Image source: The Motley Fool.
DATE
Tuesday, July 29, 2025 at 8 p.m. ET
CALL PARTICIPANTS
Chairman and Chief Executive Officer — Drew Marsh
Executive Vice President and Chief Financial Officer — Kimberly Fontan
Vice President, Investor Relations — Liz Hunter
Need a quote from one of our analysts? Email [email protected]
TAKEAWAYS
Adjusted EPS: Adjusted EPS of $1.05 for Q2 2025, described as keeping the company "firmly on track" for fiscal-year guidance.
Weather-Adjusted Retail Sales Growth: with industrial sales contributing close to 12% growth, primarily from new and expanded customers ramping up operations.
Four-Year Capital Plan: Increased to $40 billion, supporting increased load and renewable portfolio expansion.
Customer Agreements: Leading to four-year capital plan allocations of three gigawatts of solar, 1.4 gigawatts of battery storage, and eight gigawatts of gas units (some resources coming online after the plan period).
Transmission Investment: $8 billion in transmission investment planned in the four-year capital plan, including $5.6 billion under MISO's MTEP; projects cover 460 miles and will increase the 500 kV system by roughly 220% once completed.
Storm Resilience Program: Over $2 billion approved, $400 million invested to date including nine new substations and more than 8,000 hardened poles; Thirty percent of phase one projects are targeted for completion by year-end 2025.
Nuclear Tax Credits: Approximately $570 million in nuclear tax credits were recorded across five units, with receipt of the cash benefit expected later in 2025, pending guidance from the Treasury Department or final audit determination; management noted, "we are not counting on these credits for future years in our outlook."
Adjusted EPS Guidance: 2025 guidance affirmed; 2026 remains unchanged; Adjusted EPS guidance was increased by $0.05 for 2027 and by $0.10 for 2028, attributed to higher operating cash flow and capital plan expansion.
Equity Needs: Approximately two-thirds of the required equity through 2028 has been contracted; $800 million in equity forwards were settled in Q2 2025, providing capital for investments.
Liquidity: $2.3 billion of unsettled equity forwards available as of June 30, 2025.
Cash Flow Boost: Driven by the Arkansas infrastructure rider along with one year of nuclear PTC monetization included in the outlook through 2028.
Sale of Gas LDC Business: Completed July 1, focusing resources on the electric segment.
Regulatory Developments: Entergy Louisiana reached a stipulated settlement in early July supporting the transformational Hyperion data center project; The procedural schedule targets a commission decision no later than October.
SUMMARY
Management raised the four-year capital expenditure outlook by $3 billion to support industrial and data center load growth, highlighted by long-term commitments in Arkansas with service agreement signings since the beginning of 2024. Future years’ outlooks exclude these credits due to pricing uncertainty. New regulatory mechanisms in Arkansas and Texas enable more timely recovery of capacity and storm costs, directly strengthening cash flow and lowering capital costs for both customers and the company.
Marsh referenced a "robust" customer pipeline, with data center opportunities in the five to ten gigawatt range and ongoing large industrial projects.
Fontan noted higher operating cash flow and Arkansas's infrastructure rider as the main drivers behind unchanged equity needs despite increased capital investments.
Entergy reported accelerated resilience progress, with more than $2 billion approved as of Q2 2025, and 30% of phase one projects set to complete by year-end, mitigating financial risk tied to storms.
Recent transmission investments, if fully executed, will more than double the size of the company's 500 kV system, representing an increase of about 220% over the current system once completed and improve grid reliability for large new customers.
Fontan said, "Our adjusted EPS for 2026 remains unchanged and we are increasing 2027 by $0.05. And 2028 by $0.10 while maintaining strong credit metrics throughout the forecast period."
Following the July 1, 2025, divestiture of the gas LDC business, Entergy reaffirmed its strategic focus on regulated electric operations.
INDUSTRY GLOSSARY
LDC (Local Distribution Company): A utility responsible for the delivery of natural gas or electricity directly to residential, commercial, and industrial customers within a defined region.
MISO (Midcontinent Independent System Operator): A transmission organization that manages the electric grid and market operations across multiple states in the central U.S., including portions of Entergy's footprint.
MTEP (MISO Transmission Expansion Plan): The annual planning process led by MISO to evaluate, approve, and facilitate regional transmission expansion projects.
PTC (Production Tax Credit): A federal tax credit awarded for each unit of eligible electricity produced by qualified energy facilities, including nuclear plants under certain programs.
Full Conference Call Transcript
Drew Marsh: Today, we are reporting second quarter adjusted earnings per share of $1.05. Our progress through the first half of the year keeps us firmly on track to achieve 2025 results, in line with our guidance. We are raising our outlooks driven by our higher capital plan to meet customer expectations. Our customers, employees, communities, and owners. Our customers are listed first, so I'll start there. We have over 3,000,000 customers, and most of them are residential. For the first time since we began tracking Net Promoter Score, we achieved a result that ranks in the first quartile for utility residential service over the past twelve months across our enterprise and using J.D. Power data.
We are not first quartile in every jurisdiction or in every category. Still, we are excited about our progress, and we are energized by the opportunity ahead to further improve our service to our customers. Our industrial growth opportunities remain robust. We continue to work with state and local leaders to attract businesses to our service area with our economic development model driven by our vertically integrated customer-focused electric company, with welcoming communities and the economic advantages of the Gulf South. We provide one-stop-shop technical solutions while we bring key parties together to rapidly meet the needs of new customers. At the same time, we ensure strong protections for our existing 3,000,000 customers and maintain our credit.
