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spk13: Thank you. I will now turn the call over to Bill Abler, Vice President of Investor Relations for Entergy Corporation.
spk10: Good morning, and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Drew Marsh, and then Kimberly Fontan, our CFO, will review results. In an effort to accommodate everyone who has questions, we request that each person ask no more than two questions. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors which are set forth in our earnings release, our slide presentation, and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the investor relations section of our website. And now, I will turn the call over to Drew. Thank you, Bill, and good morning, everyone. Today, we are reporting very strong financial results for the quarter, as well as important progress with a few recent announcements, including a settlement in principle with the Arkansas Public Service Commission on series litigation and an agreement to sell our gas distribution business. Starting with our quarterly financial results, our adjusted earnings per share was $3.27. We experienced record temperatures with an estimated impact of 64 cents, which has given us the opportunity to flex our spending plans to invest in key areas that benefit our customers, de-risk 2024, and support our goal to deliver steady, predictable results. With our results to date and our biggest quarter behind us, we are raising the bottom of the guidance range by $0.10 per share. We remain well-positioned to achieve our long-term 6% to 8% growth outlooks. Our goal to deliver steady, predictable growth includes our dividends. Consistent with expectations, our Board of Directors once again raised our quarterly dividend by 6% to $1.13 per share, or $4.52 annually. Turning to the business updates, Our system faced extreme heat and we saw record demand through July and August. In fact, there were 13 days that surpassed previous peak demand records. Despite the challenging weather, our system met our customers' high expectations. Our power delivery team withstood June storms and performed well as the summer turned hot and dry for most of our service territory. Our generation portfolio covered our customer demand, and we operated well within our reserve margins, and our nuclear fleet was online throughout the quarter with a fleet capability factor of 99%. We continue to invest in our nuclear assets with the goal to operate safely and reliably well into the future. Two of our plants are currently in planned outages to complete work along these lines. Waterford III is an extended planned refueling outage that includes significant investments to drive plant longevity. In addition, River Bend is in a planned outage to complete minor repairs to improve reliability going forward. We are also investing in power delivery to improve reliability and resilience. These investments not only benefit existing customers, but also attract new economic development to our region. Through the first three quarters of this year, we replaced approximately 21,000 distribution poles, placed nearly 1,500 new transmission structures in service, and completed 15 new substations. Our past investments in modern efficient generation units, our nuclear fleet, and our power delivery system helped us meet this summer's demand. We continue to see signs of strong customer growth that helps affordability by spreading fixed costs over a larger customer base. For example, First Solar announced plans to invest up to $1.1 billion to build a solar manufacturing facility. CF Industries is proposing a $2 billion low-carbon clean ammonia production facility, and CORA is proposing an $800 million investment in two electric vehicle battery supply chain projects. These are just a few of the projects that support our expectation for strong growth in the coming years. We've made meaningful progress. on important regulatory matters, which supports the credit required to meet customers' growing needs and to drive improved customer outcomes. First, System Energy reached a $142 million global settlement in principle with the Arkansas Public Service Commission to resolve all current CERI claims. Energy Arkansas has already received some funds, and the remaining amount will be refunded by CERI once FERC approves the settlement. This agreement is consistent with CERI's settlement with Mississippi, which was approved by FERC. It is also consistent with the reserve recorded last year. With this latest settlement, CERI has now resolved nearly two-thirds of its litigation risk. The CERI settlement follows FERC's August order on rehearing for the sale leafback renewal and uncertain tax position case. In that order, FERC agreed with certain of System Energy's arguments on the sale leaseback and depreciation refund calculations and denied rehearing requests on the uncertain tax positions. Accordingly, we submitted our compliance report on the sale leaseback and CERI has recouped $40 million of the amount previously paid to Entergy New Orleans and Entergy Louisiana. Shortly after FERC's August order, the LTSC filed for rehearing and clarifications. FERC denied the rehearing by operation of law and indicated it intends to issue an additional order on this matter. We believe that the August order and settlement