1C. Cybersecurity” in Part I, Item 1C.

Entergy and the Registrant Subsidiaries are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.

The global economic cost to insurers resulting from cyber attacks, natural disasters, wildfires, and other catastrophic events, in addition to an increased focus on climate issues, has had and may continue to have disruptive effects on insurance markets. The availability of insurance capacity may decrease, and the insurance policies that Entergy or the Registrant Subsidiaries are able to obtain may have higher deductibles, higher premiums, and more restrictive terms and conditions. Further, the insurance policies of Entergy or the Registrant Subsidiaries may not cover all of their potential exposures or actual amounts of losses incurred.

Significant increases in commodity prices, the prices of other materials and supplies, and operation and maintenance expenses may adversely affect Entergy's results of operations, financial condition, and liquidity.

Entergy and its subsidiaries have observed and expect continued inflationary pressures related to commodity prices, other materials and supplies, and operation and maintenance expenses, including in the areas of labor, health care, and pension costs. The contracts for the construction of certain of the Utility operating companies’ generation facilities also have included, and in the future may include, price adjustment provisions that, subject to certain limitations, may enable the contractor to increase the contract price to reflect increases in certain costs of constructing the facility. These inflationary pressures could impact the ability of Entergy and its subsidiaries to control costs and/or make substantial investments in their businesses, including their ability to recover costs and investments, and to earn their allowed return on equity within frameworks established by their regulators while maintaining affordability of their services for their customers, in addition to having unpredictable effects on Entergy’s customers. Increases in commodity prices, the prices of other materials and supplies, and operation and maintenance expenses, including increasing labor costs and costs and funding requirements associated with Entergy's defined benefit retirement plans, health care plans, and other employee benefits, could increase their financing needs and otherwise adversely affect their results of operations, financial condition, and liquidity.

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(Entergy New Orleans)

The effect of higher purchased gas cost charges to customers taking gas service may adversely affect Entergy New Orleans’s results of operations and liquidity.

Gas rates charged to retail gas customers are comprised primarily of purchased gas cost charges, which provide no return or profit to Entergy New Orleans, and distribution charges, which provide a return or profit to the utility. Distribution charges recover fixed costs on a volumetric basis and, thus, are affected by the amount of gas sold to customers. When purchased gas cost charges increase due to higher gas procurement costs, customer usage may decrease, especially in weaker economic times, resulting in lower distribution charges for Entergy New Orleans, which, given its relatively smaller size, could adversely affect results of operations. Purchased gas cost charges, which comprise most of a customer’s bill and may be adjusted monthly, represent gas commodity costs that Entergy New Orleans recovers from its customers. Entergy New Orleans’s cash flows can be affected by differences between the time when gas is purchased and the time when ultimate recovery from customers occurs.

(Entergy Corporation and System Energy)

System Energy owns and, through an affiliate, operates a single nuclear generating facility, and it is dependent on sales to affiliated companies for all of its revenues. Certain contractual arrangements relating to System Energy, the affiliated companies, and these revenues are the subject of ongoing litigation and may be subject to future such litigation and regulatory proceedings.

System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. Charges under the Unit Power Sales Agreement are paid by the Utility operating companies (other than Entergy Texas) as consideration for their respective entitlements to receive capacity and energy. The useful economic life of Grand Gulf is finite and is limited by the terms of its operating license, which currently expires in November 2044. System Energy’s financial condition depends both on the receipt of payments from the Utility operating companies (other than Entergy Texas) under the Unit Power Sales Agreement and on the continued commercial operation of Grand Gulf. The Unit Power Sales Agreement has in the past been the subject of significant litigation, including claims for refunds and rate adjustments, and is currently the subject of a litigation proceeding at the FERC with respect to System Energy’s inclusion of pre-paid and accrued pension costs in rates. Entergy cannot predict with certainty the outcome of this proceeding or any future proceedings that may arise with respect to the Unit Power Sales Agreement.

See Note 2 to the financial statements for further discussion of the litigation proceedings that have been settled at the FERC. System Energy agreed to implement certain protocols for providing retail regulators with information regarding rates billed under the Unit Power Sales Agreement.

For information regarding the Unit Power Sales Agreement and certain other agreements relating to certain Entergy System companies’ support of System Energy, see Note 8 to the financial statements and the “Utility - System Energy and Related Agreements” section of Part I, Item 1.

(Entergy Corporation)

Entergy’s non-utility operations are subject to substantial governmental regulation and may be adversely affected by legislative, regulatory, or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.

Entergy’s non-utility operations, including wholesale sales of electricity, are subject to regulation under federal, state, and local laws. Compliance with the requirements under these various regulatory regimes may cause Entergy’s non-utility operations to incur significant additional costs, and failure to comply with such requirements could result in the imposition of liens, fines, and/or civil or criminal liability. If Entergy’s non-utility operations

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were deemed to violate market behavior rules, the FERC can impose potential penalties of up to $1.544 million per day for each violation by any such entity of market-based rate rules and regulations.

Entergy’s non-utility operations are also affected by legislative and regulatory changes, as well as by changes to market design, market rules, tariffs, cost allocations, and bidding rules imposed by the existing Independent System Operator. The Independent System Operator that oversees the relevant wholesale power market has imposed, and in the future may continue to impose, mitigation, including price limitations, offer caps and other mechanisms, to address some of the volatility and the potential exercise of market power in that market. These types of price limitations and other regulatory mechanisms may have an adverse effect on the profitability of Entergy’s non-utility operations’ generation facilities that sell energy and capacity into the wholesale power markets.

The regulatory environment applicable to the electric power industry is subject to changes as a result of restructuring initiatives at both the state and federal levels. Entergy cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on Entergy’s non-utility operations.

As a holding company, Entergy Corporation depends on cash distributions from its subsidiaries to meet its debt service and other financial obligations and to pay dividends on its common stock, and has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its other financial obligations.

Entergy Corporation is a holding company with no material revenue generating operations of its own or material assets other than the stock of its subsidiaries. Accordingly, all of its operations are conducted by its subsidiaries. Entergy Corporation has provided, and may continue to provide, capital contributions or debt financing to its subsidiaries, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness, and to pay dividends on Entergy’s common stock. Entergy Corporation’s ability to satisfy its financial obligations, including the payment of interest and principal on its outstanding debt, and to pay dividends on its common stock depends on the payment to it of dividends or distributions by its subsidiaries. The subsidiaries of Entergy Corporation are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any dividends or make distributions to Entergy Corporation. The ability of such subsidiaries to make payments of dividends or distributions to Entergy Corporation depends on their results of operations and cash flows and other items affecting retained earnings, and on any applicable legal, regulatory, or contractual limitations on subsidiaries’ ability to pay such dividends or distributions. Prior to providing funds to Entergy Corporation, such subsidiaries have financial and regulatory obligations that must be satisfied, including among others, debt service and, in the case of Entergy Utility Holding Company, LLC and Entergy Texas, dividends and distributions on preferred securities. Any distributions from the Registrant Subsidiaries other than Entergy Texas and System Energy are paid directly to Entergy Utility Holding Company, LLC and are therefore subject to prior payment of distributions on its preferred securities.

The hazardous activities associated with power generation could adversely impact our results of operations and financial condition.

Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large pieces of rotating equipment and delivering electricity to transmission and distribution systems. In addition to natural risks, such as earthquakes, floods, lightning, hurricanes and wind, hazards, such as fire, explosion, collapse, and machinery failure, are inherent risks in our operations which may occur as a result of inadequate internal processes, technological flaws, human error, or actions of third parties or other external events. The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks.

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The hazards described above, along with other safety hazards associated with our operations, can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment, contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, environmental cleanup costs, personal injury, and fines and/or penalties and may adversely affect our reputation.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Risk Management and Strategy

Entergy and the Registrant Subsidiaries maintain a security-risk-management system with defined roles, duties, governance, and accountability. Under this physical- and cyber-risk model, Entergy and the Registrant Subsidiaries streamline security into a centralized program. The Chief Security Officer (CSO) is responsible for establishing the security and reliability risk strategy, setting policies, monitoring controls and compliance, providing support activities, and reporting on the security program. The Chief Information Security Officer (CISO) is responsible for establishing the cybersecurity strategy and implementing physical and cyber security systems for the security program. The Chief Information Officer (CIO) is responsible for ensuring that Entergy’s information technology infrastructure is secure and reliable. The Chief Ethics & Compliance Officer works with the CSO to address requirements of external security-related regulations, and where applicable, incorporate them into business policies. Management is responsible for identifying and managing risk directly through execution of the security program and compliance with security policies. Entergy and the Registrant Subsidiaries’ risk management model addresses compliance with certain regulatory constructs, such as the NERC Reliability Standards, the NRC Code of Federal Regulations, the Payment Card Industry Data Security Standard, and the Health Insurance Portability and Accountability Act, among other regulations. Entergy and the Registrant Subsidiaries’ risk management model continuously evolves to improve and implement protections, controls, and monitoring to mitigate risks to their part of North America’s electric grid, to protect sensitive information, and to maintain secure business operations. Entergy and the Registrant Subsidiaries manage cybersecurity threats as an enterprise risk with close coordination and information sharing with its federal, state, and local partners. Entergy and the Registrant Subsidiaries also engage with local, state, and federal law enforcement agencies on initiatives to share threat information and participate in a wide range of industry collaborations and classified briefings on cybersecurity developments and evolving risks.

Entergy and the Registrant Subsidiaries maintain access-management controls, including a layered multi-factor authentication process for network and system access, and a defense-in-depth security ecosystem that includes advanced threat detection from independent third parties and federal agencies, security logging and monitoring, and independent third-party penetration and vulnerability assessments. Relevant employees and contractors must complete cybersecurity trainings periodically to heighten security and threat awareness, promote best practices, and meet regulatory requirements. Additional multi-layered prevention and detection processes and technologies to mitigate and minimize the effects of cybersecurity risks include email security, continuous monitoring, vulnerability scanning, anti-virus and anti-malware software, backups and recovery strategy, network segregation, third-party security, and information protection.

Entergy and the Registrant Subsidiaries have incorporated certain cyber-specific response protocols and procedures into their Entergy Incident Management System framework for responding to emergency incidents. This includes the Entergy Incident Response Team Plan, which outlines Entergy’s procedures, steps, and responsibilities for preparing for, detecting, containing, and recovering from an incident. The plan details the roles and responsibilities of Entergy’s officers who would be engaged in such a response to an emergency incident,

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including key questions to be addressed, critical decision points, and sources of key information to support decision-making. Senior management and the Emergency Incident Response Team periodically review and drill on the plan.

As cybersecurity risks continue to evolve with multiple threat vectors, Entergy and the Registrant Subsidiaries maintain a comprehensive security strategy to keep current with the changing threats. To inform this effort, Entergy and the Registrant Subsidiaries utilize the National Institute of Standards and Technology Cybersecurity Framework, which consists of standards, guidelines, and best practices to manage cybersecurity risk across the enterprise. A risk-based approach is used to direct security initiatives to the most significant risks and provide the most value in terms of risk reduction and protection. Entergy and the Registrant Subsidiaries use a vendor risk management program to assess and monitor security risks that arise from certain third-party vendors. In addition, Entergy and the Registrant Subsidiaries utilize technology and threat-intelligence services to assess and continuously monitor the cybersecurity risk of key vendors, as identified through the vendor risk management program.

While Entergy and the Registrant Subsidiaries have experienced cybersecurity incidents, except as otherwise summarized above or discussed elsewhere in this report, the risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected them including their business strategy, results of operations, or financial condition. See “Item 1A. Risk Factors” in Part I, Item 1A for a detailed description of the risks related to cybersecurity.

Corporate Governance

The Board of Directors is responsible for oversight of the identification, management, and mitigation of enterprise-wide risk, including cybersecurity risk. The Audit Committee has the primary responsibility for overseeing risk management, including oversight of cybersecurity risk management practices and performance. The Audit Committee generally receives reports at each regular quarterly meeting provided by the CSO, the CISO, the CIO, and the General Auditor on the cybersecurity management program. The reports focus on the programs and protocols in place to mitigate cybersecurity risks, led by the CSO. Among other things, the reports may include: recent cyber risk and cybersecurity developments; industry engagement activities; legislative and regulatory developments; cyber-risk governance and oversight; selected cyber risk metrics and activities; cyber risk incident response plans and strategies; cybersecurity drills and exercises; assessments by third party experts and Internal Audit; and major projects and initiatives.

While the Board of Directors and Audit Committee oversee cybersecurity risk management, Entergy’s management is responsible for managing cybersecurity risk. Entergy and the Registrant Subsidiaries’ security-risk-management system, as discussed above, is comprised of a three lines of defense model to enhance risk management efforts and define roles in the security program. The first line of defense, comprised of business units performing operational functions, including the CISO and CIO, is responsible for identification and management of security and reliability risks directly through design, implementation, and execution of control activities. The second line of defense, comprised of the CSO and Chief Security Office, performs and supports security and reliability risk management and governs and oversees the execution of security and reliability controls by the first line of defense. Ownership of specific security operations may migrate from a business unit in the first line of defense to the second line of defense, as determined to be appropriate by the Chief Security Office. The third line of defense, which includes Internal Audit, independent third parties, and certain regulatory constructs, such as the NERC Reliability Standards and the NRC Cyber Rule, provides assurance of selective actions taken by the first and second lines of defense to senior management and the Board of Directors.

Entergy’s CSO is responsible for overseeing physical, cyber, and reliability risk, including governance, compliance, and threat intelligence. The CSO’s background includes serving as the Global Lead Business Information Security Officer for a multinational pharmaceutical and biotechnology company, Vice President of Cybersecurity Solutions for an international consulting firm, and an operations manager for a multinational technology company. The CSO is also a former intelligence officer in the U.S. Marine Corps, with experience in

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the Fleet Marine Force, Joint Staff J-2/Defense Intelligence Agency, and Headquarters Marine Corps Command, Control, Communications, and Computers (C4I). The CSO participated in numerous exercises and crisis operations during his time in the military. The CSO is a member of the Information Systems Audit and Control Association and a certified Information Privacy Manager from the International Association of Privacy Professionals. The CSO also completed the Harvard Kennedy School Executive Education Program in Cybersecurity and the FBI Domestic Security Executive Academy.

Entergy’s CISO is responsible for enterprise strategic and operational cybersecurity, physical security systems, and regulatory compliance. The CISO oversees investments in tools, resources, and processes that allow for the continuous improvement and maturity of Entergy’s cybersecurity posture. The CISO has expertise spanning more than 25 years in the realm of information technology, information security, and cyber/physical security management. The CISO’s background includes serving as the Vice President and Chief Information Security Officer for an electric utility with responsibility for enterprise cybersecurity covering corporate, electric, nuclear, and gas operations. Additionally, the CISO served as the Chief Security Officer for the Electric Reliability Council of Texas with overall responsibility for its cybersecurity, physical security, and emergency management programs. Her previous experience includes multiple technical, managerial, and strategic roles within industries ranging from energy, telecommunication, software development, and cybersecurity consulting. The CISO is a Certified Information Systems Security Professional, Certified Information Security Manager, and Certified in Risk and Information Systems Control.

Entergy’s CIO is responsible for ensuring that the organization’s information technology systems, infrastructure, and applications are designed, implemented, and maintained to provide secure and reliable performance in support of Entergy’s business objectives. The CIO establishes and enforces IT policies, procedures, and controls to mitigate information technology policies, procedures, and controls to mitigate information technology-related risks and provides guidance and support to the business units in the effective use of information technology resources and the management of information technology-related risks. By fulfilling these responsibilities across the three lines of defense model, the CIO plays a critical role in ensuring that Entergy’s information technology-related risks are effectively identified, managed, and mitigated, thereby supporting Entergy’s overall risk management and governance framework. The CIO’s background includes serving in senior leadership roles, including CIO for multiple global manufacturing companies, serving on the board of directors for a telecommunications company, and consulting leadership positions providing services for numerous large, global organizations.

In the event of a suspected or actual cybersecurity incident, the Security Incident Response Team (SIRT), which includes the CISO, has primary responsibility for initial identification and evaluation of potential business impacts and escalation of the incident’s severity classification using pre-established criteria with a specified communication matrix and escalation thresholds. The Security Incident Commander, which role is served by rotating leaders in the CISO organization, provides tactical leadership and oversight management at the cross-functional level for the incident. The SIRT remains engaged throughout the incident response lifecycle, including detection and analysis, containment, eradication and recovery, and post-incident remediation, and coordinates with the impacted business functions, if warranted. Once a cyber incident is confirmed, the SIRT is responsible for maintaining situational awareness and continuous monitoring of the need for escalation or de-escalation of the incident’s severity classification. As certain escalation thresholds are exceeded, additional levels of management notification are required by the SIRT, including notification of and recurring communication with Entergy’s Incident Response Team, which includes the Chief Executive Officer, the Chief Operating Officer, the CSO, other executive management, and members of the affected business functions. Depending upon the facts, analysis, materiality, and anticipated or current impacts, the Chief Executive Officer and the General Counsel will determine the timing and cadence for communication of the cyber incident with the Board of Directors or Audit Committee.

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Results of Operations

2024 Compared to 2023

Net Income

Net income decreased $77.4 million primarily due to a $159.6 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit and a $131.8 million ($99.1 million net-of-tax) charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024. The decrease was partially offset by write-offs of $78.4 million ($58.8 million net-of-tax) in third quarter 2023 as a result of Entergy Arkansas’s approved motion to forgo recovery of identified costs resulting from the 2013 ANO stator incident, higher retail electric price, higher volume/weather, and higher other income. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit. See Note 2 to the financial statements for discussion of the opportunity sales proceeding. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.

Operating Revenues

Following is an analysis of the change in operating revenues comparing 2024 to 2023:

Amount

(In Millions)

2023 operating revenues

$2,646.4

Fuel, rider, and other revenues that do not significantly affect net income(202.1)

Retail one-time bill credit(92.3)

Volume/weather37.8

Retail electric price70.4

2024 operating revenues

$2,460.2

Entergy Arkansas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The retail one-time bill credit represents the disbursement of settlement proceeds in the form of a one-time bill credit provided to Entergy Arkansas’s retail customers during the August 2024 billing cycle through the Grand Gulf credit rider as a result of the System Energy settlement with the APSC. There is no effect on net income because Entergy Arkansas previously recorded a regulatory liability for the effects of the System Energy settlement with the APSC. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider.

The volume/weather variance is primarily due to an increase in residential and industrial usage. The increase in residential usage is primarily due to an increase in customers. The increase in industrial usage is primarily due to an increase in demand from large industrial customers, primarily new customers in the technology industry, and an increase in demand from small industrial customers.

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The retail electric price variance is primarily due to an increase in formula rate plan rates effective January 2024. See Note 2 to the financial statements for discussion of the 2023 formula rate plan filing.

Total electric energy sales for Entergy Arkansas for the years ended December 31, 2024 and 2023 are as follows:

20242023% Change

(GWh)

Residential7,658 7,610 1

Commercial5,583 5,584 —

Industrial10,179 9,095 12

Governmental185 192 (4)

Total retail 23,605 22,481 5

Sales for resale:

Associated companies2,039 2,218 (8)

Non-associated companies4,058 5,777 (30)

Total29,702 30,476 (3)

See Note 19 to the financial statements for additional discussion of Entergy Arkansas’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $11.2 million in energy efficiency expenses primarily due to the timing of recovery from customers;

•the effects of recording a final judgment in first quarter 2023 to resolve claims in the ANO damages case against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of approximately $10.3 million of spent nuclear fuel storage costs previously recorded as other operation and maintenance expenses. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and

•an increase of $7.2 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023.

The increase was partially offset by:

•a decrease of $11.3 million in nuclear generation expenses primarily due to lower nuclear labor costs;

•a decrease of $8.8 million in power delivery expenses primarily due to lower vegetation maintenance costs; and

•a decrease of $4.4 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023.

Asset write-offs includes:

•a $131.8 million charge to reflect the write-off of a previously recorded regulatory asset as a result of an adverse decision in the opportunity sales proceeding in March 2024. See Note 2 to the financial statements for discussion of the opportunity sales proceeding; and

•the effects of Entergy Arkansas forgoing recovery of identified costs resulting from the 2013 ANO stator incident. In third quarter 2023, Entergy Arkansas recorded write-offs of its regulatory asset for deferred

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fuel of $68.9 million and the undepreciated balance of $9.5 million in capital costs related to the ANO stator incident. See Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Walnut Bend Solar facility, which was placed in service in September 2024.

Other regulatory charges (credits) - net includes:

•the reversal in third quarter 2024 of a $92.3 million regulatory liability recognized for the obligation to return to customers the refund from the System Energy settlement with the APSC. The reversal of the regulatory liability offsets a reduction in gross revenues from the retail one-time bill credits provided to customers in the August 2024 billing cycle through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider; and

•a regulatory credit of $15.5 million, recorded in fourth quarter 2024, to reflect the amount of the 2023 historical year netting adjustment included in the 2024 formula rate plan filing that it expects to collect from its customers during the 2025 rate effective period. See Note 2 to the financial statements for discussion of the 2024 formula rate plan filing.

In addition, Entergy Arkansas records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.

Other income increased primarily due to:

•changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in first quarter 2024;

•higher interest earned on money pool investments;

•a decrease of $12.9 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs; and

•an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Driver Solar facility and the Walnut Bend Solar facility projects.

Interest expense increased primarily due to the issuances of $400 million of 5.75% Series mortgage bonds and $400 million of 5.45% Series mortgage bonds, each in May 2024, and the issuance of $300 million of 5.30% Series mortgage bonds in August 2023. The increase was partially offset by:

•the repayment of $375 million of 3.70% Series mortgage bonds in June 2024;

•the repayment of $250 million of 3.05% Series mortgage bonds in June 2023; and

•an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2024, including the Driver Solar facility and the Walnut Bend Solar facility projects.

The effective income tax rates were 18.9% for 2024 and (33.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

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Management’s Financial Discussion and Analysis

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Arkansas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$3,632 $5,278 $12,915

Net cash provided by (used in):

Operating activities978,680 941,021 699,732

Investing activities(1,732,630)(1,032,952)(852,794)

Financing activities755,065 90,285 145,425

Net increase (decrease) in cash and cash equivalents1,115 (1,646)(7,637)

Cash and cash equivalents at end of period$4,747 $3,632 $5,278

2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities increased $37.7 million in 2024 primarily due to:

•lower fuel and purchased power payments;

•the timing of payments to vendors;

•a decrease of $34.1 million in storm spending in 2024 as compared to 2023;

•higher collections from customers; and

•the receipt of $92.7 million in settlement proceeds in 2024 as a result of the System Energy settlement with the APSC, which was subsequently refunded to retail customers in third quarter 2024 with one-time bill credits through the Grand Gulf credit rider. See Note 2 to the financial statements for discussion of the System Energy settlement with the APSC and discussion of the Grand Gulf credit rider.

The increase was partially offset by:

•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;

•an increase of $43.5 million in interest paid;

•the refund of $41.7 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report

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filed with the FERC. The refund was subsequently applied to the under-recovered deferred fuel balance. See Note 2 to the financial statements for further discussion of the refund and the related proceedings;

•$23.2 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and

•an increase of $8.1 million in spending on nuclear refueling outages in 2024 as compared to 2023.

Investing Activities

Net cash flow used in investing activities increased $699.7 million in 2024 primarily due to:

•the initial and substantial completion payments totaling approximately $392.8 million in 2024 for the purchase of the Driver Solar facility;

•the initial and substantial completion payments totaling approximately $240.4 million in 2024 for the purchase of the West Memphis Solar facility;

•the initial and substantial completion payments totaling approximately $185.5 million in 2024 for the purchase of the Walnut Bend Solar facility;

•an increase of $18.7 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2024;

•$17.9 million in proceeds received from the DOE in April 2023 resulting from litigation regarding spent nuclear fuel storage costs that were previously recorded as construction expenditures. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and

•an increase in cash used of $13.7 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle.

The increase was partially offset by a decrease of $156.1 million in distribution construction expenditures and a decrease of $15.6 million in transmission construction expenditures, both primarily due to lower capital expenditures for storm restoration in 2024. See Note 14 to the financial statements for discussion of the Driver Solar facility, the West Memphis Solar facility, and the Walnut Bend Solar facility purchases.

Financing Activities

Net cash flow provided by financing activities increased $664.8 million in 2024 primarily due to:

•the issuances of $400 million of 5.45% Series mortgage bonds and $400 million of 5.75% Series mortgage bonds, each in May 2024;

•capital contributions of approximately $695 million received from Entergy Corporation in 2024 to partially finance the acquisitions of the Walnut Bend Solar facility, the West Memphis Solar facility, and the Driver Solar facility;

•the repayment, at maturity, of $250 million of 3.05% Series mortgage bonds in June 2023;

•a decrease of $107 million in common equity distributions paid in 2024 in order to maintain Entergy Arkansas’s capital structure;

•the issuance of $70 million of 5.54% Series O notes by the Entergy Arkansas nuclear fuel company variable interest entity in March 2024;

•the repayment, at maturity, of $40 million of 3.17% Series M notes by the Entergy Arkansas nuclear fuel company variable interest entity in December 2023; and

•an increase of $18.4 million in advance payments from customers for construction for transmission, distribution, and generator interconnection agreements.

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Management’s Financial Discussion and Analysis

The increase was partially offset by:

•the issuance of $425 million of 5.15% Series mortgage bonds in January 2023;

•the repayment, at maturity, of $375 million of 3.70% Series mortgage bonds in June 2024;

•the issuance of $300 million of 5.30% Series mortgage bonds in August 2023;

•net repayments of $47.7 million in 2024 as compared to net long-term borrowings of $70.2 million in 2023 on the nuclear fuel company variable interest entity’s credit facility; and

•money pool activity.

Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased $130.2 million in 2024 compared to decreasing by $35.4 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

See Note 5 to the financial statements for further details of long-term debt.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Arkansas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

Capital Structure

Entergy Arkansas’s debt to capital ratio is shown in the following table. The decrease in the debt to capital ratio for Entergy Arkansas is primarily due to capital contributions of $695 million received from Entergy Corporation in 2024, partially offset by the net issuance of long-term debt in 2024.

December 31,2024December 31,2023

Debt to capital53.6 %55.5 %

Effect of subtracting cash— %— %

Net debt to net capital (non-GAAP)53.6 %55.5 %

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition. The net debt to net capital ratio is a non-GAAP measure. Entergy Arkansas also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Arkansas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Arkansas may issue incremental debt or reduce distributions, or both, to

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maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Arkansas may receive equity contributions to maintain its capital structure.

Uses of Capital

Entergy Arkansas requires capital resources for:

•construction and other capital investments;

•debt maturities or retirements;

•working capital purposes, including the financing of fuel and purchased power costs; and

•distribution and interest payments.

Following are the amounts of Entergy Arkansas’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$355 $260 $250

Transmission80 70 95

Distribution360 290 310

Utility Support80 70 65

Total$875 $690 $720

In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Arkansas includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Arkansas’s portfolio; investments in ANO 1 and 2; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Arkansas is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of Entergy Arkansas’s existing debt and lease obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

(In Millions)

Long-term debt (a)$211 $885 $210 $770 $6,858

Operating leases (b)$20 $18 $15 $14 $5

Finance leases (b)$6 $6 $5 $9 $24

(a)Long-term debt is discussed in Note 5 to the financial statements.

(b)Lease obligations are discussed in Note 10 to the financial statements.

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Other Obligations

Entergy Arkansas currently expects to contribute approximately $35.5 million to its qualified pension plans and approximately $529 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

Entergy Arkansas has $15.1 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

In addition, Entergy Arkansas enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Arkansas has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Arkansas’s obligations under the Unit Power Sales Agreement.

As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Arkansas pays distributions from its earnings at a percentage determined monthly.

Lake Catherine Unit 5

In November 2024, Entergy Arkansas filed an application with the APSC seeking a certificate of environmental compatibility and public need for the construction and operation of Lake Catherine Unit 5, a 446 MW hydrogen-capable simple-cycle natural gas combustion turbine facility to be located at the existing Lake Catherine facility site in Hot Spring County, Arkansas. In December 2024 other parties, including the APSC general staff, filed testimony opposing the resource, although the APSC general staff recognized the capacity need for the resource. Entergy Arkansas filed testimony in January 2025 further supporting its application, and in February 2025 the opposing parties filed responsive rebuttal testimony continuing to dispute the estimated costs and to dispute that Entergy Arkansas performed a market solicitation sufficient to demonstrate that this resource is the most reasonable option for customers. Also in February 2025, Entergy Arkansas filed surrebuttal testimony responding to the opposing parties’ testimony. A hearing, if necessary, is scheduled for early March 2025, with an APSC decision requested by the end of March 2025. Subject to receipt of required regulatory approval and other conditions, the facility is expected to be in service by the end of 2028.

Sources of Capital

Entergy Arkansas’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•capital contributions; and

•bank financing under new or existing facilities.

Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations,

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Entergy Arkansas expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt and common and preferred membership interest issuances by Entergy Arkansas require prior regulatory approval. Debt issuances are also subject to requirements set forth in Entergy Arkansas’s bond indenture and other agreements. Entergy Arkansas has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

Entergy Arkansas’s payables to the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

($15,190)($145,385)($180,795)($139,904)

See Note 4 to the financial statements for a description of the money pool.

Entergy Arkansas has a credit facility in the amount of $300 million scheduled to expire in June 2029. Entergy Arkansas also has a $25 million credit facility scheduled to expire in April 2026. The $300 million credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, there were $18.1 million in letters of credit outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements for further discussion of the credit facilities.

The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in June 2027. As of December 31, 2024, there were $22.5 million in loans outstanding under the credit facility for the Entergy Arkansas nuclear fuel company variable interest entity. See Note 4 to the financial statements for further discussion of the nuclear fuel company variable interest entity credit facility.

Entergy Arkansas obtained authorization from the FERC through January 2027 for short-term borrowings not to exceed an aggregate amount of $250 million at any time outstanding and borrowings by its nuclear fuel company variable interest entity. See Note 4 to the financial statements for further discussion of Entergy Arkansas’s short-term borrowing limits. The long-term securities issuances of Entergy Arkansas are limited to amounts authorized by the FERC. The APSC has concurrent jurisdiction over Entergy Arkansas’s first mortgage bond/secured issuances. Entergy Arkansas has obtained long-term financing authorization from the FERC that extends through January 2027. Entergy Arkansas has obtained first mortgage bond/secured financing authorization from the APSC that extends through December 2025.

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State and Local Rate Regulation and Fuel-Cost Recovery

The rates that Entergy Arkansas charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Arkansas is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the APSC, is primarily responsible for approval of the rates charged to customers.

Retail Rates

2022 Formula Rate Plan Filing

In July 2022, Entergy Arkansas filed with the APSC its 2022 formula rate plan filing to set its formula rate for the 2023 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2023 and a netting adjustment for the historical year 2021. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2023 projected year was 7.40% resulting in a revenue deficiency of $104.8 million. The earned rate of return on common equity for the 2021 historical year was 8.38% resulting in a $15.2 million netting adjustment. The total proposed revenue change for the 2023 projected year and 2021 historical year netting adjustment was $119.9 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $79.3 million. In October 2022 other parties filed their testimony recommending various adjustments to Entergy Arkansas’s overall proposed revenue deficiency, and Entergy Arkansas filed a response including an update to actual revenues through August 2022, which raised the constraint to $79.8 million. In November 2022, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding. As a result of the settlement agreement, the total revenue change was $102.8 million, including a $87.7 million increase for the 2023 projected year and a $15.2 million netting adjustment. Because Entergy Arkansas’s revenue requirement exceeded the constraint, the resulting increase was limited to $79.8 million. In December 2022 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2023.

