Regulation of Entergy’s Business
Federal Power Act
The Federal Power Act provides the FERC the authority to regulate:
| • | the transmission and wholesale sale of electric energy in interstate commerce; |

| • | the reliability of the high voltage interstate transmission system through reliability standards; |

| • | sale or acquisition of certain assets; |

| • | securities issuances; |

| • | the licensing of certain hydroelectric projects; |

| • | certain other activities, including accounting policies and practices of electric and gas utilities; and |

| • | changes in control of FERC jurisdictional entities or rate schedules. |

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The Federal Power Act gives the FERC jurisdiction over the rates charged by System Energy for Grand Gulf capacity and energy provided to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans and over some of the rates charged by Entergy Arkansas and Entergy Louisiana. The FERC also regulates the provisions of the System Agreement, including the rates, and the provision of transmission service to wholesale market participants. The FERC also regulates the MISO RTO, an independent entity that maintains functional control over the combined transmission systems of its members and administers wholesale energy, capacity, and ancillary services markets for market participants in the MISO region, including the Utility operating companies. FERC regulation of the MISO RTO includes regulation of the design and implementation of the wholesale markets administered by the MISO RTO, as well as the rates, terms, and conditions of open access transmission service over the member systems and the allocation of costs associated with transmission upgrades.
Entergy Arkansas holds a FERC license that expires in 2053 for two hydroelectric projects totaling 70 MW of capacity.
State Regulation
Utility
Entergy Arkansas is subject to regulation by the APSC, which includes the authority to:
| • | oversee utility service; |

| • | set retail rates; |

| • | determine reasonable and adequate service; |

| • | control leasing; |

| • | control the acquisition or sale of any public utility plant or property constituting an operating unit or system; |

| • | set rates of depreciation; |

| • | issue certificates of convenience and necessity and certificates of environmental compatibility and public need; and |

| • | regulate the issuance and sale of certain securities. |

Additionally, Entergy Arkansas serves a limited number of retail customers in Tennessee. Pursuant to recent legislation enacted in Tennessee, Entergy Arkansas is subject to complaints before the Tennessee Regulatory Authority only if it fails to treat its retail customers in Tennessee in the same manner as its retail customers in Arkansas. Additionally, Entergy Arkansas maintains limited facilities in Missouri but does not provide retail electric service to customers in Missouri. Although Entergy Arkansas obtained a certificate with respect to its Missouri facilities, Entergy Arkansas is not subject to the retail rate or regulatory scheme in Missouri.
Entergy Louisiana’s electric and gas business is subject to regulation by the LPSC as to:
| • | utility service; |

| • | retail rates and charges; |

| • | certification of generating facilities and certain transmission projects; |

| • | certification of power or capacity purchase contracts; |

| • | audit of the fuel adjustment charge, environmental adjustment charge, and avoided cost payment to Qualifying Facilities; |

| • | integrated resource planning; |

| • | utility mergers and acquisitions and other changes of control; and |

| • | depreciation and other matters. |

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Entergy Mississippi is subject to regulation by the MPSC as to the following:
| • | utility service; |

| • | service areas; |

| • | facilities; |

| • | certification of generating facilities and certain transmission projects; |

| • | retail rates; |

| • | fuel cost recovery; |

| • | depreciation rates; and |

| • | mergers and changes of control. |

Entergy Mississippi is also subject to regulation by the APSC as to the certificate of environmental compatibility and public need for the Independence Station, which is located in Arkansas.
Entergy New Orleans is subject to regulation by the City Council as to the following:
| • | utility service; |

| • | retail rates and charges; |

| • | standards of service; |

| • | depreciation and other matters; |

| • | issuance and sale of certain securities; and |

| • | mergers and changes of control. |

To the extent authorized by governing legislation, Entergy Texas is subject to the original jurisdiction of the municipal authorities of a number of incorporated cities in Texas with appellate jurisdiction over such matters residing in the PUCT. Entergy Texas is also subject to regulation by the PUCT as to:
| • | retail rates and service in unincorporated areas of its service territory, and in municipalities that have ceded jurisdiction to the PUCT; |

| • | customer service standards; |

| • | certification of certain transmission and generation projects; and |

| • | extensions of service into new areas. |

Regulation of the Nuclear Power Industry
Atomic Energy Act of 1954 and Energy Reorganization Act of 1974
Under the Atomic Energy Act of 1954 and the Energy Reorganization Act of 1974, the operation of nuclear plants is heavily regulated by the NRC, which has broad power to impose licensing and safety-related requirements. The NRC has broad authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Entergy Arkansas, Entergy Louisiana, and System Energy, as owners of all or portions of ANO, River Bend and Waterford 3, and Grand Gulf, respectively, and Entergy Operations, as the licensee and operator of these units, are subject to the jurisdiction of the NRC. Entergy subsidiaries in the Entergy Wholesale Commodities segment are subject to the NRC’s jurisdiction as the owners and operators of Pilgrim, Indian Point Energy Center, Vermont Yankee, and Palisades. Substantial capital expenditures, increased operating expenses, and/or higher decommissioning costs at Entergy’s nuclear plants because of revised safety requirements of the NRC could be required in the future.
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Nuclear Waste Policy Act of 1982
Spent Nuclear Fuel
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for a specified fee, to construct storage facilities for, and to dispose of, all spent nuclear fuel and other high-level radioactive waste generated by domestic nuclear power reactors. Entergy’s nuclear owner/licensee subsidiaries have been charged fees for the estimated future disposal costs of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE is to furnish disposal services at a cost of one mill per net kWh generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy Arkansas is the only one of the Utility operating companies that generated electric power with nuclear fuel prior to that date and has a recorded liability as of December 31, 2017 of $183.3 million for the one-time fee. Entergy accepted assignment of the Pilgrim, FitzPatrick and Indian Point 3, Indian Point 1 and Indian Point 2, Vermont Yankee, Palisades, and Big Rock Point spent fuel disposal contracts with the DOE held by their previous owners. The FitzPatrick spent fuel disposal contract was assigned to Exelon as part of the sale of the plant, completed in March 2017. The previous owners have paid or retained liability for the fees for all generation prior to the purchase dates of those plants. The fees payable to the DOE may be adjusted in the future to assure full recovery. Entergy considers all costs incurred for the disposal of spent nuclear fuel, except accrued interest, to be proper components of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities for the Utility plants. Entergy’s total spent fuel fees to date, including the one-time fee liability of Entergy Arkansas, have surpassed $1.6 billion (exclusive of amounts relating to Entergy plants that were paid or are owed by prior owners of those plants).
The permanent spent fuel repository in the U.S. has been legislated to be Yucca Mountain, Nevada. The DOE is required by law to proceed with the licensing (the DOE filed the license application in June 2008) and, after the license is granted by the NRC, proceed with the repository construction and commencement of receipt of spent fuel. Because the DOE has not begun accepting spent fuel, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and has breached its spent fuel disposal contracts. The DOE continues to delay meeting its obligation. Specific steps were taken to discontinue the Yucca Mountain project, including a motion to the NRC to withdraw the license application with prejudice and the establishment of a commission to develop recommendations for alternative spent fuel storage solutions. In August 2013 the U.S. Court of Appeals for the D.C. Circuit ordered the NRC to continue with the Yucca Mountain license review, but only to the extent of funds previously appropriated by Congress for that purpose and not yet used. Although the NRC completed the safety evaluation report for the license review in 2015, the previously appropriated funds are not sufficient to complete the review, including required hearings. The government has taken no effective action to date related to the recommendations of the appointed spent fuel study commission. Accordingly, large uncertainty remains regarding the time frame under which the DOE will begin to accept spent fuel from Entergy’s facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at Entergy’s nuclear sites.
Following the defunding of the Yucca Mountain spent fuel repository program, the National Association of Regulatory Utility Commissioners and others sued the government seeking cessation of collection of the one mill per net kWh generated and sold after April 7, 1983 fee. In November 2013 the D.C. Circuit Court of Appeals ordered the DOE to submit a proposal to Congress to reset the fee to zero until the DOE complies with the Nuclear Waste Policy Act or Congress enacts an alternative waste disposal plan. In January 2014 the DOE submitted the proposal to Congress under protest, and also filed a petition for rehearing with the D.C. Circuit. The petition for rehearing was denied. The zero spent fuel fee went into effect prospectively in May 2014. Management cannot predict the potential timing or magnitude of future spent fuel fee revisions that may occur.
As a result of the DOE’s failure to begin disposal of spent nuclear fuel in 1998 pursuant to the Nuclear Waste Policy Act of 1982 and the spent fuel disposal contracts, Entergy’s nuclear owner/licensee subsidiaries have incurred and will continue to incur damages. These subsidiaries have been, and continue to be, involved in litigation to recover the damages caused by the DOE’s delay in performance. Through 2017, Entergy’s subsidiaries won and collected on judgments against the government totaling over $500 million.
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In April 2015 the U.S. Court of Federal Claims issued a judgment in the amount of $29 million in favor of Entergy Arkansas and against the DOE in the second round ANO damages case. Also in April 2015 the U.S. Court of Federal Claims issued a judgment in the amount of $44 million in favor of System Energy and against the DOE in the second round Grand Gulf damages case. In June 2015, Entergy Arkansas and System Energy appealed to the U.S. Court of Appeals for the Federal Circuit portions of those decisions relating to cask loading costs. In April 2016 the Federal Circuit issued a decision in both appeals in favor of Entergy Arkansas and System Energy, and remanded the cases back to the U.S. Court of Federal Claims. In June 2016 the U.S. Court of Federal Claims issued a final judgment in the amount of $49 million in favor of System Energy and against the DOE in the second round Grand Gulf damages case, and Entergy received the payment from the U.S. Treasury in August 2016. In July 2016 the U.S. Court of Federal Claims issued a final judgment in the amount of $31 million in favor of Entergy Arkansas and against the DOE in the second round ANO damages case, and Entergy received payment from the U.S. Treasury in October 2016.
In May 2015 the U.S. Court of Federal Claims issued a final partial summary judgment on a portion, $21 million, of the claims in the Palisades case. The DOE did not appeal that decision, and Entergy received the payment from the U.S. Treasury in October 2015.
In December 2015 the U.S. Court of Federal Claims issued a judgment in the amount of $81 million in favor of Entergy Nuclear Indian Point 3 and Entergy Nuclear FitzPatrick in the first round Indian Point 3/FitzPatrick damages case, and Entergy received the payment from the U.S. Treasury in June 2016.
In January 2016 the U.S. Court of Federal Claims issued a judgment in the amount of $49 million in favor of Entergy Louisiana and against the DOE in the first round Waterford 3 damages case. In April 2016, Entergy Louisiana appealed to the U.S. Court of Appeals for the Federal Circuit the portion of that decision relating to cask loading costs. After the ANO and Grand Gulf appeal was rendered, the U.S. Court of Appeals for the Federal Circuit remanded the Waterford 3 case back to the U.S. Court of Federal Claims for decision in accordance with the U.S. Court of Appeals ruling on cask loading costs. In August 2016 the U.S. Court of Federal Claims issued a final judgment in the Waterford 3 case in the amount of $53 million, and Entergy Louisiana received the payment from the U.S. Treasury in November 2016.
In April 2016 the U.S. Court of Federal Claims issued a partial judgment in the amount of $42 million in favor of Entergy Louisiana and against the DOE in the first round River Bend damages case, reserving the issue of cask loading costs pending resolution of the appeal on the same issues in the Entergy Arkansas and System Energy cases. Entergy Louisiana received payment from the U.S. Treasury in August 2016. In September 2016 the U.S. Court of Federal Claims issued a further judgment in the River Bend case in the amount of $5 million. Entergy Louisiana received the payment from the U.S. Treasury in January 2017. In May 2017 the U.S. Court of Federal Claims issued a final judgment in the first round River Bend damages case for $0.6 million, awarding certain cask loading costs that had not previously been adjudicated by the court.
In May 2016, Entergy Nuclear Vermont Yankee and the DOE entered into a stipulated agreement and the U.S. Court of Federal Claims issued a judgment in the amount of $19 million in favor of Entergy Nuclear Vermont Yankee and against the DOE in the second round Vermont Yankee damages case. Entergy received payment from the U.S. Treasury in June 2016.
In September 2016 the U.S. Court of Federal Claims issued a final judgment in the Entergy Nuclear Palisades case in the amount of $14 million. Entergy Nuclear Palisades received payment from the U.S. Treasury in January 2017.
In October 2016 the U.S. Supreme Court of Federal Claims issued a judgment in the second round Entergy Nuclear Indian Point 2 case in the amount of $34 million. Entergy Nuclear Indian Point 2 received payment from the U.S. Treasury in January 2017.
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Management cannot predict the timing or amount of any potential recoveries on other claims filed by Entergy subsidiaries, and cannot predict the timing of any eventual receipt from the DOE of the U.S. Court of Federal Claims damage awards.
Pending DOE acceptance and disposal of spent nuclear fuel, the owners of nuclear plants are providing their own spent fuel storage. Storage capability additions using dry casks began operations at Palisades in 1993, at ANO in 1996, at FitzPatrick in 2002, at River Bend in 2005, at Grand Gulf in 2006, at Indian Point and Vermont Yankee in 2008, at Waterford 3 in 2011, and at Pilgrim in 2015. These facilities will be expanded as needed.
Nuclear Plant Decommissioning
Entergy Arkansas, Entergy Louisiana, and System Energy are entitled to recover from customers through electric rates the estimated decommissioning costs for ANO, Waterford 3, and Grand Gulf, respectively. In addition, Entergy Louisiana and Entergy Texas are entitled to recover from customers through electric rates the estimated decommissioning costs for the portion of River Bend subject to retail rate regulation. The collections are deposited in trust funds that can only be used for future decommissioning costs. Entergy periodically reviews and updates the estimated decommissioning costs to reflect inflation and changes in regulatory requirements and technology, and then makes applications to the regulatory authorities to reflect, in rates, the changes in projected decommissioning costs.
In July 2010 the LPSC approved increased decommissioning collections for Waterford 3 and the Louisiana regulated share of River Bend and in December 2010 the PUCT approved increased decommissioning collections for the Texas share of River Bend to address previously identified funding shortfalls. In December 2016 the APSC ordered continued collections for decommissioning for ANO 2, while finding that ANO 1’s decommissioning was adequately funded without continued collections. In December 2017 the APSC ordered continued collections for decommissioning for ANO 2, and again found that ANO 1’s decommissioning was adequately funded without continued collections. In September 2016 the NRC issued a 20-year operating license renewal for Grand Gulf. In a 2017 filing at the FERC, System Energy stated that with the renewed operating license, Grand Gulf’s decommissioning trust was sufficiently funded, and proposed (among other things) to cease decommissioning collections for Grand Gulf effective October 1, 2017. The FERC accepted the proposal subject to refund, and appointed a settlement judge to oversee settlement negotiations in the case. Entergy currently believes its decommissioning funding will be sufficient for its nuclear plants subject to retail rate regulation, although decommissioning cost inflation and trust fund performance will ultimately determine the adequacy of the funding amounts.
In November 2016, Entergy entered into an agreement to sell 100% of the membership interest in Entergy Nuclear Vermont Yankee to a subsidiary of NorthStar. Upon closing of the sale, NorthStar will assume ownership of Vermont Yankee and its decommissioning and site restoration trusts, together with complete responsibility for the facility’s decommissioning and site restoration. The sale is subject to certain closing conditions, including approval from the NRC and the State of Vermont Public Utility Commission. See Note 9 to the financial statements for further discussion of Vermont Yankee decommissioning costs and see “Entergy Wholesale Commodities Exit from the Merchant Power Business” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion of the NorthStar transaction.
For the Indian Point 3 and FitzPatrick plants purchased in 2000 from NYPA, NYPA retained the decommissioning trust funds and the decommissioning liabilities with the right to require the Entergy subsidiaries to assume each of the decommissioning liabilities provided that it assigns the corresponding decommissioning trust, up to a specified level, to the Entergy subsidiaries. In August 2016, Entergy entered into a trust transfer agreement with NYPA to transfer the decommissioning trust funds and decommissioning liabilities for the Indian Point 3 and FitzPatrick plants to Entergy, which was completed in January 2017. In March 2017, Entergy sold the FitzPatrick plant to Exelon, and as part of the transaction, the FitzPatrick decommissioning trust fund, along with the decommissioning obligation for that plant, was transferred to Exelon. The FitzPatrick spent fuel disposal contract was assigned to Exelon as part of the transaction. See Note 14 to the financial statements for discussion of the FitzPatrick sale.
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In March 2017 filings with the NRC were made for certain Entergy subsidiaries’ nuclear plants reporting on decommissioning funding. Those reports showed that decommissioning funding for each of those nuclear plants met the NRC’s financial assurance requirements.
Additional information with respect to Entergy’s decommissioning costs and decommissioning trust funds is found in Note 9 and Note 16 to the financial statements.
Price-Anderson Act
The Price-Anderson Act requires that reactor licensees purchase and maintain the maximum amount of nuclear liability insurance available and participate in an industry assessment program called Secondary Financial Protection in order to protect the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclear power industry. Congress amended and renewed the Price-Anderson Act in 2005 for a term through 2025. The Price-Anderson Act limits the contingent liability for a single nuclear incident to a maximum assessment of approximately $127.3 million per reactor (with 102 nuclear industry reactors currently participating). In the case of a nuclear event in which Entergy Arkansas, Entergy Louisiana, System Energy, or an Entergy Wholesale Commodities company is liable, protection is afforded through a combination of private insurance and the Secondary Financial Protection program. In addition to this, insurance for property damage, costs of replacement power, and other risks relating to nuclear generating units is also purchased. The Price-Anderson Act and insurance applicable to the nuclear programs of Entergy are discussed in more detail in Note 8 to the financial statements.
NRC Reactor Oversight Process
The NRC’s Reactor Oversight Process is a program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response. The NRC evaluates plant performance by analyzing two distinct inputs: inspection findings resulting from the NRC’s inspection program and performance indicators reported by the licensee. The evaluations result in the placement of each plant in one of the NRC’s Reactor Oversight Process Action Matrix columns: “licensee response column,” or Column 1, “regulatory response column,” or Column 2, “degraded cornerstone column,” or Column 3, and “multiple/repetitive degraded cornerstone column,” or Column 4. Plants in Column 1 are subject to normal NRC inspection activities. Plants in Column 2, Column 3, or Column 4 are subject to progressively increasing levels of inspection by the NRC with, in general, progressively increasing levels of associated costs. Waterford 3, River Bend, Indian Point 2, Indian Point 3, and Palisades are in Column 1. Grand Gulf is in Column 2. ANO 1 and 2 are in Column 4, and are subject to an extensive set of required NRC inspections. Pilgrim is also in Column 4 and is subject to an extensive, but limited, set of required NRC inspections. See Note 8 to the financial statements for further discussion of the placement of ANO 1 and 2, and Pilgrim in Column 4 of the NRC’s matrix.
Environmental Regulation
Entergy’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy’s businesses are in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted below. Because environmental regulations are subject to change, future compliance requirements and costs cannot be precisely estimated. Except to the extent discussed below, at this time compliance with federal, state, and local provisions regulating the discharge of materials into the environment, or otherwise protecting the environment, is incorporated into the routine cost structure of Entergy’s businesses and is not expected to have a material effect on their competitive position, results of operations, cash flows, or financial position.
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Clean Air Act and Subsequent Amendments
The Clean Air Act and its amendments establish several programs that currently or in the future may affect Entergy’s fossil-fueled generation facilities and, to a lesser extent, certain operations at nuclear and other facilities. Individual states also operate similar independent state programs or delegated federal programs that may include requirements more stringent than federal regulatory requirements. These programs include:
| • | New source review and preconstruction permits for new sources of criteria air pollutants, greenhouse gases, and significant modifications to existing facilities; |

| • | Acid rain program for control of sulfur dioxide (SO2) and nitrogen oxides (NOx); |

| • | Nonattainment area programs for control of criteria air pollutants, which could include fee assessments for air pollutant emission sources under Section 185 of the Clean Air Act if attainment is not reached in a timely manner; |

| • | Hazardous air pollutant emissions reduction programs; |

| • | Interstate Air Transport; |

| • | Operating permit programs and enforcement of these and other Clean Air Act programs; |

| • | Regional Haze programs; and |

| • | New and existing source standards for greenhouse gas emissions. |

New Source Review (NSR)
Preconstruction permits are required for new facilities and for existing facilities that undergo a modification that results in a significant net emissions increase and is not classified as routine repair, maintenance, or replacement. Units that undergo certain non-routine modifications must obtain a permit modification and may be required to install additional air pollution control technologies. Entergy has an established process for identifying modifications requiring additional permitting approval and follows the regulations and associated guidance provided by the states and the federal government with regard to the determination of routine repair, maintenance, and replacement. In recent years, however, the EPA has begun an enforcement initiative, aimed primarily at coal plants, to identify modifications that it does not consider routine for which the unit did not obtain a modified permit. Various courts and the EPA have been inconsistent in their judgments regarding modifications that are considered routine and on other legal issues that affect this program.
In February 2011, Entergy received a request from the EPA for several categories of information concerning capital and maintenance projects at the White Bluff and Independence facilities, both located in Arkansas, in order to determine compliance with the Clean Air Act, including NSR requirements and air permits issued by the Arkansas Department of Environmental Quality. In August 2011, Entergy’s Nelson facility, located in Louisiana, received a similar request for information from the EPA. In September 2015 a subsequent request for similar information was received for the White Bluff facility. Entergy responded to all requests. None of these EPA requests for information alleged that the facilities were in violation of law.
In January 2018 and February 2018, Entergy Arkansas, Entergy Mississippi, Entergy Power, and other co-owners received 60-day notice of intent to sue letters from the Sierra Club and the National Parks Conservation Association concerning allegations of violations of new source review and permitting provisions of the Clean Air Act at the Independence and White Bluff coal-burning units, respectively. Entergy is reviewing these claims and will respond accordingly.
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Ozone Nonattainment
Entergy Texas operates one fossil-fueled generating facility (Lewis Creek) and is in the process of permitting and constructing one fossil-fueled facility (Montgomery Count Power Station) in a geographic area that is not in attainment with the currently-enforced national ambient air quality standards (NAAQS) for ozone. The nonattainment area that affects Entergy Texas is the Houston-Galveston-Brazoria area. Areas in nonattainment are classified as “marginal,” “moderate,” “serious,” or “severe.” When an area fails to meet the ambient air standard, the EPA requires state regulatory authorities to prepare state implementation plans meant to cause progress toward bringing the area into attainment with applicable standards.
The Houston-Galveston-Brazoria area was originally classified as “moderate” nonattainment under the 1997 8-hour ozone standard with an attainment date of June 15, 2010. In June 2007 the Texas governor petitioned the EPA to reclassify Houston-Galveston-Brazoria from “moderate” to “severe” and the EPA granted the request in October 2008. In February 2015 the Texas Commission on Environmental Quality (TCEQ) submitted a request to the EPA for a finding that the Houston-Galveston-Brazoria area is in attainment with the 1997 8-hour ozone standard. The EPA issued this finding in December 2015. In April 2015 the EPA revoked the 1997 ozone NAAQS and in May 2016, the EPA issued a proposed rule approving a substitute for the Houston-Galveston-Brazoria area. This redesignation indicates that the area has attained the revoked 1997 8-hour ozone NAAQS due to permanent and enforceable emission reductions and that it will maintain that NAAQS for 10 years from the date of the approval. Final approval, which was effective in December 2016, resulted in the area no longer being subject to any remaining anti-backsliding or non-attainment new source review requirements associated with the revoked 1997 NAAQS.
In March 2008 the EPA revised the NAAQS for ozone, creating the potential for additional counties and parishes in which Entergy operates to be placed in nonattainment status. In April 2012 the EPA released its final non-attainment designations for the 2008 ozone NAAQS. In Entergy’s utility service area, the Houston-Galveston-Brazoria, Texas; Baton Rouge, Louisiana; and Memphis, Tennessee/Mississippi/Arkansas areas were designated as in “marginal” nonattainment. In August 2015 and January 2016, the EPA proposed determinations that the Baton Rouge and Memphis areas had attained the 2008 standard. In May 2016 the EPA finalized those determinations and extended the Houston-Galveston-Brazoria area’s attainment date for the 2008 Ozone standard to July 20, 2016 and reclassified the Baton Rouge area as attainment for ozone under the 2008 8-hour ozone standard. In December 2016 the EPA determined that the Houston-Galveston-Brazoria area had failed to attain the 2008 ozone standard by the 2016 attainment date. This finding reclassifies the Houston-Galveston-Brazoria area from marginal to “moderate.”
In October 2015 the EPA issued a final rule lowering the primary and secondary NAAQS for ozone to a level of 70 parts per billion. States were required to assess their attainment status and recommend designations to the EPA. In January 2018 the EPA proposed that the following counties and parishes in Entergy’s service territory be listed as in non-attainment: in Louisiana, Ascension Parish, East Baton Rouge Parish, West Baton Rouge Parish, Iberville Parish, and Livingston Parish; in Texas, Montgomery County. In addition to Lewis Creek in Montgomery County, Texas, Entergy owns or operates fossil-fueled generating units in East Baton Rouge Parish (Louisiana Station) and in Iberville Parish (Willow Glen), Louisiana. The EPA’s final designations are pending. Entergy will continue to work with state environmental agencies on appropriate methods for assessing attainment and non-attainment with the new standard and, where necessary, in planning for compliance. Following designations by the EPA, states will be required to develop plans intended to return non-attainment areas to a condition of attainment. The timing for that action depends largely on the severity of non-attainment in a given area.
Potential SO2 Nonattainment
The EPA issued a final rule in June 2010 adopting an SO2 1-hour national ambient air quality standard of 75 parts per billion. The EPA designations for counties in attainment and nonattainment were originally due in June 2012, but the EPA indicated that it would delay designations except for those areas with existing monitoring data from 2009 to 2011 indicating violations of the new standard. In August 2013 the EPA issued final designations for these areas. In Entergy’s utility service territory, only St. Bernard Parish in Louisiana is designated as non-attainment for the SO2
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1-hour national ambient air quality standard of 75 parts per billion. Entergy does not have a generation asset in that parish. In July 2016 the EPA finalized another round of designations for areas with newly monitored violations of the 2010 standard and those with stationary sources that emit over a threshold amount of SO2. Counties and parishes in which Entergy owns and operates fossil generating facilities that were included in this round of designations include Independence County and Jefferson County, Arkansas and Calcasieu Parish, Louisiana. Independence County and Calcasieu Parish were designated “unclassifiable,” and Jefferson County was designated “unclassifiable/attainment.” In August 2015 the EPA issued a final data requirement rule for the SO2 1-hour standard. This rule will guide the process to be followed by the states and the EPA to determine the appropriate designation for the remaining unclassified areas in the country. In August 2017 the EPA issued a letter indicating that East Baton Rouge and St. Charles parishes would be designated by December 31, 2020 as monitors were installed to determine compliance. In January 2018 the EPA published a final rule designating a third round of attainment and non-attainment areas. Evangeline Parish, Louisiana, was designated non-attainment. Entergy does not have a generation asset in that parish. Additional capital projects or operational changes may be required to continue operating Entergy facilities in areas eventually designated as in non-attainment of the standard or designated as contributing to non-attainment areas.
Hazardous Air Pollutants
The EPA released the final Mercury and Air Toxics Standard (MATS) rule in December 2011, which had a compliance date, with a widely granted one-year extension, of April 2016. The required controls have been installed and are operational at all affected Entergy units.
Cross-State Air Pollution
In March 2005 the EPA finalized the Clean Air Interstate Rule (CAIR), which was intended to reduce SO2 and NOx emissions from electric generation plants in order to improve air quality in twenty-nine eastern states. The rule required a combination of capital investment to install pollution control equipment and increased operating costs through the purchase of emission allowances. Entergy began implementation in 2007, including installation of controls at several facilities and the development of an emission allowance procurement strategy.
Based on several court challenges, CAIR and its subsequent versions, now known as the Cross State Air Pollution Rule (CSAPR), have been remanded to and modified by the EPA on multiple occasions. In July 2015 the D.C. Circuit invalidated the allowance budgets created by the EPA for several states, including Texas, and remanded that portion of the rule to the EPA for further action. The court did not stay or vacate the rule in the interim. CSAPR remains in effect.
The CSAPR Phase 1 implementation became effective January 1, 2015. Entergy has developed a compliance plan that could, over time, include both installation of controls at certain facilities and an emission allowance procurement strategy.
In September 2016 the EPA finalized the CSAPR Update Rule to address interstate transport for the 2008 ozone NAAQS. Starting in 2017 the final rule will require reductions in summer nitrogen oxides (NOx) emissions. Several states, including Arkansas and Texas, filed a challenge to the Update Rule, which remains pending.
Regional Haze
In June 2005 the EPA issued its final Clean Air Visibility Rule (CAVR) regulations that potentially could result in a requirement to install SO2 and NOx pollution control technology as Best Available Retrofit Control Technology (BART) to continue operating certain of Entergy’s fossil generation units. The rule leaves certain CAVR determinations to the states.
In Arkansas, the Arkansas Department of Environmental Quality prepared a state implementation plan (SIP) for Arkansas facilities to implement its obligations under the CAVR. In April 2012 the EPA finalized a decision
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addressing the Arkansas Regional Haze SIP, in which it disapproved a large portion of the Arkansas plan, including the emission limits for NOx and SO2 at White Bluff. In April 2015 the EPA published a proposed federal implementation plan (FIP) for Arkansas, taking comment on requiring installation of scrubbers and low NOx burners to continue operating both units at the White Bluff plant and both units at the Independence plant and NOx controls to continue operating the Lake Catherine plant. Entergy filed comments by the deadline in August 2015. Among other comments, including opposition to the EPA’s proposed controls on the Independence units, Entergy proposed to meet more stringent SO2 and NOx limits at both White Bluff and Independence within three years of the effective date of the final FIP and to cease the use of coal at the White Bluff units at a later date.
In September 2016 the EPA published the final Arkansas Regional Haze FIP. In most respects, the EPA finalized its original proposal but shortened the time for compliance for installation of the NOx controls. The FIP required an emission limitation consistent with SO2 scrubbers at both White Bluff and Independence by October 2021 and NOx controls by April 2018. The EPA declined to adopt Entergy’s proposals related to ceasing coal use as an alternative to SO2 scrubbers for White Bluff SO2 BART. In November 2016, Entergy and other interested parties, including the State of Arkansas, filed petitions for administrative reconsideration and stay at the EPA as well as petitions for judicial review in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit continues to review its prior grant of the government’s motion to hold the appeal litigation in abeyance pending settlement discussions and pending the State’s development of a SIP that, if approved by the EPA, would replace the FIP. The state has proposed its replacement SIP in two parts: Part I considers NOx requirements, and Part II considers SO2 requirements. The EPA approved the Part I NOx SIP in January 2018. Arkansas has proposed a Part II SIP which is still under consideration at the state level. The public comment period on Part II ended on February 2, 2018.
In Louisiana, Entergy worked with the Louisiana Department of Environmental Quality (LDEQ) and the EPA to revise the Louisiana SIP for regional haze, which was disapproved in part in 2012. The LDEQ submitted a revised SIP in February 2017. In May 2017 the EPA proposed to approve a majority of the revisions. In September 2017 the EPA issued a proposed SIP approval for the Nelson plant, requiring an emission limitation consistent with the use of low-sulfur coal, with a compliance date three years from the effective date of the final EPA approval. The EPA’s final approval decision was issued in December 2017 and is on appeal to the U.S. Court of Appeals for the Fifth Circuit.
New and Existing Source Performance Standards for Greenhouse Gas Emissions
As a part of a climate plan announced in June 2013, the EPA was directed to (i) reissue proposed carbon pollution standards for new power plants by September 20, 2013, with finalization of the rules to occur in a timely manner; (ii) issue proposed carbon pollution standards, regulations, or guidelines, as appropriate, for modified, reconstructed, and existing power plants no later than June 1, 2014; (iii) finalize those rules by no later than June 1, 2015; and (iv) include in the guidelines addressing existing power plants a requirement that states submit to the EPA the implementation plans required under Section 111(d) of the Clean Air Act and its implementing regulations by no later than June 30, 2016. In January 2014 the EPA issued the proposed New Source Performance Standards rule for new sources. In June 2014 the EPA issued proposed standards for existing power plants. Entergy was actively engaged in the rulemaking process, and submitted comments to the EPA in December 2014. The EPA issued the final rules for both new and existing sources in August 2015, and they were published in the Federal Register in October 2015. The existing source rule, also called the Clean Power Plan, requires states to develop plans for compliance with the EPA’s emission standards. In February 2016 the U.S. Supreme Court issued a stay halting the effectiveness of the rule until the rule is reviewed by the D.C. Circuit and by the U.S. Supreme Court, if further review is granted. In March 2017 the current administration issued an executive order entitled “Promoting Energy Independence and Economic Growth” instructing the EPA to review and then to suspend, revise, or rescind the Clean Power Plan, if appropriate. The EPA subsequently asked the D.C. Circuit to hold the challenges to the Clean Power Plan and the greenhouse gas new source performance standards in abeyance and signed a notice of withdrawal of the proposed federal plan, model trading rules, and the Clean Energy Incentive Program. The court placed the litigation in abeyance in April 2017. The EPA Administrator also sent a letter to the affected governors explaining that states are not currently required to meet Clean Power Plan deadlines, some of which have passed. In October 2017 the EPA proposed a new rule that would repeal the Clean Power Plan on the grounds that it exceeds the EPA’s statutory authority under the Clean Air Act. In December
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2017 the EPA issued an advanced notice of proposed rulemaking regarding section 111(d), seeking comment on the form and content of a replacement for the Clean Power Plan, if one is promulgated. Entergy will continue to be engaged in this rulemaking process.
Potential Legislative, Regulatory, and Judicial Developments
In addition to the specific instances described above, there are a number of legislative and regulatory initiatives concerning air emissions, as well as other media, that are under consideration at the federal, state, and local level. Because of the nature of Entergy’s business, the imposition of any of these initiatives could affect Entergy’s operations. Entergy continues to monitor these initiatives and activities in order to analyze their potential operational and cost implications. These initiatives include:
| • | designation by the EPA and state environmental agencies of areas that are not in attainment with national ambient air quality standards; |

| • | introduction of bills in Congress and development of regulations by the EPA proposing further limits on NOx, SO2, mercury, and carbon dioxide and other air emissions. New legislation or regulations applicable to stationary sources could take the form of market-based cap-and-trade programs, direct requirements for the installation of air emission controls onto air emission sources, or other or combined regulatory programs; |

| • | efforts in Congress or at the EPA to establish a mandatory federal carbon dioxide emission control structure or unit performance standards; |

| • | revisions to the estimates of the Social Cost of Carbon and its use for regulatory impact analysis of Federal laws and regulations; |

| • | implementation of the Regional Greenhouse Gas Initiative by several states in the northeastern United States and similar actions in other regions of the United States; |

| • | efforts on the state and federal level to codify renewable portfolio standards, a clean energy standard, or a similar mechanism requiring utilities to produce or purchase a certain percentage of their power from defined renewable energy sources or energy sources with lower emissions; |

| • | efforts to develop more stringent state water quality standards, effluent limitations for Entergy’s industry sector, stormwater runoff control regulations, and cooling water intake structure requirements; |

| • | efforts to restrict the previously-approved continued use of oil-filled equipment containing certain levels of PCBs; |

| • | efforts by certain external groups to encourage reporting and disclosure of carbon dioxide emissions and risk; |

| • | the listing of additional species as threatened or endangered, the protection of critical habitat for these species, and developments in the legal protection of eagles and migratory birds; and |

| • | the regulation of the management, disposal, and beneficial reuse of coal combustion residuals. |