with Arkansas provides important clarity that will help guide constructive discussions to resolve the remaining series litigation matters. A fair and reasonable settlement can provide meaningful refunds to customers in the near term and eliminate uncertainty. which itself brings further benefits to customers. Turning to retail matters, Entergy New Orleans' new formula rates were approved by the City Council and went into effect in September. This is the last rate change under E&O's current FRP. In addition, the Council also approved Entergy New Orleans' request to extend its FRP for another three years. The outcome provides regulatory clarity for Entergy New Orleans and includes enhancements that will support the company's credit and, by extension, its ability to make important investments for its customers. Entergy Louisiana, likewise, had new formula rates affected in September, its last rate change under its current FRP. In the third quarter, Entergy Louisiana also filed its rate case. and alternatively proposed to extend its FRP with some revisions to provide an opportunity to earn a fair and improved return on investment that is critical to support the Louisiana growth. The proposal also includes new customer and community programs to support those in need. We prefer the proposed FRP renewal to the Ray case as it better supports the strong growth that is important to Louisiana. Regardless of the past, our goal is to maintain the current cadence with new rates effective next September. In late breaking news, at the LPSC yesterday afternoon, we filed an unopposed stipulated settlement that resolved outstanding 2017 to 2019 formula rate plan filings and certain issues in the 2020 and 2021 filings. This settlement, which requires LPSC review, is consistent with our outlooks and it represents continued work with our stakeholders to provide clarity on our path forward. Separately, Louisiana's docket to implement a streamlined process for certifications of up to 3,000 megawatts of new solar is also progressing. Staff testimony is supportive of enhancing the process, and we will work with them to incorporate their perspectives. It is still relatively early in the process, And we are hopeful that we will ultimately reach a constructive settlement as part of our ongoing efforts to work collaboratively with our regulators to bring clean energy solutions for our customers. In Texas, the PUCT approved our rate case settlement. New rates as well as new depreciation and amortizations are effective retroactive December 2022. And also just yesterday, Entergy Arkansas filed a unanimous settlement with its annual FRP that allows for a rate change at the 4% cap. We expect the commission to take up the matter before year end and new rates will be effective in January. Last week, Entergy Arkansas agreed to forego cost recovery from the stator incident in 2013. As a result, This quarter, Entergy Arkansas wrote off replacement power costs and undepreciated plants that were on its balance sheet. This has been a long-standing issue, and this resolution provides clarity moving forward. Finally, regarding resilience, we continue to move forward in the processes to review our accelerated resilience proposals. In New Orleans, we are holding town hall meetings to listen to our stakeholders' input and answer their questions. We're targeting a city council decision by year end. In Louisiana, we received input from the staff engineer as well as staff and interveners. All parties agreed that accelerated resilience would benefit customers. There are, however, varying opinions on how much we should pursue right now and the timing as we work together to manage customer affordability. Our focus remains on bringing as much value to customers as we can while maintaining the credit of the business. We have significant capital needs to meet our customers' growing demand for reliable, resilient, and clean energy. To that end, we are pursuing opportunities to source that capital at lower costs. On Monday, we announced an agreement to sell our gas distribution business for $484 million. We will use the proceeds to reduce debt and support our capital needs. The sale is expected to be essentially neutral to earnings. While the gas business is a relatively small piece of our overall utility business, the more than 200 employees in that business are an important part of Entergy's community and culture, as they have been for over 100 years. We have reached agreement with Bernhard Capital Partners, a Louisiana-based group and part because they understand that these employees are critical stakeholders in the gas business. In addition, our customers will continue to receive the high level of service that they have come to expect. The transaction is contingent on regulatory approvals, and we anticipate closing around the third quarter of 2025. Federal programs are another cost-effective way to source capital. We are pursuing both grants and loans through various programs. For example, under the Grid Resilience and Innovative Partnerships, or GRIP, program, each of our operating companies submitted applications. We are pleased to report that the proposal from Entergy New Orleans was selected and the federal share of the $110 million system hardening and battery microgrid project will be $55 million. While