Today, we are pleased to announce that we have secured significant new growth in Arkansas that will bring benefits to existing customers as well as communities in the state itself. With this addition, we expect our four-year industrial sales growth rate to be approximately 13%. Consistent with our practice, we aren't commenting further on specifics or customers. Although, we anticipate making regulatory filings soon, which will include additional details. We are updating our four-year capital plan to $40 billion, which will enable us to reserve increased load and grow our renewable portfolio across our jurisdictions. As a point of reference, we have signed roughly eight gigawatts of electric service agreements since the beginning of last year.
As a result, our four-year capital plan includes significant investment for customer-driven generation, including approximately three gigawatts of solar, 1.4 gigawatts of battery storage, and eight gigawatts of highly efficient gas units. Some of these resources are planned to come online beyond our full-year plan period. During the last quarter, we disclosed that we entered into an exclusivity agreement for Power Island equipment, including 15 combined cycle combustion turbines and two simple cycle combustion turbines. As an addition to the Orange County, Delta Blues, and Legend projects. Collectively, these turbines provide 15 gigawatts of capacity. That leaves seven gigawatts for future customer growth needs, deliveries for commercial operations between 2029 and 2031.
Our strategy to use standardized equipment and designs helps us effectively manage cost and schedule for our customers. Our customer pipeline continues to be robust, including our data center pipeline, which remains in the five to 10 gigawatt range. And significant interest remains in our traditional industrial segments as well. Our economic development model attracts large new customers that contribute to our communities growing jobs, and tax base. They also share in costs that would otherwise be covered by existing customers. The economic impact of these projects on our communities is substantial. And yet another sign to existing customers and potential customers that great things are happening in Entergy Corporation's service area. Customer service, storms, create moments of matter.
When you're removed from that conversation and in the hardest storm season, take a moment to review our progress. To start, we are executing phase one of our accelerated resilience program. We have more than $2 billion approved mostly in Entergy Louisiana. Today, we've invested roughly $400 million. And that includes energizing nine new substations designed to sustain both flooding and hurricane-force winds, stalling over 8,000 hardened poles while another 10,000 pole upgrades are in process which is on top of the average annual run rate of 75,000 poles replaced system-wide. And in the coastal region of Texas, we've rebuilt two short transmission lines to harden standards.
Earlier this month, Entergy Texas submitted its application for the Texas Energy Fund to support $200 million of resilience projects. We expect to complete about 30% of our phase one projects by year-end. As a reminder, we prioritize projects with the highest benefits. So these earlier projects will have a relatively higher impact. We plan to file later this year for the next phase of accelerated resilience, to support continued progress. In addition to our accelerated resilience program, new transmission investments built to today's more stringent standards, also improve the resilience of our grid. For example, we have several large 500 kV transmission projects in front of regulators in Louisiana and Texas that provide resilience benefits while also supporting growth.
Mount Olive to Sarepta line in North Louisiana, a line along the West Bank of the Mississippi River in Louisiana, through a growing industrial corridor, the Southeast Texas area reliability project, or CTEX, and the Cypress to Legend line will support strong growth in the Port Arthur area. These projects and the Babble to Weber line in Louisiana to be filed later this year total 460 miles. And will represent about 220% of our 500 kV system once completed. These projects will also loop existing transmission lines such that if an event occurs at any point on the loop, power will be automatically diverted in another direction avoiding customer outages.
Altogether, we are planning $8 billion of transmission investment in our four-year capital plan. Including $5.6 billion reviewed through MITO's MTEP process. In addition to system improvements, we ensure that we are prepared for storms through planning, drills, and vegetation maintenance. Technology is also part of the journey. And we've been experimenting with cameras and information systems on planes and drones and soon helicopters that fly power lines to gather data with a plan to ultimately feed AI more quickly assess damage, and optimize the productivity of our teams on the ground. Capital deployment is critical, but it takes more than that to be Premier.
To that end, our power delivery team is launching PD Strong, short for Power Delivery Strong. To transform our power delivery team. This includes everything from work management and capability building to behaviors and culture. All with an eye towards better serving our customers every day but especially in moments that matter. Like storms. Our regulators are also supporting our storm response improvement efforts. In addition to approving resilience investment, Louisiana and Texas implemented new processes to expedite storm securitization. Allowing operating companies to request recovery based on estimated storm costs. And accelerated commission timelines for decisions. Those commissions, of course, retain their authority to determine the prudence of utility storm costs.
And estimated cost would be trued up to actual costs once available. Louisiana's expedited process for 2025 storm costs includes a commitment to review the storm cost related financing order request at the subsequent commission meeting after the utility's filing. Accelerating storm cost recovery reduces carrying costs for our customers and supports the operating company's credit. Which also keeps the cost for capital lower for our customers. This new process also gives confidence to vendors and mutual assistance partners that support storm recovery. As we deploy our capital plan throughout our service area, a smaller and smaller percentage of our infrastructure is exposed to storms along the coast. Reducing our relative financial risk.