2023 Formula Rate Plan Filing

In July 2023, Entergy Arkansas filed with the APSC its 2023 formula rate plan filing to set its formula rate for the 2024 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the projected year 2024 and a netting adjustment for the historical year 2022. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2024 projected year was 8.11% resulting in a revenue deficiency of $80.5 million. The earned rate of return on common equity for the 2022 historical year was 7.29% resulting in a $49.8 million netting adjustment. The total proposed revenue change for the 2024 projected year and 2022 historical year netting adjustment was $130.3 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $88.6 million. The APSC general staff and intervenors filed their errors and objections in October 2023, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues which lowers the constraint to $87.7 million. Entergy Arkansas filed its rebuttal in October 2023. In October 2023, Entergy Arkansas filed with the APSC a settlement agreement reached with other parties resolving all issues in the proceeding, none of which affected Entergy Arkansas’s requested recovery up to the constraint of $87.7 million. The settlement agreement provided for amortization of the approximately $39 million regulatory asset for costs associated with the COVID-19 pandemic over a 10-year period as well as recovery of $34.9 million related to the resolution of the 2016 and 2017 IRS audits from previous tax positions that are no longer uncertain, partially offset by $24.7 million in excess accumulated deferred income taxes from reductions in state income tax rates, each before consideration of their respective tax gross-up. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit and the State of Arkansas corporate income tax rate changes. In December

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2023 the APSC approved the settlement agreement as being in the public interest and approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2024.

2024 Formula Rate Plan Filing

In July 2024, Entergy Arkansas filed with the APSC its 2024 formula rate plan filing to set its formula rate for the 2025 calendar year. The filing contained an evaluation of Entergy Arkansas’s earnings for the 2025 projected year and a netting adjustment for the 2023 historical year. The filing showed that Entergy Arkansas’s earned rate of return on common equity for the 2025 projected year was 8.43% resulting in a revenue deficiency of $69.5 million. The earned rate of return on common equity for the 2023 historical year was 7.48% resulting in a $33.1 million netting adjustment. The total proposed revenue change for the 2025 projected year and 2023 historical year netting adjustment is $102.6 million. By operation of the formula rate plan, Entergy Arkansas’s recovery of the revenue requirement is subject to a four percent annual revenue constraint. Because Entergy Arkansas’s revenue requirement in this filing exceeded the constraint, the resulting increase was limited to $82.6 million. The APSC general staff and intervenors filed their errors and objections in October 2024, proposing certain adjustments, including the APSC general staff’s update to annual filing year revenues that increases the constraint to $83.5 million. Entergy Arkansas filed its rebuttal in October 2024, and later in October 2024 the parties submitted a joint issues list and stipulations setting forth the disputed issues and the noncontested issues. In December 2024 the APSC approved the parties’ stipulations without modification, approved Entergy Arkansas’s adjustment with respect to storm costs, directed Entergy Arkansas to adjust its projected year distribution reliability capital closings, and deferred the recoverability of Entergy Arkansas’s opportunity sales legal fees until the next general rate case. Also in December 2024 the APSC approved Entergy Arkansas’s compliance tariff effective with the first billing cycle of January 2025. As a result of the proceeding, the total revenue change was $82.7 million, including a $63.7 million increase for the 2025 projected year and a $31.4 million netting adjustment for the 2023 historical year. In fourth quarter 2024, Entergy Arkansas recorded a regulatory asset of $15.5 million to reflect the amount of the 2023 historical year netting adjustment that it expects to collect from its customers during the 2025 rate effective period. Pursuant to the terms of the parties’ stipulations, Entergy Arkansas made a filing with the APSC in January 2025 to refund customers $30.1 million in excess accumulated deferred income taxes resulting from the reduction in the State of Arkansas’s income tax rate from 4.8% to 4.3% in 2024. Entergy Arkansas will make this refund over a 24-month period effective with the first billing cycle of February 2025.

Grand Gulf Credit Rider

In June 2024, Entergy Arkansas filed with the APSC a tariff to provide retail customers a credit resulting from the terms of the settlement agreement between Entergy Arkansas, System Energy, additional named Entergy parties, and the APSC pertaining to System Energy’s billings for wholesale sales of energy and capacity from the Grand Gulf nuclear plant. See “Complaints Against System Energy - System Energy Settlement with the APSC” in Note 2 to the financial statements for discussion of the settlement. In July 2024 the APSC approved the tariff, under which Entergy Arkansas will refund to retail customers a total of $100.6 million. To date, Entergy Arkansas has refunded $92.3 million of the total through one-time bill credits during the August 2024 billing cycle and is finalizing plans for the refund of the remaining regulatory liability balance.

Energy Cost Recovery Rider

Entergy Arkansas’s retail rates include an energy cost recovery rider to recover fuel and purchased energy costs in monthly customer bills. The rider utilizes the prior calendar-year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over- or under-recovery, including carrying charges, of the energy costs for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs.

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Management’s Financial Discussion and Analysis

In January 2014, Entergy Arkansas filed a motion with the APSC relating to its upcoming energy cost rate redetermination filing that was made in March 2014. In that motion, Entergy Arkansas requested that the APSC authorize Entergy Arkansas to exclude from the redetermination of its 2014 energy cost rate $65.9 million of incremental fuel and replacement energy costs incurred in 2013 as a result of the ANO stator incident. Entergy Arkansas requested that the APSC authorize Entergy Arkansas to retain that amount in its deferred fuel balance, with recovery to be reviewed in a later period after more information was available regarding various claims associated with the ANO stator incident. In February 2014 the APSC approved Entergy Arkansas’s request to retain that amount in its deferred fuel balance. In July 2017, Entergy Arkansas filed for a change in rates pursuant to its formula rate plan rider. In that proceeding, the APSC approved a settlement agreement agreed upon by the parties, including a provision that requires Entergy Arkansas to initiate a regulatory proceeding for the purpose of recovering funds currently withheld from rates and related to the stator incident, including the $65.9 million of deferred fuel and purchased energy costs and costs related to the incremental oversight previously noted, subject to certain timelines and conditions set forth in the settlement agreement. In October 2023, Entergy Arkansas made a commitment to the APSC to make a filing to forgo its opportunity to seek recovery of the incremental fuel and purchased energy expense, among other identified costs, resulting from the ANO stator incident. As a result, in third quarter 2023, Entergy Arkansas recorded a write-off of its regulatory asset for deferred fuel of $68.9 million, which includes interest, related to the ANO stator incident. Consistent with its October 2023 commitment, Entergy Arkansas filed a motion to forgo recovery in November 2023, and the motion was approved by the APSC in December 2023. See the “ANO Damage, Outage, and NRC Reviews” section in Note 8 to the financial statements for further discussion of the ANO stator incident and the approved motion to forgo recovery.

In March 2017, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01164 per kWh to $0.01547 per kWh. The APSC staff filed testimony in March 2017 recommending that the redetermined rate be implemented with the first billing cycle of April 2017 under the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuant to the tariff. In July 2017 the Arkansas Attorney General requested additional information to support certain of the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.

In March 2018, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01547 per kWh to $0.01882 per kWh. The Arkansas Attorney General filed a response to Entergy Arkansas’s annual redetermination filing requesting that the APSC suspend the proposed tariff to investigate the amount of the redetermination or, alternatively, to allow recovery subject to refund. Among the reasons the Attorney General cited for suspension were questions pertaining to how Entergy Arkansas forecasted sales and potential implications of the Tax Cuts and Jobs Act. Entergy Arkansas replied to the Attorney General’s filing and stated that, to the extent there are questions pertaining to its load forecasting or the operation of the energy cost recovery rider, those issues exceed the scope of the instant rate redetermination. Entergy Arkansas also stated that potential effects of the Tax Cuts and Jobs Act are appropriately considered in the APSC’s separate proceeding regarding potential implications of the tax law. The APSC general staff filed a reply to the Attorney General’s filing and agreed that Entergy Arkansas’s filing complied with the terms of the energy cost recovery rider. The redetermined rate became effective with the first billing cycle of April 2018. Subsequently in April 2018 the APSC issued an order declining to suspend Entergy Arkansas’s energy cost recovery rider rate and declining to require further investigation at that time of the issues suggested by the Attorney General in the proceeding. Following a period of discovery, the Attorney General filed a supplemental response in October 2018 raising new issues with Entergy Arkansas’s March 2018 rate redetermination and asserting that $45.7 million of the increase should be collected subject to refund pending further investigation. Entergy Arkansas filed to dismiss the Attorney General’s supplemental response, the APSC general staff filed a motion to strike the Attorney General’s filing, and the Attorney General filed a supplemental response disputing Entergy Arkansas and the APSC staff’s filing. Applicable APSC rules and processes authorize its general staff to initiate periodic audits of Entergy Arkansas’s energy cost recovery rider. In late-2018 the APSC general staff notified Entergy Arkansas it initiated an audit of the 2017 fuel costs. The time in which the audit will be complete is uncertain at this time.

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Management’s Financial Discussion and Analysis

In March 2022, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.00959 per kWh to $0.01785 per kWh. The primary reason for the rate increase was a large under-recovered balance as a result of higher natural gas prices in 2021, particularly in the fourth quarter 2021. At the request of the APSC general staff, Entergy Arkansas deferred its request for recovery of $32 million from the under-recovery related to the February 2021 winter storms until the 2023 energy cost rate redetermination, unless a request for an interim adjustment to the energy cost recovery rider is necessary. This resulted in a redetermined rate of $0.016390 per kWh, which became effective with the first billing cycle in April 2022 through the normal operation of the tariff. In February 2023 the APSC issued orders initiating proceedings with the utilities under its jurisdiction to address the prudence of costs incurred and appropriate cost allocation of the February 2021 winter storms. With respect to any prudence review of Entergy Arkansas fuel costs, as part of the APSC’s draft report issued in its February 2021 winter storms investigation docket, the APSC included findings that the load shedding plans of the investor-owned utilities and some cooperatives were appropriate and comprehensive, and, further, that Entergy Arkansas’s emergency plan was comprehensive and had a multilayered approach supported by a system-wide response plan, which is considered an industry standard. In September 2023 the APSC issued an order in Entergy Arkansas's company-specific proceeding and found that Entergy Arkansas’s practices during the winter storms were prudent.

In March 2023, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01639 per kWh to $0.01883 per kWh. The primary reason for the rate increase is a large under-recovered balance as a result of higher natural gas prices in 2022 and a $32 million deferral related to the February 2021 winter storms consistent with the APSC general staff’s request in 2022. The under-recovered balance included in the filing was partially offset by the proceeds of the $41.7 million refund that System Energy made to Entergy Arkansas in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See “Complaints Against System Energy - Grand Gulf Sale-leaseback Renewal Complaint and Uncertain Tax Position Rate Base Issue” in Note 2 to the financial statements for discussion of the compliance report filed by System Energy with the FERC in January 2023. The redetermined rate of $0.01883 per kWh became effective with the first billing cycle in April 2023 through the normal operation of the tariff.

In March 2024, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected a decrease in the rate from $0.01883 per kWh to $0.00882 per kWh. Due to a change in law in the State of Arkansas, the annual redetermination included $9 million, recorded as a credit to fuel expense in first quarter 2024, for recovery attributed to net metering costs in 2023. The primary reason for the rate decrease is a large over-recovered balance as a result of lower natural gas prices in 2023. To mitigate the effect of projected increases in natural gas prices in 2024, Entergy Arkansas adjusted the over-recovered balance included in the March 2024 annual redetermination filing by $43.7 million. This adjustment is expected to reduce the rate change that will be reflected in the 2025 energy cost rate redetermination. The redetermined rate of $0.00882 per kWh became effective with the first billing cycle in April 2024 through the normal operation of the tariff.

Opportunity Sales Proceeding

In June 2009 the LPSC filed a complaint requesting that the FERC determine that certain of Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocated the energy generated by Entergy System resources; (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity; and (c) violated the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. The LPSC’s complaint challenged sales made beginning in 2002 and requested refunds. In July 2009 the Utility operating companies filed a response to the complaint arguing among other things that the System Agreement contemplates that the Utility operating companies may make sales to third parties for their own account, subject to the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company. The FERC subsequently ordered a hearing in the proceeding.

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Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

After a hearing, the ALJ issued an initial decision in December 2010. The ALJ found that the System Agreement allowed for Entergy Arkansas to make the sales to third parties but concluded that the sales should be accounted for in the same manner as joint account sales. The ALJ concluded that “shareholders” should make refunds of the damages to the Utility operating companies, along with interest. Entergy disagreed with several aspects of the ALJ’s initial decision and in January 2011 filed with the FERC exceptions to the decision.

The FERC issued a decision in June 2012 and held that, while the System Agreement is ambiguous, it does provide authority for individual Utility operating companies to make opportunity sales for their own account and Entergy Arkansas made and priced these sales in good faith. The FERC found, however, that the System Agreement does not provide authority for an individual Utility operating company to allocate the energy associated with such opportunity sales as part of its load but provides a different allocation authority. The FERC further found that the after-the-fact accounting methodology used to allocate the energy used to supply the sales was inconsistent with the System Agreement. The FERC in its decision established further hearing procedures to quantify the effect of repricing the opportunity sales in accordance with the FERC’s June 2012 decision. The hearing was held in May 2013 and the ALJ issued an initial decision in August 2013. The LPSC, the APSC, the City Council, and FERC staff filed briefs on exceptions and/or briefs opposing exceptions. Entergy filed a brief on exceptions requesting that the FERC reverse the initial decision and a brief opposing certain exceptions taken by the LPSC and FERC staff.

In April 2016 the FERC issued orders addressing requests for rehearing filed in July 2012 and the ALJ’s August 2013 initial decision. The first order denied Entergy’s request for rehearing and affirmed the FERC’s earlier rulings that Entergy’s original methodology for allocating energy costs to the opportunity sales was incorrect and, as a result, Entergy Arkansas must make payments to the other Utility operating companies to put them in the same position that they would have been in absent the incorrect allocation. The FERC clarified that interest should be included with the payments. The second order affirmed in part, and reversed in part, the rulings in the ALJ’s August 2013 initial decision regarding the methodology that should be used to calculate the payments Entergy Arkansas is to make to the other Utility operating companies. The FERC affirmed the ALJ’s ruling that a full re-run of intra-system bills should be performed but required that methodology be modified so that the sales have the same priority for purposes of energy allocation as joint account sales. The FERC reversed the ALJ’s decision that any payments by Entergy Arkansas should be reduced by 20%. The FERC also reversed the ALJ’s decision that adjustments to other System Agreement service schedules and excess bandwidth payments should not be taken into account when calculating the payments to be made by Entergy Arkansas. The FERC held that such adjustments and excess bandwidth payments should be taken into account but ordered further proceedings before an ALJ to address whether a cap on any reduction due to bandwidth payments was necessary and to implement the other adjustments to the calculation methodology.

In May 2016, Entergy Services filed a request for rehearing of the FERC’s April 2016 order arguing that payments made by Entergy Arkansas should be reduced as a result of the timing of the LPSC’s approval of certain contracts. Entergy Services also filed a request for clarification and/or rehearing of the FERC’s April 2016 order addressing the ALJ’s August 2013 initial decision. The APSC and the LPSC also filed requests for rehearing of the FERC’s April 2016 order. In September 2017 the FERC issued an order denying the request for rehearing on the issue of whether any payments by Entergy Arkansas to the other Utility operating companies should be reduced due to the timing of the LPSC’s approval of Entergy Arkansas’s wholesale baseload contract with Entergy Louisiana. In November 2017 the FERC issued an order denying all of the remaining requests for rehearing of the April 2016 order. In November 2017, Entergy Services filed a petition for review in the D.C. Circuit of the FERC’s orders in the first two phases of the opportunity sales case. In December 2017 the D.C. Circuit granted Entergy Services’ request to hold the appeal in abeyance pending final resolution of the related proceeding before the FERC. In January 2018 the APSC and the LPSC filed separate petitions for review in the D.C. Circuit, and the D.C. Circuit consolidated the appeals with Entergy Services’ appeal.

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Management’s Financial Discussion and Analysis

The hearing required by the FERC’s April 2016 order was held in May 2017. In July 2017 the ALJ issued an initial decision addressing whether a cap on any reduction due to bandwidth payments was necessary and whether to implement the other adjustments to the calculation methodology. In August 2017 the Utility operating companies, the LPSC, the APSC, and FERC staff filed individual briefs on exceptions challenging various aspects of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council, and FERC staff filed separate briefs opposing exceptions taken by various parties.

Based on testimony previously submitted in the case and its assessment of the April 2016 FERC orders, in the first quarter 2016, Entergy Arkansas recorded a liability of $87 million, which included interest, for its estimated increased costs and payment to the other Utility operating companies, and a deferred fuel regulatory asset of $75 million. Following its assessment of the course of the proceedings, including the FERC’s denial of rehearing in November 2017 described above, in the fourth quarter 2017, Entergy Arkansas recorded an additional liability of $35 million and a regulatory asset of $31 million.

In October 2018 the FERC issued an order addressing the ALJ’s July 2017 initial decision. The FERC reversed the ALJ’s decision to cap the reduction in Entergy Arkansas’s payment to account for the increased bandwidth payments that Entergy Arkansas made to the other operating companies. The FERC also reversed the ALJ’s decision that Grand Gulf sales from January through September 2000 should be included in the calculation of Entergy Arkansas’s payment. The FERC affirmed on other grounds the ALJ’s rejection of the LPSC’s claim that certain joint account sales should be accounted for as part of the calculation of Entergy Arkansas’s payment. In November 2018 the LPSC requested rehearing of the FERC’s October 2018 decision. In December 2019 the FERC denied the LPSC’s request for rehearing. In January 2020 the LPSC appealed the December 2019 decision to the D.C. Circuit.

In December 2018, Entergy made a compliance filing in response to the FERC’s October 2018 order. The compliance filing provided a final calculation of Entergy Arkansas’s payments to the other Utility operating companies, including interest. No protests were filed in response to the December 2018 compliance filing. Refunds and interest in the following amounts were paid by Entergy Arkansas to the other operating companies in December 2018:

Total refunds including interest

Payment/(Receipt)

(In Millions)

PrincipalInterestTotal

Entergy Arkansas$68$67$135

Entergy Louisiana($30)($29)($59)

Entergy Mississippi($18)($18)($36)

Entergy New Orleans($3)($4)($7)

Entergy Texas($17)($16)($33)

Entergy Arkansas previously recognized a regulatory asset with a balance of $116 million as of December 31, 2018 for a portion of the payments due as a result of this proceeding.

As described above, the FERC’s opportunity sales orders were appealed to the D.C. Circuit. In February 2020 all of the appeals were consolidated and in April 2020 the D.C. Circuit established a briefing schedule. Briefing was completed in September 2020 and oral argument was heard in December 2020. In July 2021 the D.C. Circuit issued a decision denying all of the petitions for review filed in response to the FERC’s opportunity sales orders.

In February 2019 the LPSC filed a new complaint relating to two issues that were raised in the opportunity sales proceeding, but that, in its October 2018 order, the FERC held were outside the scope of the proceeding. In

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Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

March 2019, Entergy Services filed an answer and motion to dismiss the new complaint. In November 2019 the FERC issued an order denying the LPSC’s complaint. The order concluded that the settlement agreement approved by the FERC in December 2015 terminating the System Agreement barred the LPSC’s new complaint. In December 2019 the LPSC requested rehearing of the FERC’s November 2019 order, and in July 2020 the FERC issued an order dismissing the LPSC’s request for rehearing. In September 2020 the LPSC appealed to the D.C. Circuit the FERC’s orders dismissing the new opportunity sales complaint. In November 2020 the D.C. Circuit issued an order establishing that briefing will occur in January 2021 through April 2021. Oral argument was held in September 2021. In December 2021 the D.C. Circuit denied the LPSC’s Petition for Review of the new opportunity sales complaint. The opportunity sales cases are complete at FERC and at the D.C. Circuit and no additional refund amounts are owed by Entergy Arkansas.

In May 2019, Entergy Arkansas filed an application and supporting testimony with the APSC requesting approval of a special rider tariff to recover the costs of these payments from its retail customers over a 24-month period. The application requested that the APSC approve the rider to take effect within 30 days or, if suspended by the APSC as allowed by commission rule, approve the rider to take effect in the first billing cycle of the first month occurring 30 days after issuance of the APSC’s order approving the rider. In June 2019 the APSC suspended Entergy Arkansas’s tariff and granted Entergy Arkansas’s motion asking the APSC to establish the proceeding as the single designated proceeding in which interested parties may assert claims related to the appropriate retail rate treatment of the FERC’s October 2018 order and related FERC orders in the opportunity sales proceeding. In January 2020 the APSC adopted a procedural schedule with a hearing in April 2020. In January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed a joint motion seeking to dismiss Entergy Arkansas’s application alleging that the APSC, in a prior proceeding, ruled on the issues addressed in the application and determined that Entergy Arkansas’s requested relief violates the filed rate doctrine and the prohibition against retroactive ratemaking. Entergy Arkansas responded to the joint motion in February 2020 rebutting these arguments, including demonstrating that the claims in this proceeding differ substantially from those the APSC addressed previously and that the payment resulting from a FERC tariff violation for which Entergy Arkansas seeks retail cost recovery in this proceeding differs materially from the refunds resulting from a FERC tariff amendment that the APSC previously rejected on filed rate doctrine and the retroactive ratemaking grounds. In addition, in January 2020 the Attorney General and Arkansas Electric Energy Consumers, Inc. filed testimony opposing the recovery by Entergy Arkansas of the opportunity sales payment but also claiming that certain components of the payment should be segregated and refunded to customers. In March 2020, Entergy Arkansas filed rebuttal testimony.

In July 2020 the APSC issued a decision finding that Entergy Arkansas’s application is not in the public interest. The order also directed Entergy Arkansas to refund to its retail customers within 30 days of the order the FERC-determined over-collection of $13.7 million, plus interest, associated with a recalculated bandwidth remedy. In addition to these primary findings, the order also denied the Attorney General’s request for Entergy Arkansas to prepare a compliance filing detailing all of the retail impacts from the opportunity sales and denied a request by the Arkansas Electric Energy Consumers to recalculate all costs using the revised responsibility ratio. Entergy Arkansas filed a motion for temporary stay of the 30-day requirement to allow Entergy Arkansas a reasonable opportunity to seek rehearing of the APSC order, but in July 2020 the APSC denied Entergy Arkansas’s request for a stay and directed Entergy Arkansas to refund to its retail customers the component of the total FERC-determined opportunity sales payment that was associated with increased bandwidth remedy payments of $13.7 million, plus interest. The refunds were issued in the August 2020 billing cycle. While the APSC denied Entergy Arkansas’s stay request, Entergy Arkansas believes its actions were prudent and, therefore, the costs, including the $13.7 million, plus interest, are recoverable. In July 2020, Entergy Arkansas requested rehearing of the APSC order, which rehearing was denied by the APSC in August 2020. In September 2020, Entergy Arkansas filed a complaint in the U.S. District Court for the Eastern District of Arkansas challenging the APSC’s order denying Entergy Arkansas’s request to recover the costs of these payments. In October 2020 the APSC filed a motion to dismiss Entergy Arkansas’s complaint, to which Entergy Arkansas responded. Also in December 2020, Entergy Arkansas and the APSC held a pre-trial conference, and filed a report with the court in January 2021. The court held a hearing in February 2021 regarding issues addressed in the pre-trial conference report, and in June 2021 the

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court stayed all discovery until it rules on pending motions, after which the court will issue an amended schedule if necessary. In March 2022 the court denied the APSC’s motion to dismiss, and, in April 2022, issued a scheduling order including a trial date in February 2023. In June 2022, Entergy Arkansas filed a motion asserting that it is entitled to summary judgment because Entergy Arkansas’s position that the APSC’s order is pre-empted by the filed rate doctrine and violates the Dormant Commerce Clause is premised on facts that are not subject to genuine dispute. In July 2022, Arkansas Electric Energy Consumers, Inc., an industrial customer association, filed a motion to intervene and to hold Entergy Arkansas’s motion for summary judgment in abeyance pending a ruling on the motion to intervene. Entergy Arkansas filed a consolidated opposition to both motions. In August 2022 the APSC filed a motion for summary judgment arguing that there is no genuine issue as to any material fact and the APSC is entitled to judgment as a matter of law. In September 2022, Entergy Arkansas filed an opposition to the motion. In October 2022 the APSC filed a motion asking the court to hold further proceedings in abeyance pending a decision on the motions for summary judgment filed by Entergy Arkansas and the APSC. Also in October 2022, Entergy Arkansas filed an opposition to the motion, and the APSC filed a reply in support of its motion for summary judgment. In January 2023 the judge assigned to the case, on her own motion, identified facts that may present a conflict and recused herself; a new judge was assigned to the case, but he also recused due to a conflict. The case again was reassigned to a new judge. In January 2023 the court denied all pending motions (including those described above) except for a motion by the APSC to exclude certain testimony and further ruled that the matter would proceed to trial. In January 2023, Arkansas Electric Energy Consumers, Inc. filed a notice of appeal of the court’s order denying its motion to intervene to the United States Court of Appeals for the Eighth Circuit and a motion with the district court to stay the proceedings pending the appeal, which was denied. In February 2023, Arkansas Electric Energy Consumers, Inc. filed a motion with the United States Court of Appeals for the Eighth Circuit to stay the proceedings pending the appeal, which also was denied. The trial was held in February 2023. Following the trial, Entergy Arkansas filed a motion with the United States Court of Appeals for the Eighth Circuit to expedite the appeal filed by Arkansas Electric Energy Consumers, Inc. The United States Court of Appeals for the Eighth Circuit granted Entergy Arkansas’s request, and oral arguments were held in June 2023. In August 2023 the United States Court of Appeals for the Eighth Circuit affirmed the order of the court denying Arkansas Electric Energy Consumers, Inc.’s motion to intervene.

In March 2024 the U.S. District Court for the Eastern District of Arkansas issued a judgment in favor of the APSC and against Entergy Arkansas. In March 2024 Entergy Arkansas filed a notice of appeal and a motion to expedite oral arguments with the United States Court of Appeals for the Eighth Circuit and the court granted the motion to expedite. Briefing to the United States Court of Appeals for the Eighth Circuit concluded in July 2024 and oral arguments concluded in September 2024. As a result of the adverse decision by the U.S. District Court for the Eastern District of Arkansas, Entergy Arkansas concluded that it could no longer support the recognition of its $131.8 million regulatory asset reflecting the previously-expected recovery of a portion of the costs at issue in the opportunity sales proceeding and recorded a $131.8 million ($99.1 million net-of-tax) charge to earnings in first quarter 2024. In December 2024 the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Arkansas, and Entergy Arkansas filed a petition for rehearing en banc. In January 2025 the United States Court of Appeals for the Eighth Circuit denied Entergy Arkansas’s petition. Entergy Arkansas is evaluating a petition for certiorari with the United States Supreme Court.

Net Metering Legislation

After the passage of an Arkansas net metering law that was enacted effective July 2019, the APSC approved numerous applications allowing Entergy Arkansas customers to enter into purchase power agreements with third parties and to utilize these purchase power agreements to offset power usage by Entergy Arkansas, despite the lack of proximity between the purchase power agreement and the end-use customer. The APSC also allowed the aggregation of accounts by net metering customers. These decisions by the APSC created subsidies in favor of eligible net metering customers to the detriment of non-participating customers. The level of this subsidy grew as additional net metering applications were approved by the APSC. The size and number of customers eligible under the 2019 law present a risk of loss of load and shifting of costs to customers.

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Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Another Arkansas law was enacted effective March 2023 that revised the billing arrangements for net metering facilities in order to reduce the cost shift to non-net metering customers. The new law also imposes a new limit of 5 MW for future net metering facilities, allows utilities to recover net metering credits in the same manner as fuel, and grandfathers certain net metering facilities that are online or in process to be online by September 2024. As of October 2024, new net metering facilities are subject to two-channel billing. Because of the new law, in May 2023, the APSC closed its prior cost-shifting proceeding and grandfathering rulemaking relating to the prior net metering rate structure. Under the new law, the APSC had to approve revisions to utilities’ net metering tariffs to conform to the new law no later than December 2023. The APSC opened a new rulemaking in April 2023 to consider implementation of the new law and tariffs. In October 2023 the APSC issued new net metering rules to conform to the new law, and utilities, including Entergy Arkansas, filed revised net metering tariffs to comply with the new rules on October 16, 2023. Entergy Arkansas’s revised net metering tariff was approved by the APSC in December 2023.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Nuclear Matters

Entergy Arkansas owns and, through an affiliate, operates the ANO 1 and 2 nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy Arkansas’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of either ANO 1 or 2, Entergy Arkansas may be required to file with the APSC a rate mechanism to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. ANO 1’s operating license expires in 2034 and ANO 2’s operating license expires in 2038.

Environmental Risks

Entergy Arkansas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Arkansas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

Critical Accounting Estimates

The preparation of Entergy Arkansas’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree

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Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Arkansas’s financial position, results of operations, or cash flows.

Nuclear Decommissioning Costs

See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

Qualified Pension and Other Postretirement Benefits

Entergy Arkansas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$684$23,229

Rate of return on plan assets(0.25%)$2,591$—

Rate of increase in compensation0.25%$957$4,945

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Entergy Arkansas, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$140$3,257

Health care cost trend0.25%$393$2,080

Each fluctuation above assumes that the other components of the calculation are held constant.

Costs and Employer Contributions

Total qualified pension cost for Entergy Arkansas in 2024 was $19.6 million. Entergy Arkansas anticipates 2025 qualified pension cost to be $21.4 million. Entergy Arkansas contributed $55.1 million to its qualified pension plans in 2024 and estimates pension contributions will be approximately $35.5 million in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for Entergy Arkansas in 2024 was $5.5 million. Entergy Arkansas expects 2025 postretirement health care and life insurance benefit income of approximately $6.8 million. In 2024, Entergy Arkansas’ contributions to its other postretirement plans, specifically contributions to the external trusts plus claims payments, were offset by trust claims reimbursements, resulting in a net reimbursement of $604 thousand. Entergy Arkansas estimates that 2025 contributions will be approximately $529 thousand.

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the member and Board of Directors of

Entergy Arkansas, LLC and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entergy Arkansas, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows and changes in equity (pages 340 through 344 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rate and Regulatory Matters — Entergy Arkansas, LLC and Subsidiaries — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Arkansas Public Service Commission (the “APSC”), which has jurisdiction with respect to the rates of electric companies in Arkansas, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

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The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the APSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the APSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the APSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the APSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the APSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the APSC’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s filings with the APSC and the FERC and orders issued, and considered the filings with the APSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

339

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$2,460,181 $2,646,396 $2,673,194

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale274,282 514,885 640,344

Purchased power239,281 257,890 201,726

Nuclear refueling outage expenses51,840 59,973 53,438

Other operation and maintenance742,573 737,649 754,293

Asset write-offs131,775 78,434 —

Decommissioning93,582 87,321 82,326

Taxes other than income taxes141,225 141,502 136,565

Depreciation and amortization422,767 400,944 386,272

Other regulatory charges (credits) - net(152,834)(87,409)(89,418)

TOTAL1,944,491 2,191,189 2,165,546

OPERATING INCOME515,690 455,207 507,648

OTHER INCOME

Allowance for equity funds used during construction29,569 20,587 17,787

Interest and investment income70,628 25,024 19,554

Miscellaneous - net(17,995)(23,216)(27,348)

TOTAL82,202 22,395 9,993

INTEREST EXPENSE

Interest expense218,281 188,232 150,928

Allowance for borrowed funds used during construction(14,429)(8,270)(7,070)

TOTAL203,852 179,962 143,858

INCOME BEFORE INCOME TAXES394,040 297,640 373,783

Income taxes74,574 (99,210)80,896

NET INCOME319,466 396,850 292,887

Net loss attributable to noncontrolling interest(5,300)(5,231)(4,358)

EARNINGS APPLICABLE TO MEMBER'S EQUITY$324,766 $402,081 $297,245

See Notes to Financial Statements.