four of our projects were not selected, they did receive encouragement letters, and we are able to reapply for future funding rounds. We are also preparing to apply for federal loans through the DOE Title 17 Clean Energy Financing Program. Our application will include projects that we are already planning, including renewable generation, battery storage, and transmission projects. Beyond federal financing directly for our customers, we are working with our community partners to attract other federal support for investment in our region. A good example is Louisiana's HERO project that unites public, private, and philanthropic sectors to accelerate more affordable, reliable, and clean energy to protect residents of Louisiana from climate change threats. Entergy Louisiana and Entergy New Orleans were both critical team members in helping Louisiana secure the $500 million award. Another example is Entergy Texas' participation in the High Velocity Hydrogen Hub, which was selected by the DOE for a $1.2 billion award. This funding will help jumpstart additional clean energy production, transportation, and end-use opportunities which in turn will create jobs and economic activity in our communities. Entergy Texas could see additional load from blue and green hydrogen customers as a result. Most of our community work is local, boots on the ground, including economic development. Our teams work alongside our state and local governments to attract new business, jobs, and tax base to our service area. We are honored that Site Selection Magazine has once again recognized Entergy as a top utility for economic development. We also have programs to directly help our customers in need. With the extreme heat this past quarter, we stepped up our efforts to provide resources for bill assistance, provide education on energy efficiency, arrange for payment plans, and encourage customers to transition to levelized billing. We also hosted our first Power Your Future Summit with education and workforce partners across our service area to create pathways to employment for individuals from underrepresented communities. These are just a few examples of the tremendous work our utility companies and employees put toward our community stakeholder every day. The EEI Financial Conference is just a couple weeks away. The fundamentals underpinning our growth and value creation for each of our key stakeholders remains intact. Our long-term sales growth outlook is robust, bolstered by the IRA. Our investment plan includes incremental capital to support the growth and other customer objectives, including reliability, resilience, and clean energy investments. Customer affordability remains a priority, and we are actively pursuing continuous improvement efforts to expand our employees' skills and capabilities, and using technologies like artificial intelligence and robotic process automation to help us maintain a generally flat O&M trajectory despite the inflationary environment and our incremental investments. And while our capital plan is increasing, we have a plan to manage within the current financing environment that meets our credit objectives with the same level of equity we laid out at Analyst Day. With all of that, We are on track to deliver steady, predictable earnings and dividend growth, and steadily working to build the premier utility. We look forward to continuing this conversation with you at the EEI Financial Conference in a couple weeks. Now, I'll turn the call over to Kimberly, who will review our financial results for the quarter.
spk01: Thank you, Drew, and good morning, everyone. As Drew said, we've had a very strong quarter with results to keep us on track to meet our financial commitments. Summarized on slide three, our adjusted earnings were $3.27 per share. With results to date, we are narrowing our guidance range. We are also affirming our 6% to 8% adjusted EPS growth through 2026. Slide four details the quarter's variances by line items. As Drew mentioned, weather this quarter was one of the hottest on record. Excluding weather, retail sales volume declined roughly 1%. For industrial, sales to new and expansion customers increased, mainly in the primary metals, industrial gases, and petrochemical sectors. Sales to cogen customers were lower in the quarter. You may recall that cogen sales were elevated last year. Sales to existing large industrial customers also declined, primarily in the petrochemicals, pulp and paper, and agricultural chemical sectors, largely due to outage timing. We continue to expect strong industrial sales in the fourth quarter from new and expansion customers, which will bring the full-year industrial growth to close to 2%. Regulatory actions positively affected results. Entergy Texas implemented new base rates, and new formula rates were in effect at the other operating companies. O&M was 12 cents lower compared to last year. Drivers for the decrease were nuclear expense, including lower outage costs, and compensation and benefits costs. MISO ancillary generator service costs were also lower. This was largely offset by lower generator ancillary revenues. Other drivers for the quarter results included expense increases that result from our customer-centric investments, primarily higher interest costs and depreciation on new assets. New