Which benefits our customers as well as our owners. These actions continue to build on our improved balance sheet and strong liquidity. We have made good progress over the last year reducing storm risk through accelerated resilience, hardening of our grid, financial readiness, and regulatory changes to improve outcomes for customers. And we have more plans for improvement still ahead. Meanwhile, we stand ready to respond for anything that comes our way. We have some other operational achievements that I'd like to also highlight. On July 1, we completed the sale of our gas LDC business to Delta Utilities.
The transition for customers was smooth, because of the hard work and planning by many employees, including those who have moved to Delta Utilities. We are extremely grateful for their efforts. The sale of that business allows us to focus on our core electric business. Safe and effective nuclear operations also remain a cornerstone for all stakeholders. This year, Waterford Three and Graham Gulf are proudly celebrating forty years of operations. The Waterford Three refueling outage wrapped up in June on time and on budget. Work included replacement, of all three low-pressure turbines which will improve reliability and pave the way to increase the capacity of the unit by an estimated 40 megawatts in 2026.
We've already filed the upgrade request with the LPSC. Additionally, planned turbine rotary replacements in ANO One in the fall of this year will set us up for future upgrades there. We continue to engage with customers, regulators, vendors, and others regarding new nuclear. So we don't have any updates to report. At this time. Turning to regulatory. We are making progress on important matters to meet customers' growing needs and drive improved customer outcomes. In early July, we reached a stipulated settlement with the Louisiana Public Service Commission staff and a number of parties recommending approval of our request to invest in assets to support adding medicine transformational Hyperion data center to our system.
The hearing was held in mid-July and we presented extensive evidence on significant benefits to our customers and communities from making these investments. As well as through bringing Meta online as a customer. These benefits are in addition to the benefits that Meta will create through its billions of dollars in investment in Louisiana, and the high-paying good quality jobs it will provide. The procedural schedule supports commission decision no later than October. The Mississippi Public Service Commission approved Entergy Mississippi's form of rate plan settlement which does not result in a rate change. Also, Entergy Louisiana and Entergy New Orleans filed their annual formula rate plans and new rates are expected in September.
Entergy Arkansas, filed its annual formulary plan with new rates expected to be in place at the beginning of next year. This is the tenth and final projected year in the current cycle. And in February 2026, we will file a base rate case, which will include a proposal for a new formula rate plan tariff. At the federal level, FERC approved MISO's expedited resource addition study or ARRIS proposal, last week. We appreciate FERC's work to temporarily facilitate customer growth across MISO, and we all work together to improve MISO's existing queue processes. Last quarter, we covered Arkansas legislation that allows for a rider to support investment for economic development.
This quarter, the Texas legislature passed and the governor signed three bills that provide benefits to our customers and communities. One accelerates storm securitization, which I mentioned earlier. Another allows rider recovery of MISO-related capacity costs that are currently included in base rates. The rider may be filed annually. The third is a wildfire bill that provides a potential path to improve wildfire liability. While our likelihood of experiencing wildfires is lower than in other parts of the state, we take the risk seriously and intend to use the new tools that are available. Finally, our communities are a key stakeholder. Actively supporting them beyond economic development is an important part of our strategy.
Entergy Corporation has once again been named a top 50 most community-minded company and the leader in the utility sector. By the 50. Initiative of Points of Light. In 2024, our employees and retirees contributed more than 122,000 volunteer hours across our service area valued at over $4 million. Before I wrap up, I'd like to highlight that Lewis Rock, has been elected to our board of directors. A Louisiana native, Lewis brings extensive investment experience from his years of work at Barrow Hanley, historically one of our largest active investors. At Barrow Hanley, he worked as their lead equity portfolio manager and also served on the executive committee.
Combined with his prior work experience, Lewis' tremendous familiarity with utilities as well as industrial companies many of which are part of our customer base. We are very excited to have Lewis join our board. It's been an exciting quarter, continue to make progress on creating value for our customers, communities, employees, and owners. Our teams are working very hard to foster community and economic growth and customer growth in our state. While also delivering on commitments made to improve resilience and reliability. I'll now turn the call over to Kimberly who will review our financial results, for the quarter.
Kimberly Fontan: Thank you, Drew. Good morning, everyone. Today, I will review our financial results for the quarter, our capital plan update, and our guidance and outlooks. I will also cover effects from the final budget reconciliation bill. Starting with earnings, our adjusted EPS for the quarter was $1.05. This result keeps us firmly on track for our guidance for the year. Adjusted EPS is shown on Slide five. Primary drivers were the net effect of investments made for our customers, higher retail sales volume, and higher other income. These increases were partially offset by higher other O&M, consistent with the estimate we provided last quarter and higher MISO capacity cost at Entergy Texas. Which are currently recovered in base rates.
New legislation allows those costs to be recovered through a rider beginning in 2026. Earnings contribution from retail sales volume was positive, despite weather being milder than the second quarter of last year. Weather-adjusted retail sales growth for the quarter was very strong at 4.5%. Industrial sales were the largest contributor with close to 12% growth. Primarily from new and expansion customers that continue to ramp up their operations. Slide six summarizes our credit ratings and affirms that our credit metric outlooks remain better than agency thresholds. Over the past several years, we have strengthened our balance sheet to support our operations and the growth opportunity before us.