340

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income$319,466 $396,850 $292,887

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation, amortization, and decommissioning, including nuclear fuel amortization588,599 556,780 532,291

Deferred income taxes, investment tax credits, and non-current taxes accrued81,911 (102,070)78,958

Asset write-offs131,775 78,434 —

Changes in assets and liabilities:

Receivables114,936 (84,428)(73,579)

Fuel inventory7,558 (6,351)(252)

Accounts payable(10,425)(69,947)64,944

Taxes accrued(11,936)4,625 10,936

Interest accrued3,007 16,554 1,708

Deferred fuel costs(43,124)228,021 (31,009)

Other working capital accounts(29,148)(29,690)(29,789)

Provisions for estimated losses17,520 (21,039)2,914

Regulatory assets185,251 (6,197)(120,603)

Other regulatory liabilities97,049 240,762 (264,054)

Pension and other postretirement funded status(135,464)(109,077)(67,783)

Other assets and liabilities(338,295)(152,206)302,163

Net cash flow provided by operating activities978,680 941,021 699,732

INVESTING ACTIVITIES

Construction expenditures(812,329)(946,244)(785,168)

Allowance for equity funds used during construction29,569 20,587 17,787

Payment for purchase of plant(819,014)— (1,044)

Nuclear fuel purchases(151,604)(137,616)(98,635)

Proceeds from sale of nuclear fuel33,213 32,937 37,198

Proceeds from nuclear decommissioning trust fund sales718,415 117,123 248,191

Investment in nuclear decommissioning trust funds(730,910)(139,280)(269,497)

Litigation proceeds for reimbursement of spent nuclear fuel storage costs— 17,933 —

Decrease (increase) in other investments30 1,608 (1,626)

Net cash flow used in investing activities(1,732,630)(1,032,952)(852,794)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt1,154,129 1,093,253 232,731

Retirement of long-term debt(717,121)(597,720)(28,521)

Capital contributions from parent695,000 — —

Changes in money pool payable - net(130,195)(35,410)40,891

Common equity distributions paid(310,000)(417,000)(86,000)

Other63,252 47,162 (13,676)

Net cash flow provided by financing activities755,065 90,285 145,425

Net increase (decrease) in cash and cash equivalents1,115 (1,646)(7,637)

Cash and cash equivalents at beginning of period3,632 5,278 12,915

Cash and cash equivalents at end of period$4,747 $3,632 $5,278

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:

Interest - net of amount capitalized$212,691 $169,173 $147,060

Income taxes$9,484 $2,705 ($2,753)

Noncash investing activities:

Accrued construction expenditures$37,495 $36,264 $93,189

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$1,306 $520

Temporary cash investments3,441 3,112

Total cash and cash equivalents4,747 3,632

Accounts receivable:

Customer139,234 157,520

Allowance for doubtful accounts(4,672)(7,182)

Associated companies35,412 124,672

Other70,927 89,532

Accrued unbilled revenues125,824 117,119

Total accounts receivable366,725 481,661

Fuel inventory - at average cost49,937 57,495

Materials and supplies384,238 358,302

Deferred nuclear refueling outage costs48,879 35,463

Prepayments and other41,404 40,866

TOTAL895,930 977,419

OTHER PROPERTY AND INVESTMENTS

Decommissioning trust funds1,604,428 1,414,009

Other797 801

TOTAL1,605,225 1,414,810

UTILITY PLANT

Electric16,371,182 14,821,814

Construction work in progress320,447 340,601

Nuclear fuel257,533 213,722

TOTAL UTILITY PLANT16,949,162 15,376,137

Less - accumulated depreciation and amortization6,275,150 6,002,203

UTILITY PLANT - NET10,674,012 9,373,934

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets1,700,110 1,885,361

Other198,706 21,334

TOTAL1,898,816 1,906,695

TOTAL ASSETS$15,073,983 $13,672,858

See Notes to Financial Statements.

342

ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Currently maturing long-term debt$— $375,000

Accounts payable:

Associated companies85,137 225,344

Other210,040 215,502

Customer deposits129,267 113,186

Taxes accrued93,215 105,151

Interest accrued38,377 35,370

Deferred fuel costs45,158 88,282

Other55,313 55,683

TOTAL656,507 1,213,518

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued1,489,169 1,437,053

Accumulated deferred investment tax credits26,069 27,270

Regulatory liability for income taxes - net417,561 392,496

Other regulatory liabilities831,165 759,181

Decommissioning1,691,583 1,560,057

Accumulated provisions76,479 58,959

Long-term debt5,122,494 4,298,080

Other298,951 165,574

TOTAL9,953,471 8,698,670

Commitments and Contingencies

EQUITY

Member's equity4,448,837 3,739,071

Noncontrolling interest15,168 21,599

TOTAL4,464,005 3,760,670

TOTAL LIABILITIES AND EQUITY$15,073,983 $13,672,858

See Notes to Financial Statements.

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ENTERGY ARKANSAS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Noncontrolling InterestMember's EquityTotal

(In Thousands)

Balance at December 31, 2021$33,110 $3,542,745 $3,575,855

Net income (loss)(4,358)297,245 292,887

Common equity distributions— (86,000)(86,000)

Distributions to noncontrolling interest(927)— (927)

Balance at December 31, 2022$27,825 $3,753,990 $3,781,815

Net income (loss)(5,231)402,081 396,850

Common equity distributions— (417,000)(417,000)

Distributions to noncontrolling interest(995)— (995)

Balance at December 31, 2023$21,599 $3,739,071 $3,760,670

Net income (loss)(5,300)324,766 319,466

Capital contributions from parent— 695,000 695,000

Common equity distributions— (310,000)(310,000)

Distributions to noncontrolling interest(1,131)— (1,131)

Balance at December 31, 2024$15,168 $4,448,837 $4,464,005

See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

2024 Compared to 2023

Net Income

Net income decreased $382.6 million primarily due to:

•expenses of $151.5 million ($110.7 million net-of-tax), recorded in second quarter 2024, primarily consisting of regulatory charges to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement;

•a $179.1 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit, partially offset by a $38 million regulatory charge ($27.8 million net-of-tax) to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit;

•the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act, recorded in fourth quarter 2023, as part of the settlement of Entergy Louisiana’s test year 2017 formula rate plan filing. See Note 3 to the financial statements for discussion of the Tax Cuts and Jobs Act;

•the net effects of Entergy Louisiana’s storm cost securitization in March 2023, including a $133.4 million reduction in income tax expense, partially offset by a $103.4 million ($76.4 million net-of-tax) regulatory charge to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued as part of the securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization;

•higher depreciation and amortization expenses; and

•higher interest expense.

The decrease was partially offset by higher other income, higher retail electric price, and higher volume/weather.

Operating Revenues

Following is an analysis of the change in operating revenues comparing 2024 to 2023:

Amount

(In Millions)

2023 operating revenues

$5,147.8

Fuel, rider, and other revenues that do not significantly affect net income(80.2)

Storm restoration carrying costs(30.6)

Volume/weather52.0

Retail electric price55.0

2024 operating revenues

$5,144.0

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Entergy Louisiana’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

Storm restoration carrying costs represent the equity component of storm restoration carrying costs recognized as part of the securitization of Hurricane Ida restoration costs in March 2023. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization.

The volume/weather variance is primarily due to an increase in industrial usage driven by an increase in demand from large industrial customers, primarily in the petroleum refining and chlor-alkali industries. In addition, there was an increase in commercial usage and an increase in weather-adjusted residential usage, partially offset by the effect of less favorable weather on residential sales. The increase in weather-adjusted residential usage is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage.

The retail electric price variance is primarily due to increases in formula rate plan revenues, including increases in the distribution and transmission recovery mechanisms, effective September 2023 and September 2024. See Note 2 to the financial statements for discussion of the formula rate plan proceedings.

Total electric energy sales for Entergy Louisiana for the years ended December 31, 2024 and 2023 are as follows:

20242023% Change

(GWh)

Residential14,000 14,207 (1)

Commercial11,108 11,074 —

Industrial34,759 31,599 10

Governmental836 801 4

Total retail 60,703 57,681 5

Sales for resale:

Associated companies5,808 4,406 32

Non-associated companies1,574 1,534 3

Total68,085 63,621 7

See Note 19 to the financial statements for additional discussion of Entergy Louisiana’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses remained relatively unchanged primarily due to the following activity:

•an increase of $13.6 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023, and higher incentive-based accruals in 2024 as compared to 2023;

•an increase of $7.9 million in transmission costs allocated by MISO. See Note 2 to the financial statements for discussion of the recovery of these costs;

•an increase of $7 million in loss provisions;

•an increase of $4.4 million in energy efficiency expenses primarily due to higher energy efficiency costs;

•a decrease of $4.5 million in customer service center support costs primarily due to lower contract costs;

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

•a decrease of $5.6 million in information technology costs primarily due to enhancements made in 2023 to certain information technology systems; and

•a decrease of $13.8 million in power delivery expenses primarily due to lower vegetation maintenance costs.

Depreciation and amortization expenses increased primarily due to additions to plant in service and an increase in nuclear depreciation rates effective September 2024 in accordance with the global stipulated settlement agreement approved by the LPSC in August 2024. See Note 2 to the financial statements for discussion of the global stipulated settlement agreement.

Other regulatory charges (credits) - net includes:

•regulatory charges of $150.2 million, recorded in second quarter 2024, to reflect the effects of an agreement in principle between Entergy Louisiana and the LPSC staff and the intervenors in July 2024 to renew Entergy Louisiana’s formula rate plan and resolve a number of other retail dockets and matters, including all formula rate plan test years prior to 2023. See Note 2 to the financial statements for discussion of the agreement in principle and the subsequently filed global stipulated settlement agreement;

•a regulatory charge of $103.4 million, recorded in first quarter 2023, to reflect Entergy Louisiana’s obligation to provide credits to its customers as described in an LPSC ancillary order issued in the Hurricane Ida securitization regulatory proceeding. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization; and

•a regulatory charge of $38 million, recorded in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit.

In addition, Entergy Louisiana records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and nuclear decommissioning trust earnings plus asset retirement obligation-related costs collected in revenue.

Other income increased primarily due to:

•changes in decommissioning trust fund activity, including portfolio rebalancing of decommissioning trust funds in 2024;

•a decrease of $27.4 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs;

•a $14.6 million charge, recorded in first quarter 2023, for the LURC’s 1% beneficial interest in the storm trust II established as part of the March 2023 storm cost securitization; and

•an increase of $13.9 million in affiliated dividend income from affiliated preferred membership interests related to storm cost securitizations.

See Note 2 to the financial statements for discussion of the storm cost securitizations.

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Interest expense increased primarily due to the issuances of $700 million of 5.70% Series mortgage bonds and $500 million of 5.35% Series mortgage bonds, each in March 2024, and the issuance of $700 million of 5.15% Series mortgage bonds in August 2024. The increase was partially offset by:

•the repayment of $400 million of 5.40% Series mortgage bonds in April 2024;

•the repayment of $300 million of 5.59% Series mortgage bonds in December 2023; and

•the repayment of $325 million of 4.05% Series mortgage bonds in August 2023.

The effective income tax rates were 20.2% for 2024 and (19.3%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Louisiana’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

Sale of Natural Gas Distribution Business

See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy Louisiana natural gas distribution business.

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$2,772 $56,613 $18,573

Net cash provided by (used in):

Operating activities2,247,563 2,032,120 1,177,508

Investing activities(1,512,147)(3,039,456)(4,707,711)

Financing activities(411,086)953,495 3,568,243

Net increase (decrease) in cash and cash equivalents324,330 (53,841)38,040

Cash and cash equivalents at end of period$327,102 $2,772 $56,613

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2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities increased $215.4 million in 2024 primarily due to:

•the receipt of a $151.7 million advance payment in 2024 from a customer related to a generation agreement;

•the timing of payments to vendors;

•the receipt of $80.2 million in settlement proceeds in December 2024 as a result of the System Energy settlement with the LPSC. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the LPSC;

•a decrease of $44.6 million in spending on nuclear refueling outages in 2024 as compared to 2023;

•$21.3 million received in third quarter 2024 related to the wind up of the NISCO partnership. See Note 9 to the financial statements for a discussion of the NISCO partnership; and

•a decrease of $10 million in interest paid.

The increase was partially offset by:

•income tax payments of $16.9 million in 2024 compared to income tax refunds of $141.1 million in 2023. Entergy Louisiana made income tax payments in 2024 and received income tax refunds in 2023, each in accordance with an intercompany income tax allocation agreement;

•lower collections from customers;

•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;

•the refund of $27.8 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements for further discussion of the refund and the related proceedings; and

•an increase of $19.5 million in storm spending primarily due to Hurricane Francine restoration efforts in 2024.

Investing Activities

Net cash flow used in investing activities decreased $1,527.3 million in 2024 primarily due to:

•the purchase in 2023 of $1,457.7 million by the storm trust II of preferred membership interests issued by an Entergy affiliate. See Note 2 to the financial statements for a discussion of the March 2023 storm cost securitization and the storm trust II’s investment in preferred membership interests;

•a decrease in cash used of $69.8 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle;

•a decrease of $187.2 million in nuclear construction expenditures primarily due to decreased spending on various nuclear projects in 2024;

•an increase of $114.2 million in redemptions of the preferred membership interests held by the storm trusts in 2024 as compared to 2023, as part of periodic redemptions that are expected to occur, subject to certain conditions, for the preferred membership interests that were issued in connection with the storm cost securitizations. See Note 2 to the financial statements for a discussion of the storm cost securitizations;

•a decrease of $18.9 million in information technology capital expenditures primarily due to decreased spending on various technology projects in 2024; and

•a decrease of $18.8 million in capital expenditures for distributed generation under Entergy Louisiana’s distributed generation program.

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The decrease was partially offset by:

•an increase of $176.8 million in distribution construction expenditures primarily due to increased investment in the resilience of the distribution system and higher capital expenditures for storm restoration in 2024. The increase in storm restoration expenditures is primarily due to Hurricane Francine restoration efforts in 2024;

•an increase of $62.8 million in non-nuclear generation construction expenditures primarily due to higher spending on new generation resources in north Louisiana and the Sterlington solar project;

•payments to storm reserve escrow accounts of $12.9 million in 2024 as compared to net receipts from storm reserve escrow accounts of $49.6 million in 2023; and

•money pool activity.

Increases in Entergy Louisiana’s receivables from the money pool are a use of cash flow, and Entergy Louisiana’s receivable from the money pool increased $32.7 million in 2024. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Entergy Louisiana’s financing activities used $411.1 million of cash in 2024 as compared to providing $953.5 million of cash in 2023 primarily due to the following activity:

•proceeds from securitization of $1.5 billion received by the storm trust II in 2023;

•a capital contribution of approximately $1.5 billion in 2023 received indirectly from Entergy Corporation related to the March 2023 storm cost securitization;

•the repayment, prior to maturity, of $1 billion of 0.95% Series mortgage bonds in August 2024;

•the repayment, prior to maturity, of $400 million of 5.40% Series mortgage bonds in April 2024;

•an increase of $198.4 million in common equity distributions paid in 2024 in order to maintain Entergy Louisiana’s capital structure;

•money pool activity;

•the issuance of $70 million of 5.94% Series J notes by the Entergy Louisiana Waterford variable interest entity in September 2023;

•an increase of $110.8 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements;

•the repayment, prior to maturity, of $300 million of 5.59% Series mortgage bonds in December 2023;

•the repayment, at maturity, of $325 million of 4.05% Series mortgage bonds in September 2023;

•the issuances of $500 million of 5.35% Series mortgage bonds and $700 million of 5.70% Series mortgage bonds in March 2024;

•the repayment, at maturity, of $665 million of 0.62% Series mortgage bonds in November 2023; and

•the issuance of $700 million of 5.15% Series mortgage bonds in August 2024.

Decreases in Entergy Louisiana’s payable to the money pool are a use of cash flow, and Entergy Louisiana’s payable to the money pool decreased $156.2 million in 2024 compared to decreasing by $69.9 million in 2023.

See Note 5 to the financial statements for details of long-term debt. See Note 2 to the financial statements for discussion of the March 2023 storm cost securitization.

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2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Louisiana’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

Capital Structure

Entergy Louisiana’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy Louisiana is primarily due to the net issuance of long-term debt in 2024.

December 31,2024December 31,2023

Debt to capital46.0 %44.9 %

Effect of subtracting cash(0.8 %)0.0 %

Net debt to net capital (non-GAAP)45.2 %44.9 %

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Louisiana uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition. The net debt to net capital ratio is a non-GAAP measure. Entergy Louisiana also uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because net debt indicates Entergy Louisiana’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Louisiana seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Louisiana may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Louisiana may receive equity contributions to maintain its capital structure.

Uses of Capital

Entergy Louisiana requires capital resources for:

•construction and other capital investments;

•debt maturities or retirements;

•working capital purposes, including the financing of fuel and purchased power costs; and

•distribution and interest payments.

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Following are the amounts of Entergy Louisiana’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$1,635 $1,975 $2,570

Transmission945 1,435 1,270

Distribution1,140 1,100 685

Utility Support110 105 210

Total$3,830 $4,615 $4,735

In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Louisiana includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Louisiana’s portfolio, as well as to support customer growth, including St. Jacques Facility, Sterlington facility, Bayou Power Station, and new generation resources in north Louisiana; investments in River Bend and Waterford 3; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Louisiana is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of Entergy Louisiana’s existing debt and lease obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

(In Millions)

Long-term debt (a)$686 $1,088 $909 $1,081 $12,568

Operating leases (b)$20 $18 $15 $18 $4

Finance leases (b)$7 $6 $5 $7 $5

(a)Long-term debt is discussed in Note 5 to the financial statements.

(b)Lease obligations are discussed in Note 10 to the financial statements.

Other Obligations

Entergy Louisiana currently expects to contribute approximately $41.3 million to its qualified pension plans and approximately $14.4 million to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

Entergy Louisiana has $114 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

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In addition, Entergy Louisiana enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Louisiana has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Louisiana’s obligations under and divestiture from the Unit Power Sales Agreement and its obligations under the Vidalia purchased power agreement.

As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Louisiana pays distributions from its earnings at a percentage determined monthly.

2021 Solar Certification and the Geaux Green Option

In November 2021, Entergy Louisiana filed an application with the LPSC seeking certification of and approval for the addition of four new solar photovoltaic resources with a combined nameplate capacity of 475 megawatts (the 2021 Solar Portfolio) and the implementation of a new green tariff, the Geaux Green Option (Rider GGO). The 2021 Solar Portfolio consists of four resources that are expected to provide $242 million in net benefits to Entergy Louisiana’s customers. These resources, all of which would be constructed in Louisiana, include (i) the Vacherie Facility, a 150 megawatt resource in St. James Parish; (ii) the Sunlight Road Facility, a 50 megawatt resource in Washington Parish; (iii) the St. Jacques Facility, a 150 megawatt resource in St. James Parish; and (iv) the Elizabeth Facility, a 125 megawatt resource in Allen Parish. The St. Jacques Facility would be acquired through a build-own-transfer agreement; the remaining resources involve power purchase agreements. The Sunlight Road Facility and the Elizabeth Facility each achieved commercial operation in 2024, and the Vacherie Facility and the St. Jacques Facility originally had estimated in service dates in 2025, but are now expected to be no sooner than 2027. The filing proposed to recover the costs of the power purchase agreements through the fuel adjustment clause and the formula rate plan and the acquisition costs through the formula rate plan.

The proposed Rider GGO is a voluntary rate schedule that will enhance Entergy Louisiana’s ability to help customers meet their sustainability goals by allowing customers to align some or all of their electricity requirements with renewable energy from the resources. Because subscription fees from Rider GGO participants are expected to help offset the cost of the resources, the design of Rider GGO also preserves the benefits of the 2021 Solar Portfolio for non-participants by providing them with the reliability and capacity benefits of locally-sited solar generation at a discounted price.

In March 2022 direct testimony from Walmart, the Louisiana Energy Users Group (LEUG), and the LPSC staff was filed. Each party recommended that the LPSC approve the resources proposed in Entergy Louisiana’s application, and the LPSC staff witness indicated that the process through which Entergy Louisiana solicited or obtained the proposals for the resources complied with applicable LPSC orders. The LPSC staff and LEUG’s witnesses made recommendations to modify the proposed Rider GGO and Entergy Louisiana’s proposed rate relief. In April 2022 the LPSC staff and LEUG filed cross-answering testimony concerning each other’s proposed modifications to Rider GGO and the proposed rate recovery. Entergy Louisiana filed rebuttal testimony in June 2022. In August 2022 the parties reached a settlement certifying the 2021 Solar Portfolio and approving implementation of Rider GGO. In September 2022 the LPSC approved the settlement. Following the LPSC approval, the St. James Parish council issued a moratorium on new land use permits for solar facilities until the later of March 2023 or the completion of an environmental and economic impact study. In November 2023, St. James Parish lifted the moratorium and adopted an ordinance modifying the parish’s land use plan to establish solar as an approved land use and defining corresponding solar regulations. In March 2024 the project developer submitted a solar energy facility farm permit application to the St. James Parish planning commission to request approval for the Vacherie and St. Jacques Facilities. In June 2024 the St. James Parish council denied the application and following this denial, the project developer and one of the project’s ground lessors filed separate lawsuits seeking to overturn the council’s decision. Entergy Louisiana is currently monitoring the status of the aforementioned lawsuits and also considering alternate paths forward.

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2022 Solar Portfolio and Expansion of the Geaux Green Option

In February 2023, Entergy Louisiana filed an application with the LPSC seeking certification of the Iberville/Coastal Prairie facility, which will provide 175 MW of capacity through a PPA with a third party, and the Sterlington facility, a 49 MW self-build project located near the deactivated Sterlington power plant (the 2022 Solar Portfolio). Entergy Louisiana is seeking to include these resources within the portfolio supporting the Rider GGO rate schedule to help fulfill customer interest in access to renewable energy. Entergy Louisiana has requested the costs of these facilities, as offset by Rider GGO revenues, be deemed eligible for recovery in accordance with the terms of the formula rate plan and fuel adjustment clause rate mechanisms that exist at the time the facilities are placed into service. In January 2024, the parties filed an uncontested stipulated settlement agreement on the key issues in the case, which stated that the 2022 Solar Portfolio should be constructed, found that Entergy Louisiana’s proposed cost recovery mechanisms were appropriate, and confirmed the resources’ eligibility for inclusion in Rider GGO. The settlement was approved by the LPSC in January 2024. The Sterlington facility is expected to achieve commercial operation in January 2026.

Alternative RFP and Certification

In 2023, Entergy Louisiana made a filing to seek approval from the LPSC for an alternative to the requests for proposals (RFP) process that would enable the acquisition of up to 3 GW of solar resources on a faster timeline than the current RFP and certification process allows. The initial phase of the filing established the need for the acquisition of additional resources and the need for an alternative to the RFP process. The second phase of the filing contained the details of the proposal for the alternative competitive procurement process and the information necessary to support certification. In addition to the acquisition of up to 3 GW of solar resources, the filing also sought approval of a new renewable energy credits-based tariff, the Geaux ZERO rider. In June 2024 the LPSC issued an order approving the application. In August 2024, Entergy Louisiana issued the first RFP pursuant to this order in solicitation of solar resources that meet the requirements of the LPSC’s order. For the first RFP, the initial selection of proposals has been completed, and negotiations are in progress.

Bayou Power Station

In March 2024, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Bayou Power Station, a 112 MW aggregated capacity floating natural gas power station with black-start capability in Leeville, Louisiana and an associated microgrid that would serve nearby areas, including Port Fourchon, Golden Meadow, Leeville, and Grand Isle. In its application, Entergy Louisiana noted that the estimated cost of the Bayou Power Station was $411 million, including estimated costs of transmission interconnection and other related costs. In October 2024, Entergy Louisiana filed a motion to suspend the procedural schedule in this proceeding in order to evaluate certain recent developments related to the project including potential changes to the estimated cost of the project. Entergy Louisiana will determine next steps for the project after fully evaluating these developments. Subject to timely approval by the LPSC and receipt of other permits and approvals, commercial operation is expected to occur by the end of 2028.

Additional Generation and Transmission Resources

In October 2024, Entergy Louisiana filed an application with the LPSC seeking approval of a variety of generation and transmission resources proposed in connection with establishing service to a new data center to be developed by a subsidiary of Meta Platforms, Inc. in north Louisiana, for which an electric service agreement has been executed. The filing requests LPSC certification of three new combined cycle combustion turbine generation resources totaling 2,262 MW, each of which will be enabled for future carbon capture and storage, a new 500 kV transmission line, and 500 kV substation upgrades. The application also requests approval to implement a corporate sustainability rider applicable to the new customer. The corporate sustainability rider contemplates the new customer contributing to the costs of the planned future addition of 1,500 MW of new solar and energy storage

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resources, agreements involving carbon capture and storage at Entergy Louisiana’s existing Lake Charles Power Station, and potential future wind and nuclear resources. The combined cost of the first two new combined cycle combustion turbine generation resources is estimated to be approximately $2,387 million, and these units are expected to achieve commercial operation in 2028. The third new generation resource is currently expected to have an estimated cost similar to the first two new generation resources and is expected to achieve commercial operation in 2029. The cost of the new 500 kV transmission line is estimated to be $546 million. Entergy Louisiana anticipates funding the incremental cost to serve the customer through direct financial contributions from the customer and the revenues it expects to earn under the electric service agreement. The electric service agreement also contains provisions for termination payments that will help ensure that there is no harm to Entergy Louisiana and its customers in the event of early termination. A directive was issued at the LPSC’s November 2024 meeting for the matter to be decided by October 2025. Consistent with this directive, a procedural schedule was adopted setting the matter for hearing in July 2025. In February 2025 intervenors filed a motion asking the LPSC to deny Entergy Louisiana’s requested exemption from the LPSC’s order addressing competitive solicitation procedures and further asking the LPSC to dismiss the application.

In February 2025, Entergy Louisiana filed supplemental testimony with the LPSC stating that the third combined cycle combustion turbine resource presented in the October 2024 application would be sited at Entergy Louisiana’s Waterford site in Killona, Louisiana, alongside existing Entergy Louisiana generation resources. The testimony also notes that Entergy Louisiana is negotiating with the customer to increase the load associated with the customer’s project in north Louisiana and that the additional load can be served without additional generation capacity beyond what was presented in the October 2024 application, but that additional transmission facilities, which will be funded directly by the customer, are needed to serve this additional load.

Transmission Projects

In March 2024, Entergy Louisiana filed an application seeking an exemption determination, or alternatively, a certificate of public convenience and necessity, for a transmission project that includes a new 500 kV/230 kV Commodore substation and an approximately 60-mile 230 kV line connecting the new Commodore substation to the Waterford substation. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, also includes certain common elements with, and right-of-way acquisition for, a future transmission project in the same area consisting of 500 kV elements. The estimated cost of the project is $498.8 million. In February 2025, Entergy Louisiana and the LPSC staff jointly filed, for consideration by the LPSC, an uncontested stipulated settlement agreement resolving all issues in the proceeding. In the motion requesting approval of the uncontested stipulated settlement agreement, the parties requested a settlement hearing in March 2025.

In December 2024, Entergy Louisiana filed an application seeking a certificate of public convenience and necessity for a 500 kV transmission project that includes the construction of a new 84-mile Commodore to Churchill 500 kV transmission line, the expansion of the Waterford 500 kV substation, the construction of a new Churchill 500 kV substation and improvements to the Churchill 230 kV substation, and the conversion of the existing 230 kV Waterford to Churchill transmission line to 500 kV, forming a 500 kV loop into the Downstream of Gypsy load pocket. The project, which was approved by MISO in the 2023 MISO Transmission Expansion Plan, shares common elements with a future transmission project in the same area consisting of 230 kV elements. The estimated cost of the project is $954.7 million.

Resilience and Grid Hardening

In December 2022, Entergy Louisiana filed an application with the LPSC seeking a public interest finding regarding Phase I of Entergy Louisiana’s Future Ready resilience plan and approval of a rider mechanism to recover the program’s costs. Phase I in the December 2022 application reflected the first five years of a ten-year resilience plan and included investment of approximately $5 billion, including hardening investment, transmission dead-end structures, enhanced vegetation management, and telecommunications improvement. In April 2024 the LPSC approved a framework which includes an initial five-year resilience plan providing for an investment of

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approximately $1.9 billion with cost recovery via a forward-looking rider with semi-annual true-ups. The plan is subject to specified reporting requirements and includes a performance review of the hardened assets. The LPSC order approving the framework does not include any restrictions on Entergy Louisiana’s ability to file applications for approval of additional investments in resilience.

The LPSC had previously opened a formal rulemaking proceeding in December 2021 to investigate efforts to improve resilience of electric utility infrastructure. In April 2023 the LPSC staff issued a draft rule in the rulemaking proceeding related to a requirement to file a grid resilience plan. The procedural schedule entered in the rulemaking proceeding contemplated adoption of a final rule in October 2023, but this did not occur, and a new date has not been set. The LPSC also has pending rulemakings addressing issues related to pole viability and grid maintenance practices. In December 2023, in those rulemakings, the LPSC staff issued a report and recommendation proposing to impose significant new reporting and compliance obligations related to jurisdictional utilities’ distribution and transmission operations, including new obligations related to grid hardening plans, pole inspections, pole replacement, vegetation management, storm restoration plans, new reliability metrics, software for handling customer complaints and complaint resolution, required use of drone technology, and new penalties and incentives for reliability performance and for compliance with the new obligations. In February 2024, Entergy Louisiana and other parties filed comments on the LPSC staff’s report.

Sources of Capital

Entergy Louisiana’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•storm reserve escrow accounts;

•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•capital contributions; and

•bank financing under new or existing facilities.

Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Louisiana expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt and common and preferred membership interest issuances by Entergy Louisiana require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indentures and other agreements. Entergy Louisiana has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

Entergy Louisiana’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

$32,668($156,166)($226,114)$14,539

See Note 4 to the financial statements for a description of the money pool.

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Entergy Louisiana has a credit facility in the amount of $400 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $15 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, $46.2 million in letters of credit were outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.

The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, each in the amount of $105 million and scheduled to expire in June 2027. As of December 31, 2024, $18.7 million in loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of December 31, 2024, $18.9 million in loans were outstanding under the Entergy Louisiana Waterford nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the nuclear fuel company variable interest entity credit facilities.

Entergy Louisiana obtained authorizations from the FERC through January 2027 for the following:

•short-term borrowings not to exceed an aggregate amount of $450 million at any time outstanding;

•long-term borrowings and security issuances; and

•borrowings by its nuclear fuel company variable interest entities.

See Note 4 to the financial statements for further discussion of Entergy Louisiana’s short-term borrowing limits.

Hurricane Francine

In September 2024, Hurricane Francine caused damage to the areas served by Entergy Louisiana and Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. See Note 2 to the financial statements for discussion of the December 2024 storm cost recovery filing related to Hurricane Francine.