depreciation rates for Entergy Texas also contributed. Operating cash flow is shown on slide five. The quarter's results is $1.4 billion, which is $412 million higher than last year. Key drivers included the timing of fuel and purchase power payments, lower O&M spending, and last year's EWC severance and retention payments. These were partially offset by lower utility customer receipts due to lower fuel revenue and the timing of pension contributions. Turning to credit and liquidity on slide six, net liquidity remained strong at $4.9 billion. With less than a quarter left, we remain squarely on track to achieve credit metrics at or above target ranges by the end of this year. Key drivers include debt repayments in the fourth quarter and roll off of FFO items from fourth quarter 2022. Looking at slide seven, our equity needs through 2024 are unchanged. We have a small amount remaining for that period that is well within the capacity of our ATM program. Slide eight summarizes our adjusted EPS outlooks. As I mentioned earlier, we are once again narrowing our guidance range and affirming our long-term six to eight percent growth outlook through 2026. As we move into the last quarter of the year, I'd like to highlight a few updates for the balance of the year. Higher than planned revenue from weather gives us the ability to flex up spending in areas that benefit our customers and de-risk future periods. Our full year O&M estimate reflects the impacts of these flex spending levers. For example, our 2023 spending now includes additional maintenance expense as a result of our generating units running at very high capacity, incremental vegetation management to improve reliability, supplemental maintenance for transmission and distribution assets to improve reliability, and bill assistance to help customers who need it. Our FLEX program helps us ensure that we deliver steady, predictable, adjusted EPS growth year in and year out. The Intergy management team will be in Phoenix in less than three weeks, where we will discuss the progress we've made on our long-term growth strategy and provide preliminary three-year capital and financing plans. Additionally, we will provide high-level consideration for 2024's earnings expectations. We have a strong base plan consistent with our strategic objectives that support our growing customer base. We are excited about the opportunities before us and look forward to talking to you at EEI. And now the Intergy team is available to answer questions.
spk13: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Char Poreza of Guggenheim. Your line is open.
spk10: Hey, guys. Good morning. Good morning, Char.
spk12: Good morning. Hey, Drew. Just a question on the 23 earnings and the 24 assumptions building up. Obviously, you now have $0.48 of positive weather impact versus normal for the year, moving up the bottom end of the range, which you talked about, by $0.10. I guess, what other offsets are you now embedding in the 23 guidance, and do you see any carry-forward benefits to 24? may be commenting on your O&M assumption going from 85 cents to 20 cents for year-over-year. How much of the difference? Quarter of a quarter is reinvestment for the benefit of 24. Thanks.
spk01: Sure, sure. Thanks for the question. As you noted, we did have significant weather that enables us to pull forward some O&M spending. Some of that is, as I noted, related to that vegetation management spending that is coming into 23. There's also been additional spending in the transmission and distribution space around maintenance on those assets. All of that does help de-risk 2024. And then we did have just higher spending in 23 in the third quarter, and it'll flow a bit into the fourth as we continue to maintain the units that Drew mentioned that ran so well to support those higher volumes. So all of those help contribute to that change in the O&M space and then help de-risk future periods.
spk12: Okay, got it. And then just, I guess, in light of just the asset sale announcement you guys did on the gas side, I guess, why keep the reiterated equity needs, especially as we're thinking about 25 and 26, and does a capex step-up require incremental equity there as we're heading into EEI? Thanks.
spk01: Sure. The gas sale does help support the incremental capital that Drew mentioned going into our 24 to 26 outlooks. We also have strong sales that support that, and we do not have incremental equity in that period as supported by those two items. And we'll go through more details of the financing plan for that at EEI in a couple weeks.
spk12: okay perfect and then just lastly on this on the surrey uh complaint proceedings i mean obviously you noted the settlement in principle in arkansas but the debate has been somewhat confrontational especially as we're thinking about louisiana what was the impetus of the settlement in for arkansas and do you guys think it's sort of repeatable with the other jurisdictions thanks well you know
spk08: Good morning. It's Rod. The impetus for the timing of the settlement, I think, stemmed from the August FERC ruling that, in our view, lowered the risk of uncertainty around further refunds due from the uncertain tax position and sale leaseback. So it was an opportunity for us to revisit negotiations, given the clarity from that August decision.