Entergy continues to support national legislation that would increase planning certainty for electric utilities while addressing carbon dioxide emissions in a responsible and flexible manner. By virtue of its proportionally large investment in low-emitting gas-fired and nuclear generation technologies, Entergy has a low overall carbon dioxide emission “intensity,” or rate of carbon dioxide emitted per megawatt-hour of electricity generated. In anticipation of the imposition of carbon dioxide emission limits on the electric industry in the future, Entergy initiated actions designed to reduce its exposure to potential new governmental requirements related to carbon dioxide emissions. These voluntary actions included establishment of a formal program to stabilize power plant carbon dioxide emissions at 2000 levels through 2005, and Entergy succeeded in reducing emissions below 2000 levels. Total carbon dioxide emissions representing Entergy’s ownership share of power plants in the United States were approximately 53.2 million tons in 2000 and 35.6 million tons in 2005. In 2006, Entergy changed its method of calculating emissions to include emissions from controllable power purchases as well as its ownership share of generation. Entergy established a second formal voluntary program to stabilize power plant carbon dioxide emissions and emissions from controllable power purchases at 20% below 2000 levels through 2010. In 2011, Entergy extended this commitment through 2020. Total carbon dioxide emissions representing Entergy’s ownership share of power plants and controllable power purchases in the United States were approximately 46.1 million tons in 2011, 45.5 million tons in 2012, 46.2 million tons in 2013, 42.4 million tons in 2014, 39.5 million tons in 2015, 42.5 million tons in 2016, and 39.9 million tons in 2017. The decrease
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in this number from 2014 to 2015 was largely attributable to the impact on the calculation methodology of the Utility operating companies’ transition into the MISO system. Participation in this system resulted in fewer power purchases being classified as “controllable” and thus included in the calculation of the emissions total.
Entergy participates in the M.J. Bradley & Associates’ Annual Benchmarking Air Emissions Report, an annual analysis of the 100 largest U.S. electric power producers. The report is available on the M.J. Bradley website. Entergy’s annual CO2 emissions audit is also third-party verified, and that certification is made available on the American Carbon Registry website. Entergy participates annually in the Dow Jones Sustainability Index and in 2017 was listed on the North American Index.
Clean Water Act
The 1972 amendments to the Federal Water Pollution Control Act (known as the Clean Water Act) provide the statutory basis for the National Pollutant Discharge Elimination System (NPDES) permit program and the basic structure for regulating the discharge of pollutants from point sources to waters of the United States. The Clean Water Act requires virtually all discharges of pollutants to waters of the United States to be permitted. Section 316(b) of the Clean Water Act regulates cooling water intake structures, section 401 of the Clean Water Act requires a water quality certification from the state in support of certain federal actions and approvals, and section 404 regulates the dredge and fill of waters of the United States, including jurisdictional wetlands.
NPDES Permits and Section 401 Water Quality Certifications
NPDES permits are subject to renewal every five years. Consequently, Entergy is currently in various stages of the data evaluation and discharge permitting process for its power plants.
For thirteen years, Entergy participated in an administrative permitting process with the New York State Department of Environmental Conservation (NYSDEC) for renewal of the Indian Point 2 and Indian Point 3 discharge permit. That proceeding recently was settled along with other ongoing proceedings. For a discussion of the recent Indian Point settlement, see “Entergy Wholesale Commodities Authorization to Operate Indian Point” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
316(b) Cooling Water Intake Structures
The EPA finalized regulations in July 2004 governing the intake of water at large existing power plants employing cooling water intake structures. The rule sought to reduce perceived impacts on aquatic resources by requiring covered facilities to implement technology or other measures to meet EPA-targeted reductions in water use and corresponding perceived aquatic impacts. Entergy, other industry members and industry groups, environmental groups, and a coalition of northeastern and mid-Atlantic states challenged various aspects of the rule. After litigation, the EPA issued a new final 316(b) rule in August 2014. Entergy is developing a compliance plan for each affected facility in accordance with the requirements of the final rule.
Entergy filed a petition for review of the final rule as a co-petitioner with the Utility Water Act Group. The U.S. Court of Appeals for the Second Circuit heard oral argument in September 2017. A decision is expected in 2018.
Coastal Zone Management Act
Before a federal licensing agency (such as the NRC) may issue a major license or permit for an activity within the federally designated coastal zone, the agency must be satisfied that the requirements of the Coastal Zone Management Act (CZMA), as applicable, have been met. In many cases, CZMA requirements are satisfied by the state’s written concurrence with a “consistency determination” filed by the federal license applicant explaining why the activity proposed to be federally licensed is consistent with the state’s coastal management program. For a discussion of the recent Indian Point settlement, including the CZMA proceedings related to Indian Point license renewal, see “Entergy
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Wholesale Commodities Authorizations to Operate Indian Point” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
Federal Jurisdiction of Waters of the United States
In September 2013 the EPA and the U.S. Army Corps of Engineers announced the intention to propose a rule to clarify federal Clean Water Act jurisdiction over waters of the United States. The announcement was made in conjunction with the EPA’s release of a draft scientific report on the “connectivity” of waters that the agency said would inform the rulemaking. This report was finalized in January 2015. The final rule was published in the Federal Register in June 2015. The rule could significantly increase the number and types of waters included in the EPA’s and the U.S. Army Corps of Engineers’ jurisdiction, which in turn could pose additional permitting and pollutant management burdens on Entergy’s operations. The final rule has been challenged in various federal courts by several parties, including most states. In August 2015 the District Court for North Dakota issued a preliminary injunction staying the new rule in 13 states, including Arkansas. In October 2015 the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay of the rule. In February 2017 the current administration issued an executive order instructing the EPA and the U.S. Army Corps of Engineers to review the Waters of the United States rule and to revise or rescind, as appropriate. In June 2017 the EPA and the U.S. Army Corps of Engineers released a proposed rule that rescinds the June 2015 rule and recodifies the definition of “waters of the U.S.” that was in effect prior to the 2015 rule. The administration is expected to propose a definition of “waters of the U.S.” at a later date. In January 2018 the Supreme Court determined that the Sixth Circuit lacked jurisdiction over the petition to review the 2015 rule and that the challenges should be heard in the federal district court. The matter has been remanded to the Sixth Circuit, which is expected to lift the nationwide stay. After the Supreme Court decision, the EPA and the U.S. Army Corps of Engineers finalized a rule delaying the applicability date of the 2015 rule to early 2020. In February 2018 the states of Louisiana, Mississippi, and Texas filed suit in Texas federal district court seeking a preliminary injunction of the 2015 rule. Entergy will continue to monitor this rulemaking and litigation.
Groundwater at Certain Nuclear Sites
The NRC requires nuclear power plants to monitor and report regularly the presence of radioactive material in the environment. Entergy joined other nuclear utilities and the Nuclear Energy Institute in 2006 to develop a voluntary groundwater monitoring and protection program. This initiative began after detection of very low levels of radioactive material, primarily tritium, in groundwater at several plants in the United States. Tritium is a radioactive form of hydrogen that occurs naturally and is also a byproduct of nuclear plant operations. In addition to tritium, other radionuclides have been found in site groundwater at nuclear plants.
As part of the groundwater monitoring and protection program, Entergy has: (1) performed reviews of plant groundwater characteristics (hydrology) and historical records of past events on site that may have potentially impacted groundwater; (2) implemented fleet procedures on how to handle events that could impact groundwater; and (3) installed groundwater monitoring wells and began periodic sampling. The program also includes protocols for notifying local officials if contamination is found. To date, radionuclides such as tritium have been detected at Arkansas Nuclear One, Indian Point, Palisades, Pilgrim, Grand Gulf, Vermont Yankee, and River Bend. Each of these sites has installed groundwater monitoring wells and implemented a program for testing groundwater at the sites for the presence of tritium and other radionuclides. Based on current information, the concentrations and locations of radionuclides detected at these plants pose no threat to public health or safety, but each site continues to evaluate the results from its groundwater monitoring program.
In February 2016, Entergy disclosed that elevated tritium levels had been detected in samples from several monitoring wells that are part of Indian Point’s groundwater monitoring program. Investigation of the source of elevated tritium has determined that the source is related to a temporary system to process water in preparation for the regularly scheduled refueling outage at Indian Point 2. The system was secured and is no longer in use and additional measures have been taken to prevent reoccurrence should the system be needed again. In June 2016, Indian Point detected trace amounts of cobalt 58 in a single well. This was associated with the draining and disassembly of a temporary heat
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exchanger operated in support of the Indian Point 2 outage. Oversight by NRC and other federal/state government bodies continues. The NRC has issued a green notice of violation related to the adequacy of Entergy’s controls to prevent the introduction of radioactivity into the site groundwater. Entergy has completed all required corrective actions and expects the NRC to close the notice of violation by March 2018.
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), authorizes the EPA to mandate clean-up by, or to collect reimbursement of clean-up costs from, owners or operators of sites at which hazardous substances may be or have been released. Certain private parties also may use CERCLA to recover response costs. Parties that transported hazardous substances to these sites or arranged for the disposal of the substances are also deemed liable by CERCLA. CERCLA has been interpreted to impose strict, joint and several liability on responsible parties. Many states have adopted programs similar to CERCLA. Entergy subsidiaries in the Utility and Entergy Wholesale Commodities businesses have sent waste materials to various disposal sites over the years, and releases have occurred at Entergy facilities. In addition, environmental laws now regulate certain of Entergy’s operating procedures and maintenance practices that historically were not subject to regulation. Some disposal sites used by Entergy subsidiaries have been the subject of governmental action under CERCLA or similar state programs, resulting in site clean-up activities. Entergy subsidiaries have participated to various degrees in accordance with their respective potential liabilities in such site clean-ups and have developed experience with clean-up costs. The affected Entergy subsidiaries have established provisions for the liabilities for such environmental clean-up and restoration activities. Details of potentially material CERCLA and similar state program liabilities are discussed in the “Other Environmental Matters” section below.
Coal Combustion Residuals
In June 2010 the EPA issued a proposed rule on coal combustion residuals (CCRs) that contained two primary regulatory options: (1) regulating CCRs destined for disposal in landfills or received (including stored) in surface impoundments as so-called “special wastes” under the hazardous waste program of RCRA Subtitle C; or (2) regulating CCRs destined for disposal in landfills or surface impoundments as non-hazardous wastes under Subtitle D of RCRA. Under both options, CCRs that are beneficially reused in certain processes would remain excluded from hazardous waste regulation. In April 2015 the EPA published the final CCR rule with the material being regulated under the second scenario presented above - as non-hazardous wastes regulated under RCRA Subtitle D.
The final regulations create new compliance requirements including modified storage, new notification and reporting practices, product disposal considerations, and CCR unit closure criteria. Entergy believes that on-site disposal options will be available at its facilities, to the extent needed for CCR that cannot be transferred for beneficial reuse. As of December 31, 2017, Entergy’s has recorded asset retirement obligations related to CCR management of $8.6 million, including $3.9 million at Entergy Arkansas, $1.8 million at Entergy Louisiana, $1.1 million at Entergy Mississippi, and $1.3 million at Entergy Texas.
In December 2016 the Water Infrastructure Improvements for the Nation Act (WIIN Act) was signed into law, which authorizes states to regulate coal ash rather than leaving primary enforcement to citizen suit actions. States may submit to the EPA proposals for a permit programs. In September 2017 the EPA agreed to reconsider certain provisions of the CCR rule in light of the WIIN Act. The EPA has not yet initiated a new round of rulemaking and did not extend the existing mid-October 2017 groundwater monitoring deadline. Entergy met the existing monitoring deadline, is monitoring state agency actions, and will participate in the regulatory development process.
In late-2017, Entergy determined that certain in-ground wastewater treatment system recycle ponds at its White Bluff and Independence facilities require management under the new EPA regulations. Entergy is taking action to address the operational and regulatory management of these facilities. Entergy also has monitored levels of constituents in the groundwater monitoring system surrounding its coal combustion residual landfills at these locations that require reporting and additional monitoring. Reporting has occurred as required, and monitoring will continue. Any potential
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requirements for corrective action or operational changes under the new EPA rule are currently being assessed. Moreover, the rule is currently under review at the EPA for potential changes, and the nature and cost of any corrective action requirements may depend, in part, on the outcome of the EPA’s review.
Other Environmental Matters
Entergy Louisiana and Entergy Texas
Entergy Louisiana, as successor in interest to Entergy Gulf States Louisiana, currently is involved in the second phase of the remedial investigation of the Lake Charles Service Center site, located in Lake Charles, Louisiana. A manufactured gas plant (MGP) is believed to have operated at this site from approximately 1916 to 1931. Coal tar, a by-product of the distillation process employed at MGPs, apparently was routed to a portion of the property for disposal. The same area also has been used as a landfill. In 1999, Entergy Gulf States, Inc. signed a second administrative consent order with the EPA to perform a removal action at the site. In 2002 approximately 7,400 tons of contaminated soil and debris were excavated and disposed of from an area within the service center. In 2003 a cap was constructed over the remedial area to prevent the migration of contamination to the surface. In August 2005 an administrative order was issued by the EPA requiring that a 10-year groundwater study be conducted at this site. The groundwater monitoring study commenced in January 2006 and is continuing. The EPA released the second Five Year Review in 2015. The EPA indicated that the current remediation technique was insufficient and that Entergy would need to utilize other remediation technologies on the site. In July 2015, Entergy submitted a Focused Feasibility Study to the EPA outlining the potential remedies and suggesting installation of a waterloo barrier. The estimated cost for this remedy is approximately $2 million. Entergy is awaiting comments and direction from the EPA on the Focused Feasibility Study and potential remedy selection. In early 2017 the EPA indicated that the new remedial method, a waterloo barrier, may not be necessary and requested revisions to the Focused Feasibility Study. The EPA plans to provide comments on the revised 2017 Focused Feasibility Study in the next Five Year Review in 2020. Entergy is continuing discussions with the EPA regarding the ongoing actions at the site.
Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas
The Texas Commission on Environmental Quality (TCEQ) notified Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas that the TCEQ believes those entities are potentially responsible parties (PRPs) concerning contamination existing at the San Angelo Electric Service Company (SESCO) facility in San Angelo, Texas. The facility operated as a transformer repair and scrapping facility from the 1930s until 2003. Both soil and groundwater contamination exists at the site. Entergy subsidiaries sent transformers to this facility. Entergy Arkansas, Entergy Louisiana, and Entergy Texas responded to an information request from the TCEQ and continue to cooperate in this investigation. Entergy Louisiana and Entergy Texas joined a group of PRPs responding to site conditions in cooperation with the State of Texas, creating cost allocation models based on review of SESCO documents and employee interviews, and investigating contribution actions against other PRPs. Entergy Louisiana and Entergy Texas have agreed to contribute to the remediation of contaminated soil and groundwater at the site in a measure proportionate to those companies’ involvement at the site, while Entergy Arkansas likely will pay a de minimis amount. Current estimates, although variable depending on ultimate remediation design and performance, indicate that Entergy’s total share of remediation costs likely will be approximately $1.5 million to $2 million. Remediation activities continue at the site.
Entergy Texas
In December 2016 a transformer inside the Hartburg, Texas Substation had an internal fault resulting in a release of approximately 15,000 gallons of non-PCB mineral oil. Cleanup ensued immediately; however, rain caused much of the oil to spread across the substation yard and into a nearby wetland. The Texas Commission on Environmental Quality (TCEQ) and the National Response Center were immediately notified, and TCEQ responded to the site approximately two hours after the cleanup was initiated. The remediation liability is estimated at $2.2 million; however, this number could fluctuate depending on the remediation extent and wetland mitigation requirements. In July 2017,
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Entergy entered into the Voluntary Cleanup Program with TCEQ. Additional direction is expected from TCEQ regarding final remediation requirements for the site.
Entergy
In May 2015 a transformer at the Indian Point facility failed, resulting in a fire and the release of non-PCB oil to the ground surface. The fire was extinguished by the facility’s fire deluge system. No injuries occurred due to the transformer failure or company response. An estimated 3,000 gallons of oil were released into the facility’s discharge canal and the environment surrounding the transformer and discharge canal, including the Hudson River, as a result of the failure, fire, and fire suppression. Once the fire was extinguished, Indian Point personnel and contractors began recovering free-product from the damaged transformer, the transformer containment moat, and the area surrounding the transformer. The United States Coast Guard designated Entergy as the responsible party under the Oil Pollution Act of 1990 and assessed a $1,000 civil penalty for the discharge of oil into navigable waters. As required, Entergy established a claims process including a voluntary hotline. Entergy received no reports to the voluntary hotline or claims under the established claims process. In September 2016, Indian Point personnel identified an oil sheen in the discharge canal. Further investigation revealed that an estimated 600 gallons of lubricating oil had leaked from the Indian Point 3 turbine system. The leaking component has been taken out of service and no oil has been discovered in the Hudson River. In October 2016 the New York Department of Environmental Conservation issued two notices of violation, one for each of these events, and a proposed order on consent for the 2015 event. In January 2017, Entergy and the New York Department of Environmental Conservation resolved this matter with an order on consent. Pursuant to the order, Entergy paid approximately $600 thousand in civil penalties, natural resource damages, and oversight costs. Additionally, Entergy repaired a section of the discharge canal wall and will conduct daily visual inspections of the discharge canal wall to help identify additional material erosion or material structural deficiencies. Entergy has completed all compliance obligations under the consent order and the Department of Environmental Conservation closed the matter in December 2017.
Litigation
Entergy uses legal and appropriate means to contest litigation threatened or filed against it, but certain states in which Entergy operates have proven to be unusually litigious environments. Judges and juries in Louisiana, Mississippi, and Texas have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. The litigation environment in these states poses a significant business risk to Entergy.
Ratepayer and Fuel Cost Recovery Lawsuits (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
Mississippi Attorney General Complaint
See Note 2 to the financial statements for a discussion of this proceeding.
Asbestos Litigation (Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas)
See Note 8 to the financial statements for a discussion of this litigation.
Employment and Labor-related Proceedings (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
See Note 8 to the financial statements for a discussion of these proceedings.
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Employees
Employees are an integral part of Entergy’s commitment to serving customers. As of December 31, 2017, Entergy subsidiaries employed 13,504 people.
| Utility: |
| Entergy Arkansas | 1,278 |
| Entergy Louisiana | 1,713 |
| Entergy Mississippi | 737 |
| Entergy New Orleans | 274 |
| Entergy Texas | 616 |
| System Energy | — |
| Entergy Operations | 3,361 |
| Entergy Services | 3,264 |
| Entergy Nuclear Operations | 2,211 |
| Other subsidiaries | 50 |
| Total Entergy | 13,504 |

