Entergy Q4 2021 Earnings Call Transcript

Quartr
Provided by Quartr
February 23, 2022

Key Takeaways

  • Strong 2021 results: Adjusted EPS of $6.02 beat the guidance midpoint for the sixth consecutive year; 2022 guidance affirmed at $6.15–$6.45 and a long-term EPS growth target of 5–7%.
  • Storm cost recovery: Entergy raised over $4 billion for Ida and Laura restorations, expects more than $3 billion of securitization proceeds in 2022 (Texas and Louisiana), and reduced near-term equity needs to $700 million.
  • 3-year $12 billion capital plan: Allocates one-third to generation (maintain gas/nuclear, add 2 GW of renewables by 2024 and 11 GW by 2030), $5.8 billion to distribution and $2.3 billion to transmission, supporting accelerated carbon-reduction goals.
  • Resilience and clean-energy expansion: Identified $5–15 billion of potential accelerated storm-hardening investments, formed a sustainable planning group, issued ~2 GW of renewable RFPs, and proposed a hydrogen-capable power plant in Texas.
  • Operational achievements: Delivered best transmission reliability in over 20 years, deployed 3 million advanced meters, achieved record output at Grand Gulf nuclear, and mobilized the largest storm-restoration workforce for Hurricane Ida.
AI Generated. May Contain Errors.
Earnings Conference Call
Entergy Q4 2021
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Entergy Fourth Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr.

Operator

Bill Abler, Vice President of Investor Relations. Mr. Abler, the floor is yours.

Speaker 1

Good morning, and thank you for joining us. We'll begin today with comments from Energies' Chairman and CEO, Leo Dennault and then Drew Marsh, our CFO, will review results. In an effort to accommodate everyone who asks questions, we request that each person ask no more than 2 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.

Speaker 1

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 Leo.

Speaker 2

Thank you, Bill, and good morning, everyone. Today, we are reporting strong results for another successful year. Our adjusted earnings per share is $6.02 which is in the top half of our guidance range. This is the 6th year in a row Our results have come in above our guidance midpoint. Underlying our steady predictable results is Entergy's dedicated, robust And resilient organization working day in and day out to create sustainable value for all our stakeholders.

Speaker 2

Because of the solid foundation that we have built and our proven track record, we are confident that we will continue to achieve success into the future by delivering meaningful outcomes. As such, we are initiating 2022 guidance and affirming our longer term outlooks in line with our discussions at EEI. This continued success is important to all of our stakeholders, including our customers. Being able to navigate through headwinds is possible only through financial discipline that allows us to continue to raise the capital needed to serve our customers. Without financial help, we could not have raised the over $4,000,000,000 needed to fund the restoration from recent storms, including Ida and Laura, 2 of the worst storms ever to hit Louisiana, nor could we have managed through the revenues lost as a result of these storms and COVID-nineteen.

Speaker 2

Without financial help, we could not consider accelerating resilience investment to better withstand future storms Nor could we make the investments in clean energy that our customers, large and small, are seeking. In 2021, Slide 2020, we were presented with headwinds caused by the pandemic and weather events. And as in 2020, we proved we could navigate those headwinds and continue to deliver strategically, operationally and financially. Strategically, we stood up our customer organization and appointed our first ever Chief Customer Officer, David Ellis. David is building a team to work with our customers to find ways to meet their reliability, affordability and decarbonization goals.

Speaker 2

We are actively working on unique and significant opportunities to help our customers reduce their carbon emissions. We created a new sustainable planning, development and operations group led by Pete Norcio. In order to drive greater strategic direction and collaboration in addressing stakeholders' We aligned key internal teams to work collectively to implement strategies that will decarbonize our portfolio and respond to our customers' sustainability needs, all while maintaining affordability and reliability for customers. Guided by this holistic planning framework, we updated our long term supply plan to significantly increase renewable capacity. We As part of this plan, we issued renewable RFPs over the last year totaling nearly 2,000 megawatts.

Speaker 2

We completed the tax equity partnership for SIRCE Solar in Arkansas. We designed this unique structure to help facilitate the economics of utility ownership, while better aligning the interest of project owner and tax equity partner. This is an important step to make utility renewable ownership an economic option We proposed the Orange County Advanced Power Station in Texas. If approved, this will be our first hydrogen capable plant and will provide Efficient Power with the flexibility to utilize clean hydrogen. We sold Indian Point We received approval from the NRC to sell Palisades, which is our last remaining EWC nuclear plant.

Speaker 2

We expect the sale to be completed around mid year. We made great progress in our diversity, inclusion and belonging initiatives, including creating the Diversity and Workforce Strategies organization. This team led by Tuan Brown is expanding our workforce development efforts and developing new standards for hiring. We Consistent with our progress, we received many awards and recognition from multiple aspects of our business, including environmental leadership and responsibility, storm response, social responsibility, corporate citizenship, economic development and workplace excellence. Operationally, we improved distribution reliability in 2021.