spk12: Got it. And then just, Rod, how do you think the read through, I guess, to the, I guess, Louisiana for sure?
spk08: Yeah, from our vantage point, we view it as constructive. Obviously, we won't talk about or comment on on specific timing or progress with Louisiana or New Orleans, but we are comfortable saying we remain in active pursuit of settlement under similar terms, with the point being, obviously, as long as we're able to reach constructive settlements that's fair and reasonable and certainly consistent with the way in which we approached Arkansas and Mississippi, we think we have a fair shot. Obviously, we need the counterparties to align with us, and that's the work that remains. Perfect.
spk12: Thanks, guys. Appreciate it. Thanks, Rod.
spk13: Our next question comes from the line of David Arcaro of Morgan Stanley. Your line is open.
spk11: Great. Good morning. Hey, Drew. Hey, Kimberly. Hey, Rod.
spk10: Good morning. Good morning.
spk11: Good morning. Thanks for taking my questions. Wondering if you could elaborate a bit on what you're seeing in the industrial sales backdrop, just seeing the weather normal sales down for this quarter. What are you seeing in terms of activity around projects and major industrial customer expansions that they've been working on?
spk01: Yeah, big picture, David. As I noted, we are seeing We continue to see a strong pipeline around new and expansion customers, and Rod can talk on those more specifically. For the quarter, you know, we had some outages in our existing customers that drove to what our results are year-to-date, but our pipeline continues to be strong.
spk08: Yeah, the short story there is that the pipeline of projects, to your question, has continued to grow. We'll provide a little more insight around that at EEI. But our confidence in our growth prospects are reflecting the actual growing number of projects of customers coming into the service territory. So robust is the operative word there.
spk11: Okay, got it. Thanks for that. And so at the end of the day, no change to your projections in terms of what you had been expecting industrial sales growth to look like going forward?
spk08: That is correct. No change.
spk11: Okay. Okay. Thanks. And then I was wondering if you could just comment on your competitiveness in renewable RFPs and just any progress there. You know, thinking ahead to the potential opportunity in Louisiana with the enhanced renewable RFP, three gigawatts, just how are you situated as that comes closer?
spk01: Yes, the pipeline continues from our perspective on our solar self-development continues to develop well. We have developed the capabilities to be competitive in that space and we are continuing to plan to support customer growth and desire for clean energy in the renewable space as well as other clean energy they may want. But our team is continuing to ramp up and continuing to be quite competitive in that space. So we're excited to see that and see that support our customers' growth. Okay, perfect.
spk11: Thanks for the call. I appreciate it.
spk13: Our next question comes from the line of Jeremy Tunnett of JPMorgan. Your line is open.
spk07: Hi, good morning. Good morning, Jeremy. Just wanted to follow up on U.S. Gulf Coast industrial activity, if I could. Just curious, I guess, in your investor conversations, do you feel the market fully appreciates given where WTI has moved up versus relative to gas and what the spread is on a BTU basis for oil and oil byproducts versus gas and natural gas byproducts? How much of a material advantage that is for the U.S. Gulf Coast, both as a feedstock for the pet chem industry as well as power costs for industrial businesses down there in, I guess, the very long multi-year trend of growth that that could underpin?
spk10: Yeah, Jeremy, those economic indicators are things that we track closely. As you mentioned, they're important to some of our industrial customers. Both the spread between natural gas and some of the oil products, that, as you point out, has widened out and been very supportive of the Gulf Coast here, particularly as european gas prices have gone up in the last uh month or so as everybody knows so that has made you know it's it's continuing what we already know um it's a big macro trends around um you know global uh geopolitical uncertainty um and that has you know led to you know as you as continued to be the case broken global supply chains and that brings a lot of investment to the U.S., and when they look at the U.S., they look at the Gulf Coast. So, whether you're talking about geographic spreads or commodity spreads, they are all very, very strongly supporting our industrial customers and the industrial growth along the Gulf Coast, and in particular, in our service territory.