Approximately 4,600 employees are represented by the International Brotherhood of Electrical Workers, the Utility Workers Union of America, the International Brotherhood of Teamsters, the United Government Security Officers of America, and the International Union, Security, Police, Fire Professionals of America.
Part I Item 1A & 1BEntergy Corporation, Utility operating companies, and System Energy
RISK FACTORS
Investors should review carefully the following risk factors and the other information in this Form 10-K. The risks that Entergy faces are not limited to those in this section. There may be additional risks and uncertainties (either currently unknown or not currently believed to be material) that could adversely affect Entergy’s financial condition, results of operations, and liquidity. See “FORWARD-LOOKING INFORMATION.”
Utility Regulatory Risks
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The terms and conditions of service, including electric and gas rates, of the Utility operating companies and System Energy are determined through regulatory approval proceedings that can be lengthy and subject to appeal that could result in delays in effecting rate changes and uncertainty as to ultimate results.
The rates that the Utility operating companies and System Energy charge reflect their capital expenditures, operations and maintenance costs, allowed rates of return, financing costs, and related costs of service. These rates significantly influence the financial condition, results of operations, and liquidity of Entergy and each of the Utility operating companies and System Energy. These rates are determined in regulatory proceedings and are subject to periodic regulatory review and adjustment, including adjustment upon the initiative of a regulator or affected stakeholders.
In addition, regulators may initiate proceedings to investigate the prudence of costs in the Utility operating companies’ base rates and examine, among other things, the reasonableness or prudence of the companies’ operation and maintenance practices, level of expenditures (including storm costs and costs associated with capital projects), allowed rates of return and rate base, proposed resource acquisitions, and previously incurred capital expenditures that the operating companies seek to place in rates. The regulators may disallow costs subject to their jurisdiction found not to have been prudently incurred or found not to have been incurred in compliance with applicable tariffs, creating some risk to the ultimate recovery of those costs. Regulatory proceedings relating to rates and other matters typically involve multiple parties seeking to limit or reduce rates. Traditional base rate proceedings, as opposed to formula rate plans, generally have long timelines, are primarily based on historical costs, and may or may not be limited in scope or duration by statute. The length of these base rate proceedings can cause the Utility operating companies and System Energy to experience regulatory lag in recovering costs through rates. Decisions are typically subject to appeal, potentially leading to additional uncertainty associated with rate case proceedings.
The base rates of Entergy Texas are established largely in traditional base rate case proceedings. Apart from base rate proceedings, Entergy Texas has also filed to use rate riders to recover the revenue requirements associated with certain authorized historical costs. For example, Entergy Texas has recovered distribution-related capital investments through the distribution cost recovery factor rider mechanism, transmission-related capital investments and certain non-fuel MISO charges through the transmission cost recovery factor rider mechanism, and MISO fuel and energy-related costs through the fixed fuel factor mechanism. Entergy Texas is also required to make a filing every three years, at a minimum, reconciling its fuel and purchased power costs and fuel factor revenues. In the course of this reconciliation, the PUCT determines whether eligible fuel and fuel-related expenses and revenues are necessary and reasonable, and makes a prudence finding for each of the fuel-related contracts for the reconciliation period.
Between base rate cases, Entergy Arkansas and Entergy Mississippi are able to adjust base rates annually through formula rate plans that utilize a forward test year (Entergy Arkansas) or forward-looking features (Entergy Mississippi). In response to Entergy Arkansas’s application for a general change in rates in 2015, the APSC approved the formula rate plan tariff proposed by Entergy Arkansas including its use of a projected year test period and an initial five-year term. The initial five-year term expires in 2021 unless Entergy Arkansas requests, and the APSC approves, the extension of the formula rate plan tariff for an additional five years through 2026. In the event that Entergy Arkansas’s formula rate plan is terminated or is not extended beyond the initial term, Entergy Arkansas could file an
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application for a general change in rates that may include a request for continued regulation under a formula rate review mechanism. If Entergy Mississippi’s formula rate plan is terminated, it would revert to the more traditional rate case environment or seek approval of a new formula rate plan. Entergy Arkansas and Entergy Mississippi recover fuel and purchased energy and certain non-fuel costs through other APSC-approved and MPSC-approved tariffs, respectively.
Entergy Louisiana historically sets electric base rates annually through a formula rate plan using an historic test year. The form of the formula rate plan, on a combined basis, was approved in connection with the business combination of Entergy Louisiana and Entergy Gulf States Louisiana and largely followed the formula rate plans that were approved by the LPSC in connection with the full electric base rate cases filed by those companies in February 2013. The formula rate plan was approved for continued use through the test year 2016 filing and included a cap in cost of service increases at a cumulative total of $30 million through the formula rate plan cycle, which cap was not reached. The LPSC also approved in the business combination Entergy Louisiana’s continuation of a mechanism to recover non-fuel MISO-related costs, which are calculated separately from the formula rate plan requirements, but embedded in the formula rate plan factor applied on customer bills. This recovery mechanism expired following the 2015 test year, but was renewed for the 2016 test year. MISO fuel and energy-related costs are recoverable in Entergy Louisiana’s fuel adjustment clause. The formula rate plan includes exceptions from the rate cap and sharing requirements for certain large capital investment projects, including acquisition or construction of generating facilities, as well as purchase power agreements approved by the LPSC, among other items. In August 2017, Entergy Louisiana filed to extend the formula rate plan for an additional three years and to reset rates to the authorized mid-point return on equity of 9.95%. The filing also seeks certain modifications to the formula rate plan, including a narrower, 80 basis points earnings sharing bandwidth and implementation of a rider to recover certain transmission-related investments, when those investments begin delivering benefits to customers. In the event that the electric formula rate plan is not renewed or extended, Entergy Louisiana would revert to the more traditional rate case environment.
Entergy New Orleans previously operated under a formula rate plan that ended with the 2011 test year. Currently, based on a settlement agreement approved by the City Council, with limited exceptions, no action may be taken with respect to Entergy New Orleans’s base rates until rates are implemented from a base rate case that must be filed for its electric and gas operations in 2018. The limited exceptions include implementation of the final year of a four-year phased-in rate increase for its Algiers operations in the Fifteenth Ward of the City of New Orleans and certain exceptional cost increases or decreases in its base revenue requirement.
The rates of System Energy are established by the FERC, and the costs allowed to be charged pursuant to these rates are, in turn, passed through to the participating Utility operating companies through the Unit Power Sales Agreement, which allows monthly adjustments to reflect the current operating costs of, and investment in, Grand Gulf.
The Utility operating companies and System Energy, and the energy industry as a whole, have experienced a period of rising costs and investments, and an upward trend in spending, especially with respect to infrastructure investments, which is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms. For information regarding rate case proceedings and formula rate plans applicable to the Utility operating companies, see Note 2 to the financial statements.
The Utility operating companies recover fuel, purchased power, and associated costs through rate mechanisms that are subject to risks of delay or disallowance in regulatory proceedings.
The Utility operating companies recover their fuel, purchased power, and associated costs from their customers through rate mechanisms subject to periodic regulatory review and adjustment. Because regulatory review can result in the disallowance of incurred costs found not to have been prudently incurred, including the cost of replacement power purchased when generators experience outages, with the possibility of refunds to ratepayers, there exists some risk to the ultimate recovery of those costs. Regulators may also initiate proceedings to investigate the continued usage or the adequacy and operation of the fuel and purchased power recovery clauses of the Utility operating companies and, therefore, there can be no assurance that existing recovery mechanisms will remain unchanged or in effect at all.
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The Utility operating companies’ cash flows can be negatively affected by the time delays between when gas, power, or other commodities are purchased and the ultimate recovery from customers of the costs in rates. On occasion, when the level of incurred costs for fuel and purchased power rises very dramatically, some of the Utility operating companies may agree to defer recovery of a portion of that period’s fuel and purchased power costs for recovery at a later date, which could increase the near-term working capital and borrowing requirements of those companies. For a description of fuel and purchased power recovery mechanisms and information regarding the regulatory proceedings for fuel and purchased power costs recovery, see Note 2 to the financial statements.
There remains uncertainty regarding the effect of the termination of the System Agreement on the Utility operating companies.
The Utility operating companies historically have engaged in the coordinated planning, construction, and operation of generating resources and bulk transmission facilities under the terms of the System Agreement, which is a rate schedule that had been approved by the FERC. The System Agreement terminated in its entirety on August 31, 2016.
There remains uncertainty regarding the long-term effect of the termination of the System Agreement on the Utility operating companies because of the significant effect of the agreement on the generation and transmission functions of the Utility operating companies and the significant period of time (over 30 years) that it had been in existence. In the absence of the System Agreement, there remains uncertainty around the effectiveness of governance processes and the potential absence of federal authority to resolve certain issues among the Utility operating companies and their retail regulators.
In addition, although the System Agreement terminated in its entirety in August 2016, there are a number of outstanding System Agreement proceedings at the FERC that may require future adjustments, including challenges to the level and timing of payments made by Entergy Arkansas under the System Agreement. The outcome and timing of these FERC proceedings and resulting recovery and impact on rates cannot be predicted at this time.
For further information regarding the regulatory proceedings relating to the System Agreement, see Note 2 to the financial statements.
The Utility operating companies are subject to economic risks associated with participation in the MISO markets and the allocation of transmission upgrade costs. The operation of the Utility operating companies’ transmission system pursuant to the MISO RTO tariff and their participation in the MISO RTO’s wholesale markets may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.
On December 19, 2013, the Utility operating companies integrated into the MISO RTO. MISO maintains functional control over the combined transmission systems of its members and administers wholesale energy and ancillary services markets for market participants in the MISO region, including the Utility operating companies. The Utility operating companies sell capacity, energy, and ancillary services on a bilateral basis to certain wholesale customers and offer available electricity production of their generating facilities into the MISO day-ahead and real-time energy markets pursuant to the MISO tariff and market rules. The Utility operating companies are subject to economic risks associated with participation in the MISO markets. MISO tariff rules and system conditions, including transmission congestion, could affect the Utility operating companies’ ability to sell power in certain regions and/or the economic value of such sales, and MISO market rules may change in ways that cause additional risk.
The Utility operating companies participate in the MISO regional transmission planning process and are subject to risks associated with planning decisions that MISO makes in the exercise of control over the planning of the Utility operating companies’ transmission assets that are under MISO’s functional control. The Utility operating companies pay transmission rates that reflect the cost of transmission projects that the Utility operating companies do not own, which could increase cash or financing needs. MISO is currently evaluating through its stakeholder process potential changes in the transmission project criteria in MISO. These changes, if adopted, could potentially result in a larger
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volume of competitively bid and regionally cost allocated transmission projects. In addition to the cash and financing-related risks arising from the potential additional cost allocation to the Utility operating companies from these projects, there is a risk that the Utility operating companies’ business and financial position could be harmed as a result of lost investment opportunities and other effects that flow from an increased number of competitive projects being approved and constructed that are interconnected with their transmission systems. Further, the terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets and the allocation of transmission upgrade costs, are subject to regulation by the FERC. The operation of the Utility operating companies’ transmission system pursuant to the MISO tariff and their participation in the MISO wholesale markets may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements. In addition, orders from each of the Utility operating companies’ respective retail regulators generally require that the Utility operating companies make periodic filings setting forth the results of analysis of the costs and benefits realized from MISO membership as well as the projected costs and benefits of continued membership in MISO and/or requesting approval of their continued membership in MISO. These filings have been submitted periodically by each of the Utility operating companies as required by their respective retail regulators, and the outcome of the resulting proceedings may affect the Utility operating companies’ continued membership in MISO.
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
A delay or failure in recovering amounts for storm restoration costs incurred as a result of severe weather could have material effects on Entergy and those Utility operating companies affected by severe weather.
Entergy’s and its Utility operating companies’ results of operations, liquidity, and financial condition can be materially affected by the destructive effects of severe weather. Severe weather can also result in significant outages for the customers of the Utility operating companies and, therefore, reduced revenues for the Utility operating companies during the period of the outages. A delay or failure in recovering amounts for storm restoration costs incurred or revenues lost as a result of severe weather could have a material effect on Entergy and those Utility operating companies affected by severe weather.
Nuclear Operating, Shutdown and Regulatory Risks
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy)
Certain of the Utility operating companies, System Energy, and Entergy Wholesale Commodities must consistently operate their nuclear power plants at high capacity factors in order to be successful, and lower capacity factors could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
Nuclear capacity factors significantly affect the results of operations of certain Utility operating companies, System Energy, and Entergy Wholesale Commodities. Nuclear plant operations involve substantial fixed operating costs. Consequently, to be successful, a plant owner must consistently operate its nuclear power plants at high capacity factors, consistent with safety requirements. For the Utility operating companies that own nuclear plants, lower capacity factors can increase production costs by requiring the affected companies to generate additional energy, sometimes at higher costs, from their fossil facilities or purchase additional energy in the spot or forward markets in order to satisfy their supply needs. For the Entergy Wholesale Commodities nuclear plants, lower capacity factors directly affect revenues and cash flow from operations. Entergy Wholesale Commodities’ forward sales are comprised of various hedge products, many of which have some degree of operational-contingent price risk. Certain unit-contingent contracts guarantee specified minimum capacity factors. In the event plants with these contracts were operating below the guaranteed capacity factors, Entergy would be subject to price risk for the undelivered power. Further, Entergy Wholesale Commodities’ nuclear forward sales contracts can also be on a firm LD basis, which subjects Entergy to increasing price risk as capacity factors decrease. Many of these firm hedge products have damages risk, capped through the use of risk management products.
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Certain of the Utility operating companies, System Energy, and the Entergy Wholesale Commodities nuclear plant owners periodically shut down their nuclear power plants to replenish fuel. Plant maintenance and upgrades are often scheduled during such refueling outages. If refueling outages last longer than anticipated or if unplanned outages arise, Entergy’s and their results of operations, financial condition, and liquidity could be materially affected.
Outages at nuclear power plants to replenish fuel require the plant to be “turned off.” Refueling outages generally are planned to occur once every 18 to 24 months and average approximately 30 days in duration. Plant maintenance and upgrades are often scheduled during such planned outages. When refueling outages last longer than anticipated or a plant experiences unplanned outages, capacity factors decrease and maintenance costs may increase. Lower than forecasted capacity factors may cause Entergy Wholesale Commodities to experience reduced revenues and may also create damages risk with certain hedge products as previously discussed.
Certain of the Utility operating companies, System Energy, and Entergy Wholesale Commodities face risks related to the purchase of uranium fuel (and its conversion, enrichment, and fabrication). These risks could materially affect Entergy’s and their results of operations, financial condition and liquidity.
Based upon currently planned fuel cycles, Entergy’s nuclear units have a diversified portfolio of contracts and inventory that provides substantially adequate nuclear fuel materials and conversion and enrichment services at what Entergy believes are reasonably predictable prices through most of 2018. The nuclear fuel supply portfolio for the Entergy Wholesale Commodities segment is being adjusted to reflect reduced overall requirements related to the planned permanent shutdown of the Palisades, Pilgrim, Indian Point 2 and Indian Point 3 plants over the next two to five years. Entergy’s ability to purchase nuclear fuel at reasonably predictable prices, however, depends upon the performance reliability of uranium miners. While there are a number of possible alternate suppliers that may be accessed to mitigate any supplier performance failure, the pricing of any such alternate uranium supply from the market will be dependent upon the market for uranium supply at that time. Entergy buys uranium from a diversified mix of sellers located in a diversified mix of countries, and from time to time purchases from nearly all qualified reliable major market participants worldwide that sell into the U.S. Market prices for nuclear fuel have been extremely volatile from time to time in the past. Although Entergy’s nuclear fuel contract portfolio provides a degree of hedging against market risks for several years, costs for nuclear fuel in the future cannot be predicted with certainty due to normal inherent market uncertainties, and price changes could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies, System Energy, and Entergy Wholesale Commodities.
Entergy’s ability to assure nuclear fuel supply also depends upon the performance and reliability of conversion, enrichment, and fabrication services providers. These service providers are fewer in number than uranium suppliers. For conversion and enrichment services, Entergy diversifies its supply by supplier and country and may take special measures to ensure a reliable supply of enriched uranium for fabrication into nuclear fuel. For fabrication services, each plant is dependent upon the performance of the fabricator of that plant’s nuclear fuel; therefore, Entergy relies upon additional monitoring, inspection, and oversight of the fabrication process to assure reliability and quality of its nuclear fuel. Certain of the suppliers and service providers are located in or dependent upon countries, such as Russia, in which deteriorating economic conditions or international sanctions could restrict the ability of such suppliers to continue to supply fuel or provide such services. The inability of such suppliers or service providers to perform such obligations could materially affect the liquidity, financial condition, and results of operations of certain of the Utility operating companies, System Energy, and Entergy Wholesale Commodities.
Entergy Arkansas, Entergy Louisiana, System Energy, and the Entergy Wholesale Commodities business face the risk that the NRC will change or modify its regulations, suspend, not renew, or revoke their licenses, or increase oversight of their nuclear plants, which could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
Under the Atomic Energy Act and Energy Reorganization Act, the NRC regulates the operation of nuclear power plants. The NRC may modify, suspend, not renew, or revoke licenses, shut down a nuclear facility and impose civil penalties for failure to comply with the Atomic Energy Act, related regulations, or the terms of the licenses for
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nuclear facilities. The license renewal process in some cases may be the subject of significant public debate and legislative review and scrutiny at the federal and, in some cases, state level, though the decision whether to renew is subject to the exclusive jurisdiction of the NRC. Interested parties may also intervene which could result in prolonged proceedings. A change in the Atomic Energy Act, other applicable statutes, or the applicable regulations or licenses, or the NRC’s interpretation thereof, may require a substantial increase in capital expenditures or may result in increased operating or decommissioning costs and could materially affect the results of operations, liquidity, or financial condition of Entergy (through Entergy Wholesale Commodities), its Utility operating companies, or System Energy. A change in the classification of a plant owned by one of these companies under the NRC’s Reactor Oversight Process, which is the NRC’s program to collect information about plant performance, assess the information for its safety significance, and provide for appropriate licensee and NRC response, also could cause the owner of the plant to incur material additional costs as a result of the increased oversight activity and potential response costs associated with the change in classification. For additional information concerning the current classification of the plants owned by Entergy Arkansas, Entergy Louisiana, System Energy, and the Entergy Wholesale Commodities business, see “Regulation of Entergy’s Business - Regulation of the Nuclear Power Industry - NRC Reactor Oversight Process” in Part I, Item 1 and Note 8 to the financial statements.
Events at nuclear plants owned by one of these companies, as well as those owned by others, may lead to a change in laws or regulations or the terms of the applicable licenses, or the NRC’s interpretation thereof, or may cause the NRC to increase oversight activity or initiate actions to modify, suspend, or revoke licenses, shut down a nuclear facility, or impose civil penalties. As a result, if an incident were to occur at any nuclear generating unit, whether an Entergy nuclear generating unit or not, it could materially affect the financial condition, results of operations, and liquidity of Entergy, certain of the Utility operating companies, System Energy, or Entergy Wholesale Commodities.
Certain of the Utility operating companies, System Energy, and Entergy Wholesale Commodities are exposed to risks and costs related to operating and maintaining their nuclear power plants, and their failure to maintain operational efficiency at their nuclear power plants could materially affect Entergy’s and their results of operations, financial condition, and liquidity.
The nuclear generating units owned by certain of the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business began commercial operations in the 1970s-1980s. Older equipment may require more capital expenditures to keep each of these nuclear power plants operating safely and efficiently. This equipment is also likely to require periodic upgrading and improvement. Any unexpected failure, including failure associated with breakdowns, forced outages, or any unanticipated capital expenditures, could result in increased costs, some of which costs may not be fully recoverable by the Utility operating companies and System Energy in regulatory proceedings. Operations at any of the nuclear generating units owned and operated by Entergy’s subsidiaries could degrade to the point where the affected unit needs to be shut down or operated at less than full capacity. If this were to happen, identifying and correcting the causes may require significant time and expense. A decision may be made to close a unit rather than incur the expense of restarting it or returning the unit to full capacity. For the Utility operating companies and System Energy, this could result in certain costs being stranded and potentially not fully recoverable in regulatory proceedings. For Entergy Wholesale Commodities, this could result in lost revenue and increased fuel and purchased power expense to meet supply commitments and penalties for failure to perform under their contracts with customers. In addition, the operation and maintenance of Entergy’s nuclear facilities require the commitment of substantial human resources that can result in increased costs.
The nuclear industry continues to address susceptibility to the effects of stress corrosion cracking and other corrosion mechanisms on certain materials within plant systems. The issue is applicable at all nuclear units to varying degrees and is managed in accordance with industry standard practices and guidelines that include in-service examinations, replacements, and mitigation strategies. Developments in the industry or identification of issues at the nuclear units could require unanticipated remediation efforts that cannot be quantified in advance.
Moreover, Entergy is becoming more dependent on fewer suppliers for key parts of Entergy’s nuclear power plants that may need to be replaced or refurbished. In addition, certain major parts have long lead-times to manufacture
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if an unplanned replacement is needed. This dependence on a reduced number of suppliers and long lead-times on certain major parts for unplanned replacements could result in delays in obtaining qualified replacement parts and, therefore, greater expense for Entergy.
The costs associated with the storage of the spent nuclear fuel of certain of the Utility operating companies, System Energy, and the owners of the Entergy Wholesale Commodities nuclear power plants, as well as the costs of and their ability to fully decommission their nuclear power plants, could be significantly affected by the timing of the opening of a spent nuclear fuel disposal facility, as well as interim storage and transportation requirements.
Certain of the Utility operating companies, System Energy and the owners of the Entergy Wholesale Commodities nuclear plants incur costs for the on-site storage of spent nuclear fuel. The approval of a license for a national repository for the disposal of spent nuclear fuel, such as the one proposed for Yucca Mountain, Nevada, or any interim storage facility, and the timing of such facility opening, will significantly affect the costs associated with on-site storage of spent nuclear fuel. For example, while the DOE is required by law to proceed with the licensing of Yucca Mountain and, after the license is granted by the NRC, to construct the repository and commence the receipt of spent fuel, the NRC licensing of the Yucca Mountain repository is effectively at a standstill. These actions are prolonging the time before spent fuel is removed from Entergy’s plant sites. Because the DOE has not accomplished its objectives, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and has breached its spent fuel disposal contracts, and Entergy has sued the DOE for such breach. Furthermore, Entergy is uncertain as to when the DOE will commence acceptance of spent fuel from its facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at the companies’ nuclear sites and maintenance costs on existing storage facilities, including aging management of fuel storage casks, may increase. The costs of on-site storage are also affected by regulatory requirements for such storage. In addition, the availability of a repository or other off-site storage facility for spent nuclear fuel may affect the ability to fully decommission the nuclear units and the costs relating to decommissioning. For further information regarding spent fuel storage, see the “Critical Accounting Estimates – Nuclear Decommissioning Costs – Spent Fuel Disposal” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy and Note 8 to the financial statements.
Certain of the Utility operating companies, System Energy, and the Entergy Wholesale Commodities nuclear plant owners may be required to pay substantial retrospective premiums imposed under the Price-Anderson Act in the event of a nuclear incident, and losses not covered by insurance could have a material effect on Entergy’s and their results of operations, financial condition, or liquidity.
Accidents and other unforeseen problems at nuclear power plants have occurred both in the United States and elsewhere. The Price-Anderson Act limits each reactor owner’s public liability (off-site) for a single nuclear incident to the payment of retrospective premiums into a secondary insurance pool of up to approximately $127.3 million per reactor. With 102 reactors currently participating, this translates to a total public liability cap of approximately $13 billion per incident. The limit is subject to change to account for the effects of inflation, a change in the primary limit of insurance coverage, and changes in the number of licensed reactors. As required by the Price-Anderson Act, the Utility operating companies, System Energy, and Entergy Wholesale Commodities carry the maximum available amount of primary nuclear off-site liability insurance with American Nuclear Insurers (which is $450 million for each operating site as of January 1, 2018). Claims for any nuclear incident exceeding that amount are covered under the retrospective premiums paid into the secondary insurance pool. As a result, in the event of a nuclear incident that causes damages (off-site) in excess of the primary insurance coverage, each owner of a nuclear plant reactor, including Entergy’s Utility operating companies, System Energy, and the Entergy Wholesale Commodities plant owners, regardless of fault or proximity to the incident, will be required to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary insurance level, up to a maximum of approximately $127.3 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is $1.146 billion). The retrospective premium payment is currently limited to approximately $19 million per year per incident per reactor until the aggregate public liability for each licensee is paid up to the $127.3 million cap.
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NEIL is a utility industry mutual insurance company, owned by its members, including the Utility operating companies, System Energy, and the owners of the Entergy Wholesale Commodities plants. All member plants could be subject to an annual assessment (retrospective premium of up to 10 times current annual premium for all policies) should the surplus (reserve) be significantly depleted due to insured losses. As of December 31, 2017, the maximum annual assessment amounts total $112.2 million for the Utility plants. Retrospective premium insurance available through NEIL’s reinsurance treaty can cover the potential assessments and the Entergy Wholesale Commodities plants currently maintain the retrospective premium insurance to cover those potential assessments.
As an owner of nuclear power plants, Entergy participates in industry self-insurance programs and could be liable to fund claims should a plant owned by a different company experience a major event. Any resulting liability from a nuclear accident may exceed the applicable primary insurance coverage and require contribution of additional funds through the industry-wide program that could significantly affect the results of operations, financial condition, or liquidity of Entergy, certain of the Utility operating companies, System Energy, or the Entergy Wholesale Commodities subsidiaries.
The decommissioning trust fund assets for the nuclear power plants owned by the Utility operating companies, System Energy and the Entergy Wholesale Commodities nuclear plant owners may not be adequate to meet decommissioning obligations if market performance and other changes decrease the value of assets in the decommissioning trusts, if one or more of Entergy’s nuclear power plants is retired earlier than the anticipated shutdown date, if the plants cost more to decommission than estimated, or if current regulatory requirements change, which then could require significant additional funding.
Owners of nuclear generating plants have an obligation to decommission those plants. Certain of the Utility operating companies, System Energy, and owners of the Entergy Wholesale Commodities nuclear power plants maintain decommissioning trust funds for this purpose. Certain of the Utility operating companies collect funds from their customers, which are deposited into the trusts covering the units operated for or on behalf of those companies. Those rate collections, as adjusted from time to time by rate regulators, are generally based upon operating license lives and trust fund balances as well as estimated trust fund earnings and decommissioning costs. Assets in these trust funds are subject to market fluctuations, will yield uncertain returns that may fall below projected return rates, and may result in losses resulting from the recognition of impairments of the value of certain securities held in these trust funds.
In connection with the acquisition of certain nuclear plants, the Entergy Wholesale Commodities plant owners acquired decommissioning trust funds that are funded in accordance with NRC regulations. Under NRC regulations, Entergy Wholesale Commodities’ nuclear subsidiaries are permitted to project the NRC-required decommissioning amount, based on an NRC formula or a site-specific estimate, and the amount that will be available in each of the Entergy Wholesale Commodities nuclear power plant’s decommissioning trusts combined with other decommissioning financial assurances in place. The projections are made based on the operating license expiration date and the mid-point of the subsequent decommissioning process, or the anticipated actual completion of decommissioning if a site-specific estimate is used, for each of these nuclear power plants. As a result, if the projected amount of individual plants’ decommissioning trusts exceeds the NRC-required decommissioning amount, then its decommissioning obligations are considered to be funded in accordance with NRC regulations. If the projected costs do not sufficiently reflect the actual costs the applicable Entergy subsidiaries would be required to incur to decommission these nuclear power plants, or funding is otherwise inadequate, or if the formula, formula inputs, or site-specific estimate is changed to require increased funding, additional resources would be required. Furthermore, depending upon the level of funding available in the trust funds, the NRC may not permit the trust funds to be used to pay for related costs such as the management of spent nuclear fuel that are not included in the NRC’s formula. The NRC may also require a plan for the provision of separate funding for spent fuel management costs. In addition to NRC requirements, there are other decommissioning-related obligations for certain of the Entergy Wholesale Commodities nuclear power plants, which management believes it will be able to satisfy.
Further, federal or state regulatory changes, including mandated increases in decommissioning funding or changes in the methods or standards for decommissioning operations, may also increase the funding requirements of,
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or accelerate the timing for funding of, the obligations related to the decommissioning of Entergy Wholesale Commodities nuclear power plants or may restrict the decommissioning-related costs that can be paid from the decommissioning trusts. As a result, under any of these circumstances, Entergy’s results of operations, liquidity, and financial condition could be materially affected.
An early plant shutdown (either generally or relative to current expectations), poor investment results or higher than anticipated decommissioning costs (including as a result of changing regulatory requirements) could cause trust fund assets to be insufficient to meet the decommissioning obligations, with the result that the Utility operating companies, System Energy or the Entergy Wholesale Commodities nuclear plant owners may be required to provide significant additional funds or credit support to satisfy regulatory requirements for decommissioning, which, with respect to the Utility operating companies, may not be recoverable from customers in a timely fashion or at all.
For further information regarding nuclear decommissioning costs, management’s decision to exit the merchant power business and the impairment charges that resulted from such decision, see the “Critical Accounting Estimates - Nuclear Decommissioning Costs” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy, the “Entergy Wholesale Commodities Exit from the Merchant Power Business” section of Management’s Financial Discussion and Analysis for Entergy Corporation and Subsidiaries and Notes 9 and 14 to the financial statements.
Changes in NRC regulations or other binding regulatory requirements may cause increased funding requirements for nuclear plant decommissioning trusts.
NRC regulations require certain minimum financial assurance requirements for meeting obligations to decommission nuclear power plants. Those financial assurance requirements may change from time to time, and certain changes may result in a material increase in the financial assurance required for decommissioning the Utility operating companies’, System Energy’s, and owners of Entergy Wholesale Commodities nuclear power plants. Such changes could result in the need for additional contributions to decommissioning trusts, or the posting of parent guarantees, letters of credit, or other surety mechanisms. For further information regarding nuclear decommissioning costs, see the “Critical Accounting Estimates – Nuclear Decommissioning Costs” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy and Note 9 to the financial statements.
New or existing safety concerns regarding operating nuclear power plants and nuclear fuel could lead to restrictions upon the operation and decommissioning of Entergy’s nuclear power plants.
New and existing concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel, in particular in the northeastern United States, which is where most of the current fleet of Entergy Wholesale Commodities nuclear power plants is located. These concerns have led to, and are expected to continue to lead to, various proposals to Federal regulators and governing bodies in some localities where Entergy’s subsidiaries own nuclear generating units for legislative and regulatory changes that could lead to the shutdown of nuclear units, denial of license renewal applications, additional requirements or restrictions related to spent nuclear fuel on-site storage and eventual disposal, or other adverse effects on owning, operating and decommissioning nuclear generating units. Entergy vigorously responds to these concerns and proposals. If any of the existing proposals, or any proposals that may arise in the future with respect to legislative and regulatory changes, become effective, they could have a material effect on Entergy’s results of operations, financial condition, and liquidity.
(Entergy Corporation)
A failure to obtain renewed licenses or other approvals required for the continued operation of the Entergy Wholesale Commodities’ Indian Point nuclear power plants could have a material effect on Entergy’s results of operations, financial condition, and liquidity and could lead to an acceleration of the timing for the funding of decommissioning obligations.
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The license renewal and related processes for the Entergy Wholesale Commodities’ Indian Point nuclear power plants have been and may continue to be the subject of significant public debate and regulatory and legislative review and scrutiny at the federal and, in certain cases, state level. The original expiration date of the operating license for Indian Point 2 was September 2013 and the original expiration date of the operating license for Indian Point 3 was December 2015. Because these plants filed timely license renewal applications, the NRC’s rules provide that these plants may continue to operate under their existing operating licenses until their renewal applications have been finally determined.
In January 2017, Entergy announced that it plans to shut down Indian Point 2 in 2020 and Indian Point 3 in 2021. The early and orderly shutdown is part of a settlement under which New York State has agreed to drop legal challenges and support renewal of the operating licenses for Indian Point. For additional discussion of the settlement agreement with New York State, see the “Entergy Wholesale Commodities Authorizations to Operate Indian Point” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
If the NRC were to deny the applications for the renewal of operating licenses for the Indian Point nuclear power plants, or if Indian Point fails to obtain other approvals, Entergy’s results of operations, financial condition, and liquidity could be materially affected by loss of revenue and cash flow associated with the plant or plants until the proposed shutdown date, potential impairments of the carrying value of the plants, increased depreciation rates, and an accelerated need for decommissioning funds, which could require additional funding. In addition, Entergy may incur increased operating costs depending on any conditions that may be imposed in connection with license renewal. For further discussion regarding the license renewal processes for the Indian Point nuclear power plants, see the “Entergy Wholesale Commodities Authorizations to Operate Indian Point” in Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis.
Entergy Wholesale Commodities nuclear power plants are exposed to price risk.
Entergy and its subsidiaries do not have a regulator-authorized rate of return on their capital investments in non-utility businesses. As a result, the sale of capacity and energy from the Entergy Wholesale Commodities nuclear power plants, unless otherwise contracted, is subject to the fluctuation of market power prices. In order to reduce future price risk to desired levels, Entergy Wholesale Commodities utilizes contracts that are unit-contingent and Firm LD and various products such as forward sales, options, and collars. As of December 31, 2017, Entergy Wholesale Commodities’ nuclear power generation plants had sold forward 98% in 2018, 91% in 2019, 51% in 2020, 74% in 2021, and 67% in 2022 of its generation portfolio’s planned energy output, reflecting the planned shutdown or sale of the Entergy Wholesale Commodities nuclear power plants by mid-2022.
Market conditions such as product cost, market liquidity, and other portfolio considerations influence the product and contractual mix. The obligations under unit-contingent agreements depend on a generating asset that is operating; if the generation asset is not operating, the seller generally is not liable for damages. For some unit-contingent obligations, however, there is also a guarantee of availability that provides for the payment to the power purchaser of contract damages, if incurred, in the event the unit owner fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. Firm LD sales transactions may be exposed to substantial operational price risk, a portion of which may be capped through the use of risk management products, to the extent that the plants do not run as expected and market prices exceed contract prices.
Market prices may fluctuate substantially, sometimes over relatively short periods of time, and at other times experience sustained increases or decreases. Demand for electricity and its fuel stock can fluctuate dramatically, creating periods of substantial under- or over-supply. During periods of over-supply, prices might be depressed. Also, from time to time there may be political pressure, or pressure from regulatory authorities with jurisdiction over wholesale and retail energy commodity and transportation rates, to impose price limitations, credit requirements, bidding rules and other mechanisms to address volatility and other issues in these markets.
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The effects of sustained low natural gas prices and power market structure challenges have resulted in lower market prices for electricity in the power regions where the Entergy Wholesale Commodities nuclear power plants are located. In addition, currently the market design under which the plants operate does not adequately compensate merchant nuclear plants for their environmental and fuel diversity benefits in the region. These conditions were primary factors leading to Entergy’s decision to shut down (or sell) Entergy Wholesale Commodities’ nuclear power plants before the end of their operating licenses (or requested operating licenses for Indian Point 2 and Indian Point 3).
The price that different counterparties offer for various products including forward sales is influenced both by market conditions as well as the contract terms such as damage provisions, credit support requirements, and the number of available counterparties interested in contracting for the desired forward period. Depending on differences between market factors at the time of contracting versus current conditions, Entergy Wholesale Commodities’ contract portfolio may have average contract prices above or below current market prices, including at the expiration of the contracts, which may significantly affect Entergy Wholesale Commodities’ results of operations, financial condition, or liquidity. New hedges are generally layered into on a rolling forward basis, which tends to drive hedge over-performance to market in a falling price environment, and hedge underperformance to market in a rising price environment; however, hedge timing, product choice, and hedging costs will also affect these results. See the “Market and Credit Risk Sensitive Instruments” section of Management’s Financial Discussion and Analysis for Entergy Corporation and Subsidiaries. Since Entergy Wholesale Commodities has announced the closure (or sale) of its nuclear plants, Entergy Wholesale Commodities may enter into fewer forward sales contracts for output from such plants.
Among the factors that could affect market prices for electricity and fuel, all of which are beyond Entergy’s control to a significant degree, are:
| • | prevailing market prices for natural gas, uranium (and its conversion, enrichment, and fabrication), coal, oil, and other fuels used in electric generation plants, including associated transportation costs, and supplies of such commodities; |

| • | seasonality and realized weather deviations compared to normalized weather forecasts; |

| • | availability of competitively priced alternative energy sources and the requirements of a renewable portfolio standard; |

| • | changes in production and storage levels of natural gas, lignite, coal and crude oil, and refined products; |

| • | liquidity in the general wholesale electricity market, including the number of creditworthy counterparties available and interested in entering into forward sales agreements for Entergy’s full hedging term; |

| • | the actions of external parties, such as the FERC and local independent system operators and other state or Federal energy regulatory bodies, that may impose price limitations and other mechanisms to address some of the volatility in the energy markets; |

| • | electricity transmission, competing generation or fuel transportation constraints, inoperability, or inefficiencies; |

| • | the general demand for electricity, which may be significantly affected by national and regional economic conditions; |

| • | weather conditions affecting demand for electricity or availability of hydroelectric power or fuel supplies; |

| • | the rate of growth in demand for electricity as a result of population changes, regional economic conditions, and the implementation of conservation programs or distributed generation; |

| • | regulatory policies of state agencies that affect the willingness of Entergy Wholesale Commodities customers to enter into long-term contracts generally, and contracts for energy in particular; |

| • | increases in supplies due to actions of current Entergy Wholesale Commodities competitors or new market entrants, including the development of new generation facilities, expansion of existing generation facilities, the disaggregation of vertically integrated utilities, and improvements in transmission that allow additional supply to reach Entergy Wholesale Commodities’ nuclear markets; |

| • | union and labor relations; |

| • | changes in Federal and state energy and environmental laws and regulations and other initiatives, such as the Regional Greenhouse Gas Initiative, including but not limited to, the price impacts of proposed emission controls; |

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| • | 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; and |

| • | natural disasters, terrorist actions, wars, embargoes, and other catastrophic events. |