Speaker 2

For transmission, years of hard work and strategic capital investment led to system improvements as that team achieved its best reliability performance in more than 20 years. We wrapped up our AMI initiative with more than 3,000,000 meters online. These advanced meters allow our customers to better understand and control energy usage to achieve their affordability goals. Advanced Meters also represent a foundational component of other customer and grid technology investments that will further improve service and reliability. Through continued focus on improved operations, Grand Gulf achieved its highest ever generation output in 2021.

Speaker 2

In response to the historic damage caused by Hurricane Ida, we deployed the largest restoration workforce in our history. The storm presented unique challenges and we came up with innovative solutions to restore power and help our customers and communities recover on a timely basis. We deployed portable generators for key businesses and community services. We also procured materials and supplies from non traditional sources. For example, we used pipe from the halted Keystone pipeline to strengthen the foundation of new distribution structures in areas with soft soil conditions.

Speaker 2

Financially, our adjusted earnings results were in the top half of our guidance range. We maintained solid liquidity throughout the year. Between driving business risk improvements and progress on our ATM program, we reduced our remaining equity needs through 2024 to $700,000,000 roughly 1 fourth of We communicated at our Analyst Day in 2020. We made significant progress on storm costs and balance sheet recovery. We expect to receive more than $3,000,000,000 of securitization proceeds in the coming months, which includes a $1,000,000,000 down payment toward IDAF costs.

Speaker 2

We filed an uncontested settlement in Louisiana and that case is on the agenda for today's LPSC meeting. Entire Entergy team proved once again to be highly resilient under challenging circumstances, And I cannot thank them enough. We also know that the key to continuing to achieve outcomes into the future is To ensure we are working for all of our stakeholders, customers, employees, communities and owners, we are committed to achieving meaningful outcomes for each. This holistic approach will drive a vibrant sustainable business for years to come. Our 3 year $12,000,000,000 capital plan will Our plan will also support our commitment to reduce carbon emissions.

Speaker 2

These customer centric investments combined with our growth forecast and regulatory mechanisms Support 5% to 7% growth in adjusted EPS and a strong credit profile. Roughly 1 third of the capital will go toward generation. In addition to maintaining our highly efficient gas fleet, this capital will continue to modernize and ensure the longevity of our emission free nuclear fleet. In the planning period, we will increase our renewable portfolio to more than 2 gigawatts. That's a 300% growth in renewables.

Speaker 2

And that trend will not only continue, but accelerate beyond 2024 with plans for 11 gigawatts in service by the end of 2,030. With this plan, we expect to achieve our 50% carbon intensity reduction goal several years earlier than our 2,030 target. Additionally, our generation capital plan includes the initial portions of the investment in the Orange County Advanced Power Station with planned hydrogen capability, which is expected to come online in 2026. As we've discussed, our region has tremendous advantages in both hydrogen and carbon capture. Our distribution and utility support capital plan totals $5,800,000,000 The The plan is designed to deliver improved reliability, resilience and customer experience through projects focused on asset renewals and enhancements in grids development.

Speaker 2

We will also ensure the grid is ready for new customer connections. Our transmission plan is $2,300,000,000 and will drive reliability and resilience, while also supporting renewables expansion. Projects will focus on asset renewal and enhancements, congestion relief and new customer interconnections. We have clear line of sight to the base plan, but our intention is to do even better. Our future investment profile will increasingly be driven by meeting evolving customer needs.

Speaker 2

The 2 most significant areas of focus for our customers in the coming years are resilience and decarbonization. We have invested significantly in resilience for years, With the potential for increasing frequency and intensity of weather events, it's time to review the speed with which we will make those investments. We've preliminarily identified between $5,000,000,000 $15,000,000,000 of resilience investments that could be accelerated, which will help mitigate future storm damage and costs. Over the coming months, We'll map out what makes sense for our customers with a goal to share this information with our regulators. Initially through technical conferences this spring and subsequently through filings targeted for late summer, so that we can with their support proceed to accelerate our resilience investment.

Speaker 2

Our customers have aggressive decarbonization objectives. We are doing our part today with one of the cleanest large scale generating fleets in the country. And as I have previously mentioned, the continued operation of our large nuclear fleet and the addition of significant renewable capacity will allow us to further support Their decarbonization goals to reduce scope 2 emissions. We are working to provide our customers with the products they need such as green tariffs, so that they can meet their environmental objectives. By meeting their clean energy needs, we can further accelerate our renewable deployment.

Speaker 2

The reduction in Scope 2 emissions will not be enough for many of our customers. Some are also looking for ways to reduce their Scope 1 emissions. Electrification is an efficient way to lower those emissions. Given the size of our industrial base as well as their emissions levels, Helping our customers reduce their carbon footprint presents an exceptional opportunity for Entergy. This is true for new and expansion customers like U.

Speaker 2

S. Steel and Sempra, We recently announced facility additions with electrified processes that will drive significant new sales. These two customers alone could add 850 megawatts of new load, which represents nearly 2,000 megawatts of renewable capacity if The new sales are supplied with 100 percent green energy. It is also true for existing customers who need to decarbonize their processes to meet their objectives. As we talked about at EEI, we believe the addressable market could be as much as 30 terawatt hours of additional clean energy by 2,030.