Our liquidity as of June 30 is very strong, including $2.3 billion of unsettled equity forwards, which are available if needed. Turning to tax credits. With the passage of the most recent budget reconciliation bill, we now have better clarity on renewable tax credits and we have adjusted our cash flow forecast accordingly. Our forecast includes updates to the timing of monetization of investment tax credits associated with projects that we expect to safe harbor. The changes include shifting our expected tax credits out one year. We now have approximately $175 million of cash benefit in 2028. And additional cash benefits beyond our outlook period. We continue to monitor for treasury guidance that could affect these cash flows.
As you may recall, we previously had not included the cash benefits from nuclear PTCs in our forecast. However, based on our current analysis, in the quarter, we recorded nuclear tax credits of approximately $570 million across our five nuclear units. We treated the recognition of these credits as an uncertain tax position pending either guidance from the treasury department on the calculation or final determination on audit. We expect to monetize the nuclear PPA and receive the cash benefit later this year. We are working with our regulators on how and over what time period we provide this benefit to customers.
As you can see from the chart on slide seven, the nuclear PTCs are highly dependent on the average revenue per megawatt hour. Which includes both capacity and energy revenues and therefore, we are not counting on these credits for future years in our outlook. Our credit outlooks provided include these changes and our estimated Moody's metric continues to grow to 15%. Over the forecast period. As Drew noted and as shown on slide eight, we are increasing our four-year capital plan by $3 billion. Including new renewables and battery storage to meet customer needs.
We're also providing updates on retail sales growth, rate base, credit metrics, and operating cash flow as well as operating company capital plans in the appendix of our presentation. As you can see on Slide nine, our equity needs are unchanged despite the higher capital investment. Higher operating cash flow, including of nuclear PTCs and utilization of Arkansas's new infrastructure rider allows us to maintain our financial metrics and current equity needs. As a reminder, we've contracted approximately two-thirds of our equity needs through 2028. In the second quarter, we settled approximately $800 million of equity forwards or about 15.6 million shares and we are using those funds to continue to invest. For our customers.
As shown on slide 10, we are affirming our adjusted EPS guidance and updating our longer-term outlooks. For 2025, we're firmly on track. Positive year-to-date results allow us to flex other O&M to manage the business. Looking ahead to the third quarter, we expect other O&M to be roughly $0.05 higher than the third quarter of last year, partly due to the timing of vegetation maintenance and non-nuclear plant outages. And we expect Entergy Texas to have higher MISO capacity costs in July and August, totaling approximately $0.06. We remain confident that we will deliver on our 2025 guidance. Looking past 2025 at our longer-term outlook, we continue to see growth as evidenced by our higher capital plan.
Our adjusted EPS for 2026 remains unchanged and we are increasing 2027 by $0.05. And 2028 by $0.10 while maintaining strong credit metrics throughout the forecast period. Our results in the first half of this year have been solid, and we are once again raising our capital plan to support our growing customer needs. We still have significant opportunities before us, and we remain well-positioned to execute, and deliver successful outcomes. And now the Entergy Corporation team is available for questions.
Operator: Thanks, Kimberly. And, again, at this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad. Once again, 1. And in the interest of time, we ask that you please limit your questions to one primary and one follow-up question. Thanks in advance. And we'll pause just a moment to compile the Q and A roster. All right. Looks like our first question today comes from the line of Jeremy Tonet with Morgan. Jeremy, please go ahead.
Jeremy Tonet: Hi. Good morning.
Drew Marsh: Good morning.
Jeremy Tonet: Exciting update there. A lot of interest in this new Arkansas customer, and appreciate somewhat limited in what you could say at this point, but just wondering if there's any color you could share with regards to the industry of the customer or even the ramp. And so it seems like not a lot of change to sales growth through '28 but just curious any shades of color you could provide in the post '28 ramp, what that what that might look like?
Drew Marsh: Yeah. Well, I think I don't think we can talk specifically about the or any customers, I guess. It's it's yeah. We consistent with where we've been, Jeremy, in our previous announcements, Yeah. We are we are sticking with you know, the filings, and the filings should be out in next two to three weeks. Is where we're aiming, and that'll have a lot of the you know, the kind of detail I think that you would be looking for with that question.
Jeremy Tonet: Got it. Makes sense there. And just want to pivot, I guess, to the gas generation you know, picture that you have there. And I think you referenced seven gigawatts of gas generation available for new load. Is this after the Arkansas project or some of the be dedicated to Arkansas? Just trying to understand how that falls out.
Drew Marsh: So that is related to projects that we have not announced. Today or that you aren't aware of. So know, if you think about the projects that are out there, we have three projects in Texas, two in Arkansas, three in Louisiana, two in Mississippi. And then I think there's one more in our capital plan that isn't publicly announced. So the seven gigawatts would be other projects beyond those. That are not in our capital plan but are but are out there, and available for us to serve new customer growth, that we anticipate will be an opportunity for us going forward given our strong pipeline.
Jeremy Tonet: Got it. Makes sense. We'll wait for more details. Thank you very much.
Drew Marsh: Thanks, Jeremy.
Kimberly Fontan: Thank you, Jeremy.
Operator: And our next question comes from the line of Nicholas Campanella with Barclays. Nick, please go ahead.
Nicholas Campanella: Hey. Good morning. Thanks for all the updates. A lot of stuff here. So yeah. Just wanted to ask just you talked about Meta a little bit in the prepared remarks. Have you already started the regulatory approval process for the upsizing of Hyperion to the five gigs like they've been talking about, or is that still on the comp?