The Entergy Wholesale Commodities business is subject to substantial governmental regulation and may be adversely affected by legislative, regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.
The Entergy Wholesale Commodities business is subject to extensive regulation under federal, state, and local laws. Compliance with the requirements under these various regulatory regimes may cause the Entergy Wholesale Commodities business to incur significant additional costs, and failure to comply with such requirements could result in the shutdown of the non-complying facility, the imposition of liens, fines and/or civil or criminal liability.
Public utilities under the Federal Power Act are required to obtain FERC acceptance of their rate schedules for wholesale sales of electricity. Each of the owners of the Entergy Wholesale Commodities nuclear power plants that generates electricity, as well as Entergy Nuclear Power Marketing, LLC, is a “public utility” under the Federal Power Act by virtue of making wholesale sales of electric energy and/or owning wholesale electric transmission facilities. The FERC has granted these generating and power marketing companies the authority to sell electricity at market-based rates. The FERC’s orders that grant the Entergy Wholesale Commodities’ generating and power marketing companies market-based rate authority reserve the right to revoke or revise that authority if the FERC subsequently determines that the Entergy Wholesale Commodities business can exercise market power in transmission or generation, create barriers to entry, or engage in abusive affiliate transactions. In addition, the Entergy Wholesale Commodities’ market-based sales are subject to certain market behavior rules, and if any of its generating and power marketing companies were deemed to have violated one of those rules, they would be subject to potential disgorgement of profits associated with the violation and/or suspension or revocation of their market-based rate authority and potential penalties of up to $1 million per day per violation. If the Entergy Wholesale Commodities’ generating or power marketing companies were to lose their market-based rate authority, such companies would be required to obtain the FERC’s acceptance of a cost-of-service rate schedule and could become subject to the accounting, record-keeping, and reporting requirements that are imposed on utilities with cost-based rate schedules. This could have an adverse effect on the rates the Entergy Wholesale Commodities business charges for power from its facilities.
The Entergy Wholesale Commodities business is also affected by legislative and regulatory changes, as well as changes to market design, market rules, tariffs, cost allocations, and bidding rules imposed by the existing Independent System Operators. The Independent System Operators that oversee most of the wholesale power markets may impose, and in the future may continue to impose, mitigation, including price limitations, offer caps and other mechanisms, to address some of the volatility and the potential exercise of market power in these markets. These types of price limitations and other regulatory mechanisms may have an adverse effect on the profitability of the Entergy Wholesale Commodities business’ generation facilities that sell energy and capacity into the wholesale power markets. Further, the New York Independent System Operator could determine that the timing of the shutdown of the Indian Point units could be inconsistent with its market power rules, and impose certain penalties that could affect Entergy Wholesale Commodities. For further information regarding federal, state and local laws and regulation applicable to the Entergy Wholesale Commodities business, see the “Regulation of Entergy’s Business” section in Part I, Item 1.
The regulatory environment applicable to the electric power industry is subject to changes as a result of restructuring initiatives at both the state and federal levels. Entergy cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on the Entergy Wholesale Commodities business. In addition, in some of these markets, interested parties have proposed material market design changes, including the elimination of a single clearing price mechanism, have raised claims that the competitive marketplace is not working because energy prices in wholesale markets exceed the marginal cost of operating nuclear power plants, and have made proposals to re-regulate the markets, impose a generation tax, or require divestitures by generating companies to reduce their market share. Other proposals to re-regulate may be made and legislative or other attention to the electric power market restructuring process may delay or reverse the deregulation process, which
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could require material changes to business planning models. If competitive restructuring of the electric power markets is reversed, modified, discontinued, or delayed, the Entergy Wholesale Commodities business’ results of operations, financial condition, and liquidity could be materially affected.
The power plants owned by the Entergy Wholesale Commodities business are subject to impairment charges in certain circumstances, which could have a material effect on Entergy’s results of operations, financial condition or liquidity.
Entergy reviews long-lived assets held in all of its business segments whenever events or changes in circumstances indicate that recoverability of these assets is uncertain. Generally, the determination of recoverability is based on the undiscounted net cash flows expected to result from the operations of such assets. Projected net cash flows depend on the expected operating life of the assets, the future operating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy and capacity over the remaining life of the assets. In particular, the assets of the Entergy Wholesale Commodities business are subject to further impairment in connection with the closure or sale of the plants discussed below. Moreover, prior to the closure or sale of these plants, the failure of the Entergy Wholesale Commodities business to achieve forecasted operating results and cash flows, an unfavorable change in forecasted operating results or cash flows, a reduction in the expected remaining useful life of a unit (including if the operating licenses for the Indian Point power plants are not renewed by the NRC), or a decline in observable industry market multiples could all result in potential additional impairment charges for the affected assets.
On August 27, 2013, Entergy announced its plan to close and decommission Vermont Yankee. Vermont Yankee ceased power production in the fourth quarter 2014 at the end of a fuel cycle. This decision was approved by the Board in August 2013, and resulted in the recognition of impairment charges in 2013 and 2014. In October 2015, Entergy determined that it will close the Pilgrim and FitzPatrick plants. The Pilgrim plant will cease operations no later than June 1, 2019. FitzPatrick was expected to shut down at the end of its current fuel cycle, planned for January 27, 2017, but in March 2017, Entergy sold the FitzPatrick plant to Exelon Generation Company, LLC which continues to operate the plant. During the third quarter 2015, Entergy recorded impairment and other related charges to write down the carrying values of the FitzPatrick and Pilgrim plants and related assets to their fair values. In addition, in the fourth quarter 2015, Entergy recorded impairment and other related charges to write down the carrying value of the Palisades plant and related assets to their fair value. In December 2016, Entergy reached an agreement with Consumers Energy to terminate the PPA for the Palisades plant and to shut down the plant in 2018, but the agreement was terminated in September 2017 after the Michigan Public Service Commission decided that Consumers Power could not recover costs incurred under the agreement. Entergy intends to shut down the Palisades plant permanently on May 31, 2022. In January 2017, Entergy announced that it reached a settlement with New York State and plans to close the Indian Point 2 plant in 2020 and the Indian Point 3 plant in 2021. As a result, in the fourth quarter of 2016, Entergy recorded impairment and other related charges to write down the carrying values of the Palisades and Indian Point 2 and Indian Point 3 plants and related assets to their fair value. In addition to the impairments and other related charges, Entergy has incurred severance and employee retention costs and expects to incur additional charges through 2022 relating to the decisions to shut down Vermont Yankee, Palisades, Pilgrim, Indian Point 2 and Indian Point 3, and the sale of FitzPatrick.
If Entergy concludes that any of its nuclear power plants is unlikely to operate through its planned shutdown date, which conclusion would be based on a variety of factors, such a conclusion could result in a further impairment of part or all of the carrying value of the plant. Any impairment charge taken by Entergy with respect to its long-lived assets, including the power plants owned by the Entergy Wholesale Commodities business, would likely be material in the quarter that the charge is taken and could otherwise have a material effect on Entergy’s results of operations, financial condition, or liquidity. For further information regarding evaluating long-lived assets for impairment, see the “Critical Accounting Estimates - Impairment of Long-lived Assets and Trust Fund Investments” section of Management’s Financial Discussion and Analysis for Entergy Corporation and Subsidiaries and for further discussion of the impairment charges, see Note 14 to the financial statements.
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General Business
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
Entergy and the Utility operating companies depend on access to the capital markets and, at times, may face potential liquidity constraints, which could make it more difficult to handle future contingencies such as natural disasters or substantial increases in gas and fuel prices. Disruptions in the capital and credit markets may adversely affect Entergy’s and its subsidiaries’ ability to meet liquidity needs, access capital and operate and grow their businesses, and the cost of capital.
Entergy’s business is capital intensive and dependent upon its ability to access capital at reasonable rates and other terms. At times there are also spikes in the price for natural gas and other commodities that increase the liquidity requirements of the Utility operating companies and Entergy Wholesale Commodities. In addition, Entergy’s and the Utility operating companies’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster similar to that experienced in Entergy’s service territory with Hurricane Katrina and Hurricane Rita in 2005, Hurricane Gustav and Hurricane Ike in 2008, and Hurricane Isaac in 2012. The occurrence of one or more contingencies, including a delay in regulatory recovery of fuel or purchased power costs or storm restoration costs, higher than expected pension contributions, an acceleration of payments or decreased credit lines, less cash flow from operations than expected, or other unknown events, could cause the financing needs of Entergy and its subsidiaries to increase. In addition, accessing the debt capital markets more frequently in these situations may result in an increase in leverage. Material leverage increases could negatively affect the credit ratings of Entergy and the Utility operating companies, which in turn could negatively affect access to the capital markets.
The inability to raise capital on favorable terms, particularly during times of uncertainty in the capital markets, could negatively affect Entergy and its subsidiaries’ ability to maintain and to expand their businesses. Events beyond Entergy’s control may create uncertainty that could increase its cost of capital or impair its ability to access the capital markets, including the ability to draw on its bank credit facilities. Entergy and its subsidiaries are unable to predict the degree of success they will have in renewing or replacing their credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If Entergy and its subsidiaries are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities and/or bear an unfavorable cost of capital, which, in turn, could impact their ability to grow their businesses, decrease earnings, significantly reduce financial flexibility and/or limit Entergy Corporation’s ability to sustain its current common stock dividend level.
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
A downgrade in Entergy Corporation’s or its subsidiaries’ credit ratings could negatively affect Entergy Corporation’s and its subsidiaries’ ability to access capital and/or could require Entergy Corporation or its subsidiaries to post collateral, accelerate certain payments, or repay certain indebtedness.
There are a number of factors that rating agencies evaluate to arrive at credit ratings for each of Entergy Corporation and the Registrant Subsidiaries, including each Registrant’s regulatory framework, ability to recover costs and earn returns, diversification and financial strength and liquidity. If one or more rating agencies downgrade Entergy Corporation’s, any of the Utility operating companies’, or System Energy’s ratings, particularly below investment grade, borrowing costs would increase, the potential pool of investors and funding sources would likely decrease, and cash or letter of credit collateral demands may be triggered by the terms of a number of commodity contracts, leases, and other agreements.
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Most of Entergy Corporation’s and its subsidiaries’ large customers, suppliers, and counterparties require sufficient creditworthiness to enter into transactions. If Entergy Corporation’s or its subsidiaries’ ratings decline, particularly below investment grade, or if certain counterparties believe Entergy Corporation or the Utility operating companies are losing creditworthiness and demand adequate assurance under fuel, gas, and purchased power contracts, the counterparties may require posting of collateral in cash or letters of credit, prepayment for fuel, gas or purchased power or accelerated payment, or counterparties may decline business with Entergy Corporation or its subsidiaries. At December 31, 2017, based on power prices at that time, Entergy had liquidity exposure of $167 million under the guarantees in place supporting Entergy Wholesale Commodities transactions and $8 million of posted cash collateral. In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of December 31, 2017, Entergy would have been required to provide approximately $98 million of additional cash or letters of credit under some of the agreements. In the event of a decrease in the credit ratings of Entergy’s Utility operating companies to below investment grade, those companies collectively could be required to provide up to $50 million of additional cash or letters of credit to MISO. As of December 31, 2017, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously received collateral from counterparties, would increase by $372 million for a $1 per MMBtu increase in gas prices in both the short- and long-term markets.
Recent U.S. tax legislation may materially adversely affect Entergy’s financial condition, results of operations, cash flows, and credit ratings.
The recently enacted H.R. 1, also known as the Tax Cuts and Jobs Act of 2017, will significantly change the U.S. Internal Revenue Code, including taxation of U.S. corporations, by, among other things, reducing the federal corporate income tax rate, limiting interest deductions, and altering the expensing of capital expenditures. The legislation is unclear in certain respects and will require interpretations and implementing regulations by the IRS, as well as state tax authorities, and the legislation could be subject to potential amendments and technical corrections, any of which could lessen or increase certain impacts of the legislation. In addition, the regulatory treatment of the impacts of this legislation, particularly on companies like Entergy and the Registrant Subsidiaries, will be subject to the discretion of federal, state, and local public utility regulators.
As further described in Note 3 to the financial statements, Entergy recorded a reduction of certain of its net deferred income tax assets (including the value of its net operating loss carryforwards) and regulatory liabilities, resulting in a charge against earnings in the fourth quarter 2017 of $526 million, including a $34 million net-of-tax reduction of regulatory liabilities, and Entergy and the Utility operating companies recorded a reduction of approximately $3.7 billion on a consolidated basis in certain of its net deferred tax liabilities and a corresponding increase in net regulatory liabilities. Depending on the outcome of the ratemaking process, IRS examinations, or tax positions and elections that Entergy may elect, Entergy and the Registrant Subsidiaries may be required to record additional charges or credits to income tax expense. Further, the amount and timing of the return of the deferred taxes to customers is dependent upon the regulatory treatment received, and, if the Registrant Subsidiaries are unsuccessful in receiving balanced regulatory treatment, Entergy’s or the Utility operating companies’ cash flow could be materially adversely affected. Further, there may be other material effects resulting from the legislation that have not been identified. While Entergy plans to finance its cash needs that result from the Act through a combination of Registrant Subsidiary debt and Entergy Corporation debt and equity, there can be no assurance that Entergy or the Registrant Subsidiaries will obtain debt or equity financing on terms that are satisfactory or consistent with their current expectations.
In addition, while Moody’s changed the ratings outlooks for Entergy Corporation to negative from stable in reaction to the legislation, it is unclear when or how capital markets, other credit rating agencies, the FERC or state or local regulators may respond to this legislation. Entergy expects that certain financial metrics used by credit rating agencies will be negatively affected as a result of the return of excess deferred taxes to customers, increased debt, and the decrease in the Registrant Subsidiaries’ revenue requirements, and related decrease in operating cash flows, expected as a consequence of the lower federal corporate income tax rate while, at the same time, the loss of the bonus depreciation tax deduction will increase taxable income in the future. Also, the timing of the return of excess deferred income taxes
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to customers will not exactly match the lower taxes that Entergy will be paying which will result in cash outflows to customers. It is also uncertain how other credit rating agencies will treat the impacts of this legislation on their credit ratings and metrics, and whether additional avenues will evolve for companies to manage the adverse aspects of this legislation. These avenues, to the extent available and if successfully applied, could lessen the impacts on certain credit metrics, although there can be no assurance in this regard.
Entergy believes that interpretations and implementing regulations by the IRS, as well as potential amendments and technical corrections, could result in lessening the impacts of certain aspects of this legislation. If Entergy is unable to successfully pursue avenues to manage the effects of the new tax legislation, or if additional interpretations, regulations, amendments, or technical corrections exacerbate the effects of the legislation, the legislation could have a material effect on Entergy’s results of operations, financial condition, and cash flows, and could result in additional credit rating agency actions. Any such actions by credit rating agencies may make it more difficult and costly for Entergy to issue debt securities and certain other types of financing and could increase borrowing costs under its credit facilities.
For further information regarding the effects of the Act, see the “Income Tax Legislation” section of Management’s Financial Discussion and Analysis for Entergy. Also, Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could negatively impact Entergy’s, the Utility operating companies’, and System Energy’s results of operations, financial condition and liquidity.
Entergy and its subsidiaries make judgments regarding the potential tax effects of various transactions and results of operations to estimate their obligations to taxing authorities. These tax obligations include income, franchise, real estate, sales and use, and employment-related taxes. These judgments include provisions for potential adverse outcomes regarding tax positions that have been taken. Entergy and its subsidiaries also estimate their ability to utilize tax benefits, including those in the form of carryforwards for which the benefits have already been reflected in the financial statements. Changes in federal, state, or local tax laws, adverse tax audit results or adverse tax rulings on positions taken by Entergy and its subsidiaries could negatively affect Entergy’s, the Utility operating companies’, and System Energy’s results of operations, financial condition, and liquidity. For further information regarding Entergy’s income taxes, see Note 3 to the financial statements.
Entergy and its subsidiaries’ ability to successfully complete strategic transactions, including merger, acquisition, divestiture, joint venture, restructuring or other strategic transactions, is subject to significant risks, including the risk that required regulatory or governmental approvals may not be obtained, risks relating to unknown or undisclosed problems or liabilities, and the risk that for these or other reasons, Entergy and its subsidiaries may be unable to achieve some or all of the benefits that they anticipate from such transactions.
From time to time, Entergy and its subsidiaries have pursued and may continue to pursue strategic transactions including merger, acquisition, divestiture, joint venture, restructuring or other strategic transactions. For example, in November 2016, Entergy announced that it had entered into a purchase and sale agreement with NorthStar for the sale of 100% of the membership interests in Entergy Nuclear Vermont Yankee, which owns the Vermont Yankee plant. In addition, as part of Entergy’s plan to exit the merchant power business, it plans to shut down its remaining merchant nuclear power plants by mid-2022. These transactions and plans are or may become subject to regulatory approval and other material conditions or contingencies. The failure to complete these transactions or plans or any future strategic transaction successfully or on a timely basis could have an adverse effect on Entergy’s financial condition, results of operations and the market’s perception of Entergy’s ability to execute its strategy. Further, these transactions, and any completed or future strategic transactions, involve substantial risks, including the following:
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| • | the disposition of a business or asset may involve continued financial involvement in the divested business, such as through continuing equity ownership, transition service agreements, guarantees, indemnities, or other current or contingent financial obligations; |

| • | Entergy may encounter difficulty in finding buyers or executing alternative exit strategies on acceptable terms in a timely manner when it decides to sell an asset or a business, which could delay the accomplishment of its strategic objectives. Alternatively, Entergy may dispose of a business or asset at a price or on terms that are less than what it had anticipated, or with the exclusion of assets that must be divested or run off separately; |

| • | the disposition of a business could result in impairments and related write-offs of the carrying values of the relevant assets; |

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

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

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

| • | the disposition of a business, including Entergy’s planned exit from the merchant power business, could divert management’s attention from other business concerns; |

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

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

Entergy may not be successful in managing these or any other significant risks that it may encounter in acquiring or divesting a business, or engaging in other strategic transactions, which could have a material effect on its business.
The construction of, and capital improvements to, power generation facilities involve substantial risks. Should construction or capital improvement efforts be unsuccessful, the financial condition, results of operations, or liquidity of Entergy and the Utility operating companies could be materially affected.
Entergy’s and the Utility operating companies’ ability to complete construction of power generation facilities, or make other capital improvements, in a timely manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, project management expertise and escalating costs for materials, labor, and environmental compliance. Delays in obtaining permits, shortages in materials and qualified labor, suppliers and contractors not performing as required under their contracts, changes in the scope and timing of projects, poor quality initial cost estimates from contractors, the inability to raise capital on favorable terms, changes in commodity prices affecting revenue, fuel costs, or materials costs, downward changes in the economy, changes in law or regulation, including environmental compliance requirements, and other events beyond the control of the Utility operating companies or the Entergy Wholesale Commodities business may occur that may materially affect the schedule, cost, and performance of these projects. If these projects or other capital improvements are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments, or face increased risk of potential write-off of the investment in the project. In addition, the Utility operating companies could be exposed to higher costs and market volatility, which could affect cash flow and cost recovery, should their respective regulators decline to approve the construction of new generation needed to meet the reliability needs of customers at the lowest reasonable cost.
For further information regarding capital expenditure plans and other uses of capital in connection with the potential construction of additional generation supply sources within the Utility operating companies’ service territory, and as to the Entergy Wholesale Commodities business, see the “Capital Expenditure Plans and Other Uses of Capital” section of Management’s Financial Discussion and Analysis for Entergy and each of the Registrant Subsidiaries.
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The Utility operating companies, System Energy, and the Entergy Wholesale Commodities business may incur substantial costs to fulfill their obligations related to environmental and other matters.
The businesses in which the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business operate are subject to extensive environmental regulation by local, state, and federal authorities. These laws and regulations affect the manner in which the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business conduct their operations and make capital expenditures. These laws and regulations also affect how the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business manage air emissions, discharges to water, wetlands impacts, solid and hazardous waste storage and disposal, cooling and service water intake, the protection of threatened and endangered species, certain migratory birds and eagles, hazardous materials transportation, and similar matters. Federal, state, and local authorities continually revise these laws and regulations, and the laws and regulations are subject to judicial interpretation and to the permitting and enforcement discretion vested in the implementing agencies. Developing and implementing plans for facility compliance with these requirements can lead to capital, personnel, and operation and maintenance expenditures. Violations of these requirements can subject the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, remediation and clean-up costs, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. In addition, the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business potentially are subject to liability under these laws for the costs of remediation of environmental contamination of property now or formerly owned or operated by the Utility operating companies, System Energy, and Entergy Wholesale Commodities and of property contaminated by hazardous substances they generate. The Utility operating companies are currently involved in proceedings relating to sites where hazardous substances have been released and may be subject to additional proceedings in the future. The Utility operating companies, System Energy, and the Entergy Wholesale Commodities business have incurred and expect to incur significant costs related to environmental compliance.
Emissions of nitrogen and sulfur oxides, mercury, particulates, greenhouse gases, and other regulated air emissions from generating plants are potentially subject to increased regulation, controls and mitigation expenses. In addition, existing air regulations and programs promulgated by the EPA often are challenged legally, sometimes resulting in large-scale changes to anticipated regulatory regimes and the resulting need to shift course, both operationally and economically, depending on the nature of the changes. Risks relating to global climate change, initiatives to compel greenhouse gas emission reductions, and water availability issues are discussed below.
Entergy and its subsidiaries may not be able to obtain or maintain all required environmental regulatory approvals. If there is a delay in obtaining any required environmental regulatory approvals, or if Entergy and its subsidiaries fail to obtain, maintain, or comply with any such approval, the operation of its facilities could be stopped or become subject to additional costs. For further information regarding environmental regulation and environmental matters, see the “Regulation of Entergy’s Business – Environmental Regulation” section of Part I, Item 1.
The Utility operating companies, System Energy, and the Entergy Wholesale Commodities business may incur substantial costs related to reliability standards.
Entergy’s business is subject to extensive and mandatory reliability standards. Such standards, which are established by the North American Electric Reliability Corporation (NERC), the SERC Reliability Corporation (SERC), and other regional enforcement entities, are approved by the FERC and frequently are reviewed, amended, and supplemented. Failure to comply with such standards could result in the imposition of fines or civil penalties, and potential exposure to third party claims for alleged violations of such standards. The standards, as well as the laws and regulations that govern them, are subject to judicial interpretation and to the enforcement discretion vested in the implementing agencies. In addition to exposure to civil penalties and fines, the Utility operating companies have incurred and expect to incur significant costs related to compliance with new and existing reliability standards, including costs associated with the Utility operating companies’ transmission system and generation assets. The changes to the
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reliability standards applicable to the electric power industry are ongoing, and Entergy cannot predict the ultimate effect that the reliability standards will have on its Utility and Entergy Wholesale Commodities.
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
The effects of weather and economic conditions, and the related impact on electricity and gas usage, may materially affect the Utility operating companies’ results of operations.
Temperatures above normal levels in the summer tend to increase electric cooling demand and revenues, and temperatures below normal levels in the winter tend to increase electric and gas heating demand and revenues. As a corollary, moderate temperatures in either season tend to decrease usage of energy and resulting revenues. Seasonal pricing differentials, coupled with higher consumption levels, typically cause the Utility operating companies to report higher revenues in the third quarter of the fiscal year than in the other quarters. Extreme weather conditions or storms, however, may stress the Utility operating companies’ generation facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on their ability to meet peak customer demand, increased regulatory oversight, and lower customer satisfaction. These extreme conditions could have a material effect on the Utility operating companies’ financial condition, results of operations, and liquidity.
Entergy’s electricity sales volumes are affected by a number of factors, including economic conditions, weather, customer bill sizes (large bills tend to induce conservation), trends in energy efficiency, new technologies and self-generation alternatives, including the willingness and ability of large industrial customers to develop co-generation facilities that greatly reduce their demand from Entergy. Some of these factors are inherently cyclical or temporary in nature, such as the weather or economic conditions, and rarely have a long-lasting effect on Entergy’s operating results. Others, such as the increasing adoption of energy efficient appliances, new building codes, distributed energy resources, energy storage, demand side management and new technologies such as rooftop solar are having a more permanent effect of reducing sales growth rates from historical norms. As a result of these emerging efficiencies and technologies, the Utility operating companies may experience lower usage per customer in the residential and commercial classes, and further advances have the potential to limit sales growth in the future. Electricity sales to industrial customers, in particular, benefit from steady economic growth and favorable commodity prices; however, they are sensitive to changes in conditions in the markets in which its customers operate. Any negative change in any of these or other factors has the potential to result in slower sales growth or sales declines and increased bad debt expense, which could materially affect Entergy’s and the Utility operating companies’ results of operations, financial condition, and liquidity.
The effects of climate change and environmental and regulatory obligations intended to compel greenhouse gas emission reductions or to place a price on greenhouse gas emissions could materially affect the financial condition, results of operations, and liquidity of Entergy, the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business.
In an effort to address climate change concerns, federal, state, and local authorities are calling for additional laws and regulations aimed at known or suspected causes of climate change. For example, in response to the United States Supreme Court’s 2007 decision holding that the EPA has authority to regulate emissions of CO2 and other “greenhouse gases” under the Clean Air Act, the EPA, various environmental interest groups, and other organizations are focusing considerable attention on CO2 emissions from power generation facilities and their potential role in climate change. In 2010, the EPA promulgated its first regulations controlling greenhouse gas emissions from certain vehicles and from new and significantly modified stationary sources of emissions, including electric generating units. During 2012 and 2014, the EPA proposed CO2 emission standards for new and existing sources. The EPA finalized these standards in 2015; however, in late 2017, the EPA proposed to repeal the regulations and issued an Advanced Notice of Proposed Rulemaking for replacing certain aspects of the standards for existing sources. As examples of state action, in the Northeast, the Regional Greenhouse Gas Initiative establishes a cap on CO2 emissions from electric power plants and requires generators to purchase emission permits to cover their CO2 emissions, and a similar program has been
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developed in California. The impact that recent changes in the federal government will have on existing and pending environmental laws and regulations related to greenhouse gas emissions is currently unclear.
Developing and implementing plans for compliance with greenhouse gas emissions reduction requirements can lead to additional capital, personnel, and operation and maintenance expenditures and could significantly affect the economic position of existing facilities and proposed projects; moreover, long-term planning to meet environmental requirements can be negatively impacted and costs may increase to the extent laws and regulations change prior to full implementation. These requirements could, in turn, lead to changes in the planning or operations of balancing authorities or organized markets in areas where the Utility operating companies, System Energy, or Entergy Wholesale Commodities do business. Violations of such requirements may subject Entergy Wholesale Commodities and the Utility operating companies to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. To the extent Entergy believes any of these costs are recoverable in rates, however, additional material rate increases for customers could be resisted by Entergy’s regulators and, in extreme cases, Entergy’s regulators might deny or defer timely recovery of these costs. Future changes in environmental regulation governing the emission of CO2 and other greenhouse gases could make some of Entergy’s electric generating units uneconomical to maintain or operate, and could increase the difficulty that Entergy and its subsidiaries have with obtaining or maintaining required environmental regulatory approvals, which could also materially affect the financial condition, results of operations and liquidity of Entergy and its subsidiaries. In addition, lawsuits have occurred or are reasonably expected against emitters of greenhouse gases alleging that these companies are liable for personal injuries and property damage caused by climate change. These lawsuits may seek injunctive relief, monetary compensation, and punitive damages.
In addition to the regulatory and financial risks associated with climate change discussed above, potential physical risks from climate change include an increase in sea level, wind and storm surge damages, wetland and barrier island erosion, risks of flooding and changes in weather conditions, (such as increases in precipitation, drought, or changes in average temperatures), and potential increased impacts of extreme weather conditions or storms. Entergy subsidiaries own assets in, and serve, communities that are at risk from sea level rise, changes in weather conditions, storms, and loss of the protection offered by coastal wetlands. A significant portion of the nation’s oil and gas infrastructure is located in these areas and susceptible to storm damage that could be aggravated by wetland and barrier island erosion, which could give rise to fuel supply interruptions and price spikes. Entergy and its subsidiaries also face the risk that climate change could impact the availability and quality of water supply necessary for operations.
These and other physical changes could result in changes in customer demand, increased costs associated with repairing and maintaining generation facilities and transmission and distribution systems resulting in increased maintenance and capital costs (and potential increased financing needs), limits on the Entergy System’s ability to meet peak customer demand, increased regulatory oversight, and lower customer satisfaction. Also, to the extent that climate change adversely impacts the economic health of a region or results in energy conservation or demand side management programs, it may adversely impact customer demand and revenues. Such physical or operational risks could have a material effect on Entergy’s, Entergy Wholesale Commodities’, System Energy’s, and the Utility operating companies’ financial condition, results of operations, and liquidity.
Continued and future availability and quality of water for cooling, process, and sanitary uses could materially affect the financial condition, results of operations, and liquidity of the Utility operating companies, System Energy, and the Entergy Wholesale Commodities business.
Water is a vital natural resource that is also critical to the Utility operating companies’, System Energy’s, and Entergy Wholesale Commodities’ business operations. Entergy’s facilities use water for cooling, boiler make-up, sanitary uses, potable supply, and many other uses. Three of Entergy’s Utility operating companies own and/or operate hydroelectric facilities. Accordingly, water availability and quality are critical to Entergy’s business operations. Impacts to water availability or quality could negatively impact both operations and revenues.
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Entergy secures water through various mechanisms (ground water wells, surface waters intakes, municipal supply, etc.) and operates under the provisions and conditions set forth by the provider and/or regulatory authorities. Entergy also obtains and operates in substantial compliance with water discharge permits issued under various provisions of the Clean Water Act and/or state water pollution control provisions. Regulations and authorizations for both water intake and use and for waste discharge can become more stringent in times of water shortages, low flows in rivers, low lake levels, low groundwater aquifer volumes, and similar conditions. The increased use of water by industry, agriculture, and the population at large, population growth, and the potential impacts of climate change on water resources may cause water use restrictions that affect Entergy and its subsidiaries.
Entergy and its subsidiaries may not be adequately hedged against changes in commodity prices, which could materially affect Entergy’s and its subsidiaries’ results of operations, financial condition, and liquidity.
To manage near-term financial exposure related to commodity price fluctuations, Entergy and its subsidiaries, including the Utility operating companies and the Entergy Wholesale Commodities business, may enter into contracts to hedge portions of their purchase and sale commitments, fuel requirements, and inventories of natural gas, uranium and its conversion and enrichment, coal, refined products, and other commodities, within established risk management guidelines. As part of this strategy, Entergy and its subsidiaries may utilize fixed- and variable-price forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. However, Entergy and its subsidiaries normally cover only a portion of the exposure of their assets and positions to market price volatility, and the coverage will vary over time. In addition, Entergy also elects to leave certain volumes during certain years unhedged. To the extent Entergy and its subsidiaries have unhedged positions, fluctuating commodity prices can materially affect Entergy’s and its subsidiaries’ results of operations and financial position.
Although Entergy and its subsidiaries devote a considerable effort to these risk management strategies, they cannot eliminate all the risks associated with these activities. As a result of these and other factors, Entergy and its subsidiaries cannot predict with precision the impact that risk management decisions may have on their business, results of operations, or financial position.
Entergy’s over-the-counter financial derivatives are subject to rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act that are designed to promote transparency, mitigate systemic risk and protect against market abuse. Entergy cannot predict the impact any proposed or not fully-implemented final rules will have on its ability to hedge its commodity price risk or on over-the-counter derivatives markets as a whole, but such rules and regulations could have a material effect on Entergy's risk exposure, as well as reduce market liquidity and further increase the cost of hedging activities.
Entergy has guaranteed or indemnified the performance of a portion of the obligations relating to hedging and risk management activities. Reductions in Entergy’s or its subsidiaries’ credit quality or changes in the market prices of energy commodities could increase the cash or letter of credit collateral required to be posted in connection with hedging and risk management activities, which could materially affect Entergy’s or its subsidiaries’ liquidity and financial position.
The Utility operating companies and the Entergy Wholesale Commodities business are exposed to the risk that counterparties may not meet their obligations, which may materially affect the Utility operating companies and Entergy Wholesale Commodities.
The hedging and risk management practices of the Utility operating companies and the Entergy Wholesale Commodities business are exposed to the risk that counterparties that owe Entergy and its subsidiaries money, energy, or other commodities will not perform their obligations. Currently, some hedging agreements contain provisions that require the counterparties to provide credit support to secure all or part of their obligations to Entergy or its subsidiaries. If the counterparties to these arrangements fail to perform, Entergy or its subsidiaries may enforce and recover the proceeds from the credit support provided and acquire alternative hedging arrangements, which credit
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support may not always be adequate to cover the related obligations. In such event, Entergy and its subsidiaries might incur losses in addition to amounts, if any, already paid to the counterparties. In addition, the credit commitments of Entergy’s lenders under its bank facilities may not be honored for a variety of reasons, including unexpected periods of financial distress affecting such lenders, which could materially affect the adequacy of its liquidity sources.
Market performance and other changes may decrease the value of benefit plan assets, which then could require additional funding and result in increased benefit plan costs.
The performance of the capital markets affects the values of the assets held in trust under Entergy’s pension and postretirement benefit plans. A decline in the market value of the assets may increase the funding requirements relating to Entergy’s benefit plan liabilities and also result in higher benefit costs. As the value of the assets decreases, the “expected return on assets” component of benefit costs decreases, resulting in higher benefits costs. Additionally, asset losses are incorporated into benefit costs over time, thus increasing benefits costs. Volatility in the capital markets has affected the market value of these assets, which may affect Entergy’s planned levels of contributions in the future. Additionally, changes in interest rates affect the liabilities under Entergy’s pension and postretirement benefit plans; as interest rates decrease, the liabilities increase, potentially requiring additional funding and recognition of higher liability carrying costs. The funding requirements of the obligations related to the pension benefit plans can also increase as a result of changes in, among other factors, retirement rates, life expectancy assumptions, or Federal regulations. For further information regarding Entergy’s pension and other postretirement benefit plans, refer to the “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” section of Management’s Financial Discussion and Analysis for Entergy and each of its Registrant Subsidiaries and Note 11 to the financial statements.
The litigation environment in the states in which certain Entergy subsidiaries operate poses a significant risk to those businesses.
Entergy and its subsidiaries are involved in the ordinary course of business in a number of lawsuits involving employment, commercial, asbestos, hazardous material and ratepayer matters, and injuries and damages issues, among other matters. The states in which the Utility operating companies operate, in particular Louisiana, Mississippi, and Texas, have proven to be unusually litigious environments. Judges and juries in these states have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage, and business tort cases. Entergy and its subsidiaries use legal and appropriate means to contest litigation threatened or filed against them, but the litigation environment in these states poses a significant business risk.
Domestic or international terrorist attacks, including cyber attacks, and failures or breaches of Entergy’s and its subsidiaries’ technology systems may adversely affect Entergy’s results of operations.
As power generators and distributors, Entergy and its subsidiaries face heightened risk of an act or threat of terrorism, including physical and cyber attacks, either as a direct act against one of Entergy’s generation facilities, transmission operations centers, or distribution infrastructure used to manage and transport power to customers. An actual act could affect Entergy’s ability to operate, including its ability to operate the information technology systems and network infrastructure on which it relies to conduct its business. While malware was recently discovered on our corporate network and remediated on a timely basis, it did not affect the company’s operational systems, nuclear plants or transmission network, nor did it have a material effect on our operations. Additionally, within Entergy’s industry, there have been attacks on energy infrastructure, but with minimal impact to operations, and there may be more attacks in the future. The Utility operating companies also face heightened risk of an act or threat by cyber criminals intent on accessing personal information for the purpose of committing identity theft, taking company-sensitive data, or disrupting the company’s ability to operate.
Entergy and its subsidiaries operate in a highly regulated industry that requires the continued operation of sophisticated information technology systems and network infrastructure in accordance with mandatory and prescriptive standards. Despite the implementation of multiple layers of security by Entergy and its subsidiaries,
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technology systems remain vulnerable to potential threats that could lead to unauthorized access or loss of availability to critical systems essential to the reliable operation of Entergy’s electric system. Moreover, the functionality of Entergy’s technology systems depends on both its and third-party systems to which Entergy is connected directly or indirectly (such as systems belonging to suppliers, vendors and contractors). While Entergy has processes in place to assess systems of certain of these suppliers, vendors and contractors, Entergy does not ultimately control the adequacy of their defenses against cyber and other attacks, but has implemented oversight measures to assess maturity and manage third-party risk. If Entergy’s or its subsidiaries’ technology systems were compromised and unable to detect or recover in a timely fashion to a normal state of operations, Entergy or its subsidiaries may be unable to perform critical business functions that are essential to the company’s well-being and the health, safety, and security needs of its customers. In addition, an attack on its information technology infrastructure may result in a loss of its confidential, sensitive, and proprietary information, including personal information of its customers, employees, vendors, and others in Entergy’s care.
Any such attacks, failures or breaches could have a material effect on Entergy’s and the Utility operating companies’ business, financial condition, results of operations or reputation. Insurance may not be adequate to cover losses that might arise in connection with these events. The risk of such attacks, failures, or breaches may cause Entergy and the Utility operating companies to incur increased capital and operating costs to implement increased security for its power generation, transmission, and distribution assets and other facilities, such as additional physical facility security and security personnel, and for systems to protect its information technology and network infrastructure systems. Such events may also expose Entergy to an increased risk of litigation (and associated damages and fines).
(Entergy New Orleans)
The effect of higher purchased gas cost charges to customers taking gas service may adversely affect Entergy New Orleans’s results of operations and liquidity.
Gas rates charged to retail gas customers are comprised primarily of purchased gas cost charges, which provide no return or profit to Entergy New Orleans, and distribution charges, which provide a return or profit to the utility. Distribution charges are affected by the amount of gas sold to customers. Purchased gas cost charges, which comprise most of a customer’s bill and may be adjusted monthly, represent gas commodity costs that Entergy New Orleans recovers from its customers. Entergy New Orleans’s cash flows can be affected by differences between the time period when gas is purchased and the time when ultimate recovery from customers occurs. When purchased gas cost charges increase substantially reflecting higher gas procurement costs incurred by Entergy New Orleans, customer usage may decrease, especially in weaker economic times, resulting in lower distribution charges for Entergy New Orleans, which could adversely affect results of operations.
(System Energy)
System Energy owns and, through an affiliate, operates a single nuclear generating facility, and it is dependent on affiliated companies for all of its revenues.
System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% ownership/leasehold interest in Grand Gulf. Charges under the Unit Power Sales Agreement are paid by the Utility operating companies as consideration for their respective entitlements to receive capacity and energy. The useful economic life of Grand Gulf is finite and is limited by the terms of its operating license, which expires in November 2044. System Energy’s financial condition depends both on the receipt of payments from the Utility operating companies under the Unit Power Sales Agreement and on the continued commercial operation of Grand Gulf.
For information regarding the Unit Power Sales Agreement, the sale and leaseback transactions and certain other agreements relating to the Entergy System companies’ support of System Energy (including the Capital Funds
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Agreement), see Notes 8 and 10 to the financial statements and the “Utility - System Energy and Related Agreements” section of Part I, Item 1.
(Entergy Corporation)
As a holding company, Entergy Corporation depends on cash distributions from its subsidiaries to meet its debt service and other financial obligations and to pay dividends on its common stock.
Entergy Corporation is a holding company with no material revenue generating operations of its own or material assets other than the stock of its subsidiaries. Accordingly, all of its operations are conducted by its subsidiaries. Entergy Corporation’s ability to satisfy its financial obligations, including the payment of interest and principal on its outstanding debt, and to pay dividends on its common stock depends on the payment to it of dividends or distributions by its subsidiaries. The payments of dividends or distributions to Entergy Corporation by its subsidiaries in turn depend on their results of operations and cash flows and other items affecting retained earnings, and on any applicable legal, regulatory, or contractual limitations on subsidiaries’ ability to pay such dividends or distributions. Provisions in the articles of incorporation of certain of Entergy Corporation’s subsidiaries restrict the payment of cash dividends to Entergy Corporation. For further information regarding dividend or distribution restrictions to Entergy Corporation, see Note 7 to the financial statements.
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MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
2017 Compared to 2016
Net income decreased $27.4 million primarily due to higher nuclear refueling outage expenses, higher depreciation and amortization expenses, higher taxes other than income taxes, and higher interest expense, partially offset by higher other income.
2016 Compared to 2015
Net income increased $92.9 million primarily due to higher net revenue and lower other operation and maintenance expenses, partially offset by a higher effective income tax rate and higher depreciation and amortization expenses.
Net Revenue
2017 Compared to 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenue comparing 2017 to 2016.
| Amount |
| (In Millions) |
| 2016 net revenue | $1,520.5 |
| Retail electric price | 33.8 |
| Opportunity sales | 5.6 |
| Asset retirement obligation | (14.8 | ) |
| Volume/weather | (29.0 | ) |
| Other | 6.5 |
| 2017 net revenue | $1,522.6 |