Speaker 2

Understanding the importance of renewables and attracting new jobs, Entergy Mississippi developed a strategy called EDGE, Economic Development with Green Energy to give Mississippi an edge in recruiting industry to the state. Entergy Mississippi is making its largest ever commitment to renewable resources with plans to replace aging natural gas plants with 1,000 megawatts of renewable energy over the next 5 years. The plan has drawn praise and support from the Governor and the state's public service commissioners. We continue to work with our customers to determine the size and pace of their needs. We will ensure that our resource plans and financial forecasts reflect the latest customer insights

Speaker 3

and we'll keep

Speaker 2

you updated along the way. This is an exciting opportunity for us and one that is unique to Entergy. 2021 was another successful year for Entergy that benefited from the resilience we built into our business. We delivered on our commitments, including steady predictable growth. We have a solid plan with significant certainty over the next 3 years.

Speaker 2

Beyond our base plan, other significant opportunities in renewable generation, clean electrification and resilience acceleration will serve at a minimum to extend our runway of growth. This growth will deliver many benefits for all of Entergy's stakeholders, which will ensure the sustainability of our business for decades to come. Before I turn it over to Drew, I'm excited to announce We will host our Analyst Day on June 16 in New York City. We will continue the conversation on the significant opportunities that we see ahead, And we will give you a view of our 5 year outlook. So stay tuned for more details.

Speaker 2

I'll now turn the call over to Drew, who will review our financial results and our outlook.

Speaker 4

Thank you, Leo. Good morning, everyone. As Leo said, today we are reporting strong 2021 results in the top half of our guidance range. We executed on key deliverables throughout the year and our results are a validation of the resilience we've built into our business. We are confident that we will continue to deliver on our commitments and we are initiating our 2022 guidance confirming our longer term 2023 2024 outlooks.

Speaker 4

I'll begin by discussing results for 2021 and then provide an overview of the key business drivers for 2022. Starting on Slide 6, Entergy adjusted EPS for 2021 was $6.02 $0.36 higher than 2020. Turning to Slide 7. Our earnings growth was driven by investments across our operating companies that benefit customers through improved resilience, reliability and operational efficiency. Weather adjusted billed retail sales growth 2% for the year as sales rebounded from COVID-nineteen impacts.

Speaker 4

Industrial sales were strong at around 6% higher than 2020. We saw continued growth from new and expansion customers, which helped keep rates low, as well as higher than expected demand from cogeneration customers. The weather effect on billed sales reduced our earnings by $0.03 per share for the year. Our December temperatures were at record highs And much of those sales were not yet billed before the year end. When you take that into account, the negative weather impact of the year was more significant at 0 point 11 dollars Starting with Q1 2022 results, we will use our AMI infrastructure to update our weather estimates to be based on the calendar view versus the billing cycle.

Speaker 4

To help you, the appendix of our webcast presentation has updated 2021 estimated weather effects by quarter, which reflects the new methodology. Coming back to drivers for 2021, our utility O and M returned to more normal levels following last year's reductions from our flex spending program used to mitigate the impact of lower revenues from COVID-nineteen. We also saw higher depreciation and interest, which were largely the result of customer centric investments. The results of EWC are summarized on Slide 8 and reflect the continued wind down of that business. We expect to close on the Palisade sale by the middle of 2022, which will complete our exit of Merchant Business.

Speaker 4

On Slide 9, operating cash flow for the year was $2,300,000,000 Slightly lower than last year. Non capital storm costs were a large driver at $220,000,000 Increased fuel and purchase power payments, Income tax payments and lower EWC revenues also contributed to the decrease, while higher utility revenue provided a partial offset. Moving to Slide 10, we continue to expect to achieve credit metrics that meet or exceed rating agency expectations by the end of 2022. Solid results of business derisking efforts reflected in Moody's upgrade of Entergy Texas long term issuer and bond ratings on January 28. This upgrade recognizes the constructive regulation over the past several years, including riders and responsive storm cost recovery that has allowed HRT Texas to earn a reasonable return on equity.

Speaker 4

The improved credit rating allows the company to attract capital at a lower cost, which benefits customers. At the same time, Moody's moved Entergy Arkansas and Entergy Mississippi to positive outlook while also citing constructive regulatory factors. Take a minute to provide an update on the excellent progress we've made with storm cost recovery. Entergy Texas has received approval from both the storm cost termination and financing order. We expect to receive securitization proceeds in March or April.