Drew Marsh: We haven't started any process, and we couldn't on that anyway. You'd have to ask Meta on their exact plans. Know, the filings that we have are related to the to the previous, announcements that we've already made, starting last fall. So that's that's where we sit overall today. the potential for expansion at that Hyperion site. That's one of the reasons why they chose that site, and so we're excited to hear. And not just us, I'm sure Richland Parish is excited to hear that. State of Louisiana's high excited to hear that. But you know, we don't have anything else to say about the potential for expansion today.
Nicholas Campanella: Okay. No. I appreciate that. Thank you. And then just on the new nuclear side, outside of the up rates, I know you said no major updates, but just has the conversation pulled back a little, or where would you kinda put that now or frame that now if you had to kinda mark to market it? And what is the ideal framework in your mind if you were to kinda move forward with this? Are you expecting a hyperscaler or a large load customer to take on construction risk before this could be transferred to rate base?
Or just how do you kind of think about the ability to grow this generation while keeping the risk profile acceptable to the various constituents. Thanks.
Drew Marsh: So that's a great question, Nick. I mean, the way that we're thinking about it is that our operating companies aren't big enough to take on the kind of risk that you know, It could be in part from the customers, but the customers don't wanna take on a whole lot of uncertainty either. So we're we're working through that. You know, there's the potential for state or vendor or federal support to help with the risk profile there. There's even some conversations that we've been a part of about sovereign funds and others know, picking up some of those risks.
But that's you know, a you get idea that you need a really large balance sheet, in order to make that happen. And there are people that are thinking about it. And so we're working through those conversations, but it's taken a while to it all together.
Nicholas Campanella: Understood. Thank you so much.
Kimberly Fontan: Thanks, Nick.
Operator: Our next question comes from the line of Julien Dumoulin-Smith. Julien? Please go ahead.
Julien Dumoulin-Smith: Hey. Thanks, Robert, and thank you, team. Nicely done again. Maybe to follow-up on the earlier question Jeremy was kinda posing to you. I mean, it seems like you have this these 15 combined cycles and two CTs secured with deposits, it seems, versus what's in the plan. Maybe to press a little bit further, there's there's upside outside of the plan that you're alluding to, but it seems like you guys have made tangible actions So if you can elaborate maybe as best you understand and see it from your customers, the timing and magnitude of some of these opportunities. It does seem as if certainly advanced, and I appreciate why it would be advanced.
Considering the commercial needs of your customers to act decisively. But I'd I'd love to hear how you think about this coming together, if you will.
Drew Marsh: Well, I mean, the timing of that, would be such that we would have plans online with that additional I mean, the eight gigawatts of the of it of the 15 is very clear. That's in our capital plan. You can see that. The additional seven gigawatts would be for COD between twenty nine and thirty one. And that's consistent with the disclosures that we've previously made. The turbine deliveries themselves would be a little bit before that. And then the plants would come online, Yeah. Nine to twelve months after the turbine deliveries.
So that's that sort of gives you a framework for what we're talking about, so you could see incremental capital should all this stuff come together as we are aiming for, near the back end of our, forecast period.
Julien Dumoulin-Smith: Excellent. And just to reconcile, and I know you guys updating here on the nuclear PTC benefit. And it seems to go hand in glove with some of the updates you're providing here. How do you think about that fitting into the financing plan If you can speak to it, just in terms of what you're recognizing here with the five seventy, but writ large across the opportunity of the PTCs, how that fits into know, the pie chart that you show about equity needs.
Kimberly Fontan: Morning, Jolene. It's it's Kimberly. As you know, we have worked we would look to do the same thing. So we've done that through incrementing cash flows, through mechanisms that, for example, throw cash off during construction that actually save cost for customers over the longer run, but also our credit in that period. We've done that with customer support as they ramp up, and there are a variety of ways that we've done that. But we will continue to look to do that and manage our equity needs but we'll evaluate each of the finances as we add capital and see what we need to do there.
Our plan does continue for what we have here to target that same 10% to 15% run rate that we've had for the last couple of years.
Julien Dumoulin-Smith: Got it. Yep. Understood. Alright. Well, look. I'll leave it there. Nicely done. Congrats again. Incredible. Looking forward to more.
Drew Marsh: Excellent. Thanks, Julian.
Kimberly Fontan: Yes. Thank you, Julian. And our next question comes from the line of Bill Apicelli with UBS. Bill, please go ahead.
Bill Apicelli: Good morning. Just following up on that equity needs I mean, as we think through the update today and the CapEx increase, with no additional equity, I mean, how much additional headroom would you would you say you have before you would need to contemplate issuing equity? In terms of, like, the capital, the CapEx upside.
Kimberly Fontan: Yeah. Good morning, Bill. Again, I would we have assumed in the base plan that run rate that I referenced about 10 to 15%, and any additional capital that we would increment, we would look at what that means to the cash flows that's thrown off, any other mechanisms, and then what that equity need is. So I think about it less as you know, what specific room and more about that's the framework and how we think about our equity, and we'll continue to think about it that way.
Bill Apicelli: Okay. And then and then on the yeah, the tariff structure in Arkansas for the new large load I mean, maybe you could speak to that, the structure of that relative to other customers and the tariffs work in Louisiana. Maybe just any color there in terms of, you know, you spoke to the favorable mechanisms in Arkansas.