The retail electric price variance is primarily due to the implementation of formula rate plan rates effective with the first billing cycle of January 2017 and an increase in base rates effective February 24, 2016, each as approved by the APSC. A significant portion of the base rate increase was related to the purchase of Power Block 2 of the Union Power Station in March 2016. The increase was partially offset by decreases in the energy efficiency rider, as approved by the APSC, effective April 2016 and January 2017. See Note 2 to the financial statements for further discussion of the rate case and formula rate plan filings. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
The opportunity sales variance results from the estimated net revenue effect of the 2017 and 2016 FERC orders in the opportunity sales proceeding attributable to wholesale customers. See Note 2 to the financial statements for further discussion of the opportunity sales proceeding.
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The asset retirement obligation affects net revenue because Entergy Arkansas records a regulatory charge or credit for the difference between asset retirement obligation-related expenses and decommissioning trust fund earnings plus asset retirement obligation-related costs collected in revenue. The variance is primarily caused by a decrease in regulatory credits because of an increase in decommissioning trust fund earnings, including portfolio rebalancing for the ANO 1 and ANO 2 decommissioning trust funds.
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales during the billed and unbilled sales periods. The decrease was partially offset by an increase of 733 GWh, or 11%, in industrial usage primarily due to a new customer in the primary metals industry.
2016 Compared to 2015
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenue comparing 2016 to 2015.
| Amount |
| (In Millions) |
| 2015 net revenue | $1,362.2 |
| Retail electric price | 161.5 |
| Other | (3.2 | ) |
| 2016 net revenue | $1,520.5 |

The retail electric price variance is primarily due to an increase in base rates, as approved by the APSC. The new base rates were effective February 24, 2016 and began billing with the first billing cycle of April 2016. The increase includes an interim base rate adjustment surcharge, effective with the first billing cycle of April 2016, to recover the incremental revenue requirement for the period February 24, 2016 through March 31, 2016. A significant portion of the increase was related to the purchase of Power Block 2 of the Union Power Station in March 2016. See Note 2 to the financial statements for further discussion of the rate case. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
Other Income Statement Variances
2017 Compared to 2016
Nuclear refueling outage expenses increased primarily due to the amortization of higher costs associated with the most recent outages compared to previous outages.
Other operation and maintenance expenses increased primarily due to:
| • | the deferral in the first quarter 2016 of $7.7 million of previously-incurred costs related to ANO post-Fukushima compliance and $9.9 million of previously-incurred costs related to ANO flood barrier compliance, as approved by the APSC as part of the 2015 rate case settlement. These costs are being amortized over a ten-year period beginning March 2016. See Note 2 to the financial statements for further discussion of the rate case settlement; |

| • | an increase of $9.5 million in transmission and distribution expenses primarily due to higher vegetation maintenance costs and higher labor costs, including contract labor; |

| • | an increase of $5.9 million in compensation and benefits costs primarily due to higher incentive-based compensation accruals in 2017 as compared to the prior year; and |

| • | the effect of recording in July 2016 the final court decision in a lawsuit against the DOE related to spent nuclear fuel storage costs. The damages awarded included the reimbursement of $5.5 million of spent nuclear fuel |

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storage costs previously recorded as other operation and maintenance expense. See Note 8 to the financial statements for further discussion of Entergy Arkansas’s spent nuclear fuel litigation.
The increase was partially offset by:
| • | a decrease of $16 million in nuclear generation expenses primarily due to a decrease in regulatory compliance costs compared to the prior year, partially offset by higher nuclear labor costs, including contract labor, to position the nuclear fleet to meet its operational goals. The decrease in regulatory compliance costs is primarily related to NRC inspection activities in 2016 as a result of the NRC’s March 2015 decision to move ANO into the “multiple/repetitive degraded cornerstone column” of the NRC’s reactor oversight process action matrix. See Note 8 to the financial statements for a discussion of the ANO stator incident and subsequent NRC reviews; |

| • | a decrease of $11.5 million in energy efficiency expenses primarily due to the timing of recovery from customers; and |

| • | a decrease of $5.2 million in fossil-fueled generation expenses primarily due to lower long-term service agreement costs, partially offset by an overall higher scope of work including plant outages in 2017 compared to 2016. |

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes primarily due to higher assessments and higher millage rates and an increase in local franchise taxes primarily due to higher billing factors.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including Power Block 2 of the Union Power Station purchased in March 2016. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
Other income increased primarily due to higher realized gains in 2017 compared to 2016 on the decommissioning trust fund investments, including portfolio rebalancing for the ANO 1 and ANO 2 decommissioning trust funds.
Interest expense increased primarily due to:
| • | an increase of $3.3 million in estimated interest expense recorded in connection with the opportunity sales proceeding. See Note 2 to the financial statements for further discussion of the opportunity sales proceeding; and |

| • | the issuance in May 2017 of $220 million of 3.5% Series first mortgage bonds and the issuance in June 2016 of $55 million of 3.5% Series first mortgage bonds, partially offset by the redemption in July 2016 of $60 million of 6.38% Series first mortgage bonds and the redemption in February 2016 of $175 million of 5.66% Series first mortgage bonds. See Note 5 to the financial statements for further discussion of long-term debt. |

2016 Compared to 2015
Nuclear refueling outage expenses increased primarily due to the amortization of higher costs associated with the most recent outages compared to previous outages.
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $21.6 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits costs as a result of an increase in the discount rate used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefits costs; |

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| • | the deferral of $7.7 million of previously-incurred costs related to ANO post-Fukushima compliance and $9.9 million of previously-incurred costs related to ANO flood barrier compliance, as approved by the APSC as part of the 2015 rate case settlement. These costs are being amortized over a ten-year period beginning March 2016. See Note 2 to the financial statements for further discussion of the rate case settlement; and |

| • | a decrease of $7.2 million in energy efficiency costs, including the effects of true-ups to the energy efficiency filings for fixed costs to be collected from customers and incentives recognized as a result of participation in energy efficiency programs. |

The decrease was partially offset by an increase of $24.1 million in nuclear generation expenses primarily due to an overall higher scope of work performed during plant outages and higher nuclear labor costs compared to prior year and an increase of $8.2 million in fossil-fueled generation expenses primarily due to the purchase of Power Block 2 of the Union Power Station in March 2016. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
Taxes other than income taxes decreased primarily due to a decrease in local franchise taxes resulting from lower residential and commercial revenues compared to the prior year and a decrease in payroll taxes.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including Power Block 2 of the Union Power Station purchased in March 2016. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
Interest expense increased primarily due to:
| • | $5.1 million in estimated interest expense recorded in connection with the FERC orders issued in April 2016 in the opportunity sales proceeding. See Note 2 to the financial statements for further discussion of the opportunity sales proceeding; and |

| • | the net issuance of $230 million of first mortgage bonds in 2016. See Note 5 to the financial statements for further discussion of long-term debt. |

Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 40.1%, 39.2%, and 35.3%, respectively. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
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Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $20,509 | $9,135 | $218,505 |
| Net cash provided by (used in): |
| Operating activities | 555,556 | 676,511 | 474,890 |
| Investing activities | (829,312 | ) | (947,995 | ) | (685,274 | ) |
| Financing activities | 259,463 | 282,858 | 1,014 |
| Net increase (decrease) in cash and cash equivalents | (14,293 | ) | 11,374 | (209,370 | ) |
| Cash and cash equivalents at end of period | $6,216 | $20,509 | $9,135 |

Operating Activities
Net cash flow provided by operating activities decreased $121 million in 2017 primarily due to income tax refunds of $8.1 million in 2017 compared to income tax refunds of $135.7 million in 2016. Entergy Arkansas had income tax refunds in 2016 and 2017 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 resulted from the utilization of Entergy Arkansas’s net operating losses. The 2016 income tax refunds resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit. See Note 3 to the financial statements for a discussion of the income tax audit.
Net cash flow provided by operating activities increased $201.6 million in 2016 primarily due to:
| • | income tax refunds of $135.7 million in 2016 compared to income tax payments of $103.3 million in 2015. Entergy Arkansas had income tax refunds in 2016 and income tax payments in 2015 in accordance with an intercompany income tax allocation agreement. The 2016 income tax refunds resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit whereas the income tax payments in 2015 resulted primarily from final settlement of amounts outstanding associated with the 2006-2007 IRS audit as well as adjustments associated with the settlement of the 2008-2009 IRS audit. See Note 3 to the financial statements for further discussion of the income tax audits; |

| • | the timing of payments to vendors; and |

| • | an increase in net revenue. |

The increase was partially offset by a decrease due to the timing of recovery of fuel and purchased power costs.
Investing Activities
Net cash flow used in investing activities decreased $118.7 million in 2017 primarily due to the purchase of Power Block 2 of the Union Power Station in March 2016 for approximately $237 million and a decrease of $35.5 million in transmission construction expenditures primarily due to a lower scope of work performed in 2017. See Note 14 to the financial statements for further discussion of the Union Power Station purchase.
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The decrease was partially offset by:
| • | an increase of $50.4 million in nuclear construction expenditures primarily due to a higher scope of work performed on various nuclear projects in 2017; |

| • | an increase of $37.7 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle; |

| • | an increase of $32.9 million in information technology construction expenditures primarily due to increased spending on substation technology upgrades; |

| • | an increase of $22.3 million in fossil-fueled generation construction expenditures primarily due to a higher scope of work performed on various projects in 2017; and |

| • | an increase of $11.2 million due to increased spending on advanced metering infrastructure. |

Net cash flow used in investing activities increased $262.7 million in 2016 primarily due to the purchase of Power Block 2 of the Union Power Station in March 2016 for approximately $237 million. See Note 14 to the financial statements for further discussion of the Union Power Station purchase. The increase was partially offset by fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle.
Financing Activities
Net cash flow provided by financing activities decreased $23.4 million in 2017 primarily due to:
| • | a $200 million capital contribution received from Entergy Corporation in March 2016 primarily in anticipation of Entergy Arkansas’s purchase of Power Block 2 of the Union Power Station; |

| • | the net issuance of $119.1 million of long-term debt in 2017 compared to the net issuance of $189.1 million of long-term debt in 2016; and |

| • | $15 million in common stock dividends paid in 2017 resulting from Entergy Arkansas’s routine evaluation of its ability to pay dividends. There were no common stock dividends paid in 2016 in anticipation of the purchase of Power Block 2 of the Union Power Station. |

The decrease was partially offset by:
| • | money pool activity; |

| • | the redemptions of $75 million of 6.45% Series preferred stock and $10 million of 6.08% Series preferred stock in 2016; and |

| • | net short-term borrowings of $50 million on the Entergy Arkansas nuclear fuel company variable interest entity credit facility in 2017 compared to net repayments of $11.7 million in 2016. |

Increases in Entergy Arkansas’s payable to the money pool are a source of cash flow, and Entergy Arkansas’s payable to the money pool increased by $114.9 million in 2017 compared to decreasing by $1.5 million in 2016. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Net cash flow provided by financing activities increased $281.8 million in 2016 primarily due to:
| • | the net issuance of $189.1 million of long-term debt in 2016 compared to the net retirement of $13.2 million of long-term debt in 2015; |

| • | a $200 million capital contribution received from Entergy Corporation in March 2016 primarily in anticipation of Entergy Arkansas’s purchase of Power Block 2 of the Union Power Station; and |

| • | net repayments of $11.7 million on the Entergy Arkansas nuclear fuel company variable interest entity credit facility in 2016 compared to net repayments of $36.3 million in 2015. |

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The increase was partially offset by the redemptions of $75 million of 6.45% Series preferred stock and $10 million of 6.08% Series preferred stock in 2016 and money pool activity.
Decreases in Entergy Arkansas’s payable to the money pool are a use of cash flow, and Entergy Arkansas’s payable to the money pool decreased by $1.5 million in 2016 compared to increasing by $52.7 million in 2015.
See Note 5 to the financial statements for further details of long-term debt.
Capital Structure
Entergy Arkansas’s capitalization is balanced between equity and debt, as shown in the following table.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 55.5% | 55.3% |
| Effect of excluding the securitization bonds | (0.3%) | (0.4%) |
| Debt to capital, excluding securitization bonds (a) | 55.2% | 54.9% |
| Effect of subtracting cash | —% | (0.2%) |
| Net debt to net capital, excluding securitization bonds (a) | 55.2% | 54.7% |

| (a) | Calculation excludes the securitization bonds, which are non-recourse to Entergy Arkansas. |

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt, preferred stock without sinking fund, and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Arkansas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because the securitization bonds are non-recourse to Entergy Arkansas, as more fully described in Note 5 to the financial statements. Entergy Arkansas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Arkansas’s financial condition because net debt indicates Entergy Arkansas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Arkansas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Arkansas may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure. In addition, in certain infrequent circumstances, such as large transactions that would materially alter the capital structure if financed entirely with debt and reducing dividends, Entergy Arkansas may receive equity contributions to maintain the targeted capital structure.
Uses of Capital
Entergy Arkansas requires capital resources for:
| • | construction and other capital investments; |

| • | debt and preferred stock maturities or retirements; |

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

| • | dividend and interest payments. |

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Following are the amounts of Entergy Arkansas’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $190 | $240 | $225 |
| Transmission | 170 | 165 | 175 |
| Distribution | 225 | 245 | 225 |
| Utility Support | 110 | 85 | 85 |
| Total | $695 | $735 | $710 |

Following are the amounts of Entergy Arkansas’s existing debt and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | after 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $125 | $266 | $672 | $4,208 | $5,271 |
| Operating leases | $17 | $29 | $16 | $24 | $86 |
| Purchase obligations (b) | $595 | $1,050 | $863 | $5,369 | $7,877 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For Entergy Arkansas, almost all of the total consists of unconditional fuel and purchased power obligations, including its obligations under the Unit Power Sales Agreement, which are discussed in Note 8 to the financial statements. |

In addition to the contractual obligations given above, Entergy Arkansas currently expects to contribute approximately $64.1 million to its qualified pension plans and approximately $472 thousand to its other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
Also in addition to the contractual obligations, Entergy Arkansas has ($117.7) million of unrecognized tax benefits and interest net of unused tax attributes for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Arkansas includes specific investments, such as transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including investment to support advanced metering; resource planning, including potential generation projects; system improvements; investments in ANO 1 and 2; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital. Management provides more information on long-term debt and preferred stock maturities in Notes 5 and 6 to the financial statements.
As discussed above in “Capital Structure,” Entergy Arkansas routinely evaluates its ability to pay dividends to Entergy Corporation from its earnings. Provisions in Entergy Arkansas’s articles of incorporation relating to preferred
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stock restrict the amount of retained earnings available for the payment of cash dividends or other distributions on its common and preferred stock.
Advanced Metering Infrastructure (AMI)
In September 2016, Entergy Arkansas filed an application seeking a finding from the APSC that Entergy Arkansas’s deployment of AMI is in the public interest. Entergy Arkansas proposed to replace existing meters with advanced meters that enable two-way data communication; design and build a secure and reliable network to support such communications; and implement support systems. AMI is intended to serve as the foundation of Entergy Arkansas’s modernized power grid. The filing included an estimate of implementation costs for AMI of $208 million. The filing identified a number of quantified and unquantified benefits, and Entergy Arkansas provided a cost benefit analysis showing that its AMI deployment is expected to produce a nominal net benefit to customers of $406 million. Entergy Arkansas also sought to continue to include in rate base the remaining book value of existing meters, which was approximately $57 million at December 31, 2015, that will be retired as part of the AMI deployment and also to depreciate those assets using current depreciation rates. Entergy Arkansas proposed a 15-year depreciable life for the new advanced meters, the three-year deployment of which is expected to begin in 2019. Deployment of the communications network is expected to begin in 2018. Entergy Arkansas proposed to include the AMI deployment costs and the quantified benefits in future formula rate plan filings, and the 2018 costs were approved in the 2017 formula rate plan filing. In June 2017 the APSC staff and Arkansas Attorney General filed direct testimony. The APSC staff generally supported Entergy Arkansas’s AMI deployment conditioned on various recommendations. The Arkansas Attorney General’s consultant primarily recommended denial of Entergy Arkansas’s application but alternatively suggested recommendations in the event the APSC approves Entergy Arkansas’s proposal. Entergy Arkansas filed rebuttal testimony in June 2017, substantially accepting the APSC staff’s recommendations. In August 2017, Entergy Arkansas and the parties to the proceeding filed a joint motion to approve a unanimous settlement agreement. In October 2017 the APSC issued an order finding that Entergy Arkansas’s AMI deployment is in the public interest and approving the settlement agreement subject to a minor modification. Entergy Arkansas expects to recover the undepreciated balance of its existing meters through a regulatory asset to be amortized over 15 years. Entergy Arkansas has begun discussions with the other parties to implement the items in the settlement agreement including pre-pay and time of use programs.
Sources of Capital
Entergy Arkansas’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt or preferred stock issuances; and |

| • | bank financing under new or existing facilities. |

Entergy Arkansas may refinance, redeem, or otherwise retire debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.
All debt and common and preferred stock issuances by Entergy Arkansas require prior regulatory approval. Preferred stock and debt issuances are also subject to issuance tests set forth in Entergy Arkansas’s corporate charters, bond indentures, and other agreements. Entergy Arkansas has sufficient capacity under these tests to meet its foreseeable capital needs.
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Entergy Arkansas’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| ($166,137) | ($51,232) | ($52,742) | $2,218 |

See Note 4 to the financial statements for a description of the money pool.
Entergy Arkansas has a credit facility in the amount of $150 million scheduled to expire in August 2022. Entergy Arkansas also has a $20 million credit facility scheduled to expire in April 2018. The $150 million credit facility permits the issuance of letters of credit against $5 million of the borrowing capacity of the facility. As of December 31, 2017, there were no cash borrowings and no letters of credit outstanding under the credit facilities. In addition, Entergy Arkansas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2017, a $1 million letter of credit was outstanding under Entergy Arkansas’s uncommitted letter of credit facility. See Note 4 to the financial statements for further discussion of the credit facilities.
The Entergy Arkansas nuclear fuel company variable interest entity has a credit facility in the amount of $80 million scheduled to expire in May 2019. As of December 31, 2017, $50 million in letters of credit to support a like amount of commercial paper issued and $24.9 million in loans were outstanding under the Entergy Arkansas nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for further discussion of the nuclear fuel company variable interest entity credit facility.
Entergy Arkansas obtained authorizations from the FERC through October 2019 for short-term borrowings not to exceed an aggregate amount of $250 million at any time outstanding and borrowings by its nuclear fuel company variable interest entity. See Note 4 to the financial statements for further discussion of Entergy Arkansas’s short-term borrowing limits. The long-term securities issuances of Entergy Arkansas are limited to amounts authorized by the APSC, and the current authorization extends through December 2018.
State and Local Rate Regulation and Fuel-Cost Recovery
Retail Rates
2015 Base Rate Filing
In April 2015, Entergy Arkansas filed with the APSC for a general change in rates, charges, and tariffs. The filing notified the APSC of Entergy Arkansas’s intent to implement a forward test year formula rate plan pursuant to Arkansas legislation passed in 2015, and requested a retail rate increase of $268.4 million, with a net increase in revenue of $167 million. The filing requested a 10.2% return on common equity. In September 2015 the APSC staff and intervenors filed direct testimony, with the APSC staff recommending a revenue requirement of $217.9 million and a 9.65% return on common equity. In December 2015, Entergy Arkansas, the APSC staff, and certain of the intervenors in the rate case filed with the APSC a joint motion for approval of a settlement of the case that proposed a retail rate increase of approximately $225 million with a net increase in revenue of approximately $133 million; an authorized return on common equity of 9.75%; and a formula rate plan tariff that provides a +/- 50 basis point band around the 9.75% allowed return on common equity. A significant portion of the rate increase is related to Entergy Arkansas’s acquisition in March 2016 of Union Power Station Power Block 2 for a base purchase price of $237 million. The settlement agreement also provided for amortization over a 10-year period of $7.7 million of previously-incurred costs related to ANO post-Fukushima compliance and $9.9 million of previously-incurred costs related to ANO flood barrier compliance. A settlement hearing was held in January 2016. In February 2016 the APSC approved the settlement with one exception that reduced the retail rate increase proposed in the settlement by $5 million. The settling parties agreed to the APSC modifications in February 2016. The new rates were effective February 24, 2016 and began billing with the first billing cycle of April 2016. In March 2016, Entergy Arkansas made a compliance filing regarding the
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new rates that included an interim base rate adjustment surcharge, effective with the first billing cycle of April 2016, to recover the incremental revenue requirement for the period February 24, 2016 through March 31, 2016. The interim base rate adjustment surcharge was designed to recover a total of $21.1 million over the nine-month period from April 2016 through December 2016.
2016 Formula Rate Plan Filing
In July 2016, Entergy Arkansas filed with the APSC its 2016 formula rate plan filing showing Entergy Arkansas’s projected earned return on common equity for the twelve months ended December 31, 2017 test period to be below the formula rate plan bandwidth. The filing requested a $67.7 million revenue requirement increase to achieve Entergy Arkansas’s target earned return on common equity of 9.75%. In October 2016, Entergy Arkansas filed with the APSC revised formula rate plan attachments with an updated request for a $54.4 million revenue requirement increase based on acceptance of certain adjustments and recommendations made by the APSC staff and other intervenors, as well as three additional adjustments identified as appropriate by Entergy Arkansas. In November 2016 a hearing was held and the APSC issued an order directing the parties to brief certain issues. In December 2016 the APSC approved the settlement agreement and the $54.4 million revenue requirement increase with approximately $25 million of the $54.4 million revenue requirement subject to possible future adjustment and refund to customers with interest. The APSC requested supplemental information for some of Entergy Arkansas’s requested nuclear expenditures. In December 2016 the APSC approved Entergy Arkansas’s formula rate plan compliance tariff, and the rates became effective with the first billing cycle of January 2017. In April 2017, Entergy Arkansas filed a motion consented to by all parties requesting that it be permitted to submit the supplemental information requested by the APSC in conjunction with its 2017 formula rate plan filing, which was subsequently made in July 2017 and is discussed below. In May 2017 the APSC approved the joint motion and proposal to review Entergy Arkansas’s supplemental information on a concurrent schedule with the 2017 formula rate plan filing. In October 2017, Entergy Arkansas and the parties to the proceeding filed a joint motion to approve a unanimous settlement agreement resolving all issues in the docket and providing for recovery of the 2017 and 2018 nuclear costs. In December 2017 the APSC approved the settlement agreement and recovery of the 2017 and 2018 nuclear costs.
2017 Formula Rate Plan Filing
In July 2017, Entergy Arkansas filed with the APSC its 2017 formula rate plan filing showing Entergy Arkansas’s projected earned return on common equity for the twelve months ended December 31, 2018 test period to be below the formula rate plan bandwidth. The filing projected a $129.7 million revenue requirement increase to achieve Entergy Arkansas’s target earned return on common equity of 9.75%. Entergy Arkansas’s formula rate plan is subject to a four percent annual revenue constraint and the projected annual revenue requirement increase exceeded the four percent, resulting in a proposed increase for the 2017 formula rate plan of $70.9 million. In October 2017, Entergy Arkansas filed with the APSC revised formula rate plan attachments that projected a $126.2 million revenue requirement increase based on acceptance of certain adjustments and recommendations made by the APSC staff and other intervenors. The revised formula rate plan filing included a proposed $71.1 million revenue requirement increase based on a revision to the four percent constraint calculation. In October 2017, Entergy Arkansas and the parties to the proceeding filed a joint motion to approve a unanimous settlement agreement resolving all issues in the docket and providing for recovery of the 2017 and 2018 nuclear costs. In December 2017 the APSC approved the settlement agreement and the $71.1 million revenue requirement increase, as well as Entergy Arkansas’s formula rate plan compliance tariff, and the rates became effective with the first billing cycle of January 2018.
Internal Restructuring
In November 2017, Entergy Arkansas filed an application with the APSC seeking authorization to undertake a restructuring that would result in the transfer of substantially all of the assets and operations of Entergy Arkansas to a new entity, which would ultimately be owned by an existing Entergy subsidiary holding company. The restructuring is subject to regulatory review and approval by the APSC, the FERC, and the NRC. Entergy Arkansas also filed a notice with the Missouri Public Service Commission in December 2017 out of an abundance of caution, although
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Entergy Arkansas does not serve any retail customers in Missouri. If the APSC approves the restructuring by September 1, 2018, and the restructuring closes on or before December 1, 2018, Entergy Arkansas proposed in its application to credit retail customers $66 million over six years, beginning in 2019. In February 2018, Entergy Arkansas filed supplemental testimony reducing the proposed retail customer credits to $39.6 million over six years. If the APSC, the FERC, and the NRC approvals are obtained, Entergy Arkansas expects the restructuring will be consummated on or before December 1, 2018.
It is currently contemplated that Entergy Arkansas would undertake a multi-step restructuring, which would include the following:
| • | Entergy Arkansas would redeem its outstanding preferred stock at the aggregate redemption price of approximately $32.7 million, which includes call premiums, plus accumulated and unpaid dividends, if any. |

| • | Entergy Arkansas would convert from an Arkansas corporation to a Texas corporation. |

| • | Under the Texas Business Organizations Code (TXBOC), Entergy Arkansas will allocate substantially all of its assets to a new subsidiary, Entergy Arkansas Power, LLC, a Texas limited liability company (Entergy Arkansas Power), and Entergy Arkansas Power will assume substantially all of the liabilities of Entergy Arkansas, in a transaction regarded as a merger under the TXBOC. Entergy Arkansas will remain in existence and hold the membership interests in Entergy Arkansas Power. |

| • | Entergy Arkansas will contribute the membership interests in Entergy Arkansas Power to an affiliate (Entergy Utility Holding Company, LLC, a Texas limited liability company and subsidiary of Entergy Corporation). As a result of the contribution, Entergy Arkansas Power will be a wholly-owned subsidiary of Entergy Utility Holding Company, LLC. |

| • | Entergy Arkansas will change its name to Entergy Utility Property, Inc., and Entergy Arkansas Power will then change its name to Entergy Arkansas, LLC. |