Speaker 4

And in Louisiana, we have submitted unanimous settlement in the 2020 storm proceeding, which includes support for an additional $1,000,000,000 as an early prepayment against Hurricane Ida cost recovery and matters on the agenda for today's Louisiana Commission meeting. Assuming the LPSC decides the matter today, we expect to issue the securitization bonds before storm season. We have also refined our estimate for Hurricane Ida and now expect the cost to be $2,700,000,000 Slightly above our original expectations due to additional resilience in Harding Investments as well as higher resource costs. We're completing storm invoice processing and Entergy Louisiana is on track to submit its cost recovery filing in April, followed by Entergy New Orleans around mid year. Our goal remains to receive the balance of Entergy Louisiana's Hurricane Ida securitization proceeds by the end of this year, pending the Louisiana Commission's procedural schedule for the case.

Speaker 4

Another area we have successfully Reduced business risk is our pension obligation. In 2021, our funded status improved by approximately $900,000,000 or 38 percent As a result of our increased contributions and actions to accelerate the reduction of the liability over the last several years. In addition, slightly higher interest rates and strong pension asset returns in 2021 contributed to the improvement. We've also made progress against our near term growth equity needs as you can see on Slide 11. In 2021, we utilized our asset market equity sold close to $500,000,000 of common equity.

Speaker 4

The decrease in our pension deficit further improves our Moody's cash flow metric We reduced our remaining equity needs by an additional $300,000,000 As of today, our remaining growth equity requirement through 2024 stands at $700,000,000 Roughly 1 fourth of the original expectation. Looking ahead, Slide 12 shows that the fundamentals of our industrial customers remain robust. Forward commodity spreads remain supportive of continued growth and expansion. The 4 sectors shown on the slide represent nearly half of our industrial sales. As you can see, the economic indicators remain at or near multi year highs and Our industrial base continues to be resilient and competitively advantaged.

Speaker 4

Our adjusted EPS guidance and outlooks shown on slide 13 remain unchanged. Our 2022 adjusted EPS guidance range of $6.15 The $6.45 with a midpoint of $6.30 Our plan supports steady predictable 5% to 7% annual growth. We also expect to continue our dividend growth commensurate with our adjusted EPS growth. The key drivers for 2022 guidance Highlighted on Slide 14 are straightforward and in line with what you would expect. Starting with the top line, we will see revenue growth as a result of the customer centric investments we've made as well as increases in depreciation and interest expense associated with the new assets.

Speaker 4

We also expect an increase in retail sales volume of 1.8% on a weather adjusted basis. This reflects Increases in commercial and industrial sales and slight decline in residential sales. Consistent with our EEI disposures, We anticipate an increase in other O and M due to typical drivers including inflation. We also have continuous improvement efforts to achieve O and M efficiencies and FlexTool that help mitigate changes during the year. The appendix of the webcast presentation contains additional details on the specific drivers, including quarterly considerations and earnings sensitivities.

Speaker 4

As Leo mentioned, 2021 was another successful year for our company. We delivered results in the top half of our guidance range despite significant storm disruption. We have strong fundamentals that underline our plan, which supports steady predictable growth and are working to do even better. As Leo mentioned, Entergy has a unique and significant opportunity ahead. We are focused on translating that opportunity into a reality for our customers, our employees, our communities and our owners.

Speaker 4

We look forward to talking more about these opportunities for you now over the coming months and at our Analyst Day in June. And now the Entergy team is available to answer questions.

Operator

Thank you. And I'll stand by as we compile the Q and A roster. Our first question comes from Shah Pareza of Guggenheim Partners, your line is open.

Speaker 5

Hi, good morning, Leo and team. It's actually Constantine here for Shar. Congrats on a great quarter and a closeout of the year. I appreciate the comments on potential upside from resiliency In the prepared remarks, I believe Mississippi has received an independent consultant recommendation on resiliency. Do you have any early indications on what the governing factors are and including some of the spending.

Speaker 5

Is it bills, regulatory construct, financing needs? Any color on the early discussions that you may have?

Speaker 6

Yes. This is Rod. Good morning. I think the early discussions are going to be focused On the state by state cost benefit analysis, if you think about our desire to accelerate resiliency, Leo alluded to it. You got 4 dimensions We talked about one of them being storm intensity, the frequency, the duration and the location.

Speaker 6

We're at the early stages right now of doing the statistical analysis around various scenarios. Each of those scenarios is going to play out differently in each of our jurisdictions. We think the lion's share of the work, as you might expect, is going to show up In Louisiana, that's the subject of the technical conference when we kind of 0 in On the scenarios and the planning assumptions where the regulator along with the customers would be in a better position to make a decision on what direction they want to go But as Leo alluded to that the technical conference is to prelude to the filings later in the year when we start To actually show the public kind of what we have to believe in order to put a specific acceleration plan in place. The nuance is being a state by state play, if that's helpful, but it's early in the process, which is why you're hearing us framing it up in general terms.

Speaker 5

Okay. That's helpful color. And just with the FEMA applications for resiliency funding of the 450,000,000 Does that kind of play a factor in how those plans get developed? And are those projects included in the CapEx plan? Or would you kind of Fund those projects yourself if the FEMA applications don't go through?