State and Local Rate Regulation and Fuel-Cost Recovery

The rates that Entergy Louisiana charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Louisiana is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the LPSC, is primarily responsible for approval of the rates charged to customers.

Retail Rates - Electric

Filings with the LPSC

2020 Formula Rate Plan Filing

In June 2021, Entergy Louisiana filed its formula rate plan evaluation report for its 2020 calendar year operations. The 2020 test year evaluation report produced an earned return on common equity of 8.45%, with a base formula rate plan revenue increase of $63 million. Certain reductions in formula rate plan revenue driven by lower sales volumes, reductions in capacity cost and net MISO cost, and higher credits resulting from the Tax Cuts and Jobs Act offset the base formula rate plan revenue increase, leading to a net increase in formula rate plan revenue of $50.7 million. The report also included multiple new adjustments to account for, among other things, the calculation of distribution recovery mechanism revenues. The effects of the changes to total formula rate plan revenue were different for each legacy company, primarily due to differences in the legacy companies’ capacity cost

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changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $27 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $23.7 million. Subject to LPSC review, the resulting changes became effective for bills rendered during the first billing cycle of September 2021, subject to refund. Discovery commenced in the proceeding. In August 2021, Entergy Louisiana submitted an update to its evaluation report to account for various changes. Relative to the June 2021 filing, the total formula rate plan revenue increased by $14.2 million to an updated total of $64.9 million. Legacy Entergy Louisiana formula rate plan revenues increased by $32.8 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $32.1 million. The results of the 2020 test year evaluation report bandwidth calculation were unchanged as there was no change in the earned return on common equity of 8.45%. In September 2021 the LPSC staff filed a letter with a general statement of objections/reservations because it had not completed its review and indicated it would update the letter once its review was complete.

In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.

2021 Formula Rate Plan Filing

In May 2022, Entergy Louisiana filed its formula rate plan evaluation report for its 2021 calendar year operations. The 2021 test year evaluation report produced an earned return on common equity of 8.33%, with a base formula rate plan revenue increase of $65.3 million. Other increases in formula rate plan revenue driven by reductions in Tax Cut and Jobs Act credits and additions to transmission and distribution plant in service reflected through the transmission recovery mechanism and distribution recovery mechanism are partly offset by an increase in net MISO revenues, leading to a net increase in formula rate plan revenue of $152.9 million. The effects of the changes to total formula rate plan revenue are different for each legacy company, primarily due to differences in the legacy companies’ capacity cost changes, including the effect of true-ups. Legacy Entergy Louisiana formula rate plan revenues increased by $86 million and legacy Entergy Gulf States Louisiana formula rate plan revenues increased by $66.9 million. In August 2022 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2020 formula rate plan filings, utilizing the extraordinary cost mechanism to address one-time changes such as state tax rate changes, and failing to include an adjustment for revenues not received as a result of Hurricane Ida. Subject to LPSC review, the resulting changes to formula rate plan revenues became effective for bills rendered during the first billing cycle of September 2022, subject to refund.

In November 2023 the LPSC approved a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.

2022 Formula Rate Plan Filing

In May 2023, Entergy Louisiana filed its formula rate plan evaluation report for its 2022 calendar year operations. The 2022 test year evaluation report produced an earned return on common equity of 8.33%, requiring an approximately $70.7 million increase to base rider revenue. Due to a cap for the 2021 and 2022 test years, however, base rider formula rate plan revenues were only increased by approximately $4.9 million, resulting in a revenue deficiency of approximately $65.9 million and providing for prospective return on common equity opportunity of approximately 8.38%. Other changes in formula rate plan revenue driven by increases in capacity costs, primarily legacy capacity costs, additions eligible for recovery through the transmission recovery mechanism

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Management’s Financial Discussion and Analysis

and distribution recovery mechanism, and higher sales during the test period were offset by reductions in net MISO costs as well as credits for FERC-ordered refunds. Also included in the 2022 test year distribution recovery mechanism revenue requirement was a $6 million credit relating to the distribution recovery mechanism performance accountability standards and requirements. In total, the net increase in formula rate plan revenues, including base formula rate plan revenues inside the formula rate plan bandwidth and subject to the cap, as well as other formula rate plan revenues outside of the bandwidth, was $85.2 million. In August 2023 the LPSC staff filed a list of objections/reservations, including outstanding issues from the test years 2017-2021 formula rate plan filings, the calculation of certain refunds from System Energy, and certain calculations relating to the tax reform adjustment mechanism. Subject to LPSC review, the resulting net increase in formula rate plan revenues of $85.2 million became effective for bills rendered during the first billing cycle of September 2023, subject to refund. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” below for further discussion.

2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request

In August 2023, Entergy Louisiana filed an application for approval of a regulatory blueprint necessary for it to strengthen the electric grid for the State of Louisiana, which contained a dual-path request to update rates through either: (1) extension of Entergy Louisiana’s current formula rate plan (with certain modifications) for three years (the Rate Mitigation Proposal), which is Entergy Louisiana’s recommended path; or (2) implementation of rates resulting from a cost-of-service study (the Rate Case path). The application complied with Entergy Louisiana’s previous formula rate plan extension order requiring that for Entergy Louisiana to obtain another extension of its formula rate plan that included a rate reset, Entergy Louisiana would need to submit a full cost-of-service rate case. Entergy Louisiana’s filing supported the need to extend Entergy Louisiana’s formula rate plan with credit supportive mechanisms needed to facilitate investment in the distribution, transmission, and generation functions.

In July 2024, Entergy Louisiana reached an agreement in principle with the LPSC staff and the intervenors in the proceeding and filed with the LPSC a joint motion to suspend the procedural schedule to allow for all parties to finalize a stipulated settlement agreement.

In August 2024, Entergy Louisiana and the LPSC staff jointly filed a global stipulated settlement agreement for consideration by the LPSC with key terms as follows:

•continuation of the formula rate plan for 2024-2026 (test years 2023-2025);

•a base formula rate plan revenue increase of $120 million for test year 2023, effective for rates beginning September 2024;

•a $140 million cumulative cap on base formula rate plan revenue increases, if needed, for test years 2024 and 2025, excluding outside the bandwidth items;

•$184 million of customer rate credits to be given over two years, including increasing customer sharing of income tax benefits resulting from the 2016-2018 IRS audit, to resolve any remaining disputed issues stemming from formula rate plan test years prior to test year 2023, including but not limited to the investigation into Entergy Services costs billed to Entergy Louisiana. As discussed in Note 3 to the financial statements, a $38 million regulatory liability was recorded in 2023 in connection with the 2016-2018 IRS audit;

•$75.5 million of customer rate credits, as provided for in the System Energy global settlement, to be credited over three years subject to and conditioned upon FERC approval of the System Energy global settlement, which was approved in November 2024. See “Complaints Against System Energy – System Energy Settlement with the LPSC” in Note 2 to the financial statements for further details of the System Energy global settlement;

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•$5.8 million of customer rate credits provided for in the Entergy Louisiana formula rate plan global settlement agreement approved by the LPSC in November 2023 credited over one year. See “Formula Rate Plan Global Settlement” below for further discussion of the settlement;

•an increase in the allowed midpoint return on common equity from 9.5% to 9.7%, with a bandwidth of 40 basis points above and below the midpoint, for the extended term of the formula rate plan, except that for test year 2023 in which the authorized return on common equity shall have no bearing on the change in base formula rate plan revenue described above and, for test year 2024, any earnings above the authorized return on common equity shall be returned to customers through a credit;

•an increase in nuclear depreciation rates by $15 million in each of the 2023, 2024, and 2025 test years outside of the formula rate plan bandwidth calculation; and

•for the transmission recovery mechanism and the distribution recovery mechanism, no change to the existing floors, but the caps for both would be $350 million for test year 2023, $375 million for test year 2024, and $400 million for test year 2025. Transmission projects filed with the LPSC will be exempt from the transmission recovery mechanism cap.

The global stipulated settlement agreement was unanimously approved by the LPSC in August 2024 and an order was issued by the LPSC in September 2024 reflecting the approval of the settlement.

Based on the July 2024 agreement in principle, in second quarter 2024 Entergy Louisiana recorded expenses of $151 million ($112 million net-of-tax) primarily consisting of regulatory charges to reflect the effects of the agreement in principle.

Formula Rate Plan Global Settlement

In October 2023 the LPSC staff and Entergy Louisiana reached a global settlement which resolved all outstanding issues related to the 2017, 2018, and 2019 formula rate plan filings and resolved certain issues with respect to the 2020 and 2021 formula rate plan filings. The settlement was approved by the LPSC in November 2023. The settlement resulted in a one-time cost of service credit to customers of $5.8 million, allowed Entergy Louisiana to retain approximately $6.2 million of securitization over-collection as recovery of a regulatory asset associated with late fees related to the 2016 Baton Rouge flood, and resulted in Entergy Louisiana recording the reversal of a $105.6 million regulatory liability, primarily associated with the Hurricane Isaac securitization, recognized in 2017 as a result of the Tax Cuts and Jobs Act. See Note 3 to the financial statements for further discussion of the reversal of the regulatory liability.

2023 Formula Rate Plan Filing

In August 2024, pursuant to the global stipulated settlement agreement, Entergy Louisiana filed its formula rate plan evaluation report for its 2023 calendar year operations. Consistent with the global stipulated settlement agreement, the filing reflected a 9.7% allowed return on common equity with a bandwidth of 40 basis points above and below the midpoint. For the 2023 test year, however, the bandwidth provisions of the formula rate plan were temporarily suspended and, pursuant to the terms of the global stipulated settlement agreement, Entergy Louisiana implemented the September 2024 formula rate plan rate adjustments effective with the first billing cycle of September 2024. Those adjustments included a $120 million increase in base rider formula rate plan revenue and a $101.8 million one-time incremental net decrease consistent with the terms of the global stipulated settlement. The formula rate plan rate adjustments reflected in the evaluation report also include a redetermination of the transmission recovery mechanism, the distribution recovery mechanism, the additional capacity mechanism, the tax adjustment mechanism, the MISO cost recovery mechanism, and other one-time adjustments. In January 2025, Entergy Louisiana and the LPSC filed a joint report indicating that no disputed issues remained in the proceeding and requesting that the LPSC issue an order accepting Entergy Louisiana’s evaluation report and, ultimately, resolving this matter. Entergy Louisiana expects a decision on the joint report in first quarter 2025.

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Investigation of Costs Billed by Entergy Services

In November 2018 the LPSC issued a notice of proceeding initiating an investigation into costs incurred by Entergy Services that are included in the retail rates of Entergy Louisiana. As stated in the notice of proceeding, the LPSC observed an increase in capital construction-related costs incurred by Entergy Services. Discovery was issued and included efforts to seek highly detailed information on a broad range of matters unrelated to the scope of the audit. In September 2024 the LPSC issued an order approving a settlement that resolved, with prejudice, all other issues identified by the staff in the matter and closed the docket. See “2023 Entergy Louisiana Rate Case and Formula Rate Plan Extension Request” above for further discussion.

Fuel and purchased power cost recovery

Entergy Louisiana recovers electric fuel and purchased power costs for the billing month based upon the level of such costs incurred two months prior to the billing month. Entergy Louisiana’s purchased gas adjustments include estimates for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.

To mitigate high electric bills, primarily driven by high summer usage and elevated gas prices, Entergy Louisiana deferred approximately $225 million of fuel expense incurred in April, May, June, July, August, and September 2022 (as reflected on June, July, August, September, October, and November 2022 bills). These deferrals were included in the over/under calculation of the fuel adjustment clause, which is intended to recover the full amount of the costs included on a rolling twelve-month basis.

In March 2020 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2016 through 2019. The LPSC staff issued its audit report in September 2021, and although certain internal record keeping recommendations were made, the LPSC staff did not recommend any disallowances. The next step is for the LPSC to review the report, but there is not a deadline for the review.

In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s purchased gas adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2021 through 2022. Discovery is ongoing, and no audit report has been filed.

In January 2023 the LPSC staff provided notice of an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2020 through 2022. Discovery is ongoing, and no audit report has been filed.

COVID-19 Orders

In April 2020 the LPSC issued an order authorizing utilities to record as a regulatory asset expenses incurred from the suspension of disconnections and collection of late fees imposed by LPSC orders associated with the COVID-19 pandemic. In April 2023, Entergy Louisiana filed an application proposing to utilize approximately $1.6 billion in certain low interest debt to generate earnings to apply toward the reduction of the COVID-19 regulatory asset, as well as to conduct additional outside right-of-way vegetation management activities and fund the minor storm reserve account. In that filing, Entergy Louisiana proposed to delay repayment of certain shorter-term first mortgage bonds that were issued to finance storm restoration costs until the costs could be securitized, and to invest the funds that otherwise would be used to repay those bonds in the money pool to take advantage of the spread between prevailing interest rates on investments in the money pool and the interest rates on the bonds. The LPSC approved Entergy Louisiana’s requested relief in June 2023. In November 2024, Entergy Louisiana submitted a filing to the LPSC requesting that the LPSC review Entergy Louisiana’s computation of the COVID-19 regulatory asset as well as Entergy Louisiana’s proposal to offset the regulatory asset against the interest earned on

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Management’s Financial Discussion and Analysis

the short-term debt funds, resulting in no increased costs to customers. At the time of the filing, Entergy Louisiana had a regulatory asset of $47.8 million for costs associated with the COVID-19 pandemic. As of December 31, 2024, Entergy Louisiana had a regulatory liability of $48.9 million for the deferred earnings related to the approximately $1.6 billion in low interest debt, which had been fully repaid by August 2024. In granting Entergy Louisiana’s requested relief in June 2023, the LPSC ordered that any amount of earnings exceeding the amount of the COVID-19 regulatory asset be transferred to Entergy Louisiana’s storm reserve escrow account.

Industrial and Commercial Customers

Entergy Louisiana’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Louisiana’s industrial customer base. Entergy Louisiana responds by working with industrial and commercial customers and negotiating electric service contracts to provide competitive rates that match specific customer needs and load profiles. Entergy Louisiana actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Nuclear Matters

Entergy Louisiana owns and, through an affiliate, operates the River Bend and Waterford 3 nuclear generating plants and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Entergy Louisiana’s nuclear fleet to meet its operational goals; the performance and capacity factors of these nuclear plants; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of River Bend or Waterford 3, Entergy Louisiana may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. Waterford 3’s operating license expires in 2044 and River Bend’s operating license expires in 2045.

Environmental Risks

Entergy Louisiana’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Louisiana is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

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Entergy Louisiana, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Critical Accounting Estimates

The preparation of Entergy Louisiana’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Louisiana’s financial position, results of operations, or cash flows.

Nuclear Decommissioning Costs

See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

Qualified Pension and Other Postretirement Benefits

Entergy Louisiana’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$960$25,042

Rate of return on plan assets(0.25%)$2,759$—

Rate of increase in compensation0.25%$1,193$6,054

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Management’s Financial Discussion and Analysis

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$284$3,760

Health care cost trend0.25%$487$2,455

Each fluctuation above assumes that the other components of the calculation are held constant.

Costs and Employer Contributions

Total qualified pension cost for Entergy Louisiana in 2024 was $10.7 million. Entergy Louisiana anticipates 2025 qualified pension cost to be $14.1 million. Entergy Louisiana contributed $48.4 million to its qualified pension plans in 2024 and estimates pension contributions will be approximately $41.3 million in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for Entergy Louisiana in 2024 was $701 thousand. Entergy Louisiana expects 2025 postretirement health care and life insurance benefit income of approximately $1.1 million. Entergy Louisiana contributed $16.9 million to its other postretirement plans in 2024 and estimates that 2025 contributions will be approximately $14.4 million.

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the member and Board of Directors of

Entergy Louisiana, LLC and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entergy Louisiana, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity (pages 367 through 372 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rate and Regulatory Matters — Entergy Louisiana, LLC and Subsidiaries — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Louisiana Public Service Commission (the “LPSC”), which has jurisdiction with respect to the rates of electric companies in Louisiana, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

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The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the LPSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the LPSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs, and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the LPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the LPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the LPSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the LPSC’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s filings with the LPSC and the FERC and orders issued, and considered the filings with the LPSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order, to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$5,068,158 $5,073,239 $6,246,933

Natural gas75,860 74,531 91,835

TOTAL5,144,018 5,147,770 6,338,768

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale1,026,343 1,080,485 2,002,456

Purchased power670,874 654,721 1,076,715

Nuclear refueling outage expenses76,020 63,429 59,698

Other operation and maintenance1,097,283 1,097,233 1,139,605

Decommissioning80,663 75,962 72,122

Taxes other than income taxes248,472 245,191 241,908

Depreciation and amortization770,904 726,389 695,204

Other regulatory charges (credits) - net41,525 41,209 148,871

TOTAL4,012,084 3,984,619 5,436,579

OPERATING INCOME1,131,934 1,163,151 902,189

OTHER INCOME

Allowance for equity funds used during construction36,782 32,160 26,252

Interest and investment income (loss)146,494 90,316 (69,144)

Interest and investment income - affiliated315,433 303,233 185,826

Miscellaneous - net(123,280)(160,972)9,824

TOTAL375,429 264,737 152,758

INTEREST EXPENSE

Interest expense403,473 375,295 373,480

Allowance for borrowed funds used during construction(12,290)(14,996)(11,550)

TOTAL391,183 360,299 361,930

INCOME BEFORE INCOME TAXES1,116,180 1,067,589 693,017

Income taxes225,409 (205,781)(162,853)

NET INCOME890,771 1,273,370 855,870

Net income attributable to noncontrolling interests3,126 2,988 1,366

EARNINGS APPLICABLE TO MEMBER'S EQUITY$887,645 $1,270,382 $854,504

See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31,

202420232022

(In Thousands)

Net Income$890,771 $1,273,370 $855,870

Other comprehensive income (loss)

Pension and other postretirement plan changes

(net of tax expense (benefit) of ($421), ($211), and $17,351)

(1,140)(572)47,092

Other comprehensive income (loss)(1,140)(572)47,092

Comprehensive Income889,631 1,272,798 902,962

Net income attributable to noncontrolling interests3,126 2,988 1,366

Comprehensive Income Applicable to Member's Equity$886,505 $1,269,810 $901,596

See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income$890,771 $1,273,370 $855,870

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation, amortization, and decommissioning, including nuclear fuel amortization937,246 864,225 852,521

Deferred income taxes, investment tax credits, and non-current taxes accrued259,474 (99,812)(70,379)

Changes in working capital:

Receivables4,248 55,140 (53,434)

Fuel inventory7,601 (15,959)1,099

Accounts payable(6,123)(100,321)(207,949)

Taxes accrued(37,448)30,459 (28,244)

Interest accrued28,530 (9,680)8,284

Deferred fuel costs29,494 134,383 (113,809)

Other working capital accounts84,692 (129,173)(103,571)

Changes in provisions for estimated losses15,754 (52,445)291,824

Changes in other regulatory assets1,937 407,327 720,487

Changes in other regulatory liabilities452,731 225,645 (4,783)

Effect of securitization on regulatory asset— (491,150)(1,190,338)

Changes in pension and other postretirement funded status(117,627)(117,886)(139,067)

Other(303,717)57,997 358,997

Net cash flow provided by operating activities2,247,563 2,032,120 1,177,508

INVESTING ACTIVITIES

Construction expenditures(1,633,669)(1,624,181)(2,568,113)

Allowance for equity funds used during construction36,782 32,160 26,252

Nuclear fuel purchases(125,315)(162,079)(122,020)

Proceeds from sale of nuclear fuel63,297 30,214 37,648

Payments to storm reserve escrow account(12,899)(14,449)(1,293,633)

Receipts from storm reserve escrow account— 64,036 1,000,228

Purchase of preferred membership interests of affiliate— (1,457,676)(3,163,572)

Redemption of preferred membership interests of affiliate239,249 125,002 1,390,587

Proceeds from nuclear decommissioning trust fund sales1,185,491 575,596 633,100

Investment in nuclear decommissioning trust funds(1,242,466)(633,029)(667,947)

Changes in money pool receivable - net(32,668)— 14,539

Proceeds from sale of assets2,109 — 5,000

Insurance proceeds received for property damages7,907 19,493 —

Litigation proceeds from settlement agreement— — 5,695

Decrease (increase) in other investments35 5,457 (5,475)

Net cash flow used in investing activities(1,512,147)(3,039,456)(4,707,711)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt2,743,965 1,410,893 2,942,771

Retirement of long-term debt(2,305,336)(2,699,235)(3,167,832)

Proceeds received by storm trusts related to securitization— 1,457,676 3,163,572

Capital contributions from parent— 1,457,676 1,000,000

Changes in money pool payable - net(156,166)(69,948)226,114

Common equity distributions paid(859,100)(660,750)(624,000)

Other165,551 57,183 27,618

Net cash flow provided by (used in) financing activities(411,086)953,495 3,568,243

Net increase (decrease) in cash and cash equivalents324,330 (53,841)38,040

Cash and cash equivalents at beginning of period2,772 56,613 18,573

Cash and cash equivalents at end of period$327,102 $2,772 $56,613

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:

Interest - net of amount capitalized$366,384 $376,353 $353,697

Income taxes$16,882 ($141,143)($82,463)

Non-cash investing activities:

Accrued construction expenditures$124,077 $105,859 $156,654

See Notes to Financial Statements.

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CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$327 $2,255

Temporary cash investments326,775 517

Total cash and cash equivalents327,102 2,772

Accounts receivable:

Customer294,089 264,776

Allowance for doubtful accounts(3,036)(6,156)

Associated companies103,055 82,292

Other39,056 74,685

Accrued unbilled revenues213,026 202,173

Total accounts receivable646,190 617,770

Deferred fuel costs— 24,800

Fuel inventory - at average cost49,515 57,818

Materials and supplies782,459 652,180

Deferred nuclear refueling outage costs31,121 96,047

Current assets held for sale2,474 —

Prepayments and other84,236 71,613

TOTAL1,923,097 1,523,000

OTHER PROPERTY AND INVESTMENTS

Investment in affiliate preferred membership interests4,256,997 4,496,245

Decommissioning trust funds2,429,088 2,107,384

Non-utility property - at cost (less accumulated depreciation)410,611 404,043

Storm reserve escrow account256,718 243,819

Other9,749 9,367

TOTAL7,363,163 7,260,858

UTILITY PLANT

Electric28,736,547 27,800,467

Natural gas33,775 315,658

Construction work in progress761,090 592,803

Nuclear fuel288,084 333,472

TOTAL UTILITY PLANT29,819,496 29,042,400

Less - accumulated depreciation and amortization10,794,817 10,570,707

UTILITY PLANT - NET19,024,679 18,471,693

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets 1,637,967 1,648,852

Deferred fuel costs168,122 168,122

Non-current assets held for sale173,669 —

Other57,853 36,945

TOTAL2,037,611 1,853,919

TOTAL ASSETS$30,348,550 $29,109,470

See Notes to Financial Statements.

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CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Currently maturing long-term debt$300,000 $1,400,000

Accounts payable:

Associated companies108,688 283,016

Other533,087 467,414

Customer deposits169,544 167,905

Taxes accrued29,002 66,463

Interest accrued120,186 91,656

Deferred fuel costs5,421 —

Customer advances 151,662 —

Other96,426 87,468

TOTAL1,514,016 2,563,922

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued2,477,954 2,391,442

Accumulated deferred investment tax credits88,679 93,242

Regulatory liability for income taxes - net355,432 193,754

Other regulatory liabilities1,692,547 1,407,689

Decommissioning1,842,855 1,836,240

Accumulated provisions279,623 263,869

Pension and other postretirement liabilities160,577 271,928

Long-term debt9,566,453 8,020,689

Customer advances for construction291,842 115,102

Other479,178 378,074

TOTAL17,235,140 14,972,029

Commitments and Contingencies

EQUITY

Member’s equity

11,503,030 11,473,614

Accumulated other comprehensive income53,658 54,798

Noncontrolling interests42,706 45,107

TOTAL11,599,394 11,573,519

TOTAL LIABILITIES AND EQUITY$30,348,550 $29,109,470

See Notes to Financial Statements.

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Noncontrolling InterestsMember’s Equity

Accumulated Other Comprehensive Income Total

(In Thousands)

Balance at December 31, 2021$— $8,172,294 $8,278 $8,180,572

Net income1,366 854,504 — 855,870

Other comprehensive income— — 47,092 47,092

Beneficial interest in storm trust31,636 — — 31,636

Non-cash contribution from parent— 3,597 — 3,597

Capital contribution from parent— 1,000,000 — 1,000,000

Common equity distributions— (624,000)— (624,000)

Distribution to LURC(1,267)— — (1,267)

Other— (52)— (52)

Balance at December 31, 2022$31,735 $9,406,343 $55,370 $9,493,448

Net income2,988 1,270,382 — 1,273,370

Other comprehensive loss

— — (572)(572)

Beneficial interest in storm trust14,577 — — 14,577

Capital contribution from parent— 1,457,676 — 1,457,676

Common equity distributions— (660,750)— (660,750)

Distribution to LURC(4,193)— — (4,193)

Other— (37)— (37)

Balance at December 31, 2023$45,107 $11,473,614 $54,798 $11,573,519

Net income3,126 887,645 — 890,771

Other comprehensive loss— — (1,140)(1,140)

Non-cash contribution from parent— 976 — 976

Common equity distributions— (859,100)— (859,100)

Distributions to LURC(5,527)— — (5,527)

Other— (105)— (105)

Balance at December 31, 2024$42,706 $11,503,030 $53,658 $11,599,394

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

2024 Compared to 2023

Net Income

Net income increased $63.4 million primarily due to higher retail electric price, partially offset by higher taxes other than income taxes and higher interest expense.

Operating Revenues

Following is an analysis of the change in operating revenues comparing 2024 to 2023:

Amount

(In Millions)

2023 operating revenues

$1,802.5

Fuel, rider, and other revenues that do not significantly affect net income(108.7)

Volume/weather0.2

Retail electric price70.6

2024 operating revenues

$1,764.6

Entergy Mississippi’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The volume/weather variance is insignificant and primarily due to an increase in residential and commercial usage. This increase is the result of higher fixed charges, partially offset by lower volumetric rates, applied to lower usage. The increase was substantially offset by a decrease in industrial usage primarily due to a decrease in demand from large industrial customers, primarily in the primary metals and transportation industries.

The retail electric price variance is primarily due to increases in formula rate plan rates effective April 2024 and July 2024, including the implementation of the interim facilities rate adjustment effective over six months beginning in July 2024. See Note 2 to the financial statements herein for discussion of the formula rate plan filings.

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Total electric energy sales for Entergy Mississippi for the years ended December 31, 2024 and 2023 are as follows:

20242023% Change

(GWh)

Residential5,443 5,460 —

Commercial4,587 4,640 (1)

Industrial2,317 2,347 (1)

Governmental397 407 (2)

Total retail 12,744 12,854 (1)

Sales for resale:

Non-associated companies5,568 4,598 21

Total18,312 17,452 5

See Note 19 to the financial statements for additional discussion of Entergy Mississippi’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses decreased primarily due to a decrease of $12.9 million in power delivery expenses primarily due to lower vegetation maintenance costs and a decrease of $7.5 million in non-nuclear generation expenses primarily due to a lower scope of work during plant outages performed in 2024 as compared to 2023. The decrease was partially offset by:

•an increase of $6.4 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023 and higher incentive-based accruals in 2024 as compared to 2023;

•an increase of $4.1 million in storm damage provisions. See Note 2 to the financial statements for discussion of Entergy Mississippi’s storm damage mitigation and restoration rider; and

•an increase of $3.1 million in energy efficiency expenses primarily due to the timing of recovery from customers.

Taxes other than income taxes increased primarily due to increases in ad valorem taxes resulting from higher assessments.

Depreciation and amortization expenses increased primarily due to additions to plant in service.

Other regulatory charges (credits) - net includes regulatory credits of $7.3 million, recorded in second quarter 2024, to reflect the effects of the joint stipulation reached in the 2024 formula rate plan filing proceeding. See Note 2 to the financial statements for discussion of the 2024 formula rate plan filing.

Other income increased primarily due to a decrease of $4.5 million in non-service pension costs primarily as a result of pension settlement charges recorded in 2023 and a reduction in 2024 in the amortization of deferred pension losses as a result of an amendment to a qualified pension plan spinning-off predominantly inactive participants into a new qualified plan, extending the amortization period for deferred losses. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs.

Interest expense increased primarily due to the issuance of $300 million of 5.85% Series mortgage bonds in May 2024 and higher carrying costs related to the deferred fuel balance, partially offset by the repayment of a $150

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million unsecured term loan, of which $50 million was repaid in May 2023 and $100 million was repaid in December 2023.

The effective income tax rates were 24.7% for 2024 and 23.0% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Mississippi’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$6,630 $16,979 $47,627

Net cash provided by (used in):

Operating activities699,455 559,391 405,649

Investing activities(705,219)(527,978)(620,740)

Financing activities154,827 (41,762)184,443

Net increase (decrease) in cash and cash equivalents149,063 (10,349)(30,648)

Cash and cash equivalents at end of period$155,693 $6,630 $16,979

2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities increased $140.1 million in 2024 primarily due to:

•lower fuel and purchased power costs;

•income tax refunds of $14.2 million in 2024 as compared to income tax payments of $50.9 million in 2023. Entergy Mississippi received income tax refunds in 2024 and made income tax payments in 2023, each in accordance with an intercompany income tax allocation agreement;

•a decrease of $13 million in storm spending in 2024 as compared to 2023; and

•a decrease of $6.1 million in pension contributions in 2024. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

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The increase was partially offset by:

•the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery;

•the timing of payments to vendors;

•lower collections from customers; and

•an increase of $15.5 million in interest paid.

Investing Activities

Net cash flow used in investing activities increased $177.2 million in 2024 primarily due to:

•an increase of $123.1 million in non-nuclear generation construction expenditures primarily due to higher spending on the Delta Blues Advanced Power Station project;

•an increase of $78.5 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Mississippi’s service area;

•money pool activity; and

•a decrease of $33.8 million in receipts from the storm reserve escrow account, which was closed in July 2024. See Note 2 to the financial statements for discussion of Entergy Mississippi’s storm escrow account activity.

The increase was partially offset by:

•a decrease of $46.3 million in distribution construction expenditures primarily due to lower capital expenditures for storm restoration in 2024;

•the substantial completion and final payments totaling approximately $35.1 million in 2023 for the purchase of the Sunflower Solar facility by a consolidated tax equity partnership. See Note 14 to the financial statements for discussion of the Sunflower Solar facility purchase; and

•a decrease of $11 million in facilities construction expenditures primarily due to the construction of a new transmission office in 2023.

Increases in Entergy Mississippi’s receivable from the money pool are a use of cash flow, and Entergy Mississippi’s receivable from the money pool increased $15.2 million in 2024 compared to decreasing by $26.9 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Entergy Mississippi’s financing activities provided $154.8 million of cash in 2024 compared to using $41.8 million of cash in 2023 primarily due to the following activity:

•the repayment, prior to maturity, of $250 million of 3.10% Series mortgage bonds in June 2023;

•the repayment of a $150 million unsecured term loan in 2023;

•an increase of $75.4 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements;

•a capital contribution of $25.7 million received in April 2023 from the noncontrolling tax equity investor in MS Sunflower Partnership, LLC and used by the partnership for payments in the acquisition of the Sunflower Solar facility. See Note 14 to the financial statements for discussion of the Sunflower Solar facility purchase;

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•the repayment, prior to maturity, of $100 million of 3.75% Series mortgage bonds in June 2024; and

•money pool activity.