Kimberly Fontan: Yeah. We won't speak specifically to customers, but as it relates to the infrastructure rider, that may be what you're asking about. They our control legislation did issue legislation around a new infrastructure rider that provides for timely recovery of large transmission and generation. It provides for good credit support during the period, and it also enables Arkansas to continue to grow from an economic development perspective beyond its 4% cap. So really nice mechanism there for all parties. As we as we think about how to use that.
Bill Apicelli: Okay. Great. And then just on the mentioned on nuclear, but specific to the up rate, just remind us if there's anything in the plan for that, and what would be the magnitude of
Kimberly Fontan: The Waterford upright is not significant capital dollars, and those capital are you can assume those are in the forecast.
Bill Apicelli: Okay. But I think the you know, in terms of beyond that, mean, what is sort of the opportunity set that's out there?
Kimberly Fontan: Yeah. As we said, each of those upgrades needs to stand alone from a business case perspective. And to the extent that they are some are more expensive than others, and to the extent that they are significant capital investments, if the decision is made to move forward, there could be some incremental capital there.
Drew Marsh: Yeah. And I'll I'll add to that, Bill, that we are talking with potential customers about those upgrades, and so we would be looking for a customer support for them as we go forward at the same time.
Bill Apicelli: Alright. Great. Thanks very much.
Kimberly Fontan: Thank you.
Bill Apicelli: Thank you, Bill.
Operator: And our next question comes from the line of David Arcaro from Morgan Stanley. David? Please go ahead.
David Arcaro: Hey. Thanks so much. Good morning. I was wondering if you could elaborate on what boosted the cash flow, the operating cash flow outlook cumulatively through 2028. Was that all the Arkansas rider and the nuclear PTC one year of that?
Kimberly Fontan: were earned in '24, and we expect to monetize this year. Those are the two primary drivers.
David Arcaro: Okay. Great. Thanks. And then, maybe just looking ahead a little bit in Arkansas, as you think about the next rate case filing, would you anticipate major changes at this point in terms of what you'd be requesting for the next kind of iteration of formula rate plans? Any reflection on the current plan? And how it's worked, and if anything major needs to be changed looking ahead? Thanks.
Drew Marsh: Yeah. So we are, you know, we are starting to gear up for that. I don't think we're in a spot to start talking about it just yet. The teams are thinking through, you know, what our needs are going to be moving forward. But I will say, you know, that generally, you know, formula rate plan that we have in Arkansas has been pretty successful. And so we've been yeah. And then these latest legislative changes that support economic growth have really helped us out in ways that weren't really contemplated in the original order. But I think those are the those are probably the starting points for us A pretty good mechanism to begin with is forward looking.
And then the component that we've recently added through legislation to support economic development within the state. So but more to come on that one.
David Arcaro: Okay. Understood. Thank you.
Drew Marsh: Thank you.
Kimberly Fontan: Thanks, David.
Operator: And our next question comes from the line of Ross Fowler with Bank of America. Ross, please go ahead.
Ross Fowler: Good morning, Drew. Morning, Kim. Drew, you highlighted a lot of transmission CapEx. In the plan. And that's moving through that MISO MTEP process. Can you remind us what the next phase of that process is, and would we get updates on that? Kind of some color around what the CapEx upside could be there?
Drew Marsh: You know, the next submit will be this fall. And so we probably have some up on what we put in at that point. I think there's there's probably an approval coming up, but I don't have that timing off the top of my head from previous from previous filings. But next middle would probably be this fall.
Ross Fowler: K. Perfect. And then following on to Nick's earlier question a little bit, the metal meta approval process in Louisiana, you're expecting that decision to come in October. As we look to not necessarily Hyperion, although that'll be great if that's out there, but as you look to other large loan opportunities in the state, Can you kind of just contextualize, give us some color around what were from your perspective, the main intervener concerns through that process?
Drew Marsh: Yeah. The main intervener concerns are the traditional ones. Right? What are the impacts on customer bills? And are there gonna be reliability impacts or resilience impacts? Associated with that? When we look at the meta project, and I and I made these comments in my earlier remarks. We see strong benefits for existing customers that come from a number of different places. First of all, just from a cost perspective, know, these are standard tariffs, so they're picking up a big chunk of costs that our existing customers would always already otherwise pick up, you know, costs associated with storms, costs associated with some of the MTAP transmission that I was talking about.
Costs associated with overheads, those things are going to be helpful for our existing customers. Then the other thing that I wanted to make sure that we were pointing out was the resilience benefits, that come from the, the building of these new assets, you know, particularly we talked about the CTECs, and the Babble to 500 kV system that basically is gonna come from the North Side Of Baton Rouge. Across Louisiana into Texas and then basically down into the North Side Of Houston, the Conroe area. And that is a big line. It's 500 kV, so it can carry a lot of capacity. It's gonna be built to modern standards.
It's going to loop all the transmission that's along the coast. That's traditionally been know, pretty exposed to hurricanes and will give a it'll create a very robust grid for our customers along the Gulf Coast. So we're excited to get that, and it's a really big benefit for our existing customers. But those are the those are the kinds of questions that you know, our customer's been asking, and then in the regulatory processes, pretty much across the board.
Ross Fowler: K. Thanks, Drew, for that. Really appreciate it. Other thing. Okay. Just have one more thing to that, Ross. The you know, in our various regulatory approval processes, no one is disputing the need for new capacity. Or really the need for new transmission. In the in the transmission space, you know, the converse the risk alright. It's not even a risk. The conversation is around what's the best route to pick. That's where the that's what most of the conversation has been about. In the generation space. It's about who is actually picking up the cost and what are the benefits associated with that investment. So there's there is strong agreement that these assets are needed.
It's more of a question around yeah, how are gonna manage them, where they're go. Those are the those are the primary questions. But more about the how and the where than the than the what we need.
Ross Fowler: Yes. Thank you. Very much appreciated. You.
Operator: Alright. Thank you, Ralph. And our next question comes from the line of Steve Fleishman with Wolfe Research. Steve, please go ahead.
Steve Fleishman: Yeah. Hey. Good morning. Thanks for the updates. So just could you Drew, you went quickly through the changes on the storm recovery I guess particularly the Louisiana. Could you just kinda go through that again quick and also just is it something that the you know, rating agencies have said anything on in terms of kind of further risk reduction?
Drew Marsh: I'll defer the question about rating agencies to Kimberly, but the in terms of the things that in Louisiana, so I think it was maybe last month or the month before, There was an order from the bench did not go through a regular process. We have a we have a request out there for regular through sort of regular order to consider a long term, solution for more rapid securitization. But from the bench to get it in front of twenty five, they created a mechanism that would allow us to recover our securitization costs. More quickly. And the mechanism, will allow us to submit estimated costs for securitization. In prior to our NA meeting.
Make a filing, and then the filing would be considered by the commission at the subsequent meeting. So very fast turnaround is what the expectation is, and the point of that is to create benefits for customers because that reduces the carrying cost for our customers because the full weighted average cost of capital would not be the carrying cost anymore. It would be the securitization rate, which of course is triple a rate, which is gonna be a much lower rate. And then the other benefits that I mentioned were the potential for a lower cost of capital because the agencies should see that as very positive.
And then lastly, we have a lot of vendors, you know, particularly for a large storm, that may be concerned about the credit worthiness of the company. This should give them a lot of confidence that the company is gonna be able to stand behind whatever the storm costs are. So I'll turn it over to Kimberly. She can comment about the credit piece.
Kimberly Fontan: Yeah. As we talked to the rating agencies about the improvements in the financial space regarding storms, They view that as very positive in the ability to return that cash quicker much quicker than what we have had previously. So, positive outlook there. That should also help us with our credit metrics too because, you know, as you know, Steve, historically, when we've had a very long time between the time of the storm and the time of the securitization, you know, our credit metrics will dip. And this should shorten that quite a bit.
Steve Fleishman: Great. And then one other question just on the GAAP build. I mean, you're probably going to be the largest builder of new gas plants late this decade. So, just aside in addition to the turbines that you've locked up, how are you feeling about the EPC and just overall ability to get all these projects done on time and budget.
Drew Marsh: Yeah. That's a great that's a great Steve. So we've been working hard, to be prepared for that. Couple of things that we've done. Certainly, we have strong relationships with EPCs, and we have a lot of actual working experience with them given building that we did have done recently with the J Wayne Leonard plant, Lake Charles plant, the Montgomery County plant, Of course, the Orange County project is under construction right now, expected to be online. Hopefully, next spring. Certainly before next summer. And so we have a lot of good existing relationships. We have a lot of working experience on getting this stuff. Built and online, so we're leveraging that.
We are also utilizing a simpler standard design. So we're using and we were building two on one stations. We simplified it to one on one. We're using Mitsubishi's larger turbines. Which allows us to do that. So there probably more projects, but they're easier to build. And so we expect to as we go through, we expect to learn more At the same time. and pick up speed and find ways to lower cost. And then the last piece I'll mention is, you know, we are working hard the supply chain.
So we have access to other critical equipment, you know, things like transformers, large high voltage breakers, and other pieces of equipment that are critical for us to maintain our timelines. So we have line of sight on all of that. The things that we don't have 100% locked up generally are available to us. In many different ways. So we have confidence that we'll be able to get that done. So those are those are just a few of the things that thinking about, but, you know, we have confidence that we can manage through making all this happen.
Steve Fleishman: Great. Thank you.
Kimberly Fontan: Thank you.
Steve Fleishman: Thank you, Steve.
Operator: And our next question comes from the line of Sophie Karp with KeyBanc Capital Markets. Sophie, please go ahead.
Sophie Karp: Hi, good morning. Thank you for taking my question and congrats on a great update here. My question is about store I guess, how storms and data center customers are going to coexist in your territory. Clearly, there doesn't seem to be a huge concern for them because customers are willing to, you know, go come into your territory. But is there an incremental opportunity for you to address here? Because presumably, they would need generation that you might be providing for them? Thanks.
Drew Marsh: Thanks, Sophie, and good morning to you as well. Yeah. That's a great question. I think the customers themselves start by locating further away from the coast. So where these data center customers are showing up And, you know, we have two examples at this point, Meta and Amazon and Mississippi. They're further away from the coast. So, you know, the META project is in Northeast Louisiana, and the Amazon projects on the North Side Of Jackson, Mississippi. Yeah, on in two locations. And so they are they are further away from the coast, And then, of course, we're building a generation to support them which is further away from the coast as well.
Along with some of these 500 k d lines that we're about, which are further away from the coast. I gave you the example of this the CTECs and the Babble to Weber line. Those are further away from the coast. So that's really the strategy right now. It's to use modern and more you know, I guess, modernized equipment that is built to the more stringent standards that we have for storms and wind loadings and things like that. And to build it just simply further away from the coast where the risk is gonna be reduced.
Sophie Karp: Got it. Thank you. That's all for me. Thank you.
Operator: All right. Thank you, Sophie. And our next question comes from the line of Anthony Cradell with Mizuho. Anthony, please go ahead.
Anthony Crowdell: Hey. Good morning, Drew. I just have a follow-up for Nick question, probably very easy. I think Nick had asked about a new nuclear deal, and you mentioned the importance of a bigger balance sheet. You threw out maybe a state solution, a federal or maybe the hyperscale or even sovereign wealth. If you had to pick of those options or the options you spoke about, one's in the lead, or which one do you think is more likely to go ahead with a new nuclear deal? Like, what builds the next nuclear plant in your jurisdictions?
Drew Marsh: You know, I wish I knew I could give you a good answer for that. We are talking with all of the above on that stuff. But, yeah, I do not have one that I would lean on at this point. We're looking for one of them to come through for us is basically the conversations that we're having. But they're they're we're you know, we're stretching the boundaries in order to see if we can find somebody that can step up to help us with that particular risk by bringing in other, you know, kinds of folks that have the kind of balance sheet that we would need to make sure that this happens.
But we haven't cracked the nut yet. So I don't have a good answer for you. Anthony. We're still working on it. It. Great. That's all I had. Nice quarter. Thanks for taking my question. Thank you. Yes. Thank you.
Operator: And our next question comes from the line of Angie Storozynski from Seaport Research Partners. Angie, please go ahead.
Angie Storozynski: Thank you. So I have two questions. One about residential sales being weak weather normal weather normalized residential sales being weak this quarter and basically flattish year to date despite some uptick in the customer account count. And I'm just wondering if you know, we're seeing this, from other companies as well. You know, the residential sales typically have a higher margin. And so I'm just asking, you know, is it a weakening economy? Do you incorporate that in your, you know, future earnings, trajectory? And then secondly, just wondering, we're seeing this inflation in the cost of new build for gas plants.
You know, you have this you know, basically, you know, framework of an agreement for the equipment supplier, for the equipment supplier. And I'm just wondering how you're managing the cost and its reflection in any future data center deals. Thank you.
Kimberly Fontan: Good morning, Angie. I'll start with your residential sales question. You may recall in the first quarter, our residential sales were really strong. And when we saw that, we looked at how those came out over the course of the year and what seen is a little bit of that coming back a little soft softer in the second quarter. But over the full year, we're about flat So I think you're just seeing some volatility in the data, not a real pattern. Nothing that we have baked in or expect to see over the long term. So you're just seeing some variances month over month that isn't that isn't an indicator of an overall weakness.
As it relates to inflation on the cost of new build, we certainly have continued to work to manage the cost of increases related to all of our investments. We have a lot continuous improvement efforts both on the capital and on the O and M side to try to manage those costs. And we have mechanisms within various contracts that enable us to manage those costs. It depends by customer, but, obviously, we are very focused on affordability for our customers and working to manage the overall cost, and we continue to be quite competitive on our new build cost. Relative to what you're seeing as sort of the industry estimates.
Angie Storozynski: Great. And just one quick follow-up. I'm just looking at the rerating of your stock. And how it should have impacted your dilution mass, and your growth rate I'm just wondering if you've already captured it in this updated plan for the EPS growth, the fact that you're basically issuing equity at a at a much higher price than likely initially anticipated?
Kimberly Fontan: Well, Angie, as you know, we've sold forward into 2027. So we've got what we what our forward contracts are as assumed and then what we need in '27 and '28. We have a price assumption But certainly, to the extent that the price moves in a positive direction, that's helpful relative to dilution on an ongoing basis.
Angie Storozynski: Great. Thank you.
Operator: Alright. Thank you, Angie. And our final question today comes from the line of Paul Patterson with Glenrock Associates. Paul, please go ahead.
Paul Patterson: Hey. Good morning. Just following up on your comments about safe harboring and the way the bill is currently constructed. And just on the July 7 executive order, have you guys had any sense as to what we might see coming out of that? And if you have, could you share it with us? And, also, what how do you how do you think about any potential changes that the executive order might cause. How are you guys managing that, or how are you how are you thinking about that? In terms of going forward and your activities?
Kimberly Fontan: We're certainly engaged, Paul, with our industry partners and other companies around understanding As far as safe harboring, we have worked within the existing rules. To do the what we need on the projects in order to safe harbor those if to see what those are specifically. But we've been working for the last couple of months to make sure that we could meet as much of our renewables could be safe harbored as possible under the rules that we have, and we continue to watch for what else may change there, and we'll adjust as we need to, Paul.
Paul Patterson: Okay. Great. Thanks a lot.
Drew Marsh: Thank you. Thank you, Paul.
Operator: And that does conclude our Q and A session today. So at this time, I will turn the call back over to Liz. Liz?
Liz Hunter: Our quarterly report on Form 10 Q is due to the SEC on August 11 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 web page as part of Entergy Corporation'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.
Operator: Thanks, Liz. And again, this concludes today's conference call. You may now disconnect.