Speaker 6

As we stated before, Anything that comes from the Fed helps to offset what would otherwise be borne by customers. And so we're going to remain actively involved ensuring we could maximize whatever input, the feds might be able to provide. That said, we still have to go forward With regulators assuming that the feds don't contribute, whether it's offsetting existing storm costs We are putting forth federal funds toward future resiliency spend. But our plans are assuming From a scenario planning perspective, both dynamics, but it's not dependent upon federal funds.

Speaker 5

Okay. That's great color. And just a quick follow-up on the equity needs and kudos on to the whole team for materially kind of mitigating the from the Analyst Day, curious on your thoughts on the timing for the remaining $700,000,000 in plan. Is there a threshold or event that could accelerate or You have some cushion to defer, given the progress made in 2021, maybe a continuation of the ATM at a modest level?

Speaker 4

Yes, this is Drew. We are still mindful that we'd like to get this done. And so we are continuing to work through with the ATM that we've been put that we put in place before. I think you'll continue to see us use that And we could knock this out fairly quickly with that framework. We'll be mindful of any other opportunities If the right market conditions come along that allow us to go ahead and finish it off through a block, So we're paying close attention to that.

Speaker 4

But as you can tell, the number has gotten much smaller. And so the end is sort of in sight for us

Operator

Thank you. Okay. Next up, we have on the line Jeremy Tonet of JPMorgan. Your line is open.

Speaker 7

Hi, good morning.

Speaker 2

Good morning, Jeremy.

Speaker 7

Just want to start on load growth, if I could. If you could provide a little bit more detail on the significant growth on the industrial side, you provided some commentary there in the slides, but just wondering How you see that trending, I guess, relative to pre pandemic levels and I guess, expectations to kind of exceed that? And then you talked a bit about green demand. Just wondering if you could update us a little bit more on where does the green tariff demand stand now across this customer base versus Where it was 12 months ago and how you see that kind of evolving over time?

Speaker 4

So this is Drew. I'll take the first piece on The load growth and I'll let Rod talk about the green tariff. So I mean overall, our load growth The industrial side continues to be robust. I went through some of the drivers for our main industries in my prepared remarks. Those are in really good places.

Speaker 4

Then we do with the announcements that we talked about with U. S. Steel and Sempra, and we are continuing to see Demand it, but the nature of it is evolving. And you see that in what's happening there. I mean, there Those customers are looking for, clean, green options at a low cost, and we are well situated for that.

Speaker 4

And as a result, That's sort of our opportunity from a generation perspective. A lot of the other fundamentals that we've had along are still there, proximity to Gulf Coast, proximity The Mississippi River, available workforce, supportive communities, all of that is still there It continues to attract investments from our customers and from others from outside the area today. So Relative to the pre pandemic, I would say that's pretty good. But post pandemic, we're seeing that shift to Wanting that clean electrification opportunity and that is what we are seeing This year, as you go into 'twenty two, it's a little bit lower, but as you look out to 'twenty four and beyond, Yes, we certainly expect it to continue to ramp up on that clean electrification opportunity.

Speaker 6

And I'll simply add. Leo alluded to the 30 terawatt hours of an addressable market through 2,030 And the efforts that we've taken internally to engage differently with those customers to kind of identify how this demand might play out. What we saw with U. S. Steel and Sempra, we think, underscores the thesis that the opportunity for growth is there.

Speaker 6

We'll share far more details about how we see the next 5 years playing out at Analyst Day, But the early indicators are that we're pretty confident that our industrial customers in particular And we're seeing it kind of flip down into the smaller commercial sector. They are they've already made public their plans To reduce their carbon emissions, then we think we have a unique opportunity to play a role in helping them get there. And that does Foreshadow for us a greater demand for our green products, also underscoring, as Leo alluded to in his comments, The significance of our low emitting and efficient gas generation, as well as our nuclear fleet, Not to mention the up to 11 gigs through 2,030 for solar. But more to come at Analyst Day. But So far, early indications are looking really good for our ability to help our customers meet their sustainability objectives.

Speaker 7

That's helpful. Thanks for that. And kind of Green tear.

Speaker 4

It's on the green tear. On the green tear. Okay.

Speaker 7

That's helpful. Thanks for that. And maybe picking up on the point there, without front running the Analyst Day, are there any broad strokes that you could provide for us as far as Themes or other topics that we might expect at the Analyst Day update wise?

Speaker 2

I think, as I mentioned, Jeremy, we're going to go out a couple of extra years as we always do at Analyst Day. And those opportunities that Rod talked about, even if you think about U. S. Steel and Sempra, for example, those are 24 and 27 in service days. So this acceleration really picks up as you get out kind of the 2024 and beyond timeframe.

Speaker 2

So I think that will be the As far as the major theme, we'll talk a little bit about what we may be seeing in that regard. So more detail

Operator

One moment please. We ask that you remain on the line. The conference will resume shortly. We apologize. The speakers have returned.