Decreases in Entergy Mississippi’s payable to the money pool are a use of cash flow, and Entergy Mississippi’s payable to the money pool decreased $73.8 million in 2024 compared to increasing by $73.8 million in 2023.

See Note 5 to the financial statements for details on long-term debt.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Mississippi’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

Capital Structure

Entergy Mississippi’s debt to capital ratio is shown in the following table.

December 31,2024December 31,2023

Debt to capital50.4 %50.5 %

Effect of subtracting cash(1.6 %)(0.1 %)

Net debt to net capital (non-GAAP)48.8 %50.4 %

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. Entergy Mississippi uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition. The net debt to net capital ratio is a non-GAAP measure. Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Mississippi seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Mississippi may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy Mississippi may receive equity contributions to maintain its capital structure.

Uses of Capital

Entergy Mississippi requires capital resources for:

•construction and other capital investments;

•debt maturities or retirements;

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•working capital purposes, including the financing of fuel and purchased power costs; and

•distributions and interest payments.

Following are the amounts of Entergy Mississippi’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$1,135 $1,605 $895

Transmission195 200 110

Distribution270 360 405

Utility Support55 40 55

Total$1,655 $2,205 $1,465

In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Mississippi includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Mississippi’s portfolio, as well as to support customer growth, including Delta Blues Advanced Power Station, Delta Solar, and Penton Solar; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Mississippi is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of Entergy Mississippi’s existing debt and lease obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

Long-term debt (a)$98 $98 $248 $545 $3,516

Operating leases (b)$10 $9 $8 $9 $3

Finance leases (b)$4 $3 $3 $4 $24

(a)Long-term debt is discussed in Note 5 to the financial statements.

(b)Lease obligations are discussed in Note 10 to the financial statements.

Other Obligations

Entergy Mississippi currently expects to contribute approximately $8.1 million to its qualified pension plans and approximately $178 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

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Management’s Financial Discussion and Analysis

Entergy Mississippi has $1.0 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

In addition, Entergy Mississippi enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Mississippi has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy Mississippi’s obligations under the Unit Power Sales Agreement.

As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Mississippi pays distributions from its earnings at a percentage determined monthly.

Additional Generation and Transmission Resources

In January 2024, Amazon Web Services announced its plan to invest in two data centers located in Madison County, Mississippi. In March 2024, Entergy Mississippi executed a large customer supply and service agreement to serve the two data centers. Entergy Mississippi will need generation and transmission resources to reliably serve all Entergy Mississippi customers, including the data centers. The large customer supply and service agreement also contains provisions which cover Entergy Mississippi’s incremental investment costs in the event of early termination. In May 2024 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan to comply with state legislation passed in January 2024 allowing Entergy Mississippi to make interim rate adjustments, including the collection of a return on construction-work-in-process on a cash basis, to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi anticipates recovering the incremental cost to serve the customer through the revenues it expects to collect under the large customer supply and service agreement.

In February 2025, Entergy Mississippi entered into a new large customer supply and service agreement with a customer. The planned capital investment estimates for 2025-2027, shown above, include amounts related to the generation and transmission resources needed to reliably serve all Entergy Mississippi customers.

Delta Blues Advanced Power Station

In September 2024, Entergy Mississippi announced plans to construct, own, and operate the Delta Blues Advanced Power Station, a 754 MW combined-cycle combustion turbine facility, to be located in Washington County, Mississippi. The facility will primarily be powered by natural gas, and it will also be enabled for future carbon capture and storage and for hydrogen co-firing optionality. The Delta Blues Advanced Power Station will cost an estimated $1.2 billion. State legislation passed in January 2024 provides for the pre-certification of construction for certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. Construction of the Delta Blues Advanced Power Station qualifies under this legislation for pre-certification. As enabled by this legislation, Entergy Mississippi began recovery of certain costs of construction of the Delta Blues Advanced Power Station through the interim facilities rate adjustments provision of its formula rate plan rider, which rates became effective in July 2024. Non-fuel revenue collected from the data center customer will be included in the formula rate plan to offset the facility’s revenue requirement. Construction is in progress and the facility is expected to be in service by the end of 2028.

Delta Solar

In December 2024 the Bolivar County Board of Supervisors approved Entergy Mississippi’s plans to construct, own, and operate the Delta Solar facility, an 80 MW solar facility to be located in Bolivar County,

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Mississippi. The Delta Solar facility will cost an estimated $157.2 million, inclusive of estimated transmission interconnection costs. Construction of the Delta Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Delta Solar facility is expected to be in service by the end of 2027.

Penton Solar

Entergy Mississippi plans to construct, own, and operate the Penton Solar facility, a 190 MW solar facility. The Penton Solar facility will cost an estimated $327.2 million, inclusive of estimated transmission interconnection and upgrade costs. Construction of the Penton Solar facility qualifies for pre-certification under the State legislation providing for the pre-certification of construction of certain types of facilities that directly or indirectly provide electric service to customers who own certain data processing center projects as specified in the legislation. The Penton Solar facility is expected to be in service by early 2028.

Sources of Capital

Entergy Mississippi’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•debt or preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•capital contributions; and

•bank financing under new or existing facilities.

Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Mississippi expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt and preferred membership interest issuances by Entergy Mississippi require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. Entergy Mississippi has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

Entergy Mississippi’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

$15,218($73,769)$26,879$40,456

See Note 4 to the financial statements for a description of the money pool.

Entergy Mississippi has a credit facility in the amount of $300 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO and for other purposes. As of December 31,

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2024, $31.8 million in MISO letters of credit and $1.3 million in non-MISO letters of credit were outstanding under this facility. See Note 4 to the financial statements for additional discussion of the credit facilities.

Entergy Mississippi obtained authorization from the FERC through January 2027 for short-term borrowings, not to exceed an aggregate amount of $200 million at any time outstanding, and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Mississippi’s short-term borrowing limits.

State and Local Rate Regulation and Fuel-Cost Recovery

The rates that Entergy Mississippi charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Mississippi is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the MPSC, is primarily responsible for approval of the rates charged to customers.

Filings with the MPSC

Retail Rates

2022 Formula Rate Plan Filing

In March 2022, Entergy Mississippi submitted its formula rate plan 2022 test year filing and 2021 look-back filing showing Entergy Mississippi’s earned return for the historical 2021 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2022 calendar year to be below the formula rate plan bandwidth. The 2022 test year filing showed a $69 million rate increase was necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.70% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, was capped at 4% of retail revenues, which equated to a revenue change of $48.6 million. The 2021 look-back filing compared actual 2021 results to the approved benchmark return on rate base and reflected the need for a $34.5 million interim increase in formula rate plan revenues. In fourth quarter 2021, Entergy Mississippi recorded a regulatory asset of $19 million to reflect the then-current estimate in connection with the look-back feature of the formula rate plan. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2021 retail revenues, effective in April 2022. With the implementation of the interim formula rate plan rates, Entergy Mississippi began recovery of the bad debt expense deferral resulting from the COVID-19 pandemic over a three-year period.

In June 2022, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2022 test year filing that resulted in a total rate increase of $48.6 million. Pursuant to the joint stipulation, Entergy Mississippi’s 2021 look-back filing reflected an earned return on rate base of 5.99% in calendar year 2021, which was below the look-back bandwidth, resulting in a $34.3 million increase in the formula rate plan revenues on an interim basis through June 2023. In July 2022 the MPSC approved the joint stipulation with rates effective in August 2022. In July 2022, Entergy Mississippi recorded regulatory credits of $22.6 million to reflect the effects of the joint stipulation.

In July 2022 the MPSC directed Entergy Mississippi to flow $14.1 million of the power management rider over-recovery balance to customers beginning in August 2022 through December 2022 to mitigate the bill impact of the increase in formula rate plan revenues.

2023 Formula Rate Plan Filing

In March 2023, Entergy Mississippi submitted its formula rate plan 2023 test year filing and 2022 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2022 calendar year to be

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below the formula rate plan bandwidth and projected earned return for the 2023 calendar year to be below the formula rate plan bandwidth. The 2023 test year filing showed a $39.8 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 6.67%, within the formula rate plan bandwidth. The 2022 look-back filing compared actual 2022 results to the approved benchmark return on rate base and reflected the need for a $19.8 million temporary increase in formula rate plan revenues, including the refund of a $1.3 million over-recovery resulting from the demand-side management costs true-up for 2022. In fourth quarter 2022, Entergy Mississippi recorded a regulatory asset of $18.2 million in connection with the look-back feature of the formula rate plan to reflect that the 2022 estimated earned return was below the formula rate plan bandwidth. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $27.9 million interim rate increase, reflecting a cap equal to 2% of 2022 retail revenues, effective in April 2023.

In May 2023, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed a 2023 test year filing resulting in a total revenue increase of $26.5 million for 2023. Pursuant to the joint stipulation, Entergy Mississippi’s 2022 look-back filing reflected an earned return on rate base of 6.10% in calendar year 2022, which was below the look-back bandwidth, resulting in a $19.0 million increase in the formula rate plan revenues on an interim basis through June 2024. Entergy Mississippi recorded a regulatory credit of $0.8 million in June 2023 to reflect the increase in the look-back regulatory asset. In addition, certain long-term service agreement and conductor handling costs were authorized for realignment from the formula rate plan to the annual power management and grid modernization riders effective January 2023, resulting in regulatory credits recorded in June 2023 of $4.1 million and $4.3 million, respectively. Also, the amortization of Entergy Mississippi’s COVID-19 bad debt expense deferral was suspended for calendar year 2023, but resumed in July 2024. In June 2023 the MPSC approved the joint stipulation with rates effective in July 2023.

2024 Formula Rate Plan Filing

In March 2024, Entergy Mississippi submitted its formula rate plan 2024 test year filing and 2023 look-back filing showing Entergy Mississippi’s earned return on rate base for the historical 2023 calendar year to be within the formula rate plan bandwidth and projected earned return for the 2024 calendar year to be below the formula rate plan bandwidth. The 2024 test year filing showed a $63.4 million rate increase was necessary to reset Entergy Mississippi’s earned return on rate base to the specified point of adjustment of 7.10%, within the formula rate plan bandwidth. The 2023 look-back filing compared actual 2023 results to the approved benchmark return on rate base and reflected no change in formula rate plan revenues. In accordance with the provisions of the formula rate plan, Entergy Mississippi implemented a $32.6 million interim rate increase, reflecting a cap equal to 2% of 2023 retail revenues, effective April 2024.

In December 2014 the MPSC ordered Entergy Mississippi to file an updated depreciation study at least once every four years. Pursuant to this order and Entergy Mississippi’s filing cycle, Entergy Mississippi would have filed an updated depreciation report with its formula rate plan filing in 2023. However, in July 2022 the MPSC directed Entergy Mississippi to file its next depreciation study in connection with its 2024 formula rate plan filing notwithstanding the MPSC’s prior order. Accordingly, Entergy Mississippi filed a depreciation study in February 2024. The study showed a need for an increase in annual depreciation expense of $55.2 million. The calculated increase in annual depreciation expense was excluded from Entergy Mississippi’s 2024 formula rate plan revenue increase request because the MPSC had not yet approved the proposed depreciation rates.

In June 2024, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed the 2024 test year filing, with the exception of immaterial adjustments to certain operation and maintenance expenses. After performance adjustments, the formula rate plan reflected an earned return on rate base of 6.08% for calendar year 2024, which resulted in a total revenue increase of $64.6 million for 2024. The joint stipulation also recommended approval of a revised customer charge of $31.82 per month for residential customers and $53.10 per month for general service customers. Pursuant to the stipulation, Entergy Mississippi’s 2023 look-back filing reflected an earned return on rate base of 6.81%, resulting in an increase of $0.3 million in the formula rate plan revenues for 2023. Finally, the stipulation recommended approval of Entergy Mississippi’s proposed

382

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Management’s Financial Discussion and Analysis

depreciation rates with those rates to be implemented upon request and approval at a later date. In June 2024 the MPSC approved the joint stipulation with rates effective in July 2024. The approval also included a reduction to the energy cost factor, resulting in a net bill decrease for a typical residential customer using 1,000 kWh per month. Also in June 2024, Entergy Mississippi recorded regulatory credits of $7.3 million to reflect the difference between interim rates placed in effect in April 2024 and the rates reflected in the joint stipulation.

In May 2024, Entergy Mississippi received approval from the MPSC for formula rate plan revisions that were necessary for Entergy Mississippi to comply with state legislation passed in January 2024. The legislation allows Entergy Mississippi to make interim rate adjustments to recover the non-fuel related annual ownership cost of certain facilities that directly or indirectly provide service to customers who own certain data processing center projects as specified in the legislation. Entergy Mississippi filed the first of its annual interim facilities rate adjustment reports in May 2024 to recover approximately $8.7 million of these costs over a six-month period with rates effective beginning in July 2024. Entergy Mississippi filed its second annual interim facilities rate adjustment report in December 2024 to recover approximately $46.7 million of these costs over a 12-month period with rates effective beginning in January 2025.

Grand Gulf Capacity Filing

In September 2024, Entergy Mississippi filed a notice of intent with the MPSC to implement revisions to its unit power cost recovery rider that would allow Entergy Mississippi to recover the first year of costs associated with the transfer of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which consists of Entergy Louisiana’s interest in and purchases of Grand Gulf capacity and energy under the revised rider schedule, effective by January 1, 2025. This notice filing related to the divestiture of Entergy Louisiana’s 14% share of Grand Gulf capacity and energy under the Unit Power Sales Agreement and 2.43% share of capacity and energy from Entergy Arkansas under the MSS-4 replacement tariff. This divestiture is being effectuated initially through Entergy Mississippi’s purchases from Entergy Louisiana pursuant to a PPA governed by the MSS-4 replacement tariff, a tariff governing the sales of energy and capacity among the Utility operating companies as described in the System Energy global settlement with the LPSC and Entergy Louisiana. The MSS-4 replacement PPA to effectuate this divestiture was approved by the FERC in November 2024. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent, finding that it was just and reasonable for Entergy Mississippi to obtain Entergy Louisiana’s entitlements to Grand Gulf capacity and energy and that Entergy Mississippi should be allowed to recover the costs associated with the transfer of such entitlements to Grand Gulf capacity and energy, as described above. The MPSC approved the MSS-4 replacement PPA, effective as of January 1, 2025. See “Complaints Against System Energy - System Energy Settlement with the LPSC” in Note 2 to the financial statements for further details of the System Energy global settlement with the LPSC and Note 8 to the financial statements for discussion of the Unit Power Sales Agreement.

Fuel and purchased power cost recovery

Entergy Mississippi’s rate schedules include an energy cost recovery rider and a power management rider, both of which are adjusted annually to reflect accumulated over- or under-recoveries. Entergy Mississippi recovers fuel and purchased energy costs through its energy cost recovery rider and recovers costs associated with natural gas hedging and capacity payments through its power management rider. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC.

In November 2021, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an under-recovery of approximately $80.6 million as of September 30, 2021. In December 2021, at the request of the MPSC, Entergy Mississippi submitted a proposal to mitigate the impact of rising fuel costs on customer bills during 2022. Entergy Mississippi proposed that the deferred fuel balance as of December 31, 2021, which was $121.9 million, be amortized over three years and that the MPSC authorize Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. In January 2022 the MPSC approved the amortization

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Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

of $100 million of the deferred fuel balance over two years and authorized Entergy Mississippi to apply its weighted-average cost of capital as the carrying cost for the unamortized fuel balance. The MPSC approved the proposed energy cost factor effective for February 2022 bills.

See “Complaints Against System Energy - System Energy Settlement with the MPSC” in Note 2 to the financial statements for discussion of the settlement agreement filed with the FERC in June 2022. The settlement, which was approved by the FERC in November 2022, provided for a refund of $235 million from System Energy to Entergy Mississippi. In July 2022 the MPSC directed the disbursement of settlement proceeds, ordering Entergy Mississippi to provide a one-time $80 bill credit to each of its approximately 460,000 retail customers to be effective during the September 2022 billing cycle and to apply the remaining proceeds to Entergy Mississippi’s under-recovered deferred fuel balance. In accordance with the MPSC’s directive, Entergy Mississippi provided approximately $36.7 million in customer bill credits as a result of the settlement. In November 2022, Entergy Mississippi applied the remaining settlement proceeds in the amount of approximately $198.3 million to Entergy Mississippi’s under-recovered deferred fuel balance.

Entergy Mississippi had a deferred fuel balance of approximately $291.7 million under the energy cost recovery rider as of July 31, 2022, along with an over-recovery balance of $51.1 million under the power management rider. Without further action, Entergy Mississippi anticipated a year-end deferred fuel balance of approximately $200 million after application of a portion of the System Energy settlement proceeds, as discussed above. In September 2022, Entergy Mississippi filed for interim adjustments under both the energy cost recovery rider and the power management rider. Entergy Mississippi proposed five monthly incremental adjustments to the net energy cost factor designed to collect the under-recovered fuel balance as of July 31, 2022 and to reflect the recovery of a higher natural gas price. Entergy Mississippi also proposed five monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance as of July 31, 2022. In October 2022 the MPSC approved modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider. The MPSC approved dividing the energy cost recovery rider interim adjustment into two components that would allow Entergy Mississippi to (1) recover a natural gas fuel rate that is better aligned with current prices; and (2) recover the estimated under-recovered deferred fuel balance as of September 30, 2022 over a period of 20 months. The MPSC approved six monthly incremental adjustments to the net energy cost factor designed to reflect the recovery of a higher natural gas price. The MPSC also approved six monthly incremental adjustments to the power management adjustment factor designed to flow through to customers the over-recovered power management rider balance. In accordance with the order of the MPSC, Entergy Mississippi did not file an annual redetermination of the energy cost recovery rider or the power management rider in November 2022.

In June 2023 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2023 formula rate plan filing. The stipulation directed Entergy Mississippi to make a compliance filing to revise its power management cost adjustment factor, to revise its grid modernization cost adjustment factor, and to include a revision to reduce the net energy cost factor to a level necessary to reflect an average natural gas price of $4.50 per MMBtu. The MPSC approved the compliance filing in June 2023, effective for July 2023 bills. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2023 Formula Rate Plan Filing” in Note 2 to the financial statements for further discussion of the 2023 formula rate plan filing and the joint stipulation agreement.

In November 2023 Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $142 million at the end of January 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $47 million at the end of January 2024. In January 2024 the MPSC approved the proposed energy cost factor and the proposed power management cost factor effective for February 2024 bills.

384

Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

In June 2024 the MPSC approved the joint stipulation agreement between Entergy Mississippi and the Mississippi Public Utilities Staff for Entergy Mississippi’s 2024 formula rate plan filing. The 2024 formula rate plan filing included the conclusion of the modified interim adjustments to Entergy Mississippi’s energy cost recovery rider and power management rider, which were approved in October 2022 and allowed Entergy Mississippi to recover certain under-collected fuel balances, effective for July 2024 bills.. The stipulation provided for Entergy Mississippi to reduce its net energy cost factor. See “Retail Rate Proceedings - Filings with the MPSC (Entergy Mississippi) - Retail Rates - 2024 Formula Rate Plan Filing” in Note 2 to the financial statements for further discussion of the 2024 formula rate plan filing and the joint stipulation agreement.

In November 2024, Entergy Mississippi filed its annual redeterminations of the energy cost factor and the power management cost adjustment factor. The calculation of the annual factor for the energy cost recovery rider included a projected over-recovery balance of approximately $144.6 million as of September 2024. The calculation of the annual factor for the power management rider included a projected under-recovery of $60.1 million as of September 2024. In January 2025 the MPSC approved a revised energy cost factor, effective for February 2025 bills, that did not reflect the fuel savings associated with Entergy Mississippi’s incremental increase in its share of capacity and energy in connection with Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, which was subject to the MPSC’s review at such time. In February 2025 the MPSC approved Entergy Mississippi’s notice of intent for Entergy Mississippi’s assumption of Entergy Louisiana’s entitlements to Grand Gulf capacity and energy, with associated fuel savings to be reflected in Entergy Mississippi’s energy cost recovery rider, effective for March 2025 bills. Additionally, in February 2025 the MPSC approved the proposed power management cost adjustment factor, effective for March 2025 bills.

Storm Cost Recovery Filings with Retail Regulators

Prior to June 2024, Entergy Mississippi had approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeded $15 million, the collection of the storm damage provision ceased until such time that the accumulated storm damage provision became less than $10 million. Entergy Mississippi’s storm damage provision balance had been less than $10 million since May 2019, and Entergy Mississippi had been billing the monthly storm damage provision since July 2019.

In December 2023, Entergy Mississippi filed a Notice of Storm Escrow Disbursement and Request for Interim Relief notifying the MPSC that Entergy Mississippi had requested disbursement of approximately $34.5 million of storm escrow funds from its restricted storm escrow account. The filing also requested authorization from the MPSC, on a temporary basis, that the $34.5 million of storm escrow funds be credited to Entergy Mississippi’s storm damage provision, pending the MPSC’s review of Entergy Mississippi’s storm-related costs, and that Entergy Mississippi continue to bill its monthly storm damage provision without suspension in the event the storm damage provision balance exceeded $15 million, in anticipation of a subsequent filing by Entergy Mississippi in this proceeding. The storm damage provision exceeded $15 million upon receipt of the storm escrow funds. Because the MPSC had not entered an order on Entergy Mississippi’s filing on the requested relief to continue billing this provision, Entergy Mississippi suspended billing the monthly storm damage provision effective with February 2024 bills.

In March 2024, Entergy Mississippi made a combined dual filing which included a notice of intent to make routine change in rates and schedules and a motion for determination relating to the above-described notice of storm escrow disbursement. The notice of intent proposed a new storm damage mitigation and restoration rider to supersede both the then-current storm damage rate schedule and the vegetation management rider schedule, in which the collection of both expenses would be combined. The proposal requested that the MPSC authorize Entergy Mississippi to collect approximately $5.2 million per month for vegetation management and a storm damage provision. Furthermore, if Entergy Mississippi’s accumulated vegetation management and storm damage provision balance were to exceed $70 million, collection under the storm damage mitigation and restoration rider

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Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

would cease until such time that the accumulated vegetation management and storm damage provision would become less than $60 million.

The Mississippi Public Utilities Staff reviewed the storm-related costs submitted by Entergy Mississippi and found them prudent. In June 2024 the MPSC considered and unanimously granted the relief sought by Entergy Mississippi, including authorization to credit any remaining funds in the storm escrow account to Entergy Mississippi’s storm damage provision and to close the storm escrow account and approving the new storm damage mitigation and restoration rider. Entergy Mississippi’s storm escrow account was liquidated in July 2024, and the new combined storm damage mitigation and restoration rider became effective with the July 2024 billing cycle. Additionally, Entergy Mississippi made a compliance filing to cease billing under the existing vegetation management rider schedule as of the same billing cycle.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Nuclear Matters

See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.

Environmental Risks

Entergy Mississippi’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Mississippi is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

Critical Accounting Estimates

The preparation of Entergy Mississippi’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Mississippi’s financial position, results of operations, or cash flows.

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

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Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Qualified Pension and Other Postretirement Benefits

Entergy Mississippi’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$178$5,973

Rate of return on plan assets(0.25%)$726$—

Rate of increase in compensation0.25%$249$1,397

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$77$912

Health care cost trend0.25%$112$594

Each fluctuation above assumes that the other components of the calculation are held constant.

Costs and Employer Contributions

Total qualified pension cost for Entergy Mississippi in 2024 was $3.3 million. Entergy Mississippi anticipates 2025 qualified pension cost to be $3.5 million. Entergy Mississippi contributed $15 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $8.1 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for Entergy Mississippi in 2024 was $3.7 million. Entergy Mississippi expects 2025 postretirement health care and life insurance benefit income of approximately $3.9 million. In 2024, Entergy Mississippi’s contributions to its other postretirement plans, specifically its contributions to the external trusts plus claims payments, were offset by trust claims reimbursements, resulting in a net reimbursement of $23 thousand. Entergy Mississippi estimates that 2025 contributions will be approximately $178 thousand.

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Entergy Mississippi, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the member and Board of Directors of

Entergy Mississippi, LLC and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entergy Mississippi, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows and changes in equity (pages 391 through 396 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rate and Regulatory Matters — Entergy Mississippi, LLC and Subsidiaries — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Mississippi Public Service Commission (the “MPSC”), which has jurisdiction with respect to the rates of electric companies in Mississippi, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

389

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the MPSC and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the MPSC and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the MPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the MPSC and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the MPSC and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the MPSC’s and FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s filings with the MPSC and the FERC and orders issued, and considered the filings with the MPSC and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

390

ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$1,764,593 $1,802,533 $1,624,234

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale270,015 563,296 252,760

Purchased power273,580 281,761 322,674

Other operation and maintenance315,651 320,192 314,902

Taxes other than income taxes166,195 150,921 137,541

Depreciation and amortization270,483 262,624 246,063

Other regulatory charges (credits) - net36,723 (111,376)38,017

TOTAL1,332,647 1,467,418 1,311,957

OPERATING INCOME431,946 335,115 312,277

OTHER INCOME (DEDUCTIONS)

Allowance for equity funds used during construction9,095 8,552 6,125

Interest and investment income3,249 2,275 508

Miscellaneous - net(11,157)(13,231)(3,619)

TOTAL1,187 (2,404)3,014

INTEREST EXPENSE

Interest expense110,931 99,857 86,960

Allowance for borrowed funds used during construction(3,520)(3,479)(2,800)

TOTAL107,411 96,378 84,160

INCOME BEFORE INCOME TAXES325,722 236,333 231,131

Income taxes80,315 54,364 54,864

NET INCOME245,407 181,969 176,267

Net loss attributable to noncontrolling interest(10,551)(10,302)(21,355)

EARNINGS APPLICABLE TO MEMBER'S EQUITY$255,958 $192,271 $197,622

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income$245,407 $181,969 $176,267

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation and amortization270,483 262,624 246,063

Deferred income taxes, investment tax credits, and non-current taxes accrued43,245 28,990 54,850

Changes in assets and liabilities:

Receivables7,221 3,627 (65,843)

Fuel inventory1,233 (648)(5,237)

Accounts payable60,450 (41,101)49,101

Taxes accrued63,890 (9,771)18,632

Interest accrued(870)3,329 925

Deferred fuel costs(4,329)273,856 (21,333)

Other working capital accounts(32,138)(23,813)2,632

Provisions for estimated losses7,719 1,972 (519)

Other regulatory assets53,229 (59,616)(57,028)

Other regulatory liabilities17,985 (59,513)20,165

Pension and other postretirement funded status(33,506)(49,223)(35,299)

Other assets and liabilities(564)46,709 22,273

Net cash flow provided by operating activities699,455 559,391 405,649

INVESTING ACTIVITIES

Construction expenditures(699,690)(562,118)(534,020)

Allowance for equity funds used during construction9,095 8,552 6,125

Payment for purchase of plant— (35,094)(105,149)

Proceeds from sale of assets818 — —

Changes in money pool receivable - net(15,218)26,879 13,577

Receipts from storm reserve escrow account736 34,493 —

Increase in other investments

(960)(690)(1,273)

Net cash flow used in investing activities(705,219)(527,978)(620,740)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt395,881 396,833 249,266

Retirement of long-term debt(200,000)(500,000)(100,000)

Capital contributions from noncontrolling interest— 25,708 24,702

Changes in money pool payable - net(73,769)73,769 —

Common equity distributions paid(44,633)(40,000)—

Other77,348 1,928 10,475

Net cash flow provided by (used in) financing activities

154,827 (41,762)184,443

Net increase (decrease) in cash and cash equivalents149,063 (10,349)(30,648)

Cash and cash equivalents at beginning of period6,630 16,979 47,627

Cash and cash equivalents at end of period$155,693 $6,630 $16,979

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:

Interest - net of amount capitalized$109,444 $93,961 $83,291

Income taxes($14,170)$50,869 ($5,396)

Noncash investing activities:

Accrued construction expenditures$141,227 $16,342 $59,474

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$184 $30

Temporary cash investments155,509 6,600

Total cash and cash equivalents155,693 6,630

Accounts receivable:

Customer97,609 121,389

Allowance for doubtful accounts(2,172)(3,312)

Associated companies23,909 4,997

Other25,148 17,697

Accrued unbilled revenues75,740 71,465

Total accounts receivable220,234 212,236

Fuel inventory - at average cost14,963 16,196

Materials and supplies113,256 95,526

Prepayments and other19,764 12,740

TOTAL523,910 343,328

OTHER PROPERTY AND INVESTMENTS

Non-utility property - at cost (less accumulated depreciation)4,482 4,497

Storm reserve escrow account— 656

Other880 —

TOTAL5,362 5,153

UTILITY PLANT

Electric7,860,409 7,455,145

Construction work in progress487,273 139,635

TOTAL UTILITY PLANT8,347,682 7,594,780

Less - accumulated depreciation and amortization2,511,091 2,346,327

UTILITY PLANT - NET5,836,591 5,248,453

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets525,847 579,076

Other97,260 51,996

TOTAL623,107 631,072

TOTAL ASSETS$6,988,970 $6,228,006

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Currently maturing long-term debt$— $100,000

Accounts payable:

Associated companies58,087 133,571

Other283,755 92,659

Customer deposits94,009 92,637

Taxes accrued179,024 115,134

Interest accrued20,667 21,537

Deferred fuel costs126,316 130,645

Other20,720 26,463

TOTAL782,578 712,646

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued870,116 821,744

Accumulated deferred investment tax credits13,446 13,811

Regulatory liability for income taxes - net180,851 188,714

Other regulatory liabilities59,544 33,696

Asset retirement cost liabilities25,110 8,229

Accumulated provisions47,200 39,481

Long-term debt2,427,073 2,129,510

Customer advances for construction112,618 32,659

Other61,446 39,302

TOTAL3,797,404 3,307,146

Commitments and Contingencies

EQUITY

Member's equity2,400,786 2,189,461

Noncontrolling interest8,202 18,753

TOTAL2,408,988 2,208,214

TOTAL LIABILITIES AND EQUITY$6,988,970 $6,228,006

See Notes to Financial Statements.

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ENTERGY MISSISSIPPI, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Noncontrolling InterestMember's EquityTotal

(In Thousands)

Balance at December 31, 2021$— $1,839,568 $1,839,568

Net income (loss)(21,355)197,622 176,267

Capital contributions from noncontrolling interest24,702 — 24,702

Balance at December 31, 2022$3,347 $2,037,190 $2,040,537

Net income (loss)(10,302)192,271 181,969

Common equity distributions— (40,000)(40,000)

Capital contributions from noncontrolling interest25,708 — 25,708

Balance at December 31, 2023$18,753 $2,189,461 $2,208,214

Net income (loss)(10,551)255,958 245,407

Common equity distributions— (44,633)(44,633)

Balance at December 31, 2024$8,202 $2,400,786 $2,408,988

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

2024 Compared to 2023

Net Income

Net income decreased $213.1 million primarily due to a $198.4 million reduction in income tax expense in 2023 as a result of the resolution of the 2016-2018 IRS audit, partially offset by a $60 million regulatory charge ($43.8 million net-of-tax) to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit, and a $78.5 million ($57.4 million net-of-tax) regulatory charge, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit. Also contributing to the decrease were higher interest expense, higher depreciation and amortization expenses, and higher other operation and maintenance expenses. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.

Operating Revenues

Following is an analysis of the change in operating revenues comparing 2024 to 2023:

Amount

(In Millions)

2023 operating revenues

$843.9

Fuel, rider, and other revenues that do not significantly affect net income(28.3)

Volume/weather(5.5)

Storm restoration carrying costs(5.2)

Retail electric price5.7

2024 operating revenues

$810.6

Entergy New Orleans’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The volume/weather variance is primarily due to a decrease in industrial and commercial usage. The decrease in industrial usage is primarily due to a decrease in demand from large industrial customers, primarily in the industrial gases industry.