spk07: Got it. Very clear to us. Thank you. Maybe just following up on some of your prepared remarks there with New Orleans and Louisiana resiliency filing comments, you mentioned that there are varying options and opinions as how much resiliency to do right now. Any sense as to how much variability you could see in the outcomes of these filings other than affordability concerns? What are the other kind of big moving pieces here that are involved in these resiliency discussions?
spk08: It's Rod. If you recall, there were two primary areas where we got initial feedback. One was the staff engineer, and the other was the commission staff. We had strong alignment on the need for resilience. So we're not arguing about whether or not this is something we ought to be doing. There were two dynamics around the staff testimony that I think is instructive. One was they referenced their support for rider recovery for retired assets. That gave us a lot of comfort that we could come to a constructive resolution once we sort of decide the scope. And they also recommended transparency and accountability features. But I think the work really for us is going to continue to align around scope, pace, and ultimately cost. When we ultimately decide on what could be a settled outcome, Our objective is making sure on the back end that the recovery mechanism continues to support credit and our access to capital. But those sort of swim lanes are where the lion's share of the debate is going to be as the commission will rightfully be looking to answer the resiliency bell, but around affordability for customers.
spk07: Got it. That makes a lot of sense to us. Just one last one, if I could. Given... that you reaffirmed your 6% to 8% EPS CAGR through 26 in line with the Investor Day commentary. Is it reasonable to assume rate-based growth will also continue at a similar 7% to 8% CAGR through 28? How would accelerated resiliency impact this? Similarly, how would higher renewables win rate impact this? On the other side of the coin, do you see pressures against this such as – FRP caps as far as inflation is concerned? Just trying to see both sides, how you see this playing out.
spk01: Sure. The rate base we would expect to continue to grow consistent with growing capital investment as those investments are made to support our customers and the objectives that we have to support them. From a pressure perspective, certainly there are opportunities for additional capital around resilience, for example. We've assumed a base level of resilience, as we've discussed previously, but with accelerated mechanisms, for example, there is more resilience that could be placed in. If customers are interested in renewables at a faster pace, that certainly could be additional capital that would drive additional spending as well. And then, you know, it really is about making sure that we are supporting our customers' growth and continuing to provide them the services and the reliable power that we offer.
spk10: And I'll just add that as we get to EEI, we plan some additional disclosures around that potential capital increase above what we already have.
spk07: Got it. Thank you for that. And just real quick, the FRPs, any issues as far as caps against inflation that are something that we should be thinking about?
spk01: Jeremy, we pay attention to customer affordability, and we certainly monitor the caps that we have to make sure that we are making investments but staying within affordability for our customers. So we've had constructive regulatory mechanisms in all of our jurisdictions and continue to expect to have that as we go forward.
spk10: And we always are talking about our continuous improvement efforts. Those are the things that help us manage against things like inflation. And it has been a tough bear the last couple of years. But we do believe that we can really hold the line, as I mentioned in my remarks, against inflation and all the other capital that we're putting to work, which also drives costs or can drive costs as well. And so that's our objective. So we don't see it impacting you know, our rates as much as just all the incremental investment really is.
spk07: Understood. Appreciate the time. Thank you.
spk13: Our next question comes from the line of Paul Zimbardo of Bank of America. Your line is open.
spk03: Hi. Good morning. Thank you, Tim. Good morning.
spk04: And offers well done on the latest series settlement progress. Very nice to see. And I was hoping I could kind of merge David and Jeremy's question and kind of combine. What's the quantum of incremental capital opportunities across the renewables efforts as well as the hardening and resiliency programs? I know there's been a lot of numbers and timeframes. If you could help kind of frame the opportunity set relative to the outlook, that would be helpful.
spk01: Yeah, Paul, we'll get into all the specifics at EEI. I don't have the details in front of me, but there is, I think we've talked historically about $900 million of resilience in the base and then incremental resilience on top of that that's available and assuming we get or when and if we get accelerated recovery. But we'll get into all the specifics on the puts and takes around capital in a couple of weeks.