Speaker 4

All right. So I I don't know, Leo, if you want to respond. Yes. I don't

Speaker 2

know if you got that last answer. I know, Jeremy, you had asked about on Analyst Day. And I was mentioning that we'll go a couple of years out farther than the 2024 current outlook. And that will be interesting because what we're starting to see from this electrification opportunities and these growth opportunities If that's not the time things could start to show up is 2024 and beyond. If you think about U.

Speaker 2

S. Steel and Sempra, those Two announcements, those are 2024 and 2027 in service dates for those facilities. So The opportunities that we're talking about does start to show up really outside the balance of the current capital plan. That will be probably the biggest pieces that we'll be talking about.

Speaker 7

Got it. That's helpful. And just one more, if I could. With regards to Grand Gulf, given stronger operations in 2021, just wondering if you could update us, I guess, how things are Right now, operations wise, in 2022 expectations and has this kind of improved performance and really kind of coming through when needed improved Stakeholder conversations, just wondering if you could provide any update there?

Speaker 2

Well, Ukraine Gulf has improved operations. I mentioned in my prepared remarks, it had its highest generation output ever in 2021, and it's our expectation to continue to have that Performance going into the future will be better, as we continue to through outages upgrade the equipment Our nuclear plants are going to be very, very important to the economic development of our jurisdiction. And as we talk about electrification, I think one thing that goes unnoticed is the already clean nature of our fleet. As one of the cleanest generating fleets in the country with Some of these decarbonization objectives can be met by electrifying processes just using the grid power that we have today Even before we build out the renewables, because it already meets scope 2 needs that some of our customers have. The objectives of the majority of our customers are decarbonization.

Speaker 2

So we have a lot of dialogue The nuclear fleet being an important part of that decarbonization. So I think The dialogue around nuclear has changed significantly in terms of its importance in the future of the economy of the states in which we operate. So it's a holistic approach. It's an important part of not only the reliability of the system, but the sustainability of the system. And as more and more customers demand carbon free energy that follows their load, we're going to be an advantage in

Speaker 7

Got it. Actually one last one if I could. Just any updated thoughts that you have on Advanced Nuclear Small Module Reactors and if you think that this could start to enter the energy plans towards the end of the decade here?

Speaker 2

Well, certainly, we have folks who are following the development of all different kinds of technologies in the nuclear space. And should we get to a point where some form of SMR is economically viable, We'd certainly make it part of the mix, because as I mentioned, the nuclear the decarbonization is what everybody is after. And today, the most reliable way to make a lot of energy without emitting carbon is through nuclear power. So we're following Those developments across the board to the extent they become economically viable, we would certainly pursue it. And as history has proven, our jurisdictions are typically open to the development of new assets to create jobs, High energy intensity and to really benefit economic development.

Speaker 2

So too early to say how quickly Those will become part of the resource mix. Certainly, there's a lot of development left to be done, but Given the focus on carbon reduction, people are spending a lot of time and effort as is the federal government on making sure that we're supporting that sort of R and D.

Operator

Thank you. And next we have on the line Michael of Goldman Sachs. Your line is open.

Speaker 8

Hey, guys. Thank you for taking my question. I actually have a couple and they're kind of unrelated to each other. First of all, on the Orange County project, Seems like it's a long construction timeframe, 4 years, right, if you get approval in May, June timeframe, but in service not till May of 26. Is that due to the hydrogen capability being added or is there some other driver?

Speaker 8

Normally combined cycle is a little bit quicker than that.

Speaker 2

No, there's nothing really. I mean by the time we get the regulatory approval, get into the process, there's a little bit more work done At this stage on the hydrogen side, but it's not a significant cost driver or anything like that at these early stages to get to the 30% blend capability, so nothing out of the ordinary. It's a big plan.

Speaker 6

And I

Speaker 4

would Say that, Michael, that given our history of construction around CCTTs, we come in underneath the expected timeline in pretty much every instance. So I wouldn't expect that we would end up in June of 26 unless there was some other kind of weather related issue or something else going on.

Speaker 8

Got it. Okay. And then an unrelated topic. The FERC put out its policy statement about gas infrastructure projects and GHG emissions. And it obviously matters to you.

Speaker 8

You're not building pipelines of material size at all or anything, but There are lots of companies in your service territory who are major customers, who either are trying to build new pipelines or trying to build New LNG facilities or other petchem related, energy related infrastructure. Just curious How you see this process changing the permitting for new gas infrastructure and what that means for your Louisiana and Texas

Speaker 6

Yes. Michael, it's Rod. As you might imagine, We are closely aligned with our industrial customer base as you alluded to. In terms of what it might have been for the future, it fits into our point of view That perhaps this might be a catalyst for the acceleration of decarbonization efforts, All of which fuels our point of view around our ability to help them Achieve their objective, whether it's through the through scope to resources from our electrical supply Or any opportunity we have to electrify sort of their Scope 1 processes, but just extrapolating From that FERC ruling for us, we're viewing it through the lens of what's the implication for the customers, them moving faster As a condition of permitting to take advantage of the other market advantages of locating expanding in our service So it is unclear how it will ultimately play out. But as you might imagine, we are giving thought to how that applies to And we are stakeholders in those proceedings for that very reason.