Storm restoration carrying costs represent the equity component of storm restoration carrying costs, recorded in fourth quarter 2023, recognized as part of the City Council’s approval of the Hurricane Ida storm cost certification report in December 2023. See Note 2 to the financial statements for further discussion of the storm cost certification.

The retail electric price variance is primarily due to increases in formula rate plan rates effective September 2023 and September 2024, each in accordance with the terms of the 2023 and 2024 formula rate plan filings. See Note 2 to the financial statements for further discussion of the formula rate plan filings.

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Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy New Orleans for the years ended December 31, 2024 and 2023 are as follows:

20242023% Change

(GWh)

Residential2,341 2,364 (1)

Commercial2,094 2,126 (2)

Industrial369 423 (13)

Governmental793 783 1

Total retail 5,597 5,696 (2)

Sales for resale:

Non-associated companies2,123 2,818 (25)

Total7,720 8,514 (9)

See Note 19 to the financial statements for additional discussion of Entergy New Orleans’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $4.1 million in bad debt expense;

•an increase of $2.6 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023; and

•an increase of $2.5 million in energy efficiency expenses primarily due to higher energy efficiency costs and the timing of recovery from customers.

The increase was partially offset by a decrease of $5.3 million in power delivery expenses primarily due to a lower scope of work performed in 2024 as compared to 2023.

Taxes other than income taxes decreased primarily due to a decrease in local franchise taxes as a result of lower retail revenues in 2024 as compared to 2023.

Depreciation and amortization expenses increased primarily due to additions to plant in service.

Other regulatory charges (credits) - net includes a regulatory charge of $78.5 million, recorded in first quarter 2024, primarily to reflect a settlement in principle between Entergy New Orleans and the City Council in April 2024 for additional sharing with customers of income tax benefits from the resolution of the 2016-2018 IRS audit and a regulatory charge of $60 million, recorded in fourth quarter 2023, to reflect credits expected to be provided to customers as a result of the resolution of the 2016-2018 IRS audit. See Note 3 to the financial statements for discussion of the April 2024 settlement in principle and discussion of the resolution of the 2016-2018 IRS audit.

Interest expense increased primarily due to the issuances of $65 million of 6.41% Series mortgage bonds, $50 million of 6.54% Series mortgage bonds, and $35 million of 6.25% Series mortgage bonds, each in May 2024. The increase was partially offset by the repayment of $100 million of 3.90% Series mortgage bonds in July 2023 and the repayment of an $85 million unsecured term loan in June 2024.

The effective income tax rates were 15.2% for 2024 and (487.5%) for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

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Management’s Financial Discussion and Analysis

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy New Orleans’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

Sale of Natural Gas Distribution Business

See the “Held for Sale - Natural Gas Distribution Businesses” section in Note 14 to the financial statements for discussion of the planned sale of the Entergy New Orleans natural gas distribution business.

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$26 $4,464 $42,862

Net cash provided by (used in):

Operating activities286,729 202,956 363,763

Investing activities(163,481)(18,802)(403,790)

Financing activities(91,497)(188,592)1,629

Net increase (decrease) in cash and cash equivalents31,751 (4,438)(38,398)

Cash and cash equivalents at end of period$31,777 $26 $4,464

2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities increased $83.8 million in 2024 primarily due to:

•the receipt of $98.1 million in settlement proceeds in 2024 as a result of the System Energy settlement with the City Council. See Note 2 to the financial statements for discussion of the System Energy settlement agreement with the City Council;

•lower fuel payments in 2024 as compared to 2023;

•the timing of payments to vendors; and

•income tax refunds of $17.9 million in 2024 compared to income tax payments of $14.1 million in 2023. Entergy New Orleans received income tax refunds in 2024 primarily in accordance with an intercompany income tax allocation agreement. Entergy New Orleans made net income tax payments in 2023 primarily related to the resolution of the 2016-2018 IRS audit and estimated federal and state income taxes.

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Management’s Financial Discussion and Analysis

The increase was partially offset by the refund of $34 million received from System Energy in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC and lower collections from customers. See Note 2 to the financial statements for discussion of the January 2023 refund received from System Energy and the related proceedings and Note 3 to the financial statements for further discussion of the resolution of the 2016-2018 IRS audit.

Investing Activities

Net cash flow used in investing activities increased $144.7 million in 2024 primarily due to money pool activity, partially offset by a decrease of $16.6 million in transmission construction expenditures primarily due to higher spending in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.

Increases in Entergy New Orleans’s receivable from the money pool are a use of cash flow, and Entergy New Orleans’s receivable from the money pool increased $3.1 million in 2024 compared to decreasing by $147.3 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow used in financing activities decreased $97.1 million in 2024 primarily due to the issuances of $65 million of 6.41% Series mortgage bonds, $50 million of 6.54% Series mortgage bonds, and $35 million of 6.25% Series mortgage bonds, each in May 2024, and the repayment, at maturity, of $100 million of 3.90% Series mortgage bonds in July 2023. The decrease was partially offset by:

•the repayment, at maturity, of an $85 million unsecured term loan in June 2024 as compared to additional borrowings of $15 million on the unsecured term loan in May 2023;

•money pool activity; and

•a $15 million advance received in 2023 related to Entergy New Orleans’s construction of the New Orleans Sewerage and Water Board Sullivan substation.

Decreases in Entergy New Orleans’s payable to the money pool are a use of cash flow, and Entergy New Orleans’s payable to the money pool decreased $21.7 million in 2024 compared to increasing by $21.7 million in 2023.

See Note 5 to the financial statements for details on long-term debt.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy New Orleans’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Capital Structure

Entergy New Orleans’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for Entergy New Orleans is primarily due to common equity distributions of $125 million in 2024 and the net issuance of long-term debt in 2024.

December 31,2024December 31,2023

Debt to capital51.5 %45.8 %

Effect of excluding securitization bonds — %(0.2 %)

Debt to capital, excluding securitization bonds (non-GAAP) (a)51.5 %45.6 %

Effect of subtracting cash(1.1 %)— %

Net debt to net capital, excluding securitization bonds (non-GAAP) (a)50.4 %45.6 %

(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy New Orleans.

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, finance lease obligations, long-term debt, including the currently maturing portion, and the long-term payable due to an associated company. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy New Orleans uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because the securitization bonds are non-recourse to Entergy New Orleans, as more fully described in Note 5 to the financial statements. Entergy New Orleans also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because net debt indicates Entergy New Orleans’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy New Orleans seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a distribution, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy New Orleans may issue incremental debt or reduce distributions, or both, to maintain its capital structure. In addition, in certain infrequent circumstances, such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced distributions, Entergy New Orleans may receive equity contributions to maintain its capital structure.

Uses of Capital

Entergy New Orleans requires capital resources for:

•construction and other capital investments;

•working capital purposes, including the financing of fuel and purchased power costs;

•debt maturities or retirements; and

•distribution and interest payments.

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Management’s Financial Discussion and Analysis

Following are the amounts of Entergy New Orleans’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$30 $15 $10

Transmission20 5 30

Distribution125 190 110

Utility Support20 20 15

Total$195 $230 $165

In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy New Orleans includes distribution and Utility support spending to deliver reliability, resilience, and customer experience; transmission spending to improve reliability and resilience; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy New Orleans is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of Entergy New Orleans’s existing debt and lease obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

(In Millions)

Long-term debt (a)$111 $116 $29 $92 $873

Operating leases (b)$2 $2 $2 $2 $1

Finance leases (b)$1 $1 $1 $3 $1

(a)Long-term debt is discussed in Note 5 to the financial statements.

(b)Lease obligations are discussed in Note 10 to the financial statements.

Other Obligations

Entergy New Orleans currently expects to contribute approximately $5 million to its qualified pension plans and approximately $205 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

Entergy New Orleans has $7.9 million of unrecognized tax benefits net of unused tax attributes plus interest for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

In addition, Entergy New Orleans enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy New Orleans has rate mechanisms in place to recover fuel, purchased power, and

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

associated costs incurred under these purchase obligations. See Note 8 to the financial statements for discussion of Entergy New Orleans’s obligations under the Unit Power Sales Agreement.

As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy New Orleans pays distributions from its earnings at a percentage determined monthly.

Resilience and Grid Hardening

In October 2021 the City Council passed a resolution and order establishing a docket and procedural schedule with respect to system resiliency and storm hardening. In July 2022, Entergy New Orleans filed with the City Council a response identifying a preliminary plan for storm hardening and resiliency projects, including microgrids, to be implemented over ten years at an approximate cost of $1.5 billion. In February 2023 the City Council approved a revised procedural schedule requiring Entergy New Orleans to make a filing in April 2023 containing a narrowed list of proposed hardening projects. In April 2023, Entergy New Orleans filed the required application and supporting testimony seeking City Council approval of the first phase (five years and $559 million) of a ten-year infrastructure hardening plan totaling approximately $1 billion. Entergy New Orleans also sought, among other relief, City Council approval of a resilience and storm hardening cost recovery rider to recover from customers the costs of the infrastructure hardening plan. In February 2024 the City Council approved a resolution authorizing Entergy New Orleans to implement a resilience project to be partially funded by $55 million of matching funding through the DOE’s Grid Resilience and Innovation Partnerships program. The resolution also required Entergy New Orleans to submit, no later than July 2024, a revised resilience plan consisting of projects over a three-year period. In March 2024, Entergy New Orleans filed with the City Council for approval the requested three-year resilience plan, which includes $168 million in hardening projects. The three-year resilience plan was to be in addition to the previously authorized resilience project to be partially funded by the DOE’s Grid Resilience and Innovation Partnerships program. In October 2024 the City Council approved a resolution authorizing a two-year resilience plan totaling $100 million and approved the requested resilience and storm hardening cost recovery rider. In December 2024, Entergy New Orleans notified the City Council of the subset of hardening projects from the revised three-year resilience plan to be included in the two-year resilience plan. Entergy New Orleans implemented the approved resilience and storm hardening cost recovery rider effective with the first billing cycle of January 2025.

Sources of Capital

Entergy New Orleans’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•storm reserve escrow accounts;

•debt and preferred membership interest issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•capital contributions; and

•bank financing under new or existing facilities.

Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy New Orleans expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt and common and preferred membership interest issuances by Entergy New Orleans require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other

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Management’s Financial Discussion and Analysis

agreements. Entergy New Orleans has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

Entergy New Orleans’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

$3,146($21,651)$147,254$36,410

See Note 4 to the financial statements for a description of the money pool.

Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in June 2027. The credit facility includes fronting commitments for the issuance of letters of credit against $10 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and no letters of credit outstanding under the credit facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, a $0.5 million letter of credit was outstanding under Entergy New Orleans’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.

Entergy New Orleans obtained authorization from the FERC through January 2027 for short-term borrowings not to exceed an aggregate amount of $150 million at any time outstanding and long-term borrowings and securities issuances. See Note 4 to the financial statements for further discussion of Entergy New Orleans’s short-term borrowing limits. The long-term securities issuances of Entergy New Orleans are limited to amounts authorized not only by the FERC, but also by the City Council, and the current City Council authorization extends through December 2025.

Hurricane Francine

In September 2024, Hurricane Francine caused damage to the areas served by Entergy New Orleans. The storm resulted in widespread power outages, primarily due to damage to distribution infrastructure as a result of strong winds and heavy rain, and the loss of sales during the power outages. In December 2024, in accordance with the terms of its storm recovery reserve escrow agreement, Entergy New Orleans transmitted to the City Council a notice of intent to withdraw up to $20 million in estimated storm costs resulting from Hurricane Francine from its storm recovery reserve escrow account, subject to the City Council’s certification of those costs. In January 2025, the City Council authorized the withdrawal and in February 2025, Entergy New Orleans withdrew $10.3 million from its storm recovery reserve escrow account.

State and Local Rate Regulation

The rates that Entergy New Orleans charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy New Orleans is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the City Council, is primarily responsible for approval of the rates charged to customers.

Retail Rates

2022 Formula Rate Plan Filing

In April 2022, Entergy New Orleans submitted to the City Council its formula rate plan 2021 test year filing. The 2021 test year evaluation report, subsequently updated in a July 2022 filing, produced an earned return on equity of 6.88% compared to the authorized return on equity of 9.35%. Entergy New Orleans sought approval of

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

a $42.1 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula resulted in an increase in authorized electric revenues of $34.1 million and an increase in authorized gas revenues of $3.3 million. Entergy New Orleans also sought to commence collecting $4.7 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2022 the City Council’s advisors issued a report seeking a reduction to Entergy New Orleans’s proposed increase of approximately $17.1 million in total for electric and gas revenues. Effective with the first billing cycle of September 2022, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council including adjustments filed in the City Council’s advisors’ report, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $24.7 million, which includes an increase of $18.2 million in electric revenues, $4.7 million in previously approved electric revenues, and an increase of $1.8 million in gas revenues. Additionally, credits of $13.9 million funded by certain regulatory liabilities currently held by Entergy New Orleans for customers were issued over an eight-month period beginning September 2022.

2023 Formula Rate Plan Filing

In April 2023, Entergy New Orleans submitted to the City Council its formula rate plan 2022 test year filing. The 2022 test year evaluation report produced an electric earned return on equity of 7.34% and a gas earned return on equity of 3.52% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $25.6 million rate increase based on the formula set by the City Council in the 2018 rate case. The formula would result in an increase in authorized electric revenues of $17.4 million and an increase in authorized gas revenues of $8.2 million. Entergy New Orleans also sought to commence collecting $3.4 million in electric revenues that were previously approved by the City Council for collection through the formula rate plan. In July 2023, Entergy New Orleans filed a report to decrease its requested formula rate plan revenues by approximately $0.5 million to account for minor errors discovered after the filing. The City Council advisors issued a report seeking a reduction in the requested formula rate plan revenues of approximately $8.3 million, combined for electric and gas, due to alleged errors. The City Council advisors proposed additional rate mitigation in the amount of $12 million through offsets to the formula rate plan rate increase by certain regulatory liabilities. In September 2023 the City Council approved an agreement to settle the 2023 formula rate plan filing. Effective with the first billing cycle of September 2023, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The agreement provides for a total increase in electric revenues of $10.5 million and a total increase in gas revenues of $6.9 million. The agreement also provides for a minor storm accrual of $0.5 million per year and the distribution of $8.9 million of currently held customer credits to implement the City Council advisors’ mitigation recommendations.

Request for Extension and Modification of Formula Rate Plan

In September 2023, Entergy New Orleans filed a motion seeking City Council approval of a three-year extension of Entergy New Orleans’s electric and gas formula rate plans. In October 2023 the City Council granted Entergy New Orleans’s request for an extension, subject to minor modifications which included a 55% equity ratio for rate setting purposes.

2024 Formula Rate Plan Filing

In April 2024, Entergy New Orleans submitted to the City Council its formula rate plan 2023 test year filing. Without the requested rate change in 2024, the 2023 test year evaluation report produced an electric earned return on equity of 8.66% and a gas earned return on equity of 5.87% compared to the authorized return on equity for each of 9.35%. Entergy New Orleans sought approval of a $12.6 million rate increase based on the formula set by the City Council in the 2018 rate case and approved again by the City Council in 2023. The formula would result in an increase in authorized electric revenues of $7.0 million and an increase in authorized gas revenues of $5.6 million. Following City Council review, the City Council’s advisors issued a report in July 2024 seeking a

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

reduction in Entergy New Orleans’s requested formula rate plan revenues in an aggregate amount of approximately $1.6 million for electric and gas together due to alleged errors. Effective with the first billing cycle of September 2024, Entergy New Orleans implemented rates reflecting an amount agreed upon by Entergy New Orleans and the City Council, per the approved process for formula rate plan implementation. The total formula rate plan increase implemented was $11.2 million, which includes an increase of $5.8 million in electric revenues and an increase of $5.4 million in gas revenues.

Fuel and purchased power cost recovery

Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.

Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.

Renewable Portfolio Standard Rulemaking

In March 2019 the City Council initiated a rulemaking proceeding to consider whether to establish a renewable portfolio standard. The four components of the Renewable and Clean Portfolio Standard that the City Council expressed a desire to implement were: (1) a mandatory requirement that Entergy New Orleans achieve 100% net zero carbon emissions by 2040; (2) reliance on renewable energy credits purchased without the associated energy for compliance with the standard being phased out over the ten-year period from 2040 to 2050; (3) no carbon-emitting resources in the portfolio of resources Entergy New Orleans uses to serve New Orleans by 2050; and (4) a mechanism to limit costs in any one plan year to no more than one percent of plan year total utility retail sales revenues. The City Council adopted the Utility Committee resolution in April 2020. The City Council approved the rule in May 2021, establishing the Renewable and Clean Portfolio Standard.

In March 2022 the City Council approved Entergy New Orleans’s initial compliance plan and established an alternative compliance payment value of $8.45 per MWh, which Entergy New Orleans will pay if it is unable to comply with the Renewable and Clean Portfolio Standard for the 2022 compliance year. Such compliance payments are paid into a clean energy fund established by the City Council. The City Council also approved the electric vehicle credit calculation methodology for use in the compliance demonstration report for 2022, to be filed prior to May 1, 2023. Entergy New Orleans’s proposal to create a 5% contingency reserve was considered reasonable for the initial compliance plan.

In August 2022, Entergy New Orleans submitted its compliance plan covering compliance years 2023-2025. After receiving comments from intervenors and Entergy New Orleans, in December 2022 the City Council adopted a resolution that (a) approved Entergy New Orleans's proposal to purchase unbundled renewable energy credits, as needed; (b) denied Entergy New Orleans’s request to treat the Sewerage and Water Board’s 230 kV Sullivan substation electrification as a “qualified measure;” (c) approved the alternative compliance payment for years 2023-2025 at $8.45 per MWh; and (d) approved the Tier 3 credit calculations for electric vehicle charging infrastructure but denied the request to approve a Tier 3 credit for the Sewerage and Water Board substation electrification project at this time while the substation is not yet in service.

In May 2023, Entergy New Orleans submitted its compliance demonstration report to the City Council for the 2022 compliance year, which describes and demonstrates Entergy New Orleans’s compliance with the Renewable and Clean Portfolio Standard in 2022 and satisfies certain informational requirements. Entergy New Orleans requested, among other things, that the City Council determine that Entergy New Orleans achieved the target under the portfolio standard for 2022 and remains within the customer protection cost cap, and that the City

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Council approve a proposal to recover costs associated with 2022 compliance. In April 2024 the City Council approved a resolution finding Entergy New Orleans was in compliance with the 2022 requirements and that Entergy New Orleans did not exceed the customer protection cost cap, as well as approving Entergy New Orleans’s proposal to recover costs.

Income Tax Audits

As discussed in Note 3 to the financial statements, in November 2023 the IRS completed its examination of the 2016 through 2018 tax years and issued a Revenue Agent Report for each federal filer under audit. Based on prior regulatory agreements and general rate-making principles, in fourth quarter 2023 Entergy New Orleans recorded a regulatory liability and associated regulatory charge of $60 million ($44 million net-of-tax). In April 2024, Entergy New Orleans and the City Council entered into a settlement in principle whereby Entergy New Orleans agreed to share with customers $138 million of income tax benefits from the resolution of the 2016–2018 IRS audit. Based on this settlement in principle, in first quarter 2024, Entergy New Orleans increased the associated regulatory liability from $60 million to $138 million and recorded a corresponding $78 million regulatory charge ($57 million net-of-tax). The settlement in principle requires that the regulatory liability be amortized over 25 years beginning in January 2025 with the unamortized balance included in rate base and the amortization treated as a reduction to Entergy New Orleans’s retail revenue requirement. In May 2024 the City Council approved the settlement.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Nuclear Matters

See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.

Environmental Risks

Entergy New Orleans’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy New Orleans is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

Critical Accounting Estimates

The preparation of Entergy New Orleans’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy New Orleans’s financial position, results of operations, or cash flows.

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Entergy New Orleans, LLC and Subsidiaries

Management’s Financial Discussion and Analysis

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

Qualified Pension and Other Postretirement Benefits

Entergy New Orleans’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$101$2,787

Rate of return on plan assets(0.25%)$313$—

Rate of increase in compensation0.25%$140$601

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$30$430

Health care cost trend0.25%$43$236

Each fluctuation above assumes that the other components of the calculation are held constant.

Costs and Employer Contributions

Total qualified pension cost for Entergy New Orleans in 2024 was $1.1 million. Entergy New Orleans anticipates 2025 qualified pension cost to be $1.2 million. Entergy New Orleans contributed $4.9 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $5 million,

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Management’s Financial Discussion and Analysis

although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for Entergy New Orleans in 2024 was $5.5 million. Entergy New Orleans expects 2025 postretirement health care and life insurance benefit income of approximately $5.6 million. Entergy New Orleans contributed $134 thousand to its other postretirement plans in 2024 and estimates 2025 contributions will be approximately $205 thousand.

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the member and Board of Directors of

Entergy New Orleans, LLC and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entergy New Orleans, LLC and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows, and changes in member’s equity (pages 412 through 416 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rate and Regulatory Matters — Entergy New Orleans, LLC and Subsidiaries — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Council of the City of New Orleans, Louisiana (the “City Council”), which has jurisdiction with respect to the rates of electric companies in the City of New Orleans, Louisiana, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

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The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the City Council and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the City Council and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the City Council and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the City Council and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the City Council and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the City Council’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s filings with the City Council and the FERC and orders issued, and considered the filings with the City Council and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$708,354 $737,974 $855,248

Natural gas102,210 105,959 142,085

TOTAL810,564 843,933 997,333

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale99,055 122,400 244,994

Purchased power252,863 268,478 314,283

Other operation and maintenance172,101 167,719 156,653

Taxes other than income taxes60,476 62,979 63,743

Depreciation and amortization84,937 81,282 76,938

Other regulatory charges (credits) - net85,136 69,211 19,596

TOTAL754,568 772,069 876,207

OPERATING INCOME55,996 71,864 121,126

OTHER INCOME

Allowance for equity funds used during construction2,118 1,470 829

Interest and investment income2,144 7,154 742

Miscellaneous - net(115)(4,119)(21)

TOTAL4,147 4,505 1,550

INTEREST EXPENSE

Interest expense42,337 38,118 34,829

Allowance for borrowed funds used during construction(883)(714)(531)

TOTAL41,454 37,404 34,298

INCOME BEFORE INCOME TAXES18,689 38,965 88,378

Income taxes2,842 (189,973)24,277

NET INCOME$15,847 $228,938 $64,101

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income$15,847 $228,938 $64,101

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation and amortization84,937 81,282 76,938

Deferred income taxes, investment tax credits, and non-current taxes accrued12,271 (191,326)18,685

Changes in assets and liabilities:

Receivables(6,955)29,944 6,128

Fuel inventory(813)2,574 (2,927)

Accounts payable(4,864)(11,924)21

Prepaid taxes and taxes accrued10,360 (11,882)5,923

Interest accrued137 454 89

Deferred fuel costs2,247 4,005 (17,760)

Other working capital accounts192 (9,184)(790)

Provisions for estimated losses2,169 1,076 80,719

Other regulatory assets25,424 19,745 46,505

Other regulatory liabilities 175,808 66,022 (8,639)

Effect of securitization on regulatory asset— — 95,920

Pension and other postretirement funded status(21,638)(16,371)9,769

Other assets and liabilities(8,393)9,603 (10,919)

Net cash flow provided by operating activities286,729 202,956 363,763

INVESTING ACTIVITIES

Construction expenditures(158,257)(164,279)(217,864)

Allowance for equity funds used during construction2,118 1,470 829

Changes in money pool receivable - net(3,146)147,254 (110,844)

Payments to storm reserve escrow account(5,011)(3,731)(200,000)

Receipts from storm reserve escrow account— — 125,000

Changes in securitization account815 (191)(236)

Decrease (increase) in other investments— 675 (675)

Net cash flow used in investing activities(163,481)(18,802)(403,790)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt148,913 14,610 —

Retirement of long-term debt(91,245)(112,525)(12,207)

Repayment of long-term payable due to associated company(1,275)(1,306)(1,326)

Contributions from customer for construction— 15,000 15,000

Changes in money pool payable - net(21,651)21,651 —

Common equity distributions paid(125,000)(125,000)—

Other(1,239)(1,022)162

Net cash flow provided by (used in) financing activities(91,497)(188,592)1,629

Net increase (decrease) in cash and cash equivalents31,751 (4,438)(38,398)

Cash and cash equivalents at beginning of period26 4,464 42,862

Cash and cash equivalents at end of period$31,777 $26 $4,464

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:

Interest - net of amount capitalized$40,312 $36,263 $33,343

Income taxes($17,903)$14,120 $499

Noncash investing activities:

Accrued construction expenditures$2,865 $7,068 $11,152

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$374 $26

Temporary cash investments31,403 —

Total cash and cash equivalents31,777 26

Securitization recovery trust account1,611 2,426

Accounts receivable:

Customer65,731 67,258

Allowance for doubtful accounts(6,735)(7,770)

Associated companies5,844 1,657

Other9,467 5,270

Accrued unbilled revenues33,296 31,087

Total accounts receivable107,603 97,502

Deferred fuel costs— 6,148

Fuel inventory - at average cost320 3,298

Materials and supplies25,516 30,019

Prepaid taxes— 1,574

Current assets held for sale13,100 —

Prepayments and other12,128 11,482

TOTAL192,055 152,475

OTHER PROPERTY AND INVESTMENTS

Storm reserve escrow account83,742 78,731

Other832 832

TOTAL84,574 79,563

UTILITY PLANT

Electric2,160,165 2,046,928

Natural gas43,279 401,846

Construction work in progress18,269 25,424

TOTAL UTILITY PLANT2,221,713 2,474,198

Less - accumulated depreciation and amortization768,305 858,672

UTILITY PLANT - NET1,453,408 1,615,526

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets (includes securitization property of $— as of December 31, 2024 and $506 as of December 31, 2023)

133,261 182,367

Deferred fuel costs4,080 4,080

Non-current assets held for sale284,738 —

Other71,037 63,964

TOTAL493,116 250,411

TOTAL ASSETS$2,223,153 $2,097,975

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Currently maturing long-term debt$78,000 $85,000

Payable due to associated company1,140 1,275

Accounts payable:

Associated companies45,479 76,736

Other43,750 39,813

Customer deposits28,834 32,420

Taxes accrued8,786 —

Interest accrued8,671 8,534

Deferred fuel costs980 —

Other14,427 8,953

TOTAL230,067 252,731

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued201,541 195,615

Accumulated deferred investment tax credits15,617 16,457

Regulatory liability for income taxes - net15,000 36,061

Other regulatory liabilities260,312 90,434

Accumulated provisions90,293 88,124

Long-term debt (includes securitization bonds of $— as of December 31, 2024 and $5,415 as of December 31, 2023)

650,463 584,171

Long-term payable due to associated company5,864 7,004

Other56,395 20,624

TOTAL1,295,485 1,038,490

Commitments and Contingencies

EQUITY

Member's equity697,601 806,754

TOTAL697,601 806,754

TOTAL LIABILITIES AND EQUITY$2,223,153 $2,097,975

See Notes to Financial Statements.

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Member’s Equity

(In Thousands)

Balance at December 31, 2021$638,715

Net income64,101

Balance at December 31, 2022$702,816

Net income228,938

Common equity distributions(125,000)

Balance at December 31, 2023$806,754

Net income15,847

Common equity distributions(125,000)

Balance at December 31, 2024$697,601

See Notes to Financial Statements.

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ENTERGY TEXAS, INC. AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Results of Operations

2024 Compared to 2023

Net Income

Net income increased $2.3 million primarily due to higher other income and higher retail electric price, partially offset by higher depreciation and amortization expenses and higher other operation and maintenance expenses.

Operating Revenues

Following is an analysis of the change in operating revenues comparing 2024 to 2023:

Amount

(In Millions)

2023 operating revenues

$2,028.6

Fuel, rider, and other revenues that do not significantly affect net income3.4

Retail electric price15.4

Volume/weather2.8

2024 operating revenues

$2,050.2

Entergy Texas’s results include revenues from rate mechanisms designed to recover fuel, purchased power, and other costs such that the revenues and expenses associated with these items generally offset and do not affect net income. “Fuel, rider, and other revenues that do not significantly affect net income” includes the revenue variance associated with these items.

The retail electric price variance is primarily due to an increase in base rates effective June 2023 and the implementation of the distribution cost recovery factor rider effective with the first billing cycle in October 2024, partially offset by the implementation of the generation cost recovery relate-back rider for the Hardin County Peaking Facility effective over three months beginning in May 2023. See Note 2 to the financial statements for discussion of the 2022 base rate case, the distribution cost recovery factor rider, and the generation cost recovery rider filings.

The volume/weather variance is primarily due to an increase in commercial usage and an increase in weather-adjusted residential usage, partially offset by the effect of less favorable weather on residential sales. The increases in commercial usage and in weather-adjusted residential usage were primarily due to an increase in customers.

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Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Total electric energy sales for Entergy Texas for the years ended December 31, 2024 and 2023 are as follows:

20242023% Change

(GWh)

Residential6,597 6,731 (2)

Commercial4,879 4,797 2

Industrial9,457 9,343 1

Governmental269 275 (2)

Total retail 21,202 21,146 —

Sales for resale:

Non-associated companies687 462 49

Total21,889 21,608 1

See Note 19 to the financial statements for additional discussion of Entergy Texas’s operating revenues.

Other Income Statement Variances

Other operation and maintenance expenses increased primarily due to:

•an increase of $8.7 million in compensation and benefits costs primarily due to higher healthcare claims activity, including lower prescription drug rebates in 2024 as compared to 2023;

•a gain of $6.9 million on the partial sale of a service center in April 2023 as part of an eminent domain proceeding;

•an increase of $3.9 million in bad debt expense;

•an increase of $3.2 million in storm damage provisions;

•an increase of $2.6 million in transmission costs allocated by MISO; and

•several individually insignificant items.

The increase was partially offset by a decrease of $13.3 million in power delivery expenses primarily due to lower vegetation maintenance costs.

Depreciation and amortization expenses increased primarily due to the recognition of $27.6 million in depreciation expense in 2024 for the 2022 base rate case relate back period, effective over six months beginning January 2024. The recognition of depreciation expense for the relate back period was effective over the same period as collections from the relate back surcharge rider and results in no effect on net income. Also contributing to the increase were additions to plant in service. See Note 2 to the financial statements for discussion of the 2022 base rate case.

Other regulatory charges (credits) - net includes the reversal in third quarter 2023 of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved. See Note 2 to the financial statements for discussion of the 2022 base rate case.

Other income increased primarily due to an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project.

Interest expense increased primarily due to the issuance of $350 million of 5.80% Series mortgage bonds in August 2023 and the issuance of $350 million of 5.55% Series mortgage bonds in August 2024, partially offset by

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Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2024, including the Orange County Advanced Power Station project.

The effective income tax rates were 18.3% for 2024 and 17.8% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of Entergy Texas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$21,986 $3,497 $28

Net cash provided by (used in):

Operating activities823,649 641,691 409,427

Investing activities(928,418)(1,125,948)(764,069)

Financing activities267,780 502,746 358,111

Net increase in cash and cash equivalents163,011 18,489 3,469

Cash and cash equivalents at end of period$184,997 $21,986 $3,497

2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities increased $182 million in 2024 primarily due to lower fuel and purchased power costs and the timing of recovery of fuel and purchased power costs. See Note 2 to the financial statements for a discussion of fuel and purchased power cost recovery. The increase was partially offset by:

•the timing of payments to vendors;

•an increase of $22.6 million in interest paid; and

•an increase of $14.5 million in storm spending primarily due to Hurricane Beryl restoration efforts in 2024.

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Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities decreased $197.5 million in 2024 primarily due to money pool activity and cash collateral of $7 million posted in 2023, and subsequently returned to Entergy Texas in 2024, to support Entergy Texas’s obligations to MISO. The decrease was partially offset by:

•an increase of $148.8 million in transmission construction expenditures primarily due to higher capital expenditures as a result of increased development in Entergy Texas’s service area and increased spending on various transmission projects in 2024;

•an increase of $108.2 million in distribution construction expenditures primarily due to higher capital expenditures for storm restoration in 2024 and higher capital expenditures as a result of increased development in Entergy Texas’s service area. The increase in storm restoration expenditures is primarily due to Hurricane Beryl restoration efforts in 2024;

•an increase of $92.4 million in non-nuclear generation construction expenditures primarily due to higher spending on the Legend Power Station project; and

•the partial sale of a service center in April 2023 for $11 million as part of an eminent domain proceeding.

Decreases in Entergy Texas’s receivable from the money pool are a source of cash flow, and Entergy Texas’s receivable from the money pool decreased $299.4 million in 2024 compared to increasing by $218.4 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

Net cash flow provided by financing activities decreased $235 million in 2024 primarily due to:

•a capital contribution of $150 million received from Entergy Corporation in 2023 in order to maintain Entergy Texas’s capital structure and in anticipation of various capital expenditures;

•the payment of $69 million of common stock dividends in 2024. No common stock dividends were paid in 2023 in order to maintain Entergy Texas’s capital structure; and

•a decrease of $13.2 million in advance payments from customers for construction related to transmission, distribution, and generator interconnection agreements.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of Entergy Texas’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

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Capital Structure

Entergy Texas’s debt to capital ratio is shown in the following table.

December 31,2024December 31,2023

Debt to capital51.6 %50.9 %

Effect of excluding securitization bonds(1.7 %)(2.1 %)

Debt to capital, excluding securitization bonds (non-GAAP) (a)49.9 %48.8 %

Effect of subtracting cash(1.5 %)(0.2 %)

Net debt to net capital, excluding securitization bonds (non-GAAP) (a)48.4 %48.6 %

(a)Calculation excludes the securitization bonds, which are non-recourse to Entergy Texas.

Net debt consists of debt less cash and cash equivalents. Debt consists of finance lease obligations and long-term debt, including the currently maturing portion. Capital consists of debt and equity. Net capital consists of capital less cash and cash equivalents. The debt to capital ratio excluding securitization bonds and net debt to net capital ratio excluding securitization bonds are non-GAAP measures. Entergy Texas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because the securitization bonds are non-recourse to Entergy Texas, as more fully described in Note 5 to the financial statements. Entergy Texas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because net debt indicates Entergy Texas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

Entergy Texas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, to the extent funds are legally available to do so, or both, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Texas may issue incremental debt or reduce dividends, or both, to maintain its capital structure. In addition, Entergy Texas may receive equity contributions to maintain its capital structure for certain circumstances such as financing of large transactions that would materially alter the capital structure if financed entirely with debt and reduced dividends.

Uses of Capital

Entergy Texas requires capital resources for:

•construction and other capital investments;

•debt maturities or retirements;

•working capital purposes, including the financing of fuel and purchased power costs; and

•dividend and interest payments.

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Following are the amounts of Entergy Texas’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$835 $850 $350

Transmission310 410 830

Distribution450 395 325

Utility Support45 55 30

Total$1,640 $1,710 $1,535

In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Texas includes investments in generation projects to modernize, decarbonize, expand, and diversify Entergy Texas’s portfolio, including Orange County Advanced Power Station, Lone Star Power Station, Segno Solar, and Votaw Solar; distribution and Utility support spending to improve reliability, resilience, and customer experience; transmission spending to improve reliability and resilience while also supporting renewables expansion and customer growth; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. Entergy Texas is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of Entergy Texas’s existing debt and lease obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

(In Millions)

Long-term debt (a)$160 $289 $308 $595 $4,944

Operating leases (b)$9 $8 $6 $7 $2

Finance leases (b)$3 $2 $2 $3 $2

(a)Long-term debt is discussed in Note 5 to the financial statements.

(b)Lease obligations are discussed in Note 10 to the financial statements.

Other Obligations

Entergy Texas currently expects to contribute approximately $7.7 million to its qualified pension plans and approximately $156 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

Entergy Texas has $69.9 million of unrecognized tax benefits net of unused tax attributes plus interest and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

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In addition, Entergy Texas enters into fuel and purchased power agreements that contain minimum purchase obligations. Entergy Texas has rate mechanisms in place to recover fuel, purchased power, and associated costs incurred under these purchase obligations.

As a subsidiary, Entergy Texas dividends its earnings to Entergy Corporation at a percentage determined monthly.

Orange County Advanced Power Station

In September 2021, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station, a new 1,215 MW combined-cycle combustion turbine facility to be located in Bridge City, Texas at an initially-estimated expected total cost of $1.2 billion inclusive of the estimated costs of the generation facilities, transmission upgrades, contingency, an allowance for funds used during construction, and necessary regulatory expenses, among others. The project includes combustion turbine technology with dual fuel capability, able to co-fire up to 30% hydrogen by volume upon commercial operation and upgradable to support 100% hydrogen operations in the future. In December 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. In March 2022 certain intervenors filed testimony opposing the hydrogen co-firing component of the proposed project and others filed testimony opposing the project outright. Also in March 2022 the PUCT staff filed testimony opposing the hydrogen co-firing component of the proposed project, but otherwise taking no specific position on the merits of the project. The PUCT staff also proposed that the PUCT establish a maximum amount that Entergy Texas may recover in rates attributable to the project. In April 2022, Entergy Texas filed rebuttal testimony addressing and rebutting these various arguments. The hearing on the merits was held in June 2022, and post-hearing briefs were submitted in July 2022. In September 2022 the ALJs with the State Office of Administrative Hearings issued a proposal for decision recommending the PUCT approve Entergy Texas’s application for certification of Orange County Advanced Power Station subject to certain conditions, including a cap on cost recovery at $1.37 billion, the exclusion of investment associated with co-firing hydrogen, weatherization requirements, and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate. In October 2022 the parties in the proceeding filed exceptions and replies to exceptions to the proposal for decision. Also in October 2022, Entergy Texas filed with the PUCT information regarding a new fixed pricing option for an estimated project cost of approximately $1.55 billion associated with Entergy Texas’s issuance of limited notice to proceed by mid-November 2022. In November 2022 the PUCT issued a final order approving the requested amendment to Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Orange County Advanced Power Station without the investment associated with hydrogen co-firing capability, without a cap on cost recovery, and subject to certain conditions, including weatherization requirements and customer receipt of any contractual benefits associated with the facility’s guaranteed heat rate.

In December 2022, Texas Industrial Energy Consumers and Sierra Club filed motions for rehearing of the PUCT’s final order alleging the PUCT erred in granting the certification of the Orange County Advanced Power Station, in not imposing a cost cap, in including certain findings related to the reasonableness of Entergy Texas’s request for proposals from which the Orange County Advanced Power Station was selected, and in other regards. Also in December 2022, Entergy Texas filed a response to the motions for rehearing refuting the points raised therein. In January 2023 the PUCT issued letters noting that it voted to consider Texas Industrial Energy Consumers’ motion for rehearing at its upcoming January 2023 open meeting and voted not to consider Sierra Club’s motion for rehearing at an open meeting. At the January 2023 open meeting, the PUCT voted to grant Texas Industrial Energy Consumers’ motion for rehearing for the limited purpose of issuing an order on rehearing that excludes three findings related to Entergy Texas’s request for proposals. The order on rehearing does not change the PUCT’s certification of the Orange County Advanced Power Station or the conditions placed thereon in the PUCT’s November 2022 final order. Construction is in progress, and subject to receipt of required permits, the facility is expected to be in service by mid-2026.

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Legend Power Station and Lone Star Power Station

In June 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Legend Power Station, a 754 MW combined-cycle combustion turbine facility, which will be enabled for future carbon capture and storage and for hydrogen co-firing optionality, to be located in Jefferson County, Texas, and the Lone Star Power Station, a 453 MW simple-cycle combustion turbine facility, which will be enabled with hydrogen co-firing optionality, to be located in Liberty County, Texas. In its application, Entergy Texas noted that the Legend Power Station was expected to cost an estimated $1.46 billion and the Lone Star Power Station was expected to cost an estimated $735.3 million, in each case inclusive of the estimated costs of the generation facilities, interconnection costs, transmission network upgrades, and an allowance for funds used during construction. As described in the application, Entergy Texas is considering alternative financing approaches for the Legend Power Station and plans to pursue the financing option that is in the best interest of its customers. In July 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings and, also in July 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled to begin in October 2024. In September 2024, Entergy Texas filed, and the ALJ with the State Office of Administrative Hearings granted, a motion to extend the procedural schedule in this proceeding in order to address certain developments relating to the cost and scope of the Legend Power Station and the Lone Star Power Station. In December 2024, Entergy Texas filed supplemental testimony and exhibits addressing the cost and scope developments associated with the Legend Power Station and the Lone Star Power Station in further support of its application. The cost and scope developments include cost estimate increases of $139 million for Legend Power Station and $63.7 million for Lone Star Power Station and the consideration of an alternate site for Lone Star Power Station, which would reduce the estimated cost increase of the Lone Star Power Station to $36.2 million. Also in December 2024, the ALJ with the State Office of Administrative Hearings adopted a procedural schedule with a hearing on the merits to be held in April 2025. A PUCT decision is expected in July 2025. Subject to receipt of required regulatory approval and other conditions, both facilities are expected to be in service by mid-2028.

Segno Solar and Votaw Solar

In July 2024, Entergy Texas filed an application seeking PUCT approval to amend Entergy Texas’s certificate of convenience and necessity to construct, own, and operate the Segno Solar facility, a 170 MW solar facility to be located in Polk County, Texas, and the Votaw Solar facility, a 141 MW solar facility to be located in Hardin County, Texas. The Segno Solar facility will cost an estimated $351.6 million, and the Votaw Solar facility will cost an estimated $303.8 million, in each case inclusive of estimated transmission interconnection and upgrade costs. In September 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a revised agreed procedural schedule, with a hearing on the merits to be held in March 2025. In January 2025 certain intervenors and the PUCT staff filed testimony opposing Entergy Texas’s application. The opposing testimony argues that the proposed generation additions will have a net cost to customers, and it also challenges the design and effectiveness of the voluntary renewable energy tariff. In addition, the opposing testimony recommends that the PUCT impose conditions on any approval of Entergy Texas’s application. The conditions that certain intervenors and the PUCT staff propose include guarantees related to customer net benefits, resource production, independent investigation of any material cost overruns, and the addition of a mandatory sleeving tariff. Entergy Texas plans to file rebuttal testimony in February 2025. A PUCT decision is expected in third quarter 2025. Subject to receipt of required regulatory approval and other conditions, the Segno Solar facility is expected to be in service by early 2027, and the Votaw Solar facility is expected to be in service by mid-2028.

Resilience and Grid Hardening

In June 2024, Entergy Texas filed an application with the PUCT requesting approval of Phase I of its Texas Future Ready Resiliency Plan, a cost-effective set of measures to begin accelerating the resiliency of Entergy Texas’s transmission and distribution system. Phase I is comprised of projects totaling approximately $335.1

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million, including approximately $137 million of projects to be funded by Entergy Texas and approximately $198 million of projects contingent upon Entergy Texas’s receipt of grant funds in that amount from the Texas Energy Fund. The projects in Phase I include distribution and transmission hardening and modernization projects and targeted vegetation management projects to mitigate the risk of wildfire. These projects are expected to be implemented within approximately three years of PUCT approval. In October 2024, Entergy Texas filed an unopposed settlement that would resolve all issues in the proceeding and the PUCT staff filed testimony in support of the unopposed settlement. In January 2025 the PUCT unanimously approved Phase I of Entergy Texas’s Texas Future Ready Resiliency Plan, including the approximately $137 million of projects to be funded by Entergy Texas and application of performance metrics consistent with the unopposed settlement. The PUCT clarified that, while not part of Entergy Texas’s Phase I plan, Entergy Texas is permitted to pursue the remaining $198 million of identified projects and Texas Energy Fund grant funding for those projects. In February 2025 the PUCT issued an order adopting a new rule establishing the procedures for application to the grant fund and Entergy Texas intends to pursue an application.

Hurricane Beryl

In July 2024, Hurricane Beryl caused extensive damage to Entergy Texas’s service area. The storm resulted in widespread power outages, as a result of extensive debris and damage to distribution and transmission infrastructure, and the loss of sales during the power outages. Total restoration costs for the repair and/or replacement of Entergy Texas’s electric facilities damaged by Hurricane Beryl are currently estimated to be approximately $85 million. Based on the historic treatment of such costs in Entergy Texas’s service area, management believes that recovery of restoration costs is probable. There are well established mechanisms and precedent for addressing these catastrophic events and providing for recovery of prudently incurred storm costs in accordance with applicable regulatory and legal principles. Entergy Texas expects to recover the majority of the restoration costs associated with Hurricane Beryl through its transmission and distribution cost recovery factor riders.

Sources of Capital

Entergy Texas’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•debt or preferred stock issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•capital contributions; and

•bank financing under new or existing facilities.

Circumstances such as weather patterns, fuel and purchased power price fluctuations, and unanticipated expenses, including unscheduled plant outages and storms, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, Entergy Texas expects to continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt and common and preferred stock issuances by Entergy Texas require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. Entergy Texas has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

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Entergy Texas’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

$18,504$317,882$99,468($79,594)

See Note 4 to the financial statements for a description of the money pool.

Entergy Texas has a credit facility in the amount of $300 million scheduled to expire in June 2029. The credit facility includes fronting commitments for the issuance of letters of credit against $25 million of the borrowing capacity of the facility. As of December 31, 2024, there were no cash borrowings and $1.1 million in letters of credit outstanding under the credit facility. In addition, Entergy Texas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2024, $93.4 million in letters of credit were outstanding under Entergy Texas’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.

Entergy Texas obtained authorizations from the FERC through January 2027 for short-term borrowings, not to exceed an aggregate amount of $200 million at any time outstanding, and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Texas’s short-term borrowing limits.

State and Local Rate Regulation and Fuel-Cost Recovery

The rates that Entergy Texas charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Texas is regulated, and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the PUCT, is primarily responsible for approval of the rates charged to customers.

Filings with the PUCT and Texas Cities

Retail Rates

2022 Base Rate Case

In July 2022, Entergy Texas filed a base rate case with the PUCT seeking a net increase in base rates of approximately $131.4 million. The base rate case was based on a 12-month test year ending December 31, 2021. Key drivers of the requested increase were changes in depreciation rates as the result of a depreciation study and an increase in the return on equity. In addition, Entergy Texas included capital additions placed into service for the period of January 1, 2018 through December 31, 2021, including those additions reflected in the then-effective distribution and transmission cost recovery factor riders and the generation cost recovery rider, all of which were reset to zero in June 2023 as a result of this proceeding. In July 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In October 2022 intervenors filed direct testimony challenging and supporting various aspects of Entergy Texas’s rate case application. The key issues addressed included the appropriate return on equity, generation plant deactivations, depreciation rates, and proposed tariffs related to electric vehicles. In November 2022 the PUCT staff filed direct testimony addressing a similar set of issues and recommending a reduction of $50.7 million to Entergy Texas’s overall cost of service associated with the requested net increase in base rates of approximately $131.4 million. Entergy Texas filed rebuttal testimony in November 2022.

In May 2023, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding, except for issues related to electric vehicle charging infrastructure which were eventually severed to a separate proceeding and resolved in October 2024, and Entergy Texas filed an agreed motion for interim rates,

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subject to refund or surcharge to the extent that the interim rates differ from the final approved rates. The unopposed settlement reflected a net base rate increase to be effective and relate back to December 2022 of $54 million, exclusive of, and incremental to, the costs being realigned from the distribution and transmission cost recovery factor riders and the generation cost recovery rider and $4.8 million of rate case expenses to be recovered through a rider over a period of 36 months. The net base rate increase of $54 million includes updated depreciation rates and a total annual revenue requirement of $14.5 million for the accrual of a self-insured storm reserve and the recovery of the regulatory assets for the pension and postretirement benefits expense deferral, costs associated with the COVID-19 pandemic, and retired non-advanced metering system electric meters. In May 2023 the ALJ with the State Office of Administrative Hearings granted the motion for interim rates, which became effective in June 2023. Additionally, the ALJ remanded the proceeding to the PUCT to consider the settlement. In August 2023 the PUCT issued an order approving the unopposed settlement. Concurrently, Entergy Texas recorded the reversal of $21.9 million of regulatory liabilities to reflect the recognition of certain receipts by Entergy Texas under affiliated PPAs that have been resolved.

Following the PUCT’s approval of the unopposed settlement in August 2023, Entergy Texas recorded a regulatory liability of $10.3 million, which reflected the net effects of higher depreciation and amortizations for the relate back period, partially offset by the relate back of base rate revenues that would have been collected had the approved rates been in effect for the period from December 2022 through June 2023, the date the new base rates were implemented on an interim basis. In October 2023, Entergy Texas filed a relate back surcharge rider to collect over six months beginning in January 2024 an additional approximately $24.6 million, which was the revenue requirement associated with the relate back of rates from December 2022 through June 2023, including carrying costs, as authorized by the PUCT’s August 2023 order. In November 2023, Entergy Texas filed an amended relate back surcharge rider to collect approximately $24.1 million based on a revised carrying cost rate. The amended relate back surcharge rider was approved by the PUCT in December 2023. The higher depreciation and amortizations for the relate back period were also recognized over the six months beginning in January 2024, resulting in no effect on net income from the collection of the relate back surcharge rider.

Distribution Cost Recovery Factor (DCRF) Rider

In June 2024, Entergy Texas filed with the PUCT a request to set a new DCRF rider. The new rider was designed to collect from Entergy Texas’s retail customers approximately $40.3 million annually based on its capital invested in distribution between January 1, 2022 and March 31, 2024. In September 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s as-filed request, and rates became effective with the first billing cycle in October 2024.

In September 2024, Entergy Texas filed with the PUCT a request to amend its DCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $48.9 million annually, or $8.6 million in incremental annual revenues beyond Entergy Texas’s then-effective DCRF rider based on its capital invested in distribution between April 1, 2024 and June 30, 2024. In December 2024, Entergy Texas filed an errata to revise its DCRF application for minor corrections, which decreased the requested annual revenue requirement to $48.5 million. The amended request represented an incremental increase of $8.2 million in annual revenues beyond Entergy Texas’s then-effective DCRF rider. Also in December 2024 the PUCT approved the DCRF rider, consistent with Entergy Texas’s filed errata, and rates became effective on December 20, 2024.

Transmission Cost Recovery Factor (TCRF) Rider

In December 2018, Entergy Texas filed with the PUCT a request to set a new TCRF rider. The new TCRF rider was designed to collect approximately $2.7 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and September 30, 2018. In April 2019 parties filed testimony proposing a load growth adjustment, which would fully offset Entergy Texas’s proposed TCRF revenue requirement. In July 2019 the PUCT granted Entergy Texas’s application as filed to begin recovery of the requested $2.7 million annual revenue requirement, rejecting opposing parties’ proposed adjustment; however, the PUCT

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found that the question of prudence of the actual investment costs should be determined in Entergy Texas’s next rate case similar to the procedure used for the costs recovered through the DCRF rider. In October 2019 the PUCT issued an order on a motion for rehearing, clarifying and affirming its prior order granting Entergy Texas’s application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing was overruled by operation of law. In December 2019, Texas Industrial Energy Consumers filed an appeal to the PUCT order in district court alleging that the PUCT erred in declining to apply a load growth adjustment.

In October 2021, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $66.1 million annually, or $15.1 million in incremental annual revenues beyond Entergy Texas’s then-effective TCRF rider based on its capital invested in transmission between September 1, 2020 and July 31, 2021 and changes in approved transmission charges. In January 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In February 2022 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2022. In February 2022 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting. In June 2022 the PUCT issued an order approving the settlement.

In October 2024, Entergy Texas filed with the PUCT a request to amend its TCRF rider, which was previously reset to zero in June 2023 as a result of the 2022 base rate case. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $9.7 million annually based on its capital invested in transmission between January 1, 2022 and June 30, 2024 and changes in other transmission charges. In December 2024 the PUCT staff filed a recommendation that the PUCT approve Entergy Texas’s as-filed application. In February 2025 the PUCT staff issued a proposed order that, if approved by the PUCT, would approve Entergy Texas’s TCRF rider as filed.

Generation Cost Recovery Rider

In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider to begin recovering a return of and on its generation capital investment in the Montgomery County Power Station. Entergy Texas filed an unopposed settlement agreement in December 2020, and the PUCT approved the generation cost recovery rider settlement rates on an interim basis in January 2021. In March 2021, Entergy Texas filed to update its generation cost recovery rider, and an unopposed settlement agreement filed by Entergy Texas on behalf of the parties in October 2021 was approved by the PUCT in January 2022. In February 2022, Entergy Texas filed a relate-back rider to collect over five months an additional approximately $5 million, which was the difference between the interim revenue requirement approved in January 2021 and the revenue requirement approved in January 2022 reflecting Entergy Texas’s full generation capital investment and ownership in Montgomery County Power Station on January 1, 2021, plus carrying costs from January 2021 through January 2022 when the updated revenue requirement took effect. The PUCT approved the relate-back rider consistent with Entergy Texas’s as-filed request, and rates became effective over a five-month period, in August 2022.

In December 2020, Entergy Texas also filed an application to amend its generation cost recovery rider to reflect its acquisition of the Hardin County Peaking Facility, which closed in June 2021. Because Hardin was to be acquired in the future, the initial generation cost recovery rider rates proposed in the application represented no change from the generation cost recovery rider rates established in Entergy Texas’s previous generation cost recovery rider proceeding. In July 2021 the PUCT issued an order approving the application. In August 2021, Entergy Texas filed an update application to recover its actual investment in the acquisition of the Hardin County Peaking Facility, and in January 2022, Entergy Texas filed an update to its application to align the requested revenue requirement with the terms of the generation cost recovery rider settlement approved by the PUCT in January 2022. In April 2022, Entergy Texas filed on behalf of the parties a unanimous settlement agreement that would adjust its generation cost recovery rider to recover an annual revenue requirement of approximately $92.8 million, which was $4.5 million in incremental annual revenue above the revenue requirement approved in

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January 2022 described above and related to Entergy Texas’s investment in the Montgomery County Power Station. The PUCT approved the settlement agreement and rates became effective in August 2022. In September 2022, Entergy Texas filed a relate-back rider designed to collect over three months an additional approximately $5.7 million, which is the revenue requirement, plus carrying costs, associated with Entergy Texas’s acquisition of Hardin County Peaking Facility from June 2021 through August 2022 when the updated revenue requirement took effect. In April 2023 the PUCT approved Entergy Texas’s as-filed request with rates effective over three months beginning in May 2023.

Fuel and purchased power cost recovery

Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, not recovered in base rates. Historically, semi-annual revisions of the fixed fuel factor have been made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT. In 2023 the Texas legislature modified the Texas Utilities Code to provide that material over- and under-recovered fuel balances are to be refunded or surcharged through interim fuel adjustments and that fuel reconciliations must be filed at least once every two years. Entergy Texas expects the PUCT to undertake a rulemaking to effectuate the new legislation in 2025.

In May 2022, Entergy Texas filed an application with the PUCT to implement an interim fuel surcharge to collect the cumulative under-recovery of approximately $51.7 million, including interest, of fuel and purchased power costs incurred from May 1, 2020 through December 31, 2021. The under-recovery balance was primarily attributable to the impacts of Winter Storm Uri, including historically high natural gas prices, partially offset by settlements received by Entergy Texas from MISO related to Hurricane Laura. Entergy Texas proposed that the interim fuel surcharge be assessed over a period of six months beginning with the first billing cycle after the PUCT issues a final order, but no later than the first billing cycle of September 2022. Also in May 2022, the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2022, Entergy Texas filed on behalf of the parties an unopposed settlement resolving all issues in the proceeding. In addition, Entergy Texas filed on behalf of the parties a motion to admit evidence, to approve interim rates as requested in the initial application, and to remand the proceeding to the PUCT to consider the unopposed settlement. In August 2022 the ALJ with the State Office of Administrative Hearings issued an order granting Entergy Texas’s motion, approving interim rates effective with the first billing cycle of September 2022, and remanding the case to the PUCT for final approval. The interim fuel surcharge was approved by the PUCT in January 2023.

In September 2022, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2019 through March 2022. During the reconciliation period, Entergy Texas incurred approximately $1.7 billion in eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. As of the end of the reconciliation period, Entergy Texas’s cumulative under-recovery balance was approximately $103.1 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning April 2022, pending future surcharges or refunds as approved by the PUCT. In November 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2023, Entergy Texas filed an unopposed settlement, supporting testimony, and an agreed motion to admit evidence and remand the proceeding to the PUCT. Pursuant to the unopposed settlement, Entergy Texas would receive no disallowance of fuel costs incurred over the three-year reconciliation period and retain $9.3 million in margins from off-system sales made during the reconciliation period, resulting in a cumulative under-recovery balance of approximately $99.7 million, including interest, as of the end of the reconciliation period. In July 2023 the ALJ with the State Office of Administrative Hearings granted the motion to admit evidence and remanded the proceeding to the PUCT for consideration of the unopposed settlement. The PUCT approved the settlement in September 2023.

In September 2024, Entergy Texas filed an application with the PUCT to reconcile its fuel and purchased power costs for the period from April 2022 through March 2024. During the reconciliation period, Entergy Texas

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Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

incurred approximately $1.6 billion in eligible fuel and purchased power expenses to generate and purchase electricity to serve its customers, net of certain revenues credited to such expenses and other adjustments. Entergy Texas’s cumulative under-recovery balance for the reconciliation period was approximately $30 million, including interest, which Entergy Texas requested authority to carry over as part of the cumulative fuel balance for the subsequent reconciliation period beginning April 2024. In November 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In December 2024 the ALJs with the State Office of Administrative Hearings adopted a procedural schedule, with a hearing on the merits scheduled for May 2025. A PUCT decision is expected in third quarter 2025.

In December 2024, Entergy Texas filed an application with the PUCT to implement an interim fuel refund of $45.5 million, including interest. Entergy Texas proposed that the interim fuel refund be implemented over a three-month period beginning with the first billing cycle in February 2025 for residential and other small customers and through a one-time credit, or surcharge depending on historical usage for the respective customer, for certain transmission voltage level and seasonal agricultural customers in February 2025. Also in December 2024 the PUCT referred the proceeding to the State Office of Administrative Hearings. In January 2025 the ALJ with the State Office of Administrative Hearings issued an order approving the interim fuel refund consistent with Entergy Texas’s application and, because no hearing was requested in the proceeding, dismissing the case from the State Office of Administrative Hearings and the PUCT.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Nuclear Matters

See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.

Industrial and Commercial Customers

Entergy Texas’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Texas’s industrial customer base. Entergy Texas responds by working with industrial and commercial customers and negotiating electric service contracts to provide, under existing rate schedules, competitive rates that match specific customer needs and load profiles. Entergy Texas actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.

Environmental Risks

Entergy Texas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Texas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

Critical Accounting Estimates

The preparation of Entergy Texas’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on

430

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of Entergy Texas’s financial position, results of operations, or cash flows.

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

Qualified Pension and Other Postretirement Benefits

Entergy Texas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$145$4,710

Rate of return on plan assets(0.25%)$570$—

Rate of increase in compensation0.25%$202$865

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$16$1,029

Health care cost trend0.25%$50$611

Each fluctuation above assumes that the other components of the calculation are held constant.

431

Entergy Texas, Inc. and Subsidiaries

Management’s Financial Discussion and Analysis

Costs and Employer Contributions

Total qualified pension cost for Entergy Texas in 2024 was $436 thousand. Entergy Texas anticipates 2025 qualified pension cost to be $2.3 million. Entergy Texas contributed $8.3 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $7.7 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for Entergy Texas in 2024 was $10.9 million. Entergy Texas expects 2025 postretirement health care and life insurance benefit income to approximate $10.6 million. Entergy Texas contributed $690 thousand to its other postretirement plans in 2024 and estimates 2025 contributions will be approximately $156 thousand.

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

432

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of

Entergy Texas, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Entergy Texas, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, cash flows, and changes in equity (pages 435 through 440 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rate and Regulatory Matters — Entergy Texas, Inc. and Subsidiaries — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utility Commission of Texas (the “PUCT”), which has jurisdiction with respect to the rates of electric companies in Texas, and to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

433

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the PUCT and the FERC set the rates the Company is allowed to charge customers based on allowable costs, including a reasonable return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the PUCT and the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the likelihood of recovery in future rates of incurred costs and refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the PUCT and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the PUCT and the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the PUCT and the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the PUCT’s and the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s filings with the PUCT and the FERC and orders issued, and considered the filings with the PUCT and the FERC by intervenors that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

434

ENTERGY TEXAS, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$2,050,150 $2,028,586 $2,288,905

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale482,486 403,111 443,765

Purchased power373,036 468,511 717,501

Other operation and maintenance340,956 323,797 312,340

Taxes other than income taxes101,993 117,852 101,673

Depreciation and amortization338,890 278,311 230,692

Other regulatory charges (credits) - net(13,884)7,324 49,175

TOTAL1,623,477 1,598,906 1,855,146

OPERATING INCOME426,673 429,680 433,759

OTHER INCOME

Allowance for equity funds used during construction47,833 28,193 13,527

Interest and investment income15,107 11,116 4,141

Miscellaneous - net(11,113)(10,411)(6,572)

TOTAL51,827 28,898 11,096

INTEREST EXPENSE

Interest expense137,820 114,978 95,454

Allowance for borrowed funds used during construction(18,626)(10,545)(4,547)

TOTAL119,194 104,433 90,907

INCOME BEFORE INCOME TAXES359,306 354,145 353,948

Income taxes65,684 62,872 50,621

NET INCOME293,622 291,273 303,327

Preferred dividend requirements2,072 2,072 2,072

EARNINGS APPLICABLE TO COMMON STOCK$291,550 $289,201 $301,255

See Notes to Financial Statements.