Upon the completion of the restructuring, Entergy Arkansas, LLC will hold substantially all of the assets, and will have assumed substantially all of the liabilities, of Entergy Arkansas. Entergy Arkansas may modify or supplement the steps to be taken to effectuate the restructuring.
Production Cost Allocation Rider
The APSC approved a production cost allocation rider for recovery from customers of the retail portion of the costs allocated to Entergy Arkansas as a result of the System Agreement proceedings, which are discussed in the “System Agreement Cost Equalization Proceedings” section below. These costs cause an increase in Entergy Arkansas’s deferred fuel cost balance because Entergy Arkansas pays the costs over seven months but collects the costs from customers over twelve months.
In May 2014, Entergy Arkansas filed its annual redetermination of the production cost allocation rider to recover the $3 million unrecovered retail balance as of December 31, 2013 and the $67.8 million System Agreement bandwidth remedy payment made in May 2014 as a result of the compliance filing pursuant to the FERC’s February 2014 orders related to the bandwidth payments/receipts for the June - December 2005 period. In January 2015 the APSC issued an order approving Entergy Arkansas’s request for recovery of the $3 million under-recovered amount based on the true-up of the production cost allocation rider and the $67.8 million May 2014 System Agreement bandwidth remedy payment subject to refund with interest, with recovery of these payments concluding with the last billing cycle in December 2015. The APSC also found that Entergy Arkansas is entitled to carrying charges pursuant to the current terms of the production cost allocation rider. Entergy Arkansas made its compliance filing pursuant to the order in January 2015 and the APSC issued its approval order, also in January 2015. The redetermined rate went into effect with the first billing cycle of February 2015.
In May 2015, Entergy Arkansas filed its annual redetermination of the production cost allocation rider, which included a $38 million payment made by Entergy Arkansas as a result of the FERC’s February 2014 order related to the comprehensive bandwidth recalculation for calendar year 2006, 2007, and 2008 production costs. The redetermined rate for the 2015 production cost allocation rider update was added to the redetermined rate from the 2014 production
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cost allocation rider update and the combined rate was effective with the first billing cycle of July 2015. This combined rate was effective through December 2015. The collection of the remainder of the redetermined rate for the 2015 production cost allocation rider update continued through June 2016.
In May 2016, Entergy Arkansas filed its annual redetermination pursuant to the production cost allocation rider, which reflected recovery of the production cost allocation rider true-up adjustment of the 2014 and 2015 unrecovered retail balance in the amount of $1.9 million. Additionally, the redetermined rates reflected the recovery of a $1.9 million System Agreement bandwidth remedy payment resulting from a compliance filing pursuant to the FERC’s December 2015 order related to test year 2009 production costs. The rates for the 2016 production cost allocation rider update became effective with the first billing cycle of July 2016, and the rates were effective through June 2017.
In May 2017, Entergy Arkansas filed its annual redetermination pursuant to the production cost allocation rider, which reflected a credit amount of $0.3 million resulting from a compliance filing pursuant to the FERC’s September 2016 order. Additionally, the redetermined rate reflected recovery of the production cost allocation rider true-up adjustment of the 2016 unrecovered retail balance in the amount of $0.3 million. Because of the small effect of the 2017 production cost allocation rider update, Entergy Arkansas proposed to reduce the effective period of the update to one month, July 2017. After the one month collection period, rates were set to zero for all rate classes for the period August 2017 through June 2018.
Energy Cost Recovery Rider
Entergy Arkansas’s retail rates include an energy cost recovery rider to recover fuel and purchased energy costs in monthly customer bills. The rider utilizes the prior calendar-year energy costs and projected energy sales for the twelve-month period commencing on April 1 of each year to develop an energy cost rate, which is redetermined annually and includes a true-up adjustment reflecting the over- or under-recovery, including carrying charges, of the energy costs for the prior calendar year. The energy cost recovery rider tariff also allows an interim rate request depending upon the level of over- or under-recovery of fuel and purchased energy costs.
In January 2014, Entergy Arkansas filed a motion with the APSC relating to its redetermination of its energy cost rate that was subsequently filed in March 2014. In that motion, Entergy Arkansas requested that the APSC authorize Entergy Arkansas to exclude $65.9 million of deferred fuel and purchased energy costs incurred in 2013 from the redetermination of its 2014 energy cost rate. The $65.9 million is an estimate of the incremental fuel and replacement energy costs that Entergy Arkansas incurred as a result of the ANO stator incident. Entergy Arkansas requested that the APSC authorize Entergy Arkansas to retain that amount in its deferred fuel balance, with recovery to be reviewed in a later period after more information is available regarding various claims associated with the ANO stator incident. The APSC approved Entergy Arkansas’s request in February 2014. In July 2017, Entergy Arkansas filed for a change in rates pursuant to its formula rate plan rider. In that proceeding, the APSC approved a settlement agreement agreed upon by the parties, including a provision that requires Entergy Arkansas to initiate a proceeding for the purpose of recovering funds currently withheld from rates and related to the stator incident, including the $65.9 million of deferred fuel and purchased energy costs previously noted, subject to certain timelines and conditions set forth in the settlement agreement. See the “ANO Damage, Outage, and NRC Reviews” section in Note 8 to the financial statements for further discussion of the ANO stator incident.
In March 2017, Entergy Arkansas filed its annual redetermination of its energy cost rate pursuant to the energy cost recovery rider, which reflected an increase in the rate from $0.01164 per kWh to $0.01547 per kWh. The APSC staff filed testimony in March 2017 recommending that the redetermined rate be implemented with the first billing cycle of April 2017 under the normal operation of the tariff. Accordingly, the redetermined rate went into effect on March 31, 2017 pursuant to the tariff. In July 2017 the Arkansas Attorney General requested additional information to support certain of the costs included in Entergy Arkansas’s 2017 energy cost rate redetermination.
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Opportunity Sales Proceeding
In June 2009 the LPSC filed a complaint requesting that the FERC determine that certain of Entergy Arkansas’s sales of electric energy to third parties: (a) violated the provisions of the System Agreement that allocated the energy generated by Entergy System resources, (b) imprudently denied the Entergy System and its ultimate consumers the benefits of low-cost Entergy System generating capacity, and (c) violated the provision of the System Agreement that prohibited sales to third parties by individual companies absent an offer of a right-of-first-refusal to other Utility operating companies. The LPSC’s complaint challenged sales made beginning in 2002 and requests refunds. In July 2009 the Utility operating companies filed a response to the complaint requesting that the FERC dismiss the complaint on the merits without hearing because the LPSC has failed to meet its burden of showing any violation of the System Agreement and failed to produce any evidence of imprudent action by the Entergy System. In their response, the Utility operating companies explained that the System Agreement clearly contemplates that the Utility operating companies may make sales to third parties for their own account, subject to the requirement that those sales be included in the load (or load shape) for the applicable Utility operating company. The FERC subsequently ordered a hearing in the proceeding.
The LPSC filed direct testimony in the proceeding alleging, among other things, (1) that Entergy violated the System Agreement by permitting Entergy Arkansas to make non-requirements sales to non-affiliated third parties rather than making such energy available to the other Utility operating companies’ customers; and (2) that over the period 2000 - 2009, these non-requirements sales caused harm to the Utility operating companies’ customers and these customers should be compensated for this harm by Entergy. In subsequent testimony, the LPSC modified its original damages claim in favor of quantifying damages by re-running intra-system bills. The Utility operating companies believe the LPSC’s allegations are without merit. A hearing in the matter was held in August 2010.
In December 2010 the ALJ issued an initial decision. The ALJ found that the System Agreement allowed for Entergy Arkansas to make the sales to third parties but concluded that the sales should be accounted for in the same manner as joint account sales. The ALJ concluded that “shareholders” should make refunds of the damages to the Utility operating companies, along with interest. Entergy disagreed with several aspects of the ALJ’s initial decision and in January 2011 filed with the FERC exceptions to the decision.
The FERC issued a decision in June 2012 and held that, while the System Agreement is ambiguous, it does provide authority for individual Utility operating companies to make opportunity sales for their own account and Entergy Arkansas made and priced these sales in good faith. The FERC found, however, that the System Agreement does not provide authority for an individual Utility operating company to allocate the energy associated with such opportunity sales as part of its load, but provides a different allocation authority. The FERC further found that the after-the-fact accounting methodology used to allocate the energy used to supply the sales was inconsistent with the System Agreement. Quantifying the effect of the FERC’s decision requires re-running intra-system bills for a ten-year period, and the FERC in its decision established further hearing procedures to determine the calculation of the effects. In July 2012, Entergy and the LPSC filed requests for rehearing of the FERC’s June 2012 decision. A hearing was held in May 2013 to quantify the effect of repricing the opportunity sales in accordance with the FERC’s June 2012 decision.
In August 2013 the presiding judge issued an initial decision in the calculation proceeding. The initial decision concluded that the methodology proposed by the LPSC, rather than the methodologies proposed by Entergy or the FERC Staff, should be used to calculate the payments that Entergy Arkansas is to make to the other Utility operating companies. The initial decision also concluded that the other System Agreement service schedules should not be adjusted and that payments by Entergy Arkansas should not be reflected in the rough production cost equalization bandwidth calculations for the applicable years. The initial decision recognized that the LPSC’s methodology would result in an inequitable windfall to the other Utility operating companies and, therefore, concluded that any payments by Entergy Arkansas should be reduced by 20%. The LPSC, APSC, City Council, and FERC staff filed briefs on exceptions and/or briefs opposing exceptions. Entergy filed a brief on exceptions requesting that the FERC reverse the initial decision and a brief opposing certain exceptions taken by the LPSC and FERC staff.
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Entergy Arkansas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
In April 2016 the FERC issued orders addressing requests for rehearing filed in July 2012 and the ALJ’s August 2013 initial decision. The first order denied Entergy’s request for rehearing and affirmed the FERC’s earlier rulings that Entergy’s original methodology for allocating energy costs to the opportunity sales was incorrect and, as a result, Entergy Arkansas must make payments to the other Utility operating companies to put them in the same position that they would have been in absent the incorrect allocation. The FERC clarified that interest should be included with the payments. The second order affirmed in part, and reversed in part, the rulings in the ALJ’s August 2013 initial decision regarding the methodology that should be used to calculate the payments Entergy Arkansas is to make to the other Utility operating companies. The FERC affirmed the ALJ’s ruling that a full re-run of intra-system bills should be performed, but required that methodology be modified so that the sales have the same priority for purposes of energy allocation as joint account sales. The FERC reversed the ALJ’s decision that any payments by Entergy Arkansas should be reduced by 20%. The FERC also reversed the ALJ’s decision that adjustments to other System Agreement service schedules and excess bandwidth payments should not be taken into account when calculating the payments to be made by Entergy Arkansas. The FERC held that such adjustments and excess bandwidth payments should be taken into account, but ordered further proceedings before an ALJ to address whether a cap on any reduction due to bandwidth payments was necessary and to implement the other adjustments to the calculation methodology.
In May 2016, Entergy Services filed a request for rehearing of the FERC’s April 2016 order arguing that payments made by Entergy Arkansas should be reduced as a result of the timing of the LPSC’s approval of certain contracts. Entergy Services also filed a request for clarification and/or rehearing of the FERC’s April 2016 order addressing the ALJ’s August 2013 initial decision. The APSC and the LPSC also filed requests for rehearing of the FERC’s April 2016 order. In September 2017 the FERC issued an order denying the request for rehearing on the issue of whether any payments by Entergy Arkansas to the other Utility operating companies should be reduced due to the timing of the LPSC’s approval of Entergy Arkansas’s wholesale baseload contract with Entergy Louisiana. In November 2017 the FERC issued an order denying all of the remaining requests for rehearing of the April 2016 order. In November 2017, Entergy Services filed a petition for review in the D.C. Circuit of the FERC’s orders in the first two phases of the opportunity sales case. In December 2017 the D.C. Circuit granted Entergy Services’s request to hold the appeal in abeyance pending final resolution of the related proceeding still pending with the FERC. In January 2018 the APSC and the LPSC filed separate petitions for review in the D.C. Circuit, and the D.C. Circuit consolidated the appeals with Entergy Services’s appeal and held all of the appeals in abeyance.
Pursuant to the procedural schedule established in the case, Entergy Services re-ran intra-system bills for the ten-year period 2000-2009 to quantify the effects of the FERC's ruling. In November 2016 the LPSC submitted testimony disputing certain aspects of the calculations. A hearing was held in May 2017. In July 2017, the ALJ issued an initial decision concluding that Entergy Arkansas should pay $86 million plus interest to the other Utility operating companies. In August 2017 the Utility operating companies, the LPSC, the APSC, and FERC staff filed individual briefs on exceptions challenging various aspects of the initial decision. In September 2017 the Utility operating companies, the LPSC, the APSC, the MPSC, the City Council, and FERC staff filed separate briefs opposing exceptions taken by various parties. The case is pending before the FERC. No payments will be made or received by the Utility operating companies until the FERC issues an order reviewing the initial decision and Entergy submits a subsequent filing to comply with that order.
The effect of the FERC’s decisions thus far in the case would be that Entergy Arkansas will make payments to some or all of the other Utility operating companies. Because further proceedings will still occur in the case, the amount and recipients of payments by Entergy Arkansas are unknown at this time. Based on testimony previously submitted in the case and its assessment of the April 2016 FERC orders, in the first quarter 2016, Entergy Arkansas recorded a liability of $87 million, which includes interest, for its estimated increased costs and payment to the other Utility operating companies. This estimate is subject to change depending on how the FERC resolves the issues that are still outstanding in the case, including its review of the July 2017 initial decision. Entergy Arkansas’s increased costs will be attributed to Entergy Arkansas’s retail and wholesale businesses, and it is not probable that Entergy Arkansas will recover the wholesale portion. Entergy Arkansas, therefore, recorded a deferred fuel regulatory asset in the first quarter 2016 of approximately $75 million, which represents its estimate of the retail portion of the costs. Following its assessment of the course of the proceedings, including the FERC’s denial of rehearing in November 2017
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Entergy Arkansas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
described above, in the fourth quarter 2017, Entergy Arkansas recorded an additional liability of $35 million and a regulatory asset of $31 million. Because management currently expects to recover the retail portion of the costs through a base rate proceeding or newly proposed rider, the regulatory asset is reflected as Other regulatory assets as of December 31, 2017.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
Entergy Arkansas owns and, through an affiliate, operates the ANO 1 and ANO 2 nuclear power plants. Entergy Arkansas is, therefore, subject to the risks related to owning and operating nuclear plants. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, to position Entergy’s nuclear fleet to meet its operational goals, including the financial requirements to address emerging issues like stress corrosion cracking of certain materials within the plant systems and the Fukushima event; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license renewal and amendments, and decommissioning; the performance and capacity factors of these nuclear plants; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts and types of insurance commercially available for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of either ANO 1 or ANO 2, Entergy Arkansas may be required to file with the APSC a rate mechanism to provide additional funds or credit support to satisfy regulatory requirements for decommissioning.
See Note 8 to the financial statements for discussion of the NRC’s decision in March 2015 to move ANO into the “multiple/repetitive degraded cornerstone column,” or Column 4, of the NRC’s Reactor Oversight Process Action Matrix, and the resulting significant additional NRC inspection activities at the ANO site.
Environmental Risks
Entergy Arkansas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Arkansas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Arkansas’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in the assumptions and measurements that could produce estimates that would have a material effect on the presentation of Entergy Arkansas’s financial position or results of operations.
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Entergy Arkansas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Unbilled Revenue
See “Unbilled Revenue” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the unbilled revenue amounts.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets and trust fund investments.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Arkansas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Costs and Sensitivities
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Qualified Projected Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $3,107 | $47,040 |
| Rate of return on plan assets | (0.25%) | $2,914 | $- |
| Rate of increase in compensation | 0.25% | $1,353 | $6,446 |

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Entergy Arkansas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated Postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $506 | $7,552 |
| Health care cost trend | 0.25% | $782 | $5,513 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for Entergy Arkansas in 2017 was $37 million. Entergy Arkansas anticipates 2018 qualified pension cost to be $43 million. In 2016, Entergy Arkansas refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $13.3 million. Entergy Arkansas contributed $79.6 million to its qualified pension plan in 2017 and estimates pension contributions will be approximately $64.1 million in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total other postretirement health care and life insurance benefit income for Entergy Arkansas in 2017 was $4 million. Entergy Arkansas expects 2018 postretirement health care and life insurance benefit income of approximately $10.2 million. In 2016, Entergy Arkansas refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $2.5 million. Entergy Arkansas contributed $695 thousand to its other postretirement plans in 2017 and estimates 2018 contributions will be approximately $472 thousand.
Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
317
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Arkansas, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Arkansas, Inc. and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, cash flows and changes in common equity (pages 319 through 324 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
318
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $2,139,919 | $2,086,608 | $2,253,564 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 402,777 | 325,036 | 535,919 |
| Purchased power | 230,652 | 233,350 | 380,081 |
| Nuclear refueling outage expenses | 83,968 | 56,650 | 51,411 |
| Other operation and maintenance | 707,825 | 706,573 | 734,118 |
| Decommissioning | 56,860 | 53,610 | 50,414 |
| Taxes other than income taxes | 103,662 | 93,109 | 99,926 |
| Depreciation and amortization | 277,146 | 264,215 | 246,897 |
| Other regulatory charges (credits) - net | (16,074 | ) | 7,737 | (24,608 | ) |
| TOTAL | 1,846,816 | 1,740,280 | 2,074,158 |
| OPERATING INCOME | 293,103 | 346,328 | 179,406 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 18,452 | 17,099 | 14,227 |
| Interest and investment income | 35,882 | 19,087 | 22,382 |
| Miscellaneous - net | (299 | ) | (1,446 | ) | (3,385 | ) |
| TOTAL | 54,035 | 34,740 | 33,224 |
| INTEREST EXPENSE |
| Interest expense | 122,075 | 115,311 | 105,622 |
| Allowance for borrowed funds used during construction | (8,585 | ) | (9,228 | ) | (7,805 | ) |
| TOTAL | 113,490 | 106,083 | 97,817 |
| INCOME BEFORE INCOME TAXES | 233,648 | 274,985 | 114,813 |
| Income taxes | 93,804 | 107,773 | 40,541 |
| NET INCOME | 139,844 | 167,212 | 74,272 |
| Preferred dividend requirements | 1,428 | 5,270 | 6,873 |
| EARNINGS APPLICABLE TO COMMON STOCK | $138,416 | $161,942 | $67,399 |
| See Notes to Financial Statements. |

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| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $139,844 | $167,212 | $74,272 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | 427,394 | 414,933 | 400,156 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 67,711 | 201,219 | (4,330 | ) |
| Changes in assets and liabilities: |
| Receivables | (23,397 | ) | (39,118 | ) | 20,813 |
| Fuel inventory | 3,402 | 29,929 | (11,791 | ) |
| Accounts payable | 16,011 | 143,645 | (2,528 | ) |
| Prepaid taxes and taxes accrued | 40,127 | 37,485 | (54,531 | ) |
| Interest accrued | 1,635 | (3,303 | ) | (367 | ) |
| Deferred fuel costs | 33,190 | (105,741 | ) | 151,332 |
| Other working capital accounts | 15,087 | (46,490 | ) | (44,784 | ) |
| Provisions for estimated losses | 16,047 | 13,130 | (137 | ) |
| Other regulatory assets | (76,762 | ) | (95,464 | ) | 60,279 |
| Other regulatory liabilities | 1,043,507 | 62,994 | (11,123 | ) |
| Deferred tax rate change recognized as regulatory liability/asset | (1,047,837 | ) | — | — |
| Pension and other postretirement liabilities | (70,826 | ) | (36,805 | ) | (110,936 | ) |
| Other assets and liabilities | (29,577 | ) | (67,115 | ) | 8,565 |
| Net cash flow provided by operating activities | 555,556 | 676,511 | 474,890 |
| INVESTING ACTIVITIES |
| Construction expenditures | (735,816 | ) | (666,289 | ) | (624,546 | ) |
| Allowance for equity funds used during construction | 19,211 | 17,754 | 15,882 |
| Nuclear fuel purchases | (151,424 | ) | (102,050 | ) | (132,252 | ) |
| Proceeds from sale of nuclear fuel | 51,029 | 39,313 | 52,281 |
| Proceeds from nuclear decommissioning trust fund sales | 339,434 | 197,390 | 212,954 |
| Investment in nuclear decommissioning trust funds | (352,138 | ) | (213,093 | ) | (223,357 | ) |
| Payment for purchase of plant | — | (237,323 | ) | — |
| Changes in money pool receivable - net | — | — | 2,218 |
| Insurance proceeds | — | 10,404 | 11,654 |
| Other | 392 | 5,899 | (108 | ) |
| Net cash flow used in investing activities | (829,312 | ) | (947,995 | ) | (685,274 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | 294,656 | 817,563 | — |
| Retirement of long-term debt | (175,560 | ) | (628,433 | ) | (13,234 | ) |
| Capital contribution from parent | — | 200,000 | — |
| Redemption of preferred stock | — | (85,283 | ) | — |
| Change in money pool payable - net | 114,905 | (1,510 | ) | 52,742 |
| Changes in short-term borrowings - net | 49,974 | (11,690 | ) | (36,278 | ) |
| Dividends paid: |
| Common stock | (15,000 | ) | — | — |
| Preferred stock | (1,428 | ) | (6,631 | ) | (6,873 | ) |
| Other | (8,084 | ) | (1,158 | ) | 4,657 |
| Net cash flow provided by financing activities | 259,463 | 282,858 | 1,014 |
| Net increase (decrease) in cash and cash equivalents | (14,293 | ) | 11,374 | (209,370 | ) |
| Cash and cash equivalents at beginning of period | 20,509 | 9,135 | 218,505 |
| Cash and cash equivalents at end of period | $6,216 | $20,509 | $9,135 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $115,162 | $112,912 | $100,435 |
| Income taxes | ($8,141 | ) | ($135,709 | ) | $103,296 |
| See Notes to Financial Statements. |

321
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents: |
| Cash | $6,184 | $20,174 |
| Temporary cash investments | 32 | 335 |
| Total cash and cash equivalents | 6,216 | 20,509 |
| Securitization recovery trust account | 3,748 | 4,140 |
| Accounts receivable: |
| Customer | 110,016 | 102,229 |
| Allowance for doubtful accounts | (1,063 | ) | (1,211 | ) |
| Associated companies | 38,765 | 35,286 |
| Other | 65,209 | 58,153 |
| Accrued unbilled revenues | 105,120 | 100,193 |
| Total accounts receivable | 318,047 | 294,650 |
| Deferred fuel costs | 63,302 | 96,690 |
| Fuel inventory - at average cost | 29,358 | 32,760 |
| Materials and supplies - at average cost | 192,853 | 182,600 |
| Deferred nuclear refueling outage costs | 56,485 | 81,313 |
| Prepayments and other | 12,108 | 14,293 |
| TOTAL | 682,117 | 726,955 |
| OTHER PROPERTY AND INVESTMENTS |
| Decommissioning trust funds | 944,890 | 834,735 |
| Other | 3,160 | 7,912 |
| TOTAL | 948,050 | 842,647 |
| UTILITY PLANT |
| Electric | 11,059,538 | 10,488,060 |
| Property under capital lease | — | 716 |
| Construction work in progress | 280,888 | 304,073 |
| Nuclear fuel | 277,345 | 307,352 |
| TOTAL UTILITY PLANT | 11,617,771 | 11,100,201 |
| Less - accumulated depreciation and amortization | 4,762,352 | 4,635,885 |
| UTILITY PLANT - NET | 6,855,419 | 6,464,316 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Regulatory asset for income taxes - net | — | 62,646 |
| Other regulatory assets (includes securitization property of $28,583 as of December 31, 2017 and $41,164 as of December 31, 2016) | 1,567,437 | 1,428,029 |
| Deferred fuel costs | 67,096 | 66,898 |
| Other | 13,910 | 14,626 |
| TOTAL | 1,648,443 | 1,572,199 |
| TOTAL ASSETS | $10,134,029 | $9,606,117 |
| See Notes to Financial Statements. |

322
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Currently maturing long-term debt | $— | $114,700 |
| Short-term borrowings | 49,974 | — |
| Accounts payable: |
| Associated companies | 365,915 | 239,711 |
| Other | 215,942 | 185,153 |
| Customer deposits | 97,687 | 97,512 |
| Taxes accrued | 47,321 | 7,194 |
| Interest accrued | 18,215 | 16,580 |
| Other | 29,922 | 36,557 |
| TOTAL | 824,976 | 697,407 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 1,190,669 | 2,186,623 |
| Accumulated deferred investment tax credits | 34,104 | 35,305 |
| Regulatory liability for income taxes - net | 985,823 | — |
| Other regulatory liabilities | 363,591 | 305,907 |
| Decommissioning | 981,213 | 924,353 |
| Accumulated provisions | 34,729 | 18,682 |
| Pension and other postretirement liabilities | 353,274 | 424,234 |
| Long-term debt (includes securitization bonds of $34,662 as of December 31, 2017 and $48,139 as of December 31, 2016) | 2,952,399 | 2,715,085 |
| Other | 5,147 | 13,854 |
| TOTAL | 6,900,949 | 6,624,043 |
| Commitments and Contingencies |
| Preferred stock without sinking fund | 31,350 | 31,350 |
| COMMON EQUITY |
| Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 2017 and 2016 | 470 | 470 |
| Paid-in capital | 790,264 | 790,243 |
| Retained earnings | 1,586,020 | 1,462,604 |
| TOTAL | 2,376,754 | 2,253,317 |
| TOTAL LIABILITIES AND EQUITY | $10,134,029 | $9,606,117 |
| See Notes to Financial Statements. |

323
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Common Equity |
| Common Stock | Paid-in Capital | Retained Earnings | Total |
| (In Thousands) |
| Balance at December 31, 2014 | $470 | $588,471 | $1,235,296 | $1,824,237 |
| Net income | — | — | 74,272 | 74,272 |
| Preferred stock dividends | — | — | (6,873 | ) | (6,873 | ) |
| Other | — | 22 | — | 22 |
| Balance at December 31, 2015 | $470 | $588,493 | $1,302,695 | $1,891,658 |
| Net income | — | — | 167,212 | 167,212 |
| Capital contributions from parent | — | 200,000 | — | 200,000 |
| Capital stock redemption | — | 1,750 | (2,033 | ) | (283 | ) |
| Preferred stock dividends | — | — | (5,270 | ) | (5,270 | ) |
| Balance at December 31, 2016 | $470 | $790,243 | $1,462,604 | $2,253,317 |
| Net income | — | — | 139,844 | 139,844 |
| Common stock dividends | — | — | (15,000 | ) | (15,000 | ) |
| Preferred stock dividends | — | — | (1,428 | ) | (1,428 | ) |
| Other | — | 21 | — | 21 |
| Balance at December 31, 2017 | $470 | $790,264 | $1,586,020 | $2,376,754 |
| See Notes to Financial Statements. |

324
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (In Thousands) |
| Operating revenues | $2,139,919 | $2,086,608 | $2,253,564 | $2,172,391 | $2,190,159 |
| Net income | $139,844 | $167,212 | $74,272 | $121,392 | $161,948 |
| Total assets | $10,134,029 | $9,606,117 | $8,747,774 | $8,777,655 | $8,007,707 |
| Long-term obligations (a) | $2,983,749 | $2,746,435 | $2,691,189 | $2,757,423 | $2,424,969 |
| (a) Includes long-term debt (excluding currently maturing debt) and preferred stock without sinking fund. |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Millions) |
| Electric Operating Revenues: |
| Residential | $768 | $789 | $824 | $755 | $772 |
| Commercial | 495 | 495 | 515 | 461 | 469 |
| Industrial | 472 | 446 | 477 | 424 | 433 |
| Governmental | 19 | 18 | 20 | 18 | 19 |
| Total retail | 1,754 | 1,748 | 1,836 | 1,658 | 1,693 |
| Sales for resale: |
| Associated companies | 128 | 49 | 128 | 131 | 346 |
| Non-associated companies | 121 | 118 | 195 | 282 | 83 |
| Other | 137 | 172 | 95 | 101 | 68 |
| Total | $2,140 | $2,087 | $2,254 | $2,172 | $2,190 |
| Billed Electric Energy Sales (GWh): |
| Residential | 7,298 | 7,618 | 8,016 | 8,070 | 7,921 |
| Commercial | 5,825 | 5,988 | 6,020 | 5,934 | 5,929 |
| Industrial | 7,528 | 6,795 | 6,889 | 6,808 | 6,769 |
| Governmental | 237 | 237 | 235 | 238 | 241 |
| Total retail | 20,888 | 20,638 | 21,160 | 21,050 | 20,860 |
| Sales for resale: |
| Associated companies | 1,782 | 1,609 | 2,239 | 2,299 | 7,918 |
| Non-associated companies | 6,549 | 7,115 | 7,980 | 8,003 | 1,011 |
| Total | 29,219 | 29,362 | 31,379 | 31,352 | 29,789 |

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ENTERGY LOUISIANA, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
2017 Compared to 2016
Net income decreased $305.7 million primarily due to the effect of the enactment of the Tax Cuts and Jobs Act, in December 2017, which resulted in a decrease of $182.6 million in net income in 2017, and the effect of a settlement with the IRS related to the 2010-2011 IRS audit, which resulted in a $136.1 million reduction of income tax expense in 2016. Also contributing to the decrease in net income were higher other operation and maintenance expenses. The decrease was partially offset by higher net revenue and higher other income. See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act and the IRS audit.
2016 Compared to 2015
Net income increased $175.4 million primarily due to the effect of a settlement with the IRS related to the 2010-2011 IRS audit, which resulted in a $136.1 million reduction of income tax expense in 2016. Also contributing to the increase were lower other operation and maintenance expenses, higher net revenue, and higher other income. The increase was partially offset by higher depreciation and amortization expenses, higher interest expense, and higher nuclear refueling outage expenses. See Note 3 to the financial statements for discussion of the IRS audit.
Net Revenue
2017 Compared to 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenue comparing 2017 to 2016.
| Amount |
| (In Millions) |
| 2016 net revenue | $2,438.4 |
| Regulatory credit resulting from reduction of the federal corporate income tax rate | 55.5 |
| Retail electric price | 42.8 |
| Louisiana Act 55 financing savings obligation | 17.2 |
| Volume/weather | (12.4 | ) |
| Other | 19.0 |
| 2017 net revenue | $2,560.5 |

The regulatory credit resulting from reduction of the federal corporate income tax rate variance is due to the reduction of the Vidalia purchased power agreement regulatory liability by $30.5 million and the reduction of the Louisiana Act 55 financing savings obligation regulatory liabilities by $25 million as a result of the enactment of the Tax Cuts and Jobs Act, in December 2017, which lowered the federal corporate income tax rate from 35% to 21%. The effects of the Tax Cuts and Jobs Act are discussed further in Note 3 to the financial statements.
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The retail electric price variance is primarily due to an increase in formula rate plan revenues, implemented with the first billing cycle of March 2016, to collect the estimated first-year revenue requirement related to the purchase of Power Blocks 3 and 4 of the Union Power Station in March 2016 and a provision recorded in 2016 related to the settlement of the Waterford 3 replacement steam generator prudence review proceeding. See Note 2 to the financial statements for further discussion of the formula rate plan revenues and the Waterford 3 replacement steam generator prudence review proceeding.
The Louisiana Act 55 financing savings obligation variance results from a regulatory charge recorded in 2016 for tax savings to be shared with customers per an agreement approved by the LPSC. The tax savings resulted from the 2010-2011 IRS audit settlement on the treatment of the Louisiana Act 55 financing of storm costs for Hurricane Gustav and Hurricane Ike. See Note 3 to the financial statements for additional discussion of the settlement and benefit sharing.
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales and decreased usage during the unbilled sales period. The decrease was partially offset by an increase of 1,237 GWh, or 4%, in industrial usage primarily due to an increase in demand from existing customers and expansion projects in the chemicals industry.
2016 Compared to 2015
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenue comparing 2016 to 2015.
| Amount |
| (In Millions) |
| 2015 net revenue | $2,408.8 |
| Retail electric price | 62.5 |
| Volume/weather | (6.7 | ) |
| Louisiana Act 55 financing savings obligation | (17.2 | ) |
| Other | (9.0 | ) |
| 2016 net revenue | $2,438.4 |

The retail electric price variance is primarily due to an increase in formula rate plan revenues, implemented with the first billing cycle of March 2016, to collect the estimated first-year revenue requirement related to the purchase of Power Blocks 3 and 4 of the Union Power Station. See Note 2 to the financial statements for further discussion.
The volume/weather variance is primarily due to the effect of less favorable weather on residential sales, partially offset by an increase in industrial usage and an increase in volume during the unbilled period. The increase in industrial usage is primarily due to increased demand from new customers and expansion projects, primarily in the chemicals industry.
The Louisiana Act 55 financing savings obligation variance results from a regulatory charge for tax savings to be shared with customers per an agreement approved by the LPSC. The tax savings resulted from the 2010-2011 IRS audit settlement on the treatment of the Louisiana Act 55 financing of storm costs for Hurricane Gustav and Hurricane Ike. See Note 3 to the financial statements for additional discussion of the settlement and benefit sharing.
Included in Other is a provision of $23 million recorded in 2016 related to the settlement of the Waterford 3 replacement steam generator prudence review proceeding, offset by a provision of $32 million recorded in 2015 related to the uncertainty at that time associated with the resolution of the Waterford 3 replacement steam generator prudence
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review proceeding. See Note 2 to the financial statements for a discussion of the Waterford 3 replacement steam generator prudence review proceeding.
Other Income Statement Variances
2017 Compared to 2016
Other operation and maintenance expenses increased primarily due to:
| • | an increase of $17.8 million in nuclear generation expenses primarily due to higher nuclear labor costs, including contract labor, to position the nuclear fleet to meet its operational goals, partially offset by a lower scope of work performed during plant outages in 2017; |

| • | an increase of $9.5 million in compensation and benefits costs primarily due to higher incentive-based compensation accruals in 2017 as compared to the prior year; |

| • | an increase of $4.1 million as a result of the amount of transmission costs allocated by MISO. See Note 2 to the financial statements for further information on the recovery of these costs; |

| • | an increase of $3.6 million in transmission and distribution expenses due to higher vegetation maintenance costs; and |

| • | an increase of $3.2 million in write-offs of customer accounts. |

Taxes other than income taxes increased primarily due to increases in ad valorem taxes, state franchise taxes, and payroll taxes. Ad valorem taxes increased primarily due to higher assessments, including the assessment of Arkansas ad valorem taxes on the Union Power Station beginning in 2017. State franchise taxes increased primarily due to a change in the Louisiana franchise tax law which became effective for 2017.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including Power Blocks 3 and 4 of the Union Power Station purchased in March 2016, and the effects of recording in third quarter 2016 final court decisions in the River Bend and Waterford 3 lawsuits against the DOE related to spent nuclear fuel storage costs. The damages awarded include the reimbursement of approximately $6 million of spent nuclear fuel storage costs previously recorded as depreciation expense. See Note 14 to the financial statements for discussion of the Union Power Station purchase. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation.
Other income increased primarily due to an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2017, which includes the St. Charles Power Station project, and higher realized gains in 2017 on the River Bend decommissioning trust fund investments, including portfolio rebalancing to the 30% interest in River Bend formerly owned by Cajun.
Interest expense decreased primarily due to an increase in the allowance for borrowed funds used during construction due to higher construction work in progress in 2017, which includes the St. Charles Power Station project.
2016 Compared to 2015
Nuclear refueling outage expenses increased primarily due to the amortization of higher expenses associated with the refueling outages at Waterford 3.
Other operation and maintenance expenses decreased primarily due to:
| • | the $45 million write-off recorded in 2015 to recognize the portion of the assets associated with the Waterford 3 replacement steam generator project no longer probable of recovery. See Note 2 to the financial statements for further discussion of the prudence review proceeding; and |

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| • | a decrease of $35 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement costs as a result of higher discount rates used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefit costs. |

The decrease was partially offset by an increase of $19.9 million in nuclear generation expenses primarily due to higher nuclear labor costs, including contract labor.
Depreciation and amortization expenses increased primarily due to additions to plant in service, including Power Blocks 3 and 4 of the Union Power Station purchased in March 2016.
Other income increased primarily due to an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2016, which included the St. Charles Power Station project, and increased distribution and transmission spending. The increase was also due to higher income in 2016 on the River Bend and Waterford 3 decommissioning trust fund investments.
Interest expense increased primarily due to:
| • | the issuance in March 2016 of $425 million of 3.25% Series collateral trust mortgage bonds; |

| • | the issuance in March 2016 of $200 million of 4.95% Series first mortgage bonds; and |

| • | the issuance in October 2016 of $400 million of 2.40% Series collateral trust mortgage bonds. |

The increase was partially offset by the refinancing at lower interest rates of certain first mortgage bonds. See Note 5 to the financial statements for details of long-term debt.
Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 60.5%, 12.6%, and 28.6%, respectively. The difference in the effective income tax rate of 60.5% for 2017 versus the statutory rate of 35% for 2017 was primarily due to the enactment of the Tax Cuts and Jobs Act, signed by President Trump in December 2017, which changed the federal corporate income tax rate from 35% to 21% effective in 2018. See Note 3 to the financial statements for further discussion of the effects of the Tax Cuts and Jobs Act. The difference in the effective income tax rate of 12.6% for 2016 versus the statutory rate of 35% for 2016 was primarily due to the reversal of a portion of the provision for uncertain tax positions as a result of the settlement of the 2010-2011 IRS audit in the second quarter 2016 and book and tax differences related to the non-taxable income distributions earned on preferred membership interests, partially offset by state income taxes. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
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Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $213,850 | $35,102 | $320,516 |
| Net cash provided by (used in): |
| Operating activities | 1,337,545 | 1,037,912 | 1,155,516 |
| Investing activities | (1,787,409 | ) | (1,474,065 | ) | (994,208 | ) |
| Financing activities | 271,921 | 614,901 | (446,722 | ) |
| Net increase (decrease) in cash and cash equivalents | (177,943 | ) | 178,748 | (285,414 | ) |
| Cash and cash equivalents at end of period | $35,907 | $213,850 | $35,102 |

Operating Activities
Net cash flow provided by operating activities increased $299.6 million in 2017 primarily due to:
| • | income tax refunds of $234.2 million in 2017 compared to income tax payments of $156.6 million in 2016. Entergy Louisiana received income tax refunds in 2017 and made income tax payments in 2016 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 resulted from the utilization of Entergy Louisiana’s net operating losses. The income tax payments in 2016 resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit, payments for state taxes resulting from the effect of the final settlement of the 2006-2007 IRS audit, and the effect of net operating loss limitations. See Note 3 to the financial statements for a discussion of the audits; |

| • | an increase due to the timing of recovery of fuel and purchased power costs; and |

| • | an interest payment of $60 million made in March 2016 related to the purchase of a beneficial interest in the Waterford 3 leased assets. |

The increase was partially offset by:
| • | a refund to customers in January 2017 of approximately $71 million as a result of the settlement approved by the LPSC related to the Waterford 3 replacement steam generator project. See Note 2 to the financial statements for discussion of the settlement and refund; |

| • | an increase of $62.8 million in spending on nuclear refueling outages; and |

| • | proceeds of $37.8 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements for a discussion of the spent nuclear fuel litigation. |

Net cash flow provided by operating activities decreased $117.6 million in 2016 primarily due to:
| • | an increase of $67.5 million in income tax payments in 2016. Entergy Louisiana had income tax payments in 2016 and 2015 in accordance with intercompany income tax allocation agreements. The income tax payments in 2016 resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit, payments for state taxes resulting from the effect of the final settlement of the 2006-2007 IRS audit, and the effect of net operating loss limitations. The 2015 income tax payments resulted primarily from adjustments |

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associated with the settlement of the 2008-2009 IRS audit. See Note 3 to the financial statements for a discussion of the income tax audits;
| • | an increase of $80.7 million in interest paid resulting from an increase in interest expense, including a payment of $60 million made in March 2016 related to the purchase of a beneficial interest in the Waterford 3 leased assets. See Note 10 to the financial statements for a discussion of the purchase of a beneficial interest in the Waterford 3 leased assets; |

| • | the timing of collections from customers and payments to vendors; and |

| • | a decrease due to the timing of recovery of fuel and purchased power costs in 2016. |