Operator

And next on the line, we have Jonathan Arnold of Vertical Research. Your line is open.

Speaker 3

Hi, good morning guys.

Speaker 2

Good morning, Josh.

Speaker 3

Just a quick one on longer term financing. Drew, I think you sort of talked about being done once you've done the 22% to 24% reduced Equity, raise, is how do you think about that sort of post 2024 period? Is something sort of similar to the run rate you've effectively been doing here a sensible assumption? Or could you be sort of out of the Capital raise business for a few years like you've been in the past.

Speaker 4

That's a good question, Jonathan. Obviously, we've talked a lot about the types of financings that are available to us and what would be good in certain situations. The financing with the equity capital markets is useful because it gives you a firm idea of what you're going to get and it's A liquid market and you can close quickly. And so that's what we've been doing here recently because we have very near term need. And if you're talking about needs out beyond 2024, there are different options that become available because it is such long term And so it's not just capital markets, some of the other things that are out there that we've talked about

Speaker 6

before might be available to

Speaker 4

you from a strategic perspective rather than Capital Markets perspective, but that's longer term. That's not anything that we would be Thinking about necessarily right this minute, but as you look out beyond our horizon period, there are other options available, Steve.

Speaker 3

Okay. And just one just to make sure I've got this straight, the $300,000,000 or so that you did under the ATM that's not yet settled, Those shares are not yet in the share count, correct?

Speaker 4

That's correct.

Speaker 3

Okay. Thank you. And just one other thing, can you remind us or maybe tell us what went on with the Liberty County Solar project and what are there any lessons learned around that for a better outcome next time around or just some reflections there?

Speaker 6

Yes. This is Rod. The Liberty County project was pulled Not because the commission didn't recognize the benefits of the actual project. That particular one, and again, it was unique to Liberty County, had more to do with where the Texas Commission was In terms of how they view the Lithia County project and its implication inside

Speaker 4

of ERCOT.

Speaker 6

And so I don't want to send a signal that there was anything necessarily untoward with the project. We pulled it Because we wanted to come back to the commission, 1, when they actually had a full commission. And I will share with you the lack of a full commission It was also influential in their reticence to approve the deal. And so It's a short it was a short time timing play for us. We had greater needs for capital and we were also recognizing that there was a robust response 2 additional RFPs and decided to pull it, but it does not in any way toward our belief or in our view The Texas staff belief in the Bon Belios project.

Speaker 6

So we expect to come back with a bit more, but I didn't want you to over read

Speaker 3

No. Do you expect to come back with that particular project or just with other things? Is that

Speaker 6

what I'm not Well, the timing of that particular one, There's going to be there might be more to come there, but there's more than a robust opportunity for us To fill our needs with the other projects. So I won't give any signaling to that specific one, but the pipeline is quite robust.

Speaker 3

Great. Thank you, Rob.

Operator

Thank you. And next on the line, we have Paul Zimbardo of Bank of America. Your line is open.

Speaker 9

Hi, good morning. I want to follow-up on some of the potential storm hardening acceleration where you talked about some of those Data points leading up to the Analyst Day. Should we think of that as purely incremental capital or could that Kind of mitigate some of the capital already in the plan as you don't need to do some other work around storm hardening.

Speaker 2

It's really an acceleration of things that we've identified could be done. So For example, in our current 3 year outlook, there's around $2,700,000,000 of T and D investments That you could considering could consider resilience investments, about $1,700,000,000 of that's in the T space, about $1,000,000,000 of it In the D space, we've been doing resilience spending In a combination of new projects that we do and then we do storm hardening after the fact When we're repairing after a storm is well built to the new standards. What we'd be looking at with the resilience spend that we would Put out is are there things we could do faster than they would have otherwise been on the schedule. So, it would be incremental in the time frames that it would

Speaker 9

Yes, it does. Now that's clear. Thank you. And then the other question I had was just given some of the broad inflationary pressures, How are you thinking in comfort level about ability to execute in Arkansas relative to the 4% rate cap?

Speaker 4

Yes. This is Drew. I'll start and maybe Rod can add to it. Obviously, We're not immune from whatever inflation issues are out there, and so we're monitoring it closely. Yes, there's different pieces to it.

Speaker 4

There's the fuel piece, which gets collected through a separate fuel rider in Arkansas. And that might move the 4% cap up a little bit,

Speaker 2

But it's not

Speaker 4

going to hinder our investment there. On the O and M side, we haven't seen The kind of pressures that we've been hearing about seeing in other sectors, that doesn't mean that we haven't had some. We have had some Dealing with it on more of a spot basis and ramping up our continuous improvement to help manage against the potential for And then on the capital side, we are seeing some Pressure on the capital side, particularly when talking about some of these solar projects. But in the RFPs that we've been conducting recently and that we expect to conduct, we're still in the very early innings of our renewable Investments and while we've seen some pressure on some of the projects that we've already have sort of underway, The bulk of it is to come and all those expectations already have built in understanding of the inflation environment And those projects are still very robust. They have strong NPVs for the customer, and so we expect them to get support from the retail regulators as well.