spk04: Okay. Great. I'm eagerly anticipating EI. It'll be a good update. And then the other one, just on Louisiana with the rate case slash the FRP extension, is this the kind of major proceeding that you think needs to be more fully litigated, or is a settlement and opportunity there?
spk08: Yeah, from our vantage point, A settlement is, one, an opportunity, and two, desired. But to be specific, a settlement in favor of continuing on with the FRP regime provides clarity for both us and customers, certainly promotes certainty around recovery given the growing investment needs to support growth in Louisiana, and certainly a smoother transition as we begin to pick up on the putting capital to work for both resiliency and to fund the growth. And so from our vantage point, having the flexibility that an FRP provides for both us and our customers and regulators is the optimal outcome there. And avoiding the litigation, certainly an expense to our stakeholders of litigating a rate case is something, you know, we and other stakeholders have chosen to avoid in Louisiana. Yeah, the FRP is definitely the path that we're working towards.
spk03: Okay, understood.
spk04: And then to clarify quickly, just in setting expectations on timing, should we think about the settlement potentials after intervener testimony, I think March 26th of next year, or could we potentially see something faster than that?
spk08: Yeah, it's a great question, but I think it's a little early. you know, for us at this point to deem the feedback to be meaningful around timing. Because discovery really has just gotten underway, and we had a procedural order that was set last week that I think set the hearing for August of next year. A couple of things that might be helpful as you think about milestones in the coming months. The procedural schedule set forth technical conferences in December, January, and February. I think that framework, those technical conferences, will give some insight as to the initial positioning of the parties and give us then some daylight as to the path forward around potential settlement.
spk03: Okay, great. Thank you. That's very helpful. See you at EI.
spk13: Indeed. Our next question comes from the line of Michael Lonegan of Evercore. Your line is open.
spk06: Thank you. Good morning. Thanks for taking my question. So on the utility O&M outlook for the year, you talked about, you know, pulling forward spending to de-risk 2024. You know, you highlighted some of the categories. Presumably also, you know, given the record temperatures and peak demand, you had to spend more O&M for know additional work crews and overtime pay you know to maintain reliability given the stress on the grid just wondering if you could you know break out you know how much of that spending was pulled forward to de-risk you know versus the amount to you know maintain reliability on your grid thanks michael you're right we did have to spend more to support the
spk01: the hot summer and the volumes and the PowerGen team performed really well. I don't have the breakout specifically between that piece as well as the pull forward, but certainly we have been able to pull forward significant spending around reliability in the transmission and distribution space and in the vegetation space as well.
spk03: Okay, great. Thank you for the call.
spk06: I'll see you at EEI.
spk03: Thank you.
spk13: Our next question comes from the line of Anthony Crowdell of Mizuno. Sorry, Mizuho. Your line is open.
spk05: Thank you.
spk13: I think Mizuno sells sporting goods.
spk05: Excuse me. Just, I guess, two quick ones. Approval of the gas system sale, I think you're guiding to like a 3-2-25 close that's
spk08: know almost two years just curious on the length what what what causes that long long closure and any important milestones along the way we should keep an eye out for yeah this rod uh the the the experience we have and certainly the the advice of of uh initial stakeholders suggested that process given the fact that you have both louisiana public service commission the new orleans city council and the Baton Rouge Metro Council, you know, all having a partner process gives us an outlook of that 2018 to 21 month timeframe. And that's really what sort of sets our expectations. It's not any singular jurisdiction. It's just the process of getting those approvals. And if we're able to do something sooner, then clearly we'd be working to achieve that objective.
spk10: And I'll just add that, you know, our buyer is new to this particular business. And while all the operations and everything is all going to be good to go and transfer right over, they do need to – we're going to work with them to set up, you know, some of the back office pieces of this. And that might take a little bit longer than it normally would if it was a strategic buyer, for example.
spk05: Got it. And then – I appreciate the clarity you guys have given on Siri and the progress you made earlier this week. But just, and I know we don't want to just think the negative outcome, but if the company continued to struggle with Louisiana and New Orleans, is there a period of time that management would just maybe view that, you know, when you look at the book value of Siri versus maybe what the liability could be if Louisiana and New Orleans hold out, that they would just look at maybe you know, ending the venture? I'm just curious if, like, trying to maybe gauge, like, how long until just management says we've tried really hard to give it up on the weekend?
spk10: Yeah, well, I mean, I'll tell you, Anthony, I mean, we're always looking at every potential outcome and option. So, you know, that is always part of the calculation. But at this point, you know, we think, you know, we've made good progress with, The settlement in Mississippi and then now the settlement in Arkansas, such that it de-risks roughly two-thirds of the overall exposure there. So we feel like we're making good progress and that we don't really need to go down that particular path at this time. But, you know, that is something that we're always paying close attention to and looking at various options. And so that's something we'll keep considering in the future.
spk03: Great. Thanks for taking my questions, guys. I appreciate it.
spk10: Thank you.
spk13: Our next question comes from the line of Nick Campanella of Barclays. Your line is open.
spk14: Hey, good morning. Thanks a lot for taking the time. Just one for me today. A lot's been answered, but on the credit, I think you're doing 12.4% trailing 12 months, and you're obviously signaling you can get back to the 14% by year end and within the the appropriate minimums. Can you just confirm that's more just lapping and roll off of items and there's nothing else required from the regulatory standpoint of approvals at this point?
spk01: Sure, Nick. That's right. There is a significant amount of debt that will roll off in the fourth quarter, a large part related to Louisiana securitization from earlier in the year. And then there are some items from fourth quarter of 2022, including the Mississippi settlement with siri that was paid out in november that will roll off in the in the 12 months ended 2023. thanks our next question comes from the line of ryan levine of city your line is open hi everybody um what jurisdictions do you see having the biggest opportunity for incremental resilient spending and
spk02: Does the current equity issuance plan have built-in buffer for some of this CapEx upside highlighted already on the call?
spk01: Thanks, Ryan. As you know, we have open filings in New Orleans and in Louisiana. Louisiana, between those two, has much more spending than New Orleans does. We also anticipate a filing in Texas in 2024 as the commission writes the rules coming out of the legislature. As far as the equity and the amount of investment. We've assumed a base level of investment associated with resilience. And depending on what is approved out of that, we'll be looking at how to finance that. But we have a significant amount of capital in our plan, including that base level of investment. So more to come as those decisions come out of the jurisdiction.
spk03: I appreciate it. Thank you.
spk13: Our next question comes from the line of Paul Patterson of Glen Rock Associates. Your line is open.
spk09: Hey, good morning. Good morning, Paul. Just finally with most of my questions have been answered, but with respect to the Siri leaseback litigation, congratulations on the settlement and stuff, but if Louisiana, I guess what I'm wondering is from a fully litigated perspective, When will we get closure on this if there isn't a settlement, I guess, with Louisiana?
spk08: I want to make sure I'm understanding the question. Is the question when would we likely get settlement in Louisiana on the remaining issues?
spk09: I'm not asking you to predict that. I think you've sort of answered that. I guess what my question was is if there isn't a settlement, How long does the litigation, when would you expect the litigation to come through?
spk08: Yeah, it's long-lived. If you think about the FERC process, addressing those remaining issues could take you, well, two-plus years. And it goes back to what we were suggesting around why we're continuing to pursue settlement and the opportunity to provide benefits and value to customers sooner. rather than later, and a settlement provides both us and now potentially Louisiana and New Orleans the opportunity to do that versus the uncertainty that comes with a couple of years or so before there's any resolution.
spk09: Okay, great.
spk08: Thanks for the clarity. And just to say, full resolution, not any resolution, because we've resolved quite a bit. That's right. Thank you.
spk13: Our next question comes from Travis Miller of Morningstar. Your line is open.
spk03: Travis, perhaps your line is on mute.
spk13: It appears there are no further questions at this time. Mr. Abler, I will now turn the call back over to you.
spk10: Thank you, Jael, and thanks to everyone for participating this morning. Our quarterly report on Form 10-Q is due to the SEC on November 9th and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a webpage as part of Entergy's investor relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much.
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