The decrease was partially offset by proceeds of $37.8 million received in 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed and a decrease of $30.5 million in spending on nuclear refueling outages in 2016. See Note 8 to the financial statements for a discussion of the spent nuclear fuel litigation.
Investing Activities
Net cash flow used in investing activities increased $313.3 million in 2017 primarily due to:
| • | an increase of $364.3 million in fossil-fueled generation construction expenditures primarily due to higher spending on the St. Charles Power Station and Lake Charles Power Station projects in 2017; |

| • | an increase of $148.9 million in transmission construction expenditures due to a higher scope of work performed in 2017; |

| • | an increase of $144.9 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle; |

| • | proceeds of $57.9 million received in 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; |

| • | an increase of $53.6 million in nuclear construction expenditures primarily due to increased spending on various nuclear projects in 2017; |

| • | an increase of $30.4 million in distribution construction expenditures due to increased spending on digital technology improvements within the customer contact centers; |

| • | an increase of $19.9 million due to increased spending on advanced metering infrastructure; and |

| • | an increase of $12.3 million due to various information technology projects and upgrades in 2017. |

The increase was partially offset by:
| • | the purchase of Power Blocks 3 and 4 of the Union Power Station for an aggregate purchase price of approximately $475 million in March 2016. See Note 14 to the financial statements for discussion of the Union Power Station purchase; |

| • | money pool activity; and |

| • | an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2017. |

Decreases in Entergy Louisiana’s receivable from the money pool are a source of cash flow, and Entergy Louisiana’s receivable from the money pool decreased by $11.3 million in 2017 compared to increasing by $16.3 million in 2016. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
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Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Net cash flow used in investing activities increased $479.9 million in 2016 primarily due to:
| • | the purchase of Power Blocks 3 and 4 of the Union Power Station for an aggregate purchase price of approximately $475 million in March 2016. See Note 14 to the financial statements for discussion of the Union Power Station purchase; |

| • | an increase of $130.7 million in fossil-fueled generation construction expenditures primarily due to spending on the St. Charles Power Station project in 2016; |

| • | cash proceeds of $59.6 million received in 2015 from the transfer of Algiers assets to Entergy New Orleans in September 2015. See “State and Local Rate Regulation and Fuel-Cost Recovery - Retail Rates - Electric - Filings with the City Council” below for further discussion of the transfer; |

| • | an increase of $52 million in transmission construction expenditures due to a higher scope of work performed in 2016; and |

| • | an increase of $20.5 million due to various information technology projects and upgrades in 2016. |

The increase was partially offset by:
| • | fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and service deliveries, and the timing of cash payments during the nuclear fuel cycle; |

| • | proceeds of $57.9 million received in 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation; and |

| • | a decrease of $16.9 million in nuclear construction expenditures primarily due to decreased spending on compliance with NRC post-Fukushima requirements. |

Financing Activities
Net cash flow provided by financing activities decreased $343 million in 2017 primarily due to the net issuance of $325.6 million of long-term debt in 2017 compared to the net issuance of $961.2 million in 2016. The decrease was partially offset by:
| • | a decrease of $194.3 million of common equity distributions primarily as a result of higher construction expenditures and higher nuclear fuel purchases in 2017; and |

| • | net borrowings of $39.7 million on the nuclear fuel company variable interest entities’ credit facilities in 2017 compared to net repayments of $56.6 million in 2016. |

Entergy Louisiana’s financing activities provided $614.9 million of cash in 2016 compared to using $446.7 million in 2015 primarily due to the following activity:
| • | the net issuance of $961.2 million of long-term debt in 2016 compared to the net retirement of $103.4 million of long-term debt in 2015; |

| • | the redemption in September 2015 of $100 million of 6.95% Series and $10 million of 8.25% Series preferred membership interests in connection with the Entergy Louisiana and Entergy Gulf States Louisiana business combination; |

| • | net repayments of borrowings of $56.6 million on the nuclear fuel company variable interest entity’s credit facility in 2016 compared to net borrowings of $14.3 million in 2015; and |

| • | an increase of $59.5 million in common equity distributions in 2016. Equity distributions were lower in 2015 in anticipation of the purchase of Power Blocks 3 and 4 of the Union Power Station. |

See Note 5 to the financial statements for details of long-term debt.
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Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Capital Structure
Entergy Louisiana’s capitalization is balanced between equity and debt, as shown in the following table.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 53.8 | % | 53.4 | % |
| Effect of excluding securitization bonds | (0.3 | %) | (0.5 | %) |
| Debt to capital, excluding securitization bonds (a) | 53.5 | % | 52.9 | % |
| Effect of subtracting cash | (0.1 | %) | (0.9 | %) |
| Net debt to net capital, excluding securitization bonds (a) | 53.4 | % | 52.0 | % |

| (a) | Calculation excludes the securitization bonds, which are non-recourse to Entergy Louisiana. |

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Louisiana uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because the securitization bonds are non-recourse to Entergy Louisiana, as more fully described in Note 5 to the financial statements. Entergy Louisiana also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Louisiana’s financial condition because net debt indicates Entergy Louisiana’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Louisiana seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Louisiana may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure. In addition, in certain infrequent circumstances, such as large transactions that would materially alter the capital structure if financed entirely with debt and reducing dividends, Entergy Louisiana may receive equity contributions to maintain the targeted capital structure.
Uses of Capital
Entergy Louisiana requires capital resources for:
| • | construction and other capital investments; |

| • | debt maturities or retirements; |

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

| • | distribution and interest payments. |

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Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Following are the amounts of Entergy Louisiana’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $875 | $530 | $330 |
| Transmission | 465 | 350 | 285 |
| Distribution | 325 | 395 | 365 |
| Utility Support | 165 | 110 | 135 |
| Total | $1,830 | $1,385 | $1,115 |

Following are the amounts of Entergy Louisiana’s existing debt and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | After 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $940 | $903 | $843 | $6,785 | $9,471 |
| Operating leases | $22 | $41 | $24 | $19 | $106 |
| Purchase obligations (b) | $633 | $1,420 | $1,366 | $7,125 | $10,544 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For Entergy Louisiana, almost all of the total consists of unconditional fuel and purchased power obligations, including its obligations under the Vidalia purchased power agreement and the Unit Power Sales Agreement, both of which are discussed in Note 8 to the financial statements. |

In addition to the contractual obligations given above, Entergy Louisiana currently expects to contribute approximately $71.9 million to its qualified pension plans and approximately $19 million to its other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
Also, in addition to the contractual obligations, Entergy Louisiana has $926.6 million of unrecognized tax benefits and interest net of unused tax attributes for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Louisiana includes specific investments, such as the St. Charles Power Station and Lake Charles Power Station, each discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including investment to support advanced metering; resource planning, including potential generation projects; system improvements; investments in River Bend and Waterford 3; and other investments. Entergy’s Utility supply plan initiative will continue to seek to transform its generation portfolio with new or repowered generation resources. Opportunities resulting from the supply plan initiative, including new projects or the exploration of alternative financing sources, could result in increases or decreases in the capital expenditure estimates given above. The estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements,
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environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy Louisiana pays distributions from its earnings at a percentage determined monthly.
St. Charles Power Station
In August 2015, Entergy Louisiana filed with the LPSC an application seeking certification that the public necessity and convenience would be served by the construction of the St. Charles Power Station, a nominal 980 megawatt combined-cycle generating unit, on land adjacent to the existing Little Gypsy plant in St. Charles Parish, Louisiana. It is currently estimated to cost $869 million to construct, including transmission interconnection and other related costs. The LPSC issued an order approving certification of St. Charles Power Station in December 2016. Construction is in progress and commercial operation is estimated to occur by mid-2019.
Lake Charles Power Station
In November 2016, Entergy Louisiana filed an application with the LPSC seeking certification that the public convenience and necessity would be served by the construction of the Lake Charles Power Station, a nominal 994 megawatt combined-cycle generating unit in Westlake, Louisiana, on land adjacent to the existing Nelson plant in Calcasieu Parish. The current estimated cost of the Lake Charles Power Station is $872 million, including estimated costs of transmission interconnection and other related costs. In May 2017 the parties to the proceeding agreed to an uncontested stipulation finding that construction of the Lake Charles Power Station is in the public interest and authorizing an in-service rate recovery plan. In July 2017 the LPSC issued an order unanimously approving the stipulation and approved certification of the unit. Construction is in progress and commercial operation is expected to occur by mid-2020.
Washington Parish Energy Center
In April 2017, Entergy Louisiana signed a purchase and sale agreement with a subsidiary of Calpine Corporation for the acquisition of a peaking plant. Calpine will construct the plant, which will consist of two natural gas-fired combustion turbine units with a total nominal capacity of approximately 361 MW. The plant, named the Washington Parish Energy Center, will be located in Bogalusa, Louisiana and, subject to permits and approvals, is expected to be completed in 2021. Subject to regulatory approvals, Entergy Louisiana will purchase the plant once it is complete for an estimated total investment of approximately $261 million, including transmission and other related costs. In May 2017, Entergy Louisiana filed an application with the LPSC seeking certification of the plant. A procedural schedule has been established, with the deadlines recently extended and the hearing continued from March 2018 until June 2018 in order to allow the parties an opportunity to reach settlement.
Advanced Metering Infrastructure (AMI)
In November 2016, Entergy Louisiana filed an application seeking a finding from the LPSC that Entergy Louisiana’s deployment of advanced electric and gas metering infrastructure is in the public interest. Entergy Louisiana proposed to deploy advanced meters that enable two-way data communication; design and build a secure and reliable network to support such communications; and implement support systems. AMI is intended to serve as the foundation of Entergy Louisiana’s modernized power grid. The filing included an estimate of implementation costs for AMI of $330 million. The filing identified a number of quantified and unquantified benefits, and Entergy Louisiana provided a cost/benefit analysis showing that its combined electric and gas AMI deployment is expected to produce a nominal net benefit to customers of $607 million. Entergy Louisiana also sought to continue to include in rate base the remaining book value, approximately $92 million at December 31, 2015, of the existing electric meters and also to depreciate those assets using current depreciation rates. Entergy Louisiana proposed a 15-year useful life for the new advanced meters, the three-year deployment of which is expected to begin in 2019. The communications network deployment
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is expected to begin by late-2018, after the necessary information technology infrastructure is in place. Entergy Louisiana proposed to recover the cost of AMI through the implementation of a customer charge, net of certain benefits, phased in over the period 2019 through 2022. The parties reached an uncontested stipulation permitting implementation of Entergy Louisiana’s proposed AMI system, with modifications to the proposed customer charge. In July 2017 the LPSC approved the stipulation. Entergy Louisiana expects to recover the undepreciated balance of its existing meters through a regulatory asset at current depreciation rates.
Sources of Capital
Entergy Louisiana’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt or preferred membership interest issuances; and |

| • | bank financing under new or existing facilities. |

Entergy Louisiana may refinance, redeem, or otherwise retire debt prior to maturity, to the extent market conditions and interest rates are favorable.
All debt and common and preferred membership interest issuances by Entergy Louisiana require prior regulatory approval. Preferred membership interest and debt issuances are also subject to issuance tests set forth in its bond indentures and other agreements. Entergy Louisiana has sufficient capacity under these tests to meet its foreseeable capital needs.
Entergy Louisiana’s receivables from the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| $11,173 | $22,503 | $6,154 | $2,815 |

See Note 4 to the financial statements for a description of the money pool.
Entergy Louisiana has a credit facility in the amount of $350 million scheduled to expire in August 2022. The credit facility allows Entergy Louisiana to issue letters of credit against $15 million of the borrowing capacity of the facility. As of December 31, 2017, there were no cash borrowings and a $9.1 million letter of credit outstanding under the credit facility. In addition, Entergy Louisiana is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2017, a $29.7 million letter of credit was outstanding under Entergy Louisiana’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
The Entergy Louisiana nuclear fuel company variable interest entities have two separate credit facilities, one in the amount of $105 million and one in the amount of $85 million, both scheduled to expire in May 2019. As of December 31, 2017, $65.7 million of loans were outstanding under the credit facility for the Entergy Louisiana River Bend nuclear fuel company variable interest entity. As of December 31, 2017, $43.5 million in letters of credit to support a like amount of commercial paper issued and $36.4 million in loans were outstanding under the Entergy Louisiana Waterford nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the nuclear fuel company variable interest entity credit facilities.
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Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Entergy Louisiana obtained authorizations from the FERC through October 2019 for the following:
| • | short-term borrowings not to exceed an aggregate amount of $450 million at any time outstanding; |

| • | long-term borrowings and security issuances; and |

| • | long-term borrowings by its nuclear fuel company variable interest entities. |

See Note 4 to the financial statements for further discussion of Entergy Louisiana’s short-term borrowing limits.
Hurricane Isaac
In June 2014 the LPSC voted to approve a series of orders which (i) quantified $290.8 million of Hurricane Isaac system restoration costs as prudently incurred; (ii) determined $290 million as the level of storm reserves to be re-established; (iii) authorized Entergy Louisiana to utilize Louisiana Act 55 financing for Hurricane Isaac system restoration costs; and (iv) granted other requested relief associated with storm reserves and Act 55 financing of Hurricane Isaac system restoration costs. Entergy Louisiana committed to pass on to customers a minimum of $30.8 million of customer benefits through annual customer credits of approximately $6.2 million for five years. Approvals for the Act 55 financings were obtained from the Louisiana Utilities Restoration Corporation and the Louisiana State Bond Commission. See Note 2 to the financial statements for a discussion of the August 2014 issuance of bonds under Act 55 of the Louisiana Legislature.
Little Gypsy Repowering Project
In April 2007, Entergy Louisiana announced that it intended to pursue the solid fuel repowering of a 538 MW unit at its Little Gypsy plant. In March 2009 the LPSC voted in favor of a motion directing Entergy Louisiana to temporarily suspend the repowering project and, based upon an analysis of the project’s economic viability, to make a recommendation regarding whether to proceed with the project. This action was based upon a number of factors including the recent decline in natural gas prices, as well as environmental concerns, the unknown costs of carbon legislation and changes in the capital/financial markets. In April 2009, Entergy Louisiana complied with the LPSC’s directive and recommended that the project be suspended for an extended period of time of three years or more. In May 2009 the LPSC issued an order declaring that Entergy Louisiana’s decision to place the Little Gypsy project into a longer-term suspension of three years or more is in the public interest and prudent.
In October 2009, Entergy Louisiana made a filing with the LPSC seeking permission to cancel the Little Gypsy repowering project and seeking project cost recovery over a five-year period. In June 2010 and August 2010, the LPSC staff and intervenors filed testimony. The LPSC staff (1) agreed that it was prudent to move the project from long-term suspension to cancellation and that the timing of the decision to suspend on a longer-term basis was not imprudent; (2) indicated that, except for $0.8 million in compensation-related costs, the costs incurred should be deemed prudent; (3) recommended recovery from customers over ten years but stated that the LPSC may want to consider 15 years; (4) allowed for recovery of carrying costs and earning a return on project costs, but at a reduced rate approximating the cost of debt, while also acknowledging that the LPSC may consider ordering no return; and (5) indicated that Entergy Louisiana should be directed to securitize project costs, if legally feasible and in the public interest. In the third quarter 2010, in accordance with accounting standards, Entergy Louisiana determined that it was probable that the Little Gypsy repowering project would be abandoned and accordingly reclassified $199.8 million of project costs from construction work in progress to a regulatory asset. A hearing on the issues, except for cost allocation among customer classes, was held before the ALJ in November 2010. In January 2011 all parties participated in a mediation on the disputed issues, resulting in a settlement of all disputed issues, including cost recovery and cost allocation. The settlement provides for Entergy Louisiana to recover $200 million as of March 31, 2011, and carrying costs on that amount on specified terms thereafter. The settlement also provides for Entergy Louisiana to recover the approved project costs by securitization. In April 2011, Entergy Louisiana filed an application with the LPSC to authorize the securitization of the investment recovery costs associated with the project and to issue a financing order by which Entergy Louisiana could accomplish such securitization. In August 2011 the LPSC issued an order approving the settlement and also
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issued a financing order for the securitization. See Note 5 to the financial statements for a discussion of the September 2011 issuance of the securitization bonds.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Louisiana charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Louisiana is regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the LPSC, is primarily responsible for approval of the rates charged to customers.
Retail Rates - Electric
Filings with the LPSC
2014 Formula Rate Plan Filing
In connection with the approval of the business combination of Entergy Gulf States Louisiana and Entergy Louisiana, the LPSC authorized the filing of a single, joint, formula rate plan evaluation report for Entergy Gulf States Louisiana’s and Entergy Louisiana’s 2014 calendar year operations. The joint evaluation report was filed in September 2015 and reflected an earned return on common equity of 9.09%. As such, no adjustment to base formula rate plan revenue was required. The following adjustments were required under the formula rate plan, however: a decrease in the additional capacity mechanism for Entergy Louisiana of $17.8 million; an increase in the additional capacity mechanism for Entergy Gulf States Louisiana of $4.3 million; and a reduction of $5.5 million to the MISO cost recovery mechanism to collect approximately $35.7 million on a combined-company basis. Under the order approving the business combination, following completion of the prescribed review period, rates were implemented with the first billing cycle of December 2015, subject to refund. In June 2017 the LPSC staff and Entergy Louisiana filed an unopposed joint report of proceedings, which was accepted by the LPSC in June 2017, finalizing the results of this proceeding with no changes to rates already implemented.
2015 Formula Rate Plan Filing
In May 2016, Entergy Louisiana filed its formula rate plan evaluation report for its 2015 calendar year operations. The evaluation report reflected an earned return on common equity of 9.07%. As such, no adjustment to base formula rate plan revenue was required. The following other adjustments, however, were required under the formula rate plan: an increase in the legacy Entergy Louisiana additional capacity mechanism of $14.2 million; a separate increase in legacy Entergy Louisiana revenue of $10 million primarily to reflect the effects of the termination of the System Agreement; an increase in the legacy Entergy Gulf States Louisiana additional capacity mechanism of $0.5 million; a decrease in legacy Entergy Gulf States Louisiana revenue of $58.7 million primarily to reflect the effects of the termination of the System Agreement; and an increase of $11 million to the MISO cost recovery mechanism. Rates were implemented with the first billing cycle of September 2016, subject to refund. Following implementation of the as-filed rates in September 2016, there were several interim updates to Entergy Louisiana’s formula rate plan, including the one submitted in December 2016, reflecting implementation of the settlement of the Waterford 3 replacement steam generator project prudence review described below. In June 2017 the LPSC staff and Entergy Louisiana filed a joint report of proceedings, which was accepted by the LPSC in June 2017, finalizing the results of the May 2016 evaluation report, interim updates, and corresponding proceedings with no changes to rates already implemented.
Extension of MISO Cost Recovery Mechanism Rider
In November 2016, Entergy Louisiana filed with the LPSC a request to extend the MISO cost recovery mechanism rider provision of its formula rate plan. In March 2017 the LPSC staff submitted direct testimony generally supportive of a one-year extension of the MISO cost recovery mechanism and the intervenor in the proceeding did not
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oppose an extension for this period of time. In July 2017 an uncontested joint stipulation authorizing a one-year extension of the MISO cost recovery mechanism rider was approved.
2016 Formula Rate Plan Filing
In May 2017, Entergy Louisiana filed its formula rate plan evaluation report for its 2016 calendar year operations. The evaluation report reflected an earned return on common equity of 9.84%. As such, no adjustment to base formula rate plan revenue was required. Adjustments, however, were required under the formula rate plan; the 2016 formula rate plan evaluation report showed a decrease in formula rate plan revenue of approximately $16.9 million, comprised of a decrease in legacy Entergy Louisiana formula rate plan revenue of $3.5 million, a decrease in legacy Entergy Gulf States Louisiana formula rate plan revenue of $9.7 million, and a decrease in incremental formula rate plan revenue of $3.7 million. Additionally, the formula rate plan evaluation report called for a decrease of $40.5 million in the MISO cost recovery revenue requirement from the present level of $46.8 million to $6.3 million. Rates reflecting these adjustments were implemented with the first billing cycle of September 2017, subject to refund. In September 2017 the LPSC issued its report indicating that no changes to Entergy Louisiana’s original formula rate plan evaluation report were required but reserved for several issues, including Entergy Louisiana’s September 2017 update to its formula rate plan evaluation report.
Formula Rate Plan Extension Request
In August 2017, Entergy Louisiana filed a request with the LPSC seeking to extend its formula rate plan for three years (2017-2019) with limited modifications to its terms. Those modifications include: a one-time resetting of base rates to the midpoint of the band at Entergy Louisiana’s authorized return on equity of 9.95% for the 2017 test year; narrowing of the formula rate plan bandwidth from a total of 160 basis points to 80 basis points; and a forward-looking mechanism that would allow Entergy Louisiana to recover certain transmission-related costs contemporaneously with when those projects begin delivering benefits to customers. Entergy Louisiana requested that the LPSC consider its request on an expedited basis, in an effort to maintain Entergy Louisiana’s current cycle for implementing rate adjustments, i.e., September 2018, without the need for filing a full base rate case proceeding. Several parties have intervened in the proceeding and all parties have been participating in settlement discussions.
Waterford 3 Replacement Steam Generator Project
Following the completion of the Waterford 3 replacement steam generator project, the LPSC undertook a prudence review in connection with a filing made by Entergy Louisiana in April 2013 with regard to the following aspects of the replacement project: 1) project management; 2) cost controls; 3) success in achieving stated objectives; 4) the costs of the replacement project; and 5) the outage length and replacement power costs. In July 2014 the LPSC staff filed testimony recommending potential project and replacement power cost disallowances of up to $71 million, citing a need for further explanation or documentation from Entergy Louisiana. An intervenor filed testimony recommending disallowance of $141 million of incremental project costs, claiming the steam generator fabricator was imprudent. Entergy Louisiana provided further documentation and explanation requested by the LPSC staff. An evidentiary hearing was held in December 2014. At the hearing the parties maintained the positions reflected in pre-filed testimony. Entergy Louisiana believed that the replacement steam generator costs were prudently incurred and applicable legal principles supported their recovery in rates. Nevertheless, Entergy Louisiana recorded a write-off of $16 million of Waterford 3’s plant balance in December 2014 because of the uncertainty at the time associated with the resolution of the prudence review. In December 2015 the ALJ issued a proposed recommendation, which was subsequently finalized, concluding that Entergy Louisiana prudently managed the Waterford 3 replacement steam generator project, including the selection, use, and oversight of contractors, and could not reasonably have anticipated the damage to the steam generators. Nevertheless, the ALJ concluded that Entergy Louisiana was liable for the conduct of its contractor and subcontractor and, therefore, recommended a disallowance of $67 million in capital costs. Additionally, the ALJ concluded that Entergy Louisiana did not sufficiently justify the incurrence of $2 million in replacement power costs during the replacement outage. Although the ALJ’s recommendation had not yet been considered by the LPSC, after considering the progress of the proceeding in light of the ALJ recommendation, Entergy
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Louisiana recorded in the fourth quarter 2015 approximately $77 million in charges, including a $45 million asset write-off and a $32 million regulatory charge, to reflect that a portion of the assets associated with the Waterford 3 replacement steam generator project was no longer probable of recovery. Entergy Louisiana maintained that the ALJ’s recommendation contained significant factual and legal errors.
In October 2016 the parties reached a settlement in this matter. The settlement was approved by the LPSC in December 2016. The settlement effectively provided for an agreed-upon disallowance of $67 million of plant, which had been previously written off by Entergy Louisiana, as discussed above. The refund to customers of approximately $71 million as a result of the settlement approved by the LPSC was made to customers in January 2017. Of the $71 million of refunds, $68 million was credited to customers through Entergy Louisiana’s formula rate plan, outside of sharing, and $3 million through its fuel adjustment clause. Entergy Louisiana had previously recorded a provision of $48 million for this refund. The previously-recorded provision included the cumulative revenues recorded through December 2016 related to the $67 million of disallowed plant. An additional regulatory charge of $23 million was recorded in fourth quarter 2016 to reflect the effects of the settlement. The settlement also provided that Entergy Louisiana could retain the value associated with potential service credits agreed to by the project contractor, to the extent they are realized in the future. Following a review by the parties, an unopposed joint report of proceedings was filed by the LPSC staff and Entergy Louisiana in May 2017 and the LPSC accepted the joint report of proceedings resolving the matter.
Ninemile 6
In July 2014, Entergy Gulf States Louisiana and Entergy Louisiana filed an unopposed stipulation with the LPSC, which was subsequently approved, that estimated a first year revenue requirement associated with Ninemile 6 and provided a mechanism to update the revenue requirement as the in-service date approached. In late-December 2014, roughly contemporaneous with the unit's placement in service, a final updated estimated revenue requirement of $26.8 million for Entergy Gulf States Louisiana and $51.1 million for Entergy Louisiana was filed. The December 2014 estimate formed the basis of rates implemented effective with the first billing cycle of January 2015. In July 2015, Entergy Louisiana submitted to the LPSC a compliance filing including an estimate at completion, inclusive of interconnection costs and transmission upgrades, of approximately $648 million, or $76 million less than originally estimated, along with other project details and supporting evidence, to enable the LPSC to review the prudence of Entergy Louisiana’s management of the project. Testimony filed by the LPSC staff generally supported the prudence of the management of the project and recovery of the costs incurred to complete the project. The LPSC staff had questioned the warranty coverage for one element of the project. In October 2016 all parties agreed to a stipulation providing that 100% of Ninemile 6 construction costs was prudently incurred and is eligible for recovery from customers, but reserving the LPSC’s rights to review the prudence of Entergy Louisiana’s actions regarding one element of the project. This stipulation was approved by the LPSC in January 2017.
Union Power Station and Deactivation or Retirement Decisions for Entergy Louisiana Plants
In January 2015, Entergy Gulf States Louisiana filed its application with the LPSC for approval of the acquisition and cost recovery of two power blocks of the Union Power Station for an expected base purchase price of approximately $237 million per power block, subject to adjustments. In September 2015, Entergy Gulf States Louisiana agreed to settlement terms with all parties for Entergy Gulf States Louisiana’s purchase of the two power blocks. In October 2015 the LPSC voted unanimously to approve the uncontested settlement which finds, among other things, that acquisition of Power Blocks 3 and 4 is in the public interest and, therefore, prudent. The business combination of Entergy Gulf States Louisiana and Entergy Louisiana received regulatory approval and closed in October 2015 making Entergy Louisiana the named purchaser of Power Blocks 3 and 4 of the Union Power Station. In March 2016, Entergy Louisiana acquired Power Blocks 3 and 4 of Union Power Station for an aggregate purchase price of approximately $474 million and implemented rates to collect the estimated first-year revenue requirement with the first billing cycle of March 2016.
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As a term of the LPSC-approved settlement authorizing the purchase of Power Blocks 3 and 4 of the Union Power Station, Entergy Louisiana agreed to make a filing with the LPSC to review its decisions to deactivate Ninemile 3 and Willow Glen 2 and 4 and its decision to retire Little Gypsy 1. In January 2016, Entergy Louisiana made its compliance filing with the LPSC. Entergy Louisiana, LPSC staff, and intervenors participated in a technical conference in March 2016 where Entergy Louisiana presented information on its deactivation/retirement decisions for these four units in addition to information on the current deactivation decisions for the ten-year planning horizon. Parties have requested further proceedings on the prudence of the decision to deactivate Willow Glen 2 and 4. No party contests the prudence of the decision to deactivate Willow Glen 2 and 4 or suggests reactivation of these units; however, issues have been raised related to Entergy Louisiana’s decision to give up its transmission service rights in MISO for Willow Glen 2 and 4 rather than placing the units into suspended status for the three-year term permitted by MISO. An evidentiary hearing was held in August 2017 and post-hearing briefs were submitted in October 2017. A decision is expected in 2018.
Retail Rates - Gas
In accordance with the settlement of Entergy Gulf States Louisiana’s gas rate stabilization plan for the test year ended September 30, 2012, in August 2014, Entergy Gulf States Louisiana submitted for consideration a proposal for implementation of an infrastructure rider to recover expenditures associated with strategic plant investment and relocation projects mandated by local governments. After review by the LPSC staff and inclusion of certain customer safeguards required by the LPSC staff, in December 2014, Entergy Gulf States Louisiana and the LPSC staff submitted a joint settlement for implementation of an accelerated gas pipe replacement program providing for the replacement of approximately 100 miles of pipe over the next ten years, as well as relocation of certain existing pipe resulting from local government-related infrastructure projects, and for a rider to recover the investment associated with these projects. The rider allows for recovery of approximately $65 million over ten years. The rider recovery will be adjusted on a quarterly basis to include actual investment incurred for the prior quarter and is subject to the following conditions, among others: a ten-year term; application of any earnings in excess of 10.45% as an offset to the revenue requirement of the infrastructure rider; adherence to a specified spending plan, within plus or minus 20% annually; annual filings comparing actual versus planned rider spending with actual spending and explanation of variances exceeding 10%; and an annual true-up. The joint settlement was approved by the LPSC in January 2015. Implementation of the infrastructure rider commenced with bills rendered on and after the first billing cycle of April 2015.
2014 Rate Stabilization Plan Filing
In January 2015, Entergy Gulf States Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2014. The filing showed an earned return on common equity of 7.20%, which resulted in a $706 thousand rate increase. In April 2015 the LPSC issued findings recommending two adjustments to Entergy Gulf States Louisiana’s as-filed results, and an additional recommendation that did not affect the results. The LPSC staff’s recommended adjustments increase the earned return on equity for the test year to 7.24%. Entergy Gulf States Louisiana accepted the LPSC staff’s recommendations and a revenue increase of $688 thousand was implemented with the first billing cycle of May 2015.
2015 Rate Stabilization Plan Filing
In January 2016, Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2015. The filing showed an earned return on common equity of 10.22%, which is within the authorized bandwidth, therefore requiring no change in rates. In March 2016 the LPSC staff issued its report stating that the 2015 gas rate stabilization plan filing was in compliance with the exception of several issues that required additional information, explanation, or clarification for which the LPSC staff had reserved the right to further review. In July 2016 the parties to the proceeding filed an unopposed joint report and motion for entry of order accepting the report that indicated no outstanding issues remained in the filing.
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In February 2016, Entergy Louisiana filed a motion requesting to extend the term of the gas rate stabilization plan in substantially similar form for an additional three-year term and included a request for sharing of non-jurisdictional compressed natural gas revenues. Following discovery and the filing of testimony by the LPSC staff, Entergy Louisiana and the LPSC submitted a joint motion for hearing an uncontested stipulated settlement resolving the proceeding. A hearing on the stipulation was held in November 2016. The ALJ issued a report of proceedings that was presented with the parties’ stipulation to the LPSC for consideration. The stipulation approving Entergy Louisiana’s requested extension of the rate stabilization plan was approved by the LPSC in December 2016.
2016 Rate Stabilization Plan Filing
In January 2017, Entergy Louisiana filed with the LPSC its gas rate stabilization plan for the test year ended September 30, 2016. The filing of the evaluation report for test year 2016 reflected an earned return on common equity of 6.37%. As part of the original filing, pursuant to the extraordinary cost provision of the rate stabilization plan, Entergy Louisiana sought to recover approximately $1.5 million in deferred operation and maintenance expenses incurred to restore service and repair damage resulting from flooding and widespread rainfall in southeast Louisiana that occurred in August 2016. Entergy Louisiana requested to recover the prudently incurred August 2016 storm restoration costs over ten years, outside of the rate stabilization plan sharing provisions. As a result, Entergy Louisiana’s filing sought an annual increase in revenue of $1.4 million. Following review of the filing, except for the proposed extraordinary cost recovery, the LPSC staff confirmed Entergy Louisiana’s filing was consistent with the principles and requirements of the rate stabilization plan. The extraordinary cost recovery request associated with the 2016 flood-related deferred operation and maintenance expenses incurred for gas operations was removed from the rate stabilization plan pending LPSC consideration in a separate docket. In April 2017 the LPSC approved a joint report of proceedings and Entergy Louisiana submitted a revised evaluation report reflecting a $1.2 million annual increase in revenue with rates implemented with the first billing cycle of May 2017.
In connection with the joint report of proceedings accepted by the LPSC, in May 2017, Entergy Louisiana filed an application to initiate a separate proceeding to recover through the extraordinary cost provision of the gas rate stabilization plan the deferred operation and maintenance expenses of $1.4 million incurred to restore service and repair damage resulting from flooding and widespread rainfall in southeast Louisiana that occurred in August 2016. The LPSC staff submitted its direct testimony in the proceeding recommending recovery of $0.9 million. Entergy Louisiana filed rebuttal testimony responding to the LPSC staff’s recommendation. The procedural schedule was suspended to allow the parties to engage in settlement negotiations, and in February 2018 the LPSC staff and Entergy Louisiana filed an unopposed settlement. If approved by the LPSC, the settlement would provide for Entergy Louisiana to recover, over ten years, the approximately $1.4 million in deferred operation and maintenance expense and related carrying charges. The settlement further provides for recovery to commence in May 2018.
2017 Rate Stabilization Plan Filing
In January 2018, Entergy Louisiana filed with the LPSC its gas rate stabilization plan for test year ended September 30, 2017. The filing of the evaluation report for the test year 2017 reflected an earned return on common equity of 9.06%. This earned return is below the earnings sharing band of the rate stabilization plan and results in a rate increase of $0.1 million. Due to the enactment in late-December 2017 of the Tax Cuts and Jobs Act, Entergy Louisiana did not have adequate time to reflect the effects of this tax legislation in the rate stabilization plan. As a result, Entergy Louisiana will file a supplement to the January 2018 evaluation report to reflect, among other things, a 21% federal corporate income tax rate. Any rate change resulting from the revised rate stabilization plan will become effective in rates in May 2018.
Fuel and purchased power recovery
Entergy Louisiana recovers electric fuel and purchased power costs for the billing month based upon the level of such costs incurred two months prior to the billing month. Entergy Louisiana’s purchased gas adjustments include
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estimates for the billing month adjusted by a surcharge or credit that arises from an annual reconciliation of fuel costs incurred with fuel cost revenues billed to customers, including carrying charges.
In April 2010 the LPSC authorized its staff to initiate an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit included a review of the reasonableness of charges flowed through the fuel adjustment clause by Entergy Louisiana for the period from 2005 through 2009. The LPSC staff issued its audit report in January 2013. The LPSC staff recommended that Entergy Louisiana refund approximately $1.9 million, plus interest, to customers and realign the recovery of approximately $1 million from Entergy Louisiana’s fuel adjustment clause to base rates. The recommended refund was made by Entergy Louisiana in May 2013 in the form of a credit to customers through its fuel adjustment clause filing. In October 2016 the LPSC staff filed testimony affirming the recommendation in its audit report on the lone remaining issue that nuclear dry fuel storage costs should be realigned to base rates. The parties agreed to remove that remaining issue to a separate docket because the same issue was outstanding in the Entergy Gulf States Louisiana audit for the same time period. In November 2016 the LPSC approved the resolution of this audit and the creation of a new docket for the resolution of the proper method of recovery for nuclear dry fuel storage costs. In December 2016 the LPSC opened a new docket in order to resolve the issue regarding the proper methodology for the recovery of nuclear dry fuel storage costs. In October 2017 the LPSC approved the continued recovery of the nuclear dry fuel storage costs through the fuel adjustment clause, resolving the open issue in the audit.
In December 2011 the LPSC authorized its staff to initiate a proceeding to audit the fuel adjustment clause filings of Entergy Gulf States Louisiana and its affiliates. The audit included a review of the reasonableness of charges flowed by Entergy Gulf States Louisiana through its fuel adjustment clause for the period 2005 through 2009. In March 2016 the LPSC staff consultant issued its audit report. In its report, the LPSC staff consultant recommended that Entergy Louisiana refund approximately $8.6 million, plus interest, to customers and realign the recovery of approximately $12.7 million from Entergy Gulf States Louisiana’s fuel adjustment clause to base rates. In September 2016 the LPSC staff filed testimony stating that it was no longer recommending a disallowance of $3.4 million of the $8.6 million discussed above, but otherwise maintained positions from its report. Subsequently, the parties entered into a settlement, which was approved by the LPSC in November 2016. The settlement recognized the dry cask storage recovery method issue, which was addressed in the separate proceeding approved by the LPSC in October 2017, provided for a refund of $5 million, which was made to legacy Entergy Gulf States Louisiana customers in December 2016, and resolved all other issues raised in the audit.
In July 2014 the LPSC authorized its staff to initiate an audit of Entergy Gulf States Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed by Entergy Gulf States Louisiana through its fuel adjustment clause for the period from 2010 through 2013. Discovery commenced in July 2015. No report of audit has been issued.
In July 2014 the LPSC authorized its staff to initiate an audit of Entergy Louisiana’s fuel adjustment clause filings. The audit includes a review of the reasonableness of charges flowed by Entergy Louisiana through its fuel adjustment clause for the period from 2010 through 2013. Discovery commenced in July 2015. No report of audit has been issued.
In June 2016 the LPSC staff provided notice of audits of Entergy Louisiana’s fuel adjustment clause filings and purchased gas adjustment clause filings. In recognition of the business combination that occurred in 2015, the audit notice was issued to Entergy Louisiana and will also include a review of charges to legacy Entergy Gulf States Louisiana customers prior to the business combination. The audit includes a review of the reasonableness of charges flowed through Entergy Louisiana’s fuel adjustment clause for the period from 2014 through 2015 and charges flowed through Entergy Louisiana’s purchased gas adjustment clause for the period from 2012 through 2015. Discovery commenced in March 2017. No report of audit has been issued.
Due to higher fuel costs for the operating month of January 2018 resulting in part from recent cold weather, higher Henry Hub prices, and an increase in total fuel and purchased power costs, Entergy Louisiana plans to cap the
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average fuel adjustment charge to be billed in March 2018 at $0.03060 per kWh and to defer billing of all fuel costs in excess of the capped amounts by including such costs in the over- or under-recovery account.
Industrial and Commercial Customers
Entergy Louisiana’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Louisiana’s industrial customer base. Entergy Louisiana responds by working with industrial and commercial customers and negotiating electric service contracts to provide competitive rates that match specific customer needs and load profiles. Entergy Louisiana actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
Entergy Louisiana owns and, through an affiliate, operates the River Bend and Waterford 3 nuclear power plants. Entergy Louisiana is, therefore, subject to the risks related to owning and operating nuclear plants. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, to position Entergy’s nuclear fleet to meet its operational goals, including the financial requirements to address emerging issues like stress corrosion cracking of certain materials within the plant systems and the Fukushima event; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license renewal and amendments, and decommissioning; the performance and capacity factors of these nuclear plants; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts and types of insurance commercially available for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of River Bend or Waterford 3, Entergy Louisiana may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning.
Waterford 3’s operating license is currently due to expire in December 2024. In March 2016, Entergy Louisiana filed an application with the NRC for an extension of Waterford 3’s operating license to 2044. River Bend’s operating license is currently due to expire in August 2025. In May 2017, Entergy Louisiana filed an application with the NRC for an extension of River Bend’s operating license to 2045. In October 2017 an intervenor filed with the NRC a petition to intervene and request for a hearing on the River Bend license renewal application. As provided by NRC procedure, a panel of the Atomic Safety and Licensing Board has been designated to determine whether the intervenor’s three proposed contentions, or allegations of errors or omissions in the license renewal application, are admissible and, if so, to rule on any admitted contentions. In January 2018 the Atomic Safety and Licensing Board denied the petition to intervene and the request for hearing.
Environmental Risks
Entergy Louisiana’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Louisiana is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in
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“Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Louisiana’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in the assumptions and measurements that could produce estimates that would have a material effect on the presentation of Entergy Louisiana’s financial position or results of operations.
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Unbilled Revenue
See “Unbilled Revenue” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the unbilled revenue amounts.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets and trust fund investments.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Louisiana’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
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Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Projected Qualified Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $3,737 | $54,506 |
| Rate of return on plan assets | (0.25%) | $3,309 | $— |
| Rate of increase in compensation | 0.25% | $1,726 | $8,824 |