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436

ENTERGY TEXAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income$293,622 $291,273 $303,327

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation and amortization338,890 278,311 230,692

Deferred income taxes, investment tax credits, and non-current taxes accrued35,631 53,507 41,648

Changes in assets and liabilities:

Receivables(13,201)24,249 (35,131)

Fuel inventory4,877 (24,097)15,962

Accounts payable41,216 (22,046)48,199

Taxes accrued(2,413)(14,146)44,015

Interest accrued7,418 7,357 4,926

Deferred fuel costs198,290 119,096 (209,835)

Other working capital accounts(38,672)(36,097)(19,574)

Provisions for estimated losses505 1,887 (649)

Other regulatory assets46,898 (17,924)(157,349)

Other regulatory liabilities(45,301)(20,122)(30,499)

Effect of securitization on regulatory asset— — 153,383

Pension and other postretirement funded status(29,062)(36,131)20,656

Other assets and liabilities(15,049)36,574 (344)

Net cash flow provided by operating activities823,649 641,691 409,427

INVESTING ACTIVITIES

Construction expenditures(1,287,518)(946,543)(696,879)

Allowance for equity funds used during construction47,833 28,193 13,527

Proceeds from sale of assets2,396 11,000 —

Litigation proceeds from settlement agreement— — 4,134

Changes in money pool receivable - net299,378 (218,414)(99,468)

Changes in securitization account2,493 5,684 15,750

Decrease (increase) in other investments7,000 (5,868)(1,133)

Net cash flow used in investing activities(928,418)(1,125,948)(764,069)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt343,124 344,895 606,168

Retirement of long-term debt(18,334)(17,835)(66,514)

Capital contribution from parent— 150,000 —

Change in money pool payable - net— — (79,594)

Dividends paid:

Common stock(69,000)— (105,000)

Preferred stock(2,072)(2,072)(2,060)

Other14,062 27,758 5,111

Net cash flow provided by financing activities267,780 502,746 358,111

Net increase in cash and cash equivalents163,011 18,489 3,469

Cash and cash equivalents at beginning of period21,986 3,497 28

Cash and cash equivalents at end of period$184,997 $21,986 $3,497

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest - net of amount capitalized$127,342 $104,766 $87,682

Income taxes$34,077 $28,969 $1,864

Noncash investing activities:

Accrued construction expenditures$279,480 $257,467 $68,893

See Notes to Financial Statements.

437

ENTERGY TEXAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$291 $1,497

Temporary cash investments184,706 20,489

Total cash and cash equivalents184,997 21,986

Securitization recovery trust account2,703 5,195

Accounts receivable:

Customer84,842 88,468

Allowance for doubtful accounts(1,304)(1,484)

Associated companies26,564 329,941

Other43,773 24,416

Accrued unbilled revenues74,060 72,771

Total accounts receivable227,935 514,112

Deferred fuel costs— 139,019

Fuel inventory - at average cost45,970 50,847

Materials and supplies157,241 123,020

Prepayments and other34,803 35,232

TOTAL653,649 889,411

OTHER PROPERTY AND INVESTMENTS

Investments in affiliates - at equity107 214

Other15,878 15,444

TOTAL15,985 15,658

UTILITY PLANT

Electric8,628,625 7,931,340

Construction work in progress1,513,170 857,707

TOTAL UTILITY PLANT10,141,795 8,789,047

Less - accumulated depreciation and amortization2,548,961 2,363,919

UTILITY PLANT - NET7,592,834 6,425,128

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets (includes securitization property of $234,112 as of December 31, 2024 and $250,324 as of December 31, 2023)

549,708 596,606

Other157,904 129,769

TOTAL707,612 726,375

TOTAL ASSETS$8,970,080 $8,056,572

See Notes to Financial Statements.

438

ENTERGY TEXAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Accounts payable:

Associated companies$65,335 $74,423

Other361,404 195,703

Customer deposits40,782 39,999

Taxes accrued76,474 78,887

Interest accrued38,703 31,285

Deferred fuel costs59,271 —

Other20,836 16,237

TOTAL662,805 436,534

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued868,849 814,905

Accumulated deferred investment tax credits7,215 7,963

Regulatory liability for income taxes - net93,766 114,759

Other regulatory liabilities18,705 43,013

Asset retirement cost liabilities17,688 11,743

Accumulated provisions9,985 9,480

Long-term debt (includes securitization bonds of $239,622 as of December 31, 2024 and $257,592 as of December 31, 2023)

3,552,443 3,225,092

Other397,412 274,421

TOTAL4,966,063 4,501,376

Commitments and Contingencies

EQUITY

Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2024 and 2023

49,452 49,452

Paid-in capital1,200,125 1,200,125

Retained earnings2,052,885 1,830,335

Total common shareholder's equity3,302,462 3,079,912

Preferred stock without sinking fund38,750 38,750

TOTAL3,341,212 3,118,662

TOTAL LIABILITIES AND EQUITY$8,970,080 $8,056,572

See Notes to Financial Statements.

439

ENTERGY TEXAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Common Equity

Preferred StockCommon StockPaid-in CapitalRetained EarningsTotal

(In Thousands)

Balance at December 31, 2021$38,750 $49,452 $1,050,125 $1,344,879 $2,483,206

Net income— — — 303,327 303,327

Common stock dividends— — — (105,000)(105,000)

Preferred stock dividends— — — (2,072)(2,072)

Balance at December 31, 2022$38,750 $49,452 $1,050,125 $1,541,134 $2,679,461

Net income— — — 291,273 291,273

Capital contribution from parent— — 150,000 — 150,000

Preferred stock dividends— — — (2,072)(2,072)

Balance at December 31, 2023$38,750 $49,452 $1,200,125 $1,830,335 $3,118,662

Net income— — — 293,622 293,622

Common stock dividends— — — (69,000)(69,000)

Preferred stock dividends— — — (2,072)(2,072)

Balance at December 31, 2024$38,750 $49,452 $1,200,125 $2,052,885 $3,341,212

See Notes to Financial Statements.

440

SYSTEM ENERGY RESOURCES, INC.

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

System Energy’s principal asset consists of an ownership interest and a leasehold interest in Grand Gulf. The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement. Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues. As discussed in “Complaints Against System Energy” below, System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC.

Results of Operations

2024 Compared to 2023

Net Income

Net income decreased $5.3 million primarily due to the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Arkansas effective with the November 2023 service month per the settlement agreement with the APSC, the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy New Orleans effective with the June 2024 service month per the settlement agreement with the City Council, and the lower authorized rate of return on equity and capital structure limitations reflected in monthly bills issued to Entergy Louisiana effective with the September 2024 service month per the settlement agreement with the LPSC. The decrease was partially offset by an increase in operating revenues resulting from changes in rate base. See Note 2 to the financial statements for discussion of the settlements with the APSC, the City Council, and the LPSC.

Income Taxes

The effective income tax rates were 22.2% for 2024 and 22.7% for 2023. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 21% to the effective income tax rates and for additional discussion regarding income taxes.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations” in Item 7 of System Energy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of results of operations for 2023 compared to 2022.

Income Tax Legislation and Regulation

See the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of income tax legislation and regulation.

441

System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Liquidity and Capital Resources

Cash Flow

Cash flows for the years ended December 31, 2024, 2023, and 2022 were as follows:

202420232022

(In Thousands)

Cash and cash equivalents at beginning of period$60 $2,940 $89,201

Net cash provided by (used in):

Operating activities31,505 273,572 7,280

Investing activities(317,935)(75,806)(264,184)

Financing activities315,278 (200,646)170,643

Net increase (decrease) in cash and cash equivalents28,848 (2,880)(86,261)

Cash and cash equivalents at end of period$28,908 $60 $2,940

2024 Compared to 2023

Operating Activities

Net cash flow provided by operating activities decreased $242.1 million in 2024 primarily due to:

•the refund of $98.1 million made in 2024 to Entergy New Orleans as a result of the settlement with the City Council. See Note 2 to the financial statements for discussion of the settlement with the City Council;

•the refund of $92.7 million made in 2024 to Entergy Arkansas as a result of the settlement with the APSC. See Note 2 to the financial statements for discussion of the settlement with the APSC;

•the refund of $80.2 million made in 2024 to Entergy Louisiana as a result of the settlement with the LPSC. See Note 2 to the financial statements for discussion of the settlement with the LPSC;

•$40.5 million in recoupment payments received from Entergy Louisiana and Entergy New Orleans in October 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s October 2023 compliance filing with the FERC. See Note 2 to the financial statements for further discussion of the Grand Gulf sale-leaseback renewal complaint;

•an increase of $20.7 million in spending on nuclear refueling outage costs in 2024 as compared to 2023;

•income tax payments of $0.6 million in 2024 as compared to income tax refunds of $19.8 million in 2023. System Energy made income tax payments in 2024 and received income tax refunds in 2023, each in accordance with an intercompany income tax allocation agreement; and

•the timing of collections of receivables.

The decrease was partially offset by:

•aggregate refunds of $103.5 million made in January 2023 related to the sale-leaseback renewal costs and depreciation litigation as calculated in System Energy’s January 2023 compliance report filed with the FERC. See Note 2 to the financial statements for further discussion of the refunds and the related proceedings;

•refunds of $41.8 million included in September 2023 service month bills under the Unit Power Sales Agreement to reflect the revenue requirement effects of Grand Gulf’s updated depreciation rates as approved by the FERC in August 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement depreciation amendment proceeding; and

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•refunds of $19.3 million included in May 2023 service month bills under the Unit Power Sales Agreement to reflect the effects of the partial settlement agreement approved by the FERC in April 2023. See Note 2 to the financial statements for discussion of the Unit Power Sales Agreement complaint.

Investing Activities

Net cash flow used in investing activities increased by $242.1 million in 2024 primarily due to:

•money pool activity;

•an increase of $94.6 million as a result of fluctuations in nuclear fuel activity due to variations from year to year in the timing and pricing of fuel reload requirements, materials and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and

•an increase of $61 million in nuclear construction expenditures primarily due to higher spending in 2024 on Grand Gulf outage projects and upgrades.

Increases in System Energy’s receivable from the money pool are a use of cash flow, and System Energy’s receivable from the money pool increased $2.9 million in 2024 compared to decreasing by $95 million in 2023. The money pool is an intercompany cash management program that makes possible intercompany borrowing and lending arrangements, and the money pool and other borrowing arrangements are designed to reduce the Registrant Subsidiaries’ dependence on external short-term borrowings.

Financing Activities

System Energy’s financing activities provided $315.3 million of cash in 2024 compared to using $200.6 million of cash in 2023 primarily due to the following activity:

•the issuance of $300 million of 5.30% Series mortgage bonds in December 2024;

•the repayment, at maturity, of $250 million of 4.10% Series mortgage bonds in April 2023;

•net long-term borrowings of $51.2 million in 2024 compared to net repayments of $51.1 million in 2023 on the nuclear fuel company variable interest entity’s credit facility;

•a capital contribution of $150 million received from Entergy Corporation in January 2024 in order to maintain System Energy’s capital structure;

•the repayment, prior to maturity, in March 2023 of a $50 million term loan due in November 2023;

•money pool activity; and

•the issuance of $325 million of 6.00% Series mortgage bonds in March 2023.

Decreases in System Energy’s payable to the money pool are a use of cash flow, and System Energy’s payable to the money pool decreased $12.2 million in 2024 compared to increasing by $12.2 million in 2023.

See Note 5 to the financial statements for additional details of long-term debt.

2023 Compared to 2022

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Cash Flow” in Item 7 of System Energy’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024, for discussion of operating, investing, and financing cash flow activities for 2023 compared to 2022.

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System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Capital Structure

System Energy’s debt to capital ratio is shown in the following table. The increase in the debt to capital ratio for System Energy is primarily due to the net issuance of long-term debt in 2024.

December 31,2024December 31,2023

Debt to capital52.9 %45.4 %

Effect of subtracting cash(0.7 %)— %

Net debt to net capital (non-GAAP)52.2 %45.4 %

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. System Energy uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition. The net debt to net capital ratio is a non-GAAP measure. System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

System Energy seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend or a capital distribution, to the extent funds are legally available to do so, or a combination of the three, in appropriate amounts to maintain the capital structure. To the extent that operating cash flows are insufficient to support planned investments and other uses of cash such as the payment of expenses in the ordinary course, System Energy may issue incremental debt or reduce dividends, or both, to maintain its capital structure. In addition, System Energy may receive equity contributions to maintain its capital structure for certain circumstances that would materially alter the capital structure if financed entirely with debt and reduced dividends.

Uses of Capital

System Energy requires capital resources for:

•construction and other capital investments;

•debt maturities or retirements;

•working capital purposes, including the financing of fuel costs and tax payments; and

•dividend, distribution, and interest payments.

Following are the amounts of System Energy’s planned construction and other capital investments.

202520262027

(In Millions)

Planned construction and capital investment:

Generation$115 $140 $110

Utility Support25 5 5

Total$140 $145 $115

In addition to routine spending to maintain operations, the planned capital investment estimate includes amounts associated with Grand Gulf investments and initiatives. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and

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requirements, governmental actions, including trade-related governmental actions, such as tariffs and other measures, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital, including any changes to governmental programs, such as loans, grants, guarantees, and other subsidies. System Energy is not able to predict the effect of potential changes in regulation and law, changes to governmental programs, such as loans, grants, guarantees, and other subsidies, and trade-related governmental actions, such as tariffs and other measures, on its current and planned capital projects.

Following are the amounts of System Energy’s existing debt obligations (includes estimated interest payments).

2025202620272028-2029

After 2029

(In Millions)

Long-term debt (a)$269 $65 $224 $407 $611

(a)Long-term debt is discussed in Note 5 to the financial statements.

Other Obligations

System Energy currently expects to contribute approximately $15.7 million to its qualified pension plans and approximately $34 thousand to its other postretirement plans in 2025, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025, valuations are completed, which is expected by April 1, 2025. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for a discussion of qualified pension and other postretirement benefits funding.

System Energy has no unrecognized tax benefits and interest net of unused tax attributes and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.

In addition, System Energy enters into nuclear fuel purchase agreements that contain minimum purchase obligations. As discussed in Note 8 to the financial statements, System Energy recovers these costs through charges under the Unit Power Sales Agreement.

As a wholly-owned subsidiary, System Energy dividends its earnings to Entergy Corporation at a percentage determined monthly.

Sources of Capital

System Energy’s sources to meet its capital requirements include:

•internally generated funds;

•cash on hand;

•the Entergy system money pool;

•debt issuances, including debt issuances to refund or retire currently outstanding or maturing indebtedness;

•equity contributions; and

•bank financing under new or existing facilities.

Circumstances such fuel and purchased power price fluctuations and unanticipated expenses, including unscheduled plant outages, could affect the timing and level of internally generated funds in the future. In addition to the financings necessary to meet capital requirements and contractual obligations, System Energy expects to

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continue, when economically feasible, to retire higher-cost debt and replace it with lower-cost debt if market conditions permit.

All debt issuances by System Energy require prior regulatory approval. Debt issuances are also subject to requirements set forth in its bond indenture and other agreements. System Energy has sufficient capacity under these tests to meet its foreseeable capital needs for the next twelve months and beyond.

System Energy’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.

2024202320222021

(In Thousands)

$2,851($12,246)$94,981$75,745

See Note 4 to the financial statements for a description of the money pool.

The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $120 million scheduled to expire in June 2027. As of December 31, 2024, $72.7 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the variable interest entity credit facility.

System Energy obtained authorizations from the FERC through January 2027 for the following:

•short-term borrowings not to exceed an aggregate amount of $200 million at any time outstanding;

•long-term borrowings and security issuances not to exceed an aggregate amount of $1.4 billion at any time outstanding; and

•borrowings by its nuclear fuel company variable interest entity.

See Note 4 to the financial statements for further discussion of System Energy’s short-term borrowing limits.

Federal Regulation

See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.

Complaints Against System Energy

System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement. System Energy and the Unit Power Sales Agreement have been the subject of several litigation proceedings at the FERC, including challenges with respect to System Energy’s authorized return on equity and capital structure, renewal of its sale-leaseback arrangement, treatment of uncertain tax positions, a broader investigation of rates under the Unit Power Sales Agreement, and two prudence complaints, one challenging the extended power uprate completed at Grand Gulf in 2012 and the operation and management of Grand Gulf, particularly in the 2016-2020 time period, and the second challenging the operation and management of Grand Gulf in the 2021-2022 time period. Settlements that resolve all significant aspects of these complaints have been reached with the MPSC, the APSC, the City Council, and the LPSC, and these settlements have been approved by the FERC. See “Complaints Against System Energy” in Note 2 to the financial statements for discussion of these complaint proceedings and settlements.

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System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

Unit Power Sales Agreement

System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2020 Calendar Year Bills

System Energy’s Unit Power Sales Agreement includes formula rate protocols that provide for the disclosure of cost inputs, an opportunity for informal discovery procedures, and a challenge process. In February 2022, pursuant to the protocols procedures, the LPSC, the APSC, the MPSC, the City Council, and the Mississippi Public Utilities Staff filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2020. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.

System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2021 Calendar Year Bills

In March 2023, pursuant to the protocols procedures discussed above, the LPSC, the APSC, and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2021. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.

System Energy Formula Rate Annual Protocols Formal Challenge Concerning 2022 Calendar Year Bills

In February 2024, pursuant to the protocols procedures, the LPSC and the City Council filed with the FERC a formal challenge to System Energy’s implementation of the formula rate during calendar year 2022. This formal challenge was ultimately settled as a result of System Energy’s global settlements with the MPSC, the APSC, the City Council, and the LPSC. See “Complaints Against System Energy” in Note 2 to the financial statements for further discussion of the System Energy settlements with the MPSC, the APSC, the City Council, and the LPSC.

Depreciation Amendment Proceeding

In December 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to adopt updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses. The proposed amendments would result in higher charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. In February 2022 the FERC accepted System Energy’s proposed increased depreciation rates with an effective date of March 1, 2022, subject to refund pending the outcome of the settlement and/or hearing procedures. In June 2023 System Energy filed with the FERC an unopposed offer of settlement that it had negotiated with intervenors to the proceeding. In August 2023 the FERC approved the settlement, which resolves the proceeding. In third quarter 2023, System Energy recorded a reduction in depreciation expense of $41 million representing the cumulative difference in depreciation expense resulting from the depreciation rates used from March 2022 through June 2023 and the depreciation rates included in the settlement filing approved by the FERC. In October 2023, System Energy filed a refund report with the FERC. The refund provided for in the refund report was included in the September 2023 service month bills under the Unit Power Sales Agreement. No comments or protests to the refund report were filed.

Pension Costs Amendment Proceeding

In October 2021, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement to include in rate base the prepaid and accrued pension costs associated with System Energy’s qualified pension plans. Based on data ending in 2020, the increased annual revenue requirement associated with the filing is approximately $8.9 million. In March 2022 the FERC accepted System Energy’s proposed amendments with an

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Management’s Financial Discussion and Analysis

effective date of December 1, 2021, subject to refund pending the outcome of the settlement and/or hearing procedures. In August 2023 the FERC chief ALJ terminated settlement procedures and designated a presiding ALJ to oversee hearing procedures. Testimony was filed by the parties from October 2023 through April 2024, and the hearing concluded in June 2024.

In September 2024 the presiding ALJ issued an initial decision recommending that the FERC approve inclusion of a line item in rate base for prepaid and accrued pension costs; however, the presiding ALJ did not agree with System Energy’s proposed methodology to calculate the value of the prepaid and accrued pension cost input. Instead, the presiding ALJ recommended limiting System Energy’s recovery to the prepaid and accrued pension costs that were incurred beginning in 2015 and later.

System Energy disputes the presiding ALJ's determination concerning the methodology used to calculate the prepaid and accrued pension input, and System Energy filed exceptions to these rulings in October 2024. In October 2024, the LPSC, the APSC, and the FERC trial staff filed separate briefs on exceptions; these parties generally argue that the presiding ALJ should have rejected System Energy’s filing entirely, rather than limit System Energy’s recovery of the prepaid and accrued pension costs. Later in October 2024, System Energy, the LPSC, the APSC, and the FERC trial staff filed separate briefs opposing exceptions.

If the ALJ’s determination is affirmed by the FERC, System Energy estimates refunds, including interest through December 31, 2024, of approximately $16 million to $21 million would be owed. The ALJ's initial decision is not binding on the FERC and is an interim step in the hearing process. No refunds will be owed in connection with this proceeding and no changes to System Energy’s pension cost recovery methodology will be implemented unless and until the FERC requires them in a final order. This proceeding is not covered by the global settlements described above.

Nuclear Matters

System Energy owns and, through an affiliate, operates the Grand Gulf nuclear generating plant and is, therefore, subject to the risks related to such ownership and operation. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, including the financial requirements to address emerging issues related to equipment reliability, to position Grand Gulf to meet its operational goals; the performance and capacity factors of Grand Gulf; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license amendments, and decommissioning; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of the site when required; and limitations on the amounts of insurance recoveries for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of Grand Gulf, System Energy may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. Grand Gulf’s operating license expires in 2044.

Environmental Risks

System Energy’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that System Energy is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.

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Management’s Financial Discussion and Analysis

Critical Accounting Estimates

The preparation of System Energy’s financial statements in conformity with GAAP requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in these assumptions and measurements could produce estimates that would have a material effect on the presentation of System Energy’s financial position, results of operations, or cash flows.

Nuclear Decommissioning Costs

See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.

Utility Regulatory Accounting

See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.

Taxation and Uncertain Tax Positions

See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.

Qualified Pension and Other Postretirement Benefits

System Energy’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are affected by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.

Cost Sensitivity

The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Qualified Pension Cost

Impact on 2024 Qualified Projected Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$216$6,204

Rate of return on plan assets(0.25%)$671$—

Rate of increase in compensation0.25%$264$1,306

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System Energy Resources, Inc.

Management’s Financial Discussion and Analysis

The following chart reflects the sensitivity of postretirement benefits cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).

Actuarial AssumptionChange in AssumptionImpact on 2025 Postretirement Benefits Cost

Impact on 2024 Accumulated Postretirement Benefit Obligation

Increase/(Decrease)

Discount rate(0.25%)$27$773

Health care cost trend0.25%$52$550

Each fluctuation above assumes that the other components of the calculation are held constant.

Costs and Employer Contributions

Total qualified pension cost for System Energy in 2024 was $5.8 million, including $615 thousand in settlement costs. System Energy anticipates 2025 qualified pension cost to be $6 million. System Energy contributed $16.7 million to its qualified pension plans in 2024 and estimates 2025 pension contributions will be approximately $15.7 million, although the 2025 required pension contributions will be known with more certainty when the January 1, 2025 valuations are completed, which is expected by April 1, 2025.

Total postretirement health care and life insurance benefit income for System Energy in 2024 was $913 thousand. System Energy expects 2025 postretirement health care and life insurance benefit income to approximate $855 thousand. System Energy contributed $741 thousand to its other postretirement plans in 2024 and expects 2025 contributions to approximate $34 thousand.

Other Contingencies

See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.

New Accounting Pronouncements

See the “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and Board of Directors of

System Energy Resources, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of System Energy Resources, Inc. (the “Company”) as of December 31, 2024 and 2023, the related statements of operations, cash flows, and changes in common equity (pages 453 through 458 and applicable items in pages 47 through 239), for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that is material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Rate and Regulatory Matters — System Energy Resources, Inc. — Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company is subject to wholesale rate regulation by the Federal Energy Regulatory Commission (“FERC”). Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Because the FERC sets the rates the Company is allowed to charge customers based on allowable costs, including a reasonable

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return on equity, the Company applies accounting standards that require the financial statements to reflect the effects of rate regulation, including the recording of regulatory assets and liabilities. The Company assesses whether the regulatory assets and regulatory liabilities continue to meet the criteria for probable future recovery or settlement at each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs, and factors such as changes in applicable regulatory and political environments. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the FERC will not approve: (1) full recovery of the costs of providing utility service, or (2) full recovery of amounts invested in the utility business and a reasonable return on that investment.

We identified the impact of rate regulation as a critical audit matter due to the judgments made by management to support its assertions about impacted account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements. Management judgments include assessing the (1) likelihood of recovery in future rates of incurred costs and the (2) likelihood of refunds to customers. Auditing management’s judgments regarding the outcome of future decisions by the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities involved specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities and auditor judgment to evaluate management estimates and the subjectivity of audit evidence.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the uncertainty of future decisions by the FERC, recovery in future rates of regulatory assets and refunds or future reductions in rates related to regulatory liabilities included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the FERC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the FERC’s treatment of similar costs under similar circumstances. We evaluated external information and compared to management’s recorded regulatory asset and liability balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the FERC, initial Administrative Law Judge decisions and FERC orders issued, and settlement offers and agreements with the FERC for any evidence that might contradict management’s assertions.

•We obtained an analysis from management and support from internal and external legal counsel, as appropriate, regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or refund or a future reduction in rates.

•We obtained representation from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities to assess management’s assertion that amounts are probable of recovery, refund, or a future reduction in rates.

/s/ DELOITTE & TOUCHE LLP

New Orleans, Louisiana

February 18, 2025

We have served as the Company’s auditor since 2001.

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SYSTEM ENERGY RESOURCES, INC.

STATEMENTS OF OPERATIONS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING REVENUES

Electric$585,049 $586,603 $658,812

OPERATING EXPENSES

Operation and Maintenance:

Fuel, fuel-related expenses, and gas purchased for resale62,433 71,762 50,216

Nuclear refueling outage expenses19,158 26,745 24,482

Other operation and maintenance192,300 207,765 226,557

Decommissioning43,478 41,773 40,235

Taxes other than income taxes27,260 29,224 29,428

Depreciation and amortization121,386 90,858 111,889

Other regulatory charges (credits) - net(2,799)(57,429)503,162

TOTAL463,216 410,698 985,969

OPERATING INCOME (LOSS)121,833 175,905 (327,157)

OTHER INCOME (DEDUCTIONS)

Allowance for equity funds used during construction7,647 7,531 8,312

Interest and investment income47,953 13,131 5,096

Miscellaneous - net672 (9,101)(19,616)

TOTAL56,272 11,561 (6,208)

INTEREST EXPENSE

Interest expense48,121 48,416 37,381

Allowance for borrowed funds used during construction(3,019)(1,754)(1,325)

TOTAL45,102 46,662 36,056

INCOME (LOSS) BEFORE INCOME TAXES133,003 140,804 (369,421)

Income taxes29,503 32,032 (92,828)

NET INCOME (LOSS)$103,500 $108,772 ($276,593)

See Notes to Financial Statements.

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SYSTEM ENERGY RESOURCES, INC.

STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

202420232022

(In Thousands)

OPERATING ACTIVITIES

Net income (loss)$103,500 $108,772 ($276,593)

Adjustments to reconcile net income (loss) to net cash flow provided by operating activities:

Depreciation, amortization, and decommissioning, including nuclear fuel amortization217,250 195,045 194,411

Deferred income taxes, investment tax credits, and non-current taxes accrued41,142 32,982 (85,720)

Changes in assets and liabilities:

Receivables10,697 8,359 (19,530)

Accounts payable(89,911)78,655 (11,948)

Taxes accrued(11,549)19,804 (25,321)

Interest accrued388 1,363 (123)

Other working capital accounts(15,353)20,749 (38,764)

Other regulatory assets19,866 (31,239)(19,575)

Other regulatory liabilities(37,713)11,009 21,252

Pension and other postretirement funded status(30,717)(21,259)(35,354)

Other assets and liabilities(176,095)(150,668)304,545

Net cash flow provided by operating activities31,505 273,572 7,280

INVESTING ACTIVITIES

Construction expenditures(174,257)(121,075)(164,797)

Allowance for equity funds used during construction7,647 7,531 8,312

Nuclear fuel purchases(145,567)(80,663)(96,659)

Proceeds from sale of nuclear fuel16,531 46,242 18,855

Decrease (increase) in other investments23 (3)300

Proceeds from nuclear decommissioning trust fund sales901,239 390,004 346,504

Investment in nuclear decommissioning trust funds(920,700)(412,823)(357,463)

Changes in money pool receivable - net(2,851)94,981 (19,236)

Net cash flow used in investing activities(317,935)(75,806)(264,184)

FINANCING ACTIVITIES

Proceeds from the issuance of long-term debt1,325,581 715,545 1,022,472

Retirement of long-term debt(978,057)(758,437)(986,829)

Capital contribution from parent150,000 — 135,000

Changes in money pool payable - net

(12,246)12,246 —

Common stock dividends and distributions paid(170,000)(170,000)—

Net cash flow provided by (used in) financing activities315,278 (200,646)170,643

Net increase (decrease) in cash and cash equivalents28,848 (2,880)(86,261)

Cash and cash equivalents at beginning of period60 2,940 89,201

Cash and cash equivalents at end of period$28,908 $60 $2,940

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid (received) during the period for:

Interest - net of amount capitalized$57,599 $45,196 $39,848

Income taxes$624 ($19,810)$18,413

Noncash investing activities:

Accrued construction expenditures$6,290 $25,301 $28,960

See Notes to Financial Statements.

455

SYSTEM ENERGY RESOURCES, INC.

BALANCE SHEETS

ASSETS

December 31,

20242023

(In Thousands)

CURRENT ASSETS

Cash and cash equivalents:

Cash$448 $60

Temporary cash investments28,460 —

Total cash and cash equivalents28,908 60

Accounts receivable:

Associated companies48,134 54,544

Other5,425 6,861

Total accounts receivable53,559 61,405

Materials and supplies163,814 155,565

Deferred nuclear refueling outage costs19,884 8,603

Prepayments and other5,768 3,373

TOTAL271,933 229,006

OTHER PROPERTY AND INVESTMENTS

Decommissioning trust funds1,529,059 1,342,317

TOTAL1,529,059 1,342,317

UTILITY PLANT

Electric5,668,253 5,495,728

Construction work in progress85,127 130,866

Nuclear fuel220,044 160,655

TOTAL UTILITY PLANT5,973,424 5,787,249

Less - accumulated depreciation and amortization3,578,709 3,493,299

UTILITY PLANT - NET2,394,715 2,293,950

DEFERRED DEBITS AND OTHER ASSETS

Regulatory assets:

Other regulatory assets426,494 446,360

Other20,273 730

TOTAL446,767 447,090

TOTAL ASSETS$4,642,474 $4,312,363

See Notes to Financial Statements.

456

SYSTEM ENERGY RESOURCES, INC.

BALANCE SHEETS

LIABILITIES AND EQUITY

December 31,

20242023

(In Thousands)

CURRENT LIABILITIES

Currently maturing long-term debt$200,090 $57

Accounts payable:

Associated companies18,477 118,523

Other45,017 73,580

Taxes accrued15,852 27,401

Interest accrued13,342 12,954

Other4,473 4,354

TOTAL297,251 236,869

NON-CURRENT LIABILITIES

Accumulated deferred income taxes and taxes accrued451,830 405,744

Accumulated deferred investment tax credits42,984 46,960

Regulatory liability for income taxes - net105,467 107,458

Other regulatory liabilities747,190 782,912

Decommissioning1,127,712 1,084,234

Pension and other postretirement liabilities8,353 19,491

Long-term debt889,646 738,402

Other2 1,754

TOTAL3,373,184 3,186,955

Commitments and Contingencies

COMMON EQUITY

Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2024 and 2023

958,944 916,850

Retained earnings (accumulated deficit)13,095 (28,311)

TOTAL972,039 888,539

TOTAL LIABILITIES AND EQUITY$4,642,474 $4,312,363

See Notes to Financial Statements.

457

SYSTEM ENERGY RESOURCES, INC.

STATEMENTS OF CHANGES IN COMMON EQUITY

For the Years Ended December 31, 2024, 2023, and 2022

Common StockRetained Earnings (Accumulated Deficit)Total

(In Thousands)

Balance at December 31, 2021$951,850 $139,510 $1,091,360

Net loss— (276,593)(276,593)

Capital contributions from parent135,000 — 135,000

Balance at December 31, 2022$1,086,850 ($137,083)$949,767

Net income— 108,772 108,772

Common stock dividends and distributions(170,000)— (170,000)

Balance at December 31, 2023$916,850 ($28,311)$888,539

Net income — 103,500 103,500

Capital contributions from parent150,000 — 150,000

Common stock dividends and distributions(107,906)(62,094)(170,000)

Balance at December 31, 2024$958,944 $13,095 $972,039

See Notes to Financial Statements.

458

Item 2. Properties

Information regarding the registrant’s properties is included in Part I, Item 1. - Entergy’s Business under the sections titled “Utility - Property and Other Generation Resources” and “Other Business Activities - Property” in this report.