Speaker 4

And that kind of offset with fuel costs and other things we think will fit into The caps in Arkansas in particular. So right now, we don't see any real challenges. We're obviously monitoring inflation very closely, and adjusting our business and ramping up continuous improvement in order to manage it, but we don't see anything

Operator

Thank you. And next on the line, we have Stephen Byrd of Morgan Stanley. Your line is open.

Speaker 10

Hi, good morning.

Speaker 2

Good morning, Jeremy.

Speaker 10

I wanted to follow-up on Jeremy's questions just on nuclear operations And looks like there's been good improvement there. And just wondered if you could speak to just dialogue with the NRC. You're not on column 4 and Looks like operations are improving, but is there any additional color you can give in terms of the dialogue with the NRC on nuclear operations?

Speaker 2

We continue to have a lot of dialogue at all levels from the resident inspector to the regions to the headquarters in Washington, certainly around not only Operations with license transfers, etcetera. So, I'd say our relationship with the NRC is strong And it's open. I meet with resident inspectors when I'm on-site. I meet with the region on a regular basis, and I meet All the commissioners when I can. We've had to do a lot of it virtually over the course of the last couple of years, but We continue to have a very robust and open dialogue with the NRC and it's very constructive relationship.

Speaker 10

Understood. And is there been sort The improvements in operational performance of your nuclear fleet?

Speaker 3

Yes.

Speaker 2

Okay,

Speaker 10

great. And then just one last one for me. This is a common question kind of across many utilities, but just given the commodity cost outlook, could you just speak a bit to The outlook for customer bill increase, especially residential customer bill increases across your footprint. I know residential is a smaller percentage for you all than semi tools, but I'm

Speaker 4

Yes, Steve, thanks. It's Drew. So there's a couple of things going on in our builds and it depends on the jurisdiction in particular. Yes, I already talked about inflation and what that means. Going back to the fuel piece of that, When you're talking about our Louisiana and Texas, winter storm Yuri in 2021 raised the fuel cost Quite a bit in those 2 jurisdictions for 2021.

Speaker 4

So now that the fuel curve has come up a bit, Yes. It's not as much of an impact, frankly, on customers in those jurisdictions because we already had some high fuel prices because of winter storm Yuri. And then as you look forward, the fuel curve is, of course, a bit backwardated. And our expectations are Typically above the forward curve once you get out a few years and that's still the case. Obviously, there's a lot of other things besides inflation going on Yes, the price of natural gas today, but we think we're pretty well situated from a customer perspective there.

Speaker 4

And then Also in Louisiana and Texas, you have this securitization thesis coming on in the next Probably 18 months or so. Well, hopefully by the end of the year, frankly, to get all the sterilization done in Louisiana. So that would probably By the beginning of next year, you'd see the full effects of those. That's a pretty big step up, particularly in Louisiana. But once we get past that, I think the growth rate in the bills should be fairly reasonable.

Speaker 4

And We've historically said at or below inflation. Obviously, that means something different today. But our at or below inflation is probably Going to still be true based on historical expectation for inflation less than 3%. So that's what we'd expect to see Once we got past sort of the securitization and the current higher costs associated with fuel.

Speaker 10

Very good. Thank you very much.

Speaker 2

Thanks, Stephen.

Operator

Thank you. And our last question comes from the line of Greg O'Rourke of UBS. Your line is open.

Speaker 11

Thank you. Assuming all goes well at the Louisiana Public Service Commission, what are the steps for Getting storm recovery that you'll have, there's the securitization that you touched on just a minute Can you walk through the steps and the amounts that you expect to be coming in?

Speaker 4

Sure. So in Texas, we've already got the orders and so we're in the process of setting up the actual Sourcing of the funds and securitization funds, which should take place in March or April, that's I think in the neighborhood of 290,000,000 The expectation for that, and then assuming we get the outcome in Louisiana today, there's approval by the LPSC. In the next few months, we would set up the transaction for that. That would be around $3,200,000,000 including the $1,000,000,000 of EIDA funds. That's going to be a little bit different than the Texas transaction that's going through the state.

Speaker 4

In fact, We have already approval from the FAFON permission to get that done on the first piece, but we'll be setting that up here, Hopefully very soon. And then of course the remainder of the IDA costs would be hopefully by the end of the year and a similar process.

Speaker 11

Okay, thanks.

Speaker 2

Thank you.

Operator

Thank you. And now I will hand the conference back over to Bill Abler for closing comments.

Speaker 1

Thank you, Chris, and thanks to everyone for participating this morning. Our annual report on Form 10 ks is due to the SEC on February 25th and provides more details and disclosures about our financial statements. Events that occurred prior to the date of the 10 ks filing that provide additional evidence 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

Operator

Everyone, this concludes today's conference call. Thank you all for participating. You may now disconnect and have a good day.

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