The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $753 | $10,727 |
| Health care cost trend | 0.25% | $1,219 | $8,675 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for Entergy Louisiana in 2017 was $44.3 million. Entergy Louisiana anticipates 2018 qualified pension cost to be $52.1 million. In 2016, Entergy Louisiana refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $14.2 million. Entergy Louisiana contributed $87.5 million to its pension plans in 2017 and estimates pension contributions will be approximately $71.9 million in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total postretirement health care and life insurance benefit costs for Entergy Louisiana in 2017 were $12.6 million. Entergy Louisiana expects 2018 postretirement health care and life insurance benefit costs of approximately $11.2 million. In 2016, Entergy Louisiana refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $3.5 million. Entergy Louisiana contributed $14.4 million to its other postretirement plans in 2017 and estimates that 2018 contributions will be approximately $19 million.
Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
346
Entergy Louisiana, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
347
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the members and Board of Directors of
Entergy Louisiana, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Louisiana, LLC and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity (pages 349 through 354 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
348
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $4,246,020 | $4,126,343 | $4,361,524 |
| Natural gas | 54,530 | 50,705 | 55,622 |
| TOTAL | 4,300,550 | 4,177,048 | 4,417,146 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 912,060 | 804,433 | 850,869 |
| Purchased power | 980,070 | 890,058 | 1,129,910 |
| Nuclear refueling outage expenses | 52,074 | 51,361 | 44,480 |
| Other operation and maintenance | 969,400 | 923,779 | 997,546 |
| Decommissioning | 49,457 | 46,944 | 43,445 |
| Taxes other than income taxes | 175,359 | 165,665 | 167,966 |
| Depreciation and amortization | 467,369 | 451,290 | 437,036 |
| Other regulatory charges (credits) - net | (152,080 | ) | 44,131 | 27,562 |
| TOTAL | 3,453,709 | 3,377,661 | 3,698,814 |
| OPERATING INCOME | 846,841 | 799,387 | 718,332 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 51,485 | 27,925 | 19,192 |
| Interest and investment income | 164,550 | 154,778 | 150,168 |
| Miscellaneous - net | (11,960 | ) | (11,597 | ) | (13,190 | ) |
| TOTAL | 204,075 | 171,106 | 156,170 |
| INTEREST EXPENSE |
| Interest expense | 275,185 | 273,283 | 259,894 |
| Allowance for borrowed funds used during construction | (25,914 | ) | (14,571 | ) | (10,702 | ) |
| TOTAL | 249,271 | 258,712 | 249,192 |
| INCOME BEFORE INCOME TAXES | 801,645 | 711,781 | 625,310 |
| Income taxes | 485,298 | 89,734 | 178,671 |
| NET INCOME | 316,347 | 622,047 | 446,639 |
| Preferred distribution requirements and other | — | — | 5,737 |
| EARNINGS APPLICABLE TO COMMON EQUITY | $316,347 | $622,047 | $440,902 |
| See Notes to Financial Statements. |

349
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Net Income | $316,347 | $622,047 | $446,639 |
| Other comprehensive income |
| Pension and other postretirement liabilities |
| (net of tax expense of $234, $5,034, and $14,316) | 2,042 | 7,970 | 22,811 |
| Other comprehensive income | 2,042 | 7,970 | 22,811 |
| Comprehensive Income | $318,389 | $630,017 | $469,450 |
| See Notes to Financial Statements. |

350
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $316,347 | $622,047 | $446,639 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | 621,018 | 620,211 | 593,635 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 575,804 | 178,549 | 97,461 |
| Changes in working capital: |
| Receivables | (53,829 | ) | (102,200 | ) | (12,795 | ) |
| Fuel inventory | 11,010 | (2,693 | ) | (887 | ) |
| Accounts payable | 58,880 | (36,720 | ) | 23,641 |
| Prepaid taxes and taxes accrued | 128,261 | (235,246 | ) | 105,687 |
| Interest accrued | (70 | ) | 1,218 | 2,933 |
| Deferred fuel costs | 23,236 | (17,023 | ) | 4,222 |
| Other working capital accounts | (30,911 | ) | 6,462 | (41,890 | ) |
| Changes in provisions for estimated losses | (8,324 | ) | 490 | (8,946 | ) |
| Changes in other regulatory assets | 492,696 | 57,579 | 130,762 |
| Changes in other regulatory liabilities | 605,453 | 62,351 | 96,234 |
| Deferred tax rate change recognized as regulatory liability/asset | (1,207,808 | ) | — | — |
| Changes in pension and other postretirement liabilities | (32,309 | ) | (52,559 | ) | (98,695 | ) |
| Other | (161,909 | ) | (64,554 | ) | (182,485 | ) |
| Net cash flow provided by operating activities | 1,337,545 | 1,037,912 | 1,155,516 |
| INVESTING ACTIVITIES |
| Construction expenditures | (1,662,835 | ) | (1,030,416 | ) | (845,227 | ) |
| Allowance for equity funds used during construction | 51,485 | 27,925 | 19,192 |
| Insurance proceeds | 5,305 | 10,564 | — |
| Nuclear fuel purchases | (197,829 | ) | (73,618 | ) | (244,040 | ) |
| Proceeds from the sale of nuclear fuel | 42,634 | 63,304 | 54,595 |
| Payment for purchase of plant | — | (474,670 | ) | — |
| Payments to storm reserve escrow account | (2,110 | ) | (1,063 | ) | (308 | ) |
| Receipts from storm reserve escrow account | 8,835 | — | — |
| Changes in securitization account | 880 | 351 | (137 | ) |
| Proceeds from nuclear decommissioning trust fund sales | 231,293 | 219,182 | 123,474 |
| Investment in nuclear decommissioning trust funds | (266,592 | ) | (257,209 | ) | (158,028 | ) |
| Changes in money pool receivable - net | 11,330 | (16,349 | ) | (3,339 | ) |
| Proceeds from sale of assets | — | — | 59,610 |
| Payment for purchase of assets | (9,805 | ) | — | — |
| Litigation proceeds for reimbursement of spent nuclear fuel storage costs | — | 57,934 | — |
| Net cash flow used in investing activities | (1,787,409 | ) | (1,474,065 | ) | (994,208 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | 733,344 | 2,450,063 | 77,172 |
| Retirement of long-term debt | (407,736 | ) | (1,488,870 | ) | (180,595 | ) |
| Redemption of preferred membership interests | — | — | (110,286 | ) |
| Changes in credit borrowings - net | 39,746 | (56,562 | ) | 14,322 |
| Distributions paid: |
| Common equity | (91,250 | ) | (285,500 | ) | (226,000 | ) |
| Preferred membership interests | — | — | (6,082 | ) |
| Other | (2,183 | ) | (4,230 | ) | (15,253 | ) |
| Net cash flow provided by (used in) financing activities | 271,921 | 614,901 | (446,722 | ) |
| Net increase (decrease) in cash and cash equivalents | (177,943 | ) | 178,748 | (285,414 | ) |
| Cash and cash equivalents at beginning of period | 213,850 | 35,102 | 320,516 |
| Cash and cash equivalents at end of period | $35,907 | $213,850 | $35,102 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $266,871 | $324,456 | $243,745 |
| Income taxes | ($234,199 | ) | $156,605 | $89,124 |
| Non-cash financing activities: |
| Capital contribution from parent | $— | $— | ($267,826 | ) |
| See Notes to Financial Statements. |

351
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents: |
| Cash | $5,836 | $49,972 |
| Temporary cash investments | 30,071 | 163,878 |
| Total cash and cash equivalents | 35,907 | 213,850 |
| Accounts receivable: |
| Customer | 254,308 | 213,517 |
| Allowance for doubtful accounts | (8,430 | ) | (6,277 | ) |
| Associated companies | 143,524 | 155,794 |
| Other | 60,893 | 54,186 |
| Accrued unbilled revenues | 153,118 | 159,176 |
| Total accounts receivable | 603,413 | 576,396 |
| Fuel inventory | 39,728 | 50,738 |
| Materials and supplies - at average cost | 299,881 | 294,421 |
| Deferred nuclear refueling outage costs | 65,711 | 22,535 |
| Prepaid taxes | — | 110,104 |
| Prepayments and other | 34,035 | 41,687 |
| TOTAL | 1,078,675 | 1,309,731 |
| OTHER PROPERTY AND INVESTMENTS |
| Investment in affiliate preferred membership interests | 1,390,587 | 1,390,587 |
| Decommissioning trust funds | 1,312,073 | 1,140,707 |
| Storm reserve escrow account | 284,759 | 291,485 |
| Non-utility property - at cost (less accumulated depreciation) | 245,255 | 217,494 |
| Other | 18,999 | 28,844 |
| TOTAL | 3,251,673 | 3,069,117 |
| UTILITY PLANT |
| Electric | 19,678,536 | 18,827,532 |
| Natural gas | 191,899 | 172,816 |
| Construction work in progress | 1,281,452 | 670,201 |
| Nuclear fuel | 337,402 | 249,807 |
| TOTAL UTILITY PLANT | 21,489,289 | 19,920,356 |
| Less - accumulated depreciation and amortization | 8,703,047 | 8,420,596 |
| UTILITY PLANT - NET | 12,786,242 | 11,499,760 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Regulatory asset for income taxes - net | — | 470,480 |
| Other regulatory assets (includes securitization property of $71,367 as of December 31, 2017 and $92,951 as of December 31, 2016) | 1,145,842 | 1,168,058 |
| Deferred fuel costs | 168,122 | 168,122 |
| Other | 18,310 | 16,003 |
| TOTAL | 1,332,274 | 1,822,663 |
| TOTAL ASSETS | $18,448,864 | $17,701,271 |
| See Notes to Financial Statements. |

352
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Currently maturing long-term debt | $675,002 | $200,198 |
| Short-term borrowings | 43,540 | 3,794 |
| Accounts payable: |
| Associated companies | 126,685 | 82,106 |
| Other | 404,374 | 358,741 |
| Customer deposits | 150,623 | 148,601 |
| Taxes accrued | 18,157 | — |
| Interest accrued | 75,528 | 75,598 |
| Deferred fuel costs | 71,447 | 48,211 |
| Other | 79,037 | 80,013 |
| TOTAL | 1,644,393 | 997,262 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 2,050,371 | 2,691,118 |
| Accumulated deferred investment tax credits | 121,870 | 126,741 |
| Regulatory liability for income taxes - net | 725,368 | — |
| Other regulatory liabilities | 761,059 | 880,974 |
| Decommissioning | 1,140,461 | 1,082,685 |
| Accumulated provisions | 302,448 | 310,772 |
| Pension and other postretirement liabilities | 748,384 | 780,278 |
| Long-term debt (includes securitization bonds of $77,736 as of December 31, 2017 and $99,217 as of December 31, 2016) | 5,469,069 | 5,612,593 |
| Other | 176,637 | 137,039 |
| TOTAL | 11,495,667 | 11,622,200 |
| Commitments and Contingencies |
| EQUITY |
| Member’s equity | 5,355,204 | 5,130,251 |
| Accumulated other comprehensive loss | (46,400 | ) | (48,442 | ) |
| TOTAL | 5,308,804 | 5,081,809 |
| TOTAL LIABILITIES AND EQUITY | $18,448,864 | $17,701,271 |
| See Notes to Financial Statements. |

353
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Common Equity |
| Preferred Membership Interests | Member’s Equity | Accumulated Other Comprehensive Income (Loss) | Total |
| (In Thousands) |
| Balance at December 31, 2014 | $110,000 | $4,316,210 | ($79,223 | ) | $4,346,987 |
| Net income | — | 446,639 | — | 446,639 |
| Other comprehensive income | — | — | 22,811 | 22,811 |
| Preferred stock redemption | (110,000 | ) | — | — | (110,000 | ) |
| Non-cash contribution from parent | — | 267,826 | — | 267,826 |
| Distributions to parent | — | (226,000 | ) | — | (226,000 | ) |
| Distributions declared on preferred membership interests | — | (5,737 | ) | — | (5,737 | ) |
| Other | — | (5,214 | ) | — | (5,214 | ) |
| Balance at December 31, 2015 | $— | $4,793,724 | ($56,412 | ) | $4,737,312 |
| Net income | — | 622,047 | — | 622,047 |
| Other comprehensive income | — | — | 7,970 | 7,970 |
| Distributions to parent | — | (285,500 | ) | — | (285,500 | ) |
| Other | — | (20 | ) | — | (20 | ) |
| Balance at December 31, 2016 | $— | $5,130,251 | ($48,442 | ) | $5,081,809 |
| Net income | — | 316,347 | — | 316,347 |
| Other comprehensive income | — | — | 2,042 | 2,042 |
| Distributions declared on common equity | — | (91,250 | ) | — | (91,250 | ) |
| Other | — | (144 | ) | — | (144 | ) |
| Balance at December 31, 2017 | $— | $5,355,204 | ($46,400 | ) | $5,308,804 |
| See Notes to Financial Statements. |

354
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (In Thousands) |
| Operating revenues | $4,300,550 | $4,177,048 | $4,417,146 | $4,740,504 | $4,399,511 |
| Net income | $316,347 | $622,047 | $446,639 | $446,022 | $414,126 |
| Total assets | $18,448,864 | $17,701,271 | $16,387,447 | $16,423,825 | $15,275,863 |
| Long-term obligations (a) | $5,469,069 | $5,612,593 | $4,806,790 | $4,882,813 | $4,383,273 |
| (a) Includes long-term debt (excluding currently maturing debt). |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Millions) |
| Electric Operating Revenues: |
| Residential | $1,198 | $1,196 | $1,292 | $1,358 | $1,304 |
| Commercial | 956 | 930 | 989 | 1,044 | 1,003 |
| Industrial | 1,534 | 1,350 | 1,420 | 1,569 | 1,457 |
| Governmental | 69 | 67 | 67 | 70 | 68 |
| Total retail | 3,757 | 3,543 | 3,768 | 4,041 | 3,832 |
| Sales for resale: |
| Associated companies | 278 | 368 | 406 | 427 | 320 |
| Non-associated companies | 64 | 50 | 36 | 80 | 48 |
| Other | 147 | 165 | 152 | 121 | 140 |
| Total | $4,246 | $4,126 | $4,362 | $4,669 | $4,340 |
| Billed Electric Energy Sales (GWh): |
| Residential | 13,357 | 13,810 | 14,399 | 14,415 | 14,026 |
| Commercial | 11,342 | 11,478 | 11,700 | 11,555 | 11,402 |
| Industrial | 29,754 | 28,517 | 27,713 | 27,025 | 25,734 |
| Governmental | 790 | 794 | 756 | 732 | 723 |
| Total retail | 55,243 | 54,599 | 54,568 | 53,727 | 51,885 |
| Sales for resale: |
| Associated companies | 4,793 | 7,345 | 7,500 | 6,240 | 5,168 |
| Non-associated companies | 1,711 | 1,690 | 770 | 1,051 | 979 |
| Total | 61,747 | 63,634 | 62,838 | 61,018 | 58,032 |

355
ENTERGY MISSISSIPPI, INC.
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
2017 Compared to 2016
Net income increased $0.8 million primarily due to higher other income, lower other operation and maintenance expenses, and lower interest expense, substantially offset by higher depreciation and amortization expenses and a higher effective income tax rate.
2016 Compared to 2015
Net income increased $16.5 million primarily due to lower other operation and maintenance expenses, higher net revenues, and a lower effective income tax rate, partially offset by higher depreciation and amortization expenses.
Net Revenue
2017 Compared to 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory credits. Following is an analysis of the change in net revenue comparing 2017 to 2016.
| Amount |
| (In Millions) |
| 2016 net revenue | $705.4 |
| Volume/weather | (18.2 | ) |
| Retail electric price | 13.5 |
| Other | 2.4 |
| 2017 net revenue | $703.1 |

The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales.
The retail electric price variance is primarily due to a $19.4 million net annual increase in rates, effective with the first billing cycle of July 2016, and an increase in the energy efficiency rider, effective with the first billing cycle of February 2017, each as approved by the MPSC. The increase was partially offset by decreased storm damage rider revenues due to resetting the storm damage provision to zero beginning with the November 2016 billing cycle. Entergy Mississippi resumed billing the storm damage rider effective with the September 2017 billing cycle. See Note 2 to the financial statements for more discussion of the formula rate plan and the storm damage rider.
356
Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
2016 Compared to 2015
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges (credits). Following is an analysis of the change in net revenue comparing 2016 to 2015.
| Amount |
| (In Millions) |
| 2015 net revenue | $696.3 |
| Retail electric price | 12.9 |
| Volume/weather | 4.7 |
| Net wholesale revenue | (2.4 | ) |
| Reserve equalization | (2.8 | ) |
| Other | (3.3 | ) |
| 2016 net revenue | $705.4 |

The retail electric price variance is primarily due to a $19.4 million net annual increase in revenues, as approved by the MPSC, effective with the first billing cycle of July 2016, and an increase in revenues collected through the storm damage rider. See Note 2 to the financial statements for more discussion of the formula rate plan and the storm damage rider.
The volume/weather variance is primarily due to an increase of 153 GWh, or 1%, in billed electricity usage, including an increase in industrial usage, partially offset by the effect of less favorable weather on residential and commercial sales. The increase in industrial usage is primarily due to expansion projects in the pulp and paper industry, increased demand for existing customers, primarily in the metals industry, and new customers in the wood products industry.
The net wholesale revenue variance is primarily due to Entergy Mississippi’s exit from the System Agreement in November 2015.
The reserve equalization revenue variance is primarily due to the absence of reserve equalization revenue as compared to the same period in 2015 resulting from Entergy Mississippi’s exit from the System Agreement in November 2015.
Other Income Statement Variances
2017 Compared to 2016
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $12 million in fossil-fueled generation expenses primarily due to lower long-term service agreement costs and a lower scope of work done during plant outages in 2017 as compared to the same period in 2016; and |

| • | a decrease of $3.6 million in storm damage provisions. See Note 2 to the financial statements for a discussion on storm cost recovery. |

The decrease was partially offset by an increase of $4.8 million in energy efficiency costs and an increase of $2.7 million in compensation and benefits costs primarily due to higher incentive-based compensation accruals in 2017 as compared to the prior year.
357
Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Other income increased primarily due to interest income recorded in connection with the opportunity sales proceeding, interest income recorded on the deferred fuel balance, and an increase in the allowance for equity funds used during construction due to higher construction work in progress in 2017 as compared to 2016. See Note 2 to the financial statements for further discussion of the opportunity sales proceeding.
Interest expense decreased primarily due to the refinancing at lower interest rates of certain first mortgage bonds in 2016 and the retirement, at maturity, of $125 million of 3.25% Series first mortgage bonds in June 2016. See Note 5 to the financial statements for details of long-term debt.
2016 Compared to 2015
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $9.4 million in fossil-fueled generation expenses primarily due to a lower scope of work done during plant outages in 2016 as compared to the same period in 2015; |

| • | a decrease of $6.1 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits costs as a result of an increase in the discount rate used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefit costs; |

| • | a decrease of $2 million due to lower write-offs of uncollectible customer accounts in 2016; |

| • | a decrease of $2 million in energy efficiency costs; and |

| • | several individually insignificant items. |

The decrease was partially offset by an increase of $7.1 million in storm damage provisions and an increase of $6 million in distribution expenses primarily due to higher vegetation maintenance. See Note 2 to the financial statements for a discussion of storm cost recovery.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 40.2%, 36.9%, and 40.0%, respectively. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
358
Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $76,834 | $145,605 | $61,633 |
| Net cash provided by (used in): |
| Operating activities | 226,585 | 212,280 | 372,279 |
| Investing activities | (417,226 | ) | (289,444 | ) | (245,127 | ) |
| Financing activities | 119,903 | 8,393 | (43,180 | ) |
| Net increase (decrease) in cash and cash equivalents | (70,738 | ) | (68,771 | ) | 83,972 |
| Cash and cash equivalents at end of period | $6,096 | $76,834 | $145,605 |

Operating Activities
Net cash flow provided by operating activities increased $14.3 million in 2017 primarily due to the timing of recovery of fuel and purchased power costs in 2017 as compared to 2016 and an increase of $12.6 million in income tax refunds in 2017 as compared to 2016. Entergy Mississippi had income tax refunds in 2017 and 2016 in accordance with an intercompany income tax allocation agreement. The 2017 income tax refunds were primarily due to the utilization of Entergy Mississippi’s federal net operating losses and state income tax refunds resulting from the carryback of net operating losses. The increase was partially offset by the timing of payments to vendors.
Net cash flow provided by operating activities decreased $160 million in 2016 primarily due to the timing of recovery of fuel and purchased power costs in 2016 as compared to the same period in 2015 and $15.3 million in insurance proceeds received in 2015 related to the unplanned outage event that occurred at the Baxter Wilson (Unit 1) power plant in September 2013. The decrease was partially offset by income tax refunds of $12.5 million in 2016 compared to income tax payments of $61.3 million in 2015. Entergy Mississippi had income tax refunds in 2016 and income tax payments in 2015 in accordance with an intercompany income tax allocation agreement. The 2016 income tax refunds resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit whereas the income tax payments in 2015 were primarily due to the results of operations and the reversal of taxable temporary differences as well as final settlement of amounts outstanding associated with the 2006-2007 IRS audit. See Note 3 to the financial statements for a discussion of the income tax audits.
Investing Activities
Net cash flow used in investing activities increased $127.8 million in 2017 primarily due to:
| • | an increase of $48.4 million in transmission construction expenditures primarily due to a higher scope of work performed in 2017 as compared to 2016; |

| • | an increase of $39.2 million in fossil-fueled generation construction expenditures primarily due to a higher scope of work performed in 2017 as compared to 2016; and |

| • | an increase of $30.2 million in distribution construction expenditures primarily due to an increase in storm spending in 2017 as compared to 2016 and increased spending on digital technology improvements within the customer contact centers. |

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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Net cash flow used in investing activities increased $44.3 million in 2016 primarily due to:
| • | an increase of $72.4 million in transmission construction expenditures primarily due to a higher scope of work performed in 2016 as compared to 2015; |

| • | insurance proceeds of $12.9 million received in 2015 related to the unplanned outage event that occurred at the Baxter Wilson (Unit 1) power plant in September 2013; |

| • | an increase of $11.4 million in distribution construction expenditures primarily due to a higher scope of non-storm related work performed in 2016 as compared to 2015; and |

| • | an increase of $10.1 million due to various information technology projects and upgrades. |

The increase was partially offset by a decrease of $20.1 million in fossil-fueled generation construction expenditures primarily due to a decreased scope of work performed during plant outages in 2016 as compared to 2015 and money pool activity.
Decreases in Entergy Mississippi’s receivable from the money pool are a source of cash flow, and Entergy Mississippi’s receivable from the money pool decreased by $15.3 million in 2016 compared to increasing by $25.3 million in 2015. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Financing Activities
Net cash flow provided by financing activities increased $111.5 million in 2017 primarily due to the issuance of $150 million of 3.25% Series first mortgage bonds in November 2017 and the redemption of $30 million of 6.25% Series preferred stock in 2016, partially offset by the net issuance of $61.4 million of long-term debt in 2016.
Entergy Mississippi’s financing activities provided $8.4 million of cash in 2016 compared to using $43.2 million in 2015 primarily due to the net issuance of $61.4 million of long-term debt in 2016 and a decrease of $16 million in common stock dividends paid in 2016, partially offset by the redemption of $30 million of 6.25% Series preferred stock. The decrease in dividends paid was primarily because of lower operating cash flows and higher capital expenditures, each discussed above.
See Note 5 to the financial statements for details on long-term debt.
Capital Structure
Entergy Mississippi’s capitalization is balanced between equity and debt, as shown in the following table. The increase in the debt to capital ratio for Entergy Mississippi is primarily due to the issuance of long-term debt in 2017.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 51.5 | % | 50.2 | % |
| Effect of subtracting cash | (0.2 | %) | (1.8 | %) |
| Net debt to net capital | 51.3 | % | 48.4 | % |

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, capital lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, preferred stock without sinking fund, and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Mississippi uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Mississippi’s financial condition. Entergy Mississippi uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
and creditors in evaluating Entergy Mississippi’s financial condition because net debt indicates Entergy Mississippi’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Mississippi seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Mississippi may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure. In addition, in certain infrequent circumstances, such as large transactions that would materially alter the capital structure if financed entirely with debt and reducing dividends, Entergy Mississippi may receive equity contributions to maintain the targeted capital structure.
Uses of Capital
Entergy Mississippi requires capital resources for:
| • | construction and other capital investments; |

| • | debt and preferred stock maturities or retirements; |

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

| • | dividend and interest payments. |

Following are the amounts of Entergy Mississippi’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $55 | $45 | $260 |
| Transmission | 145 | 100 | 105 |
| Distribution | 125 | 140 | 130 |
| Utility Support | 70 | 50 | 35 |
| Total | $395 | $335 | $530 |

Following are the amounts of Entergy Mississippi’s existing debt obligations and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | After 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $50 | $234 | $80 | $1,784 | $2,148 |
| Operating leases | $12 | $19 | $12 | $6 | $49 |
| Purchase obligations (b) | $280 | $519 | $490 | $5,304 | $6,593 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For Entergy Mississippi, almost all of the total consists of unconditional fuel and purchased power obligations, including its obligations under the Unit Power Sales Agreement, which is discussed in Note 8 to the financial statements. |

In addition to the contractual obligations given above, Entergy Mississippi currently expects to contribute approximately $14.9 million to its qualified pension plans and approximately $110 thousand to other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018 See “Critical Accounting Estimates
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
– Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Mississippi includes amounts associated with specific investments such as transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including investment to support advanced metering; resource planning, including potential generation projects; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital. Management provides more information on long-term debt and preferred stock maturities in Notes 5 and 6 to the financial statements.
As a wholly-owned subsidiary, Entergy Mississippi dividends its earnings to Entergy Corporation at a percentage determined monthly. Provisions in Entergy Mississippi’s articles of incorporation relating to preferred stock restrict the amount of retained earnings available for the payment of cash dividends or other distributions on its common and preferred stock.
Advanced Metering Infrastructure (AMI)
In November 2016, Entergy Mississippi filed an application seeking an order from the MPSC granting a certificate of public convenience and necessity and finding that Entergy Mississippi’s deployment of AMI is in the public interest. Entergy Mississippi proposed to replace existing meters with advanced meters that enable two-way data communication; to design and build a secure and reliable network to support such communications; and to implement support systems. AMI is intended to serve as the foundation of Entergy Mississippi’s modernized power grid. The filing included an estimate of implementation costs for AMI of $132 million. The filing identified a number of quantified and unquantified benefits, and Entergy Mississippi provided a cost benefit analysis showing that its AMI deployment is expected to produce a nominal benefit to customers of $496 million over a 15-year period, which when netted against the costs of AMI results in $183 million of net customer benefits. Entergy Mississippi also sought to continue to include in rate base the remaining book value, approximately $56 million at December 31, 2015, of existing meters that will be retired as part of the AMI deployment and also to depreciate those assets using current depreciation rates. Entergy Mississippi proposed a 15-year depreciable life for the new advanced meters, the three-year deployment of which is expected to begