Clear vision, clear progress.

2015 Integrated Report

Forward-Looking Information and Regulation G Compliance

In this report and from time to time, Entergy Corporation makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements. Although Entergy believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Any forward-looking statement is based on information current as of the date of this report and speaks only as of the date on which such statement is made. Except to the extent required by the federal securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed or incorporated by reference in Item 1A. Risk Factors contained in the Form 10-K for the year ended Dec. 31, 2015, (b) those factors discussed or incorporated by reference in Management’s Financial Discussion and Analysis and (c) the following factors (in addition to others described elsewhere in this report and in subsequent securities filings):

  • resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, Entergy’s utility supply plan and recovery of fuel and purchased power costs;
  • the termination of Entergy Arkansas’ participation in the System Agreement, which occurred in December 2013, the termination of Entergy Mississippi’s participation in the System Agreement, which occurred in November 2015, and the termination of Entergy Texas’, Entergy New Orleans’ and Entergy Louisiana’s participation in the System Agreement, which will occur on August 31, 2016, and will result in the termination of the System Agreement in its entirety pursuant to a settlement agreement approved by FERC in December 2015;
  • regulatory and operating challenges and uncertainties and economic risks associated with the Utility operating companies’ move to MISO, which occurred in December 2013, including the effect of current or projected MISO market rules and market and system conditions in the MISO markets, the allocation of MISO system transmission upgrade costs, and the effect of planning decisions that MISO makes with respect to future transmission investments by the Utility operating companies;
  • changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent transmission reliability requirements or market power criteria by the FERC;
  • changes in the regulation or regulatory oversight of Entergy’s nuclear generating facilities and nuclear materials and fuel, including with respect to the planned potential or actual shutdown of nuclear generating facilities owned or operated by Entergy Wholesale Commodities, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;
  • resolution of pending or future applications, and related regulatory proceedings and litigation, for license renewals or modifications or other authorizations required of nuclear generating facilities; and the effect of public and political opposition on these applications, regulatory proceedings and litigation;
  • the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities;
  • Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas and other energy-related commodities;
  • prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants;
  • the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;
  • volatility and changes in markets for electricity, natural gas, uranium, emissions allowances and other energy-related commodities, and the effect of those changes on Entergy and its customers;
  • changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;
  • changes in environmental, tax and other laws and regulations, including requirements for reduced emissions of sulfur dioxide, nitrogen oxide, greenhouse gases, mercury, thermal energy and other regulated air and water emissions, and changes in costs of compliance with environmental and other laws and regulations;
  • uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal and the level of spent fuel and nuclear waste disposal fees charged by the U.S. government or other providers related to such sites;
  • variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization and insurance;
  • effects of climate change;
  • changes in the quality and availability of water supplies and the related regulation of water use and diversion;
  • Entergy’s ability to manage its capital projects and operation and maintenance costs;
  • Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;
  • the economic climate, and particularly economic conditions in Entergy’s Utility service area and the Northeast United States and events and circumstances that could influence economic conditions in those areas, including power prices, and the risk that anticipated load growth may not materialize;
  • the effects of Entergy’s strategies to reduce tax payments;
  • changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs and fund investments and acquisitions;
  • actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings and changes in the rating agencies’ ratings criteria;
  • changes in inflation and interest rates;
  • the effect of litigation and government investigations or proceedings;
  • changes in technology, including with respect to new, developing or alternative sources of generation;
  • the effects of threatened or actual terrorism, cyberattacks or data security breaches, including increased security costs, accidents and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;
  • Entergy’s ability to attract and retain talented management and directors;
  • changes in accounting standards and corporate governance;
  • declines in the market prices of marketable securities and resulting funding requirements and the effects on benefit costs for Entergy’s defined benefit pension and other postretirement benefit plans;
  • future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;
  • changes in decommissioning trust fund values or earnings or in the timing of, requirements for, or cost to decommission nuclear plant sites;
  • the implementation of the shutdown of Pilgrim and FitzPatrick and the related decommissioning of those plants and Vermont Yankee;
  • the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;
  • factors that could lead to impairment of long-lived assets and
  • the ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture and the success of the business following a merger, acquisition or divestiture.

Regulation G

This report includes the non-GAAP financial measures of operational earnings per share and utility normalized return on equity. The reconciliation of these measures to the most directly comparable GAAP measures are below.

GAAP to Non-GAAP Reconciliation

Earnings (Loss) Per Share 2015 2014
(per share in dollars)
As-Reported (0.99) 5.22
Less Special Items:
HCM implementation expenses (0.05)
Decisions to close Vermont Yankee, FitzPatrick and Pilgrim (5.99) (0.56)
Palisades asset impairment and related write-offs (1.43)
Top Deer investment impairment (0.13)
Gain on the sale of Rhode Island State Energy Center (0.56)
Total Special Items (6.99) (0.61)
Operational 6.00 5.83

GAAP to Non-GAAP Reconciliation

Utility Normalized Return on Equity, Excluding Impact of Regulatory Charges 2015
(dollars in millions)
As-reported earnings available to common stock (a) 1,096.9
Add back:
Preferred dividend requirement (b) 17.6
Income taxes (c) 16.8
As-reported income before income taxes (d) = (a)+(b)+(c) 1,131.3
Less certain items (pre-tax):
Weather (e) 56.3
Regulatory credit for tax sharing agreement (f) (107.0)
Normalized income before taxes (g) = (d)-(e)-(f) 1,182.0
State-specific standard income tax rate (h) 38.50%
Income tax at state-specific standard rate (i) = (g)*(h) 455.1
Normalized earnings applicable to common stock (j) = (g)-(i)-(b) 709.3
Affiliated preferred (k) 131.2
Normalized earnings applicable to common stock, adjusted for affiliate preferred (l) = (g)-[(g)-(k)]*(h)-(b) 759.8
Average common equity (m) 9,241.2
As-reported ROE (a)/(m) 11.9%
Normalized ROE (o) = (l)/(m) 8.2%
As-reported regulatory charges (pre-tax) (n) 100.5
Tax affected regulatory charges (n)*(1-h) 61.8
Impact of regulatory charges on ROE (p) = [(n)*(1-h)]/(m) 0.7%
Normalized ROE, excluding impact of regulatory charges (o)+(p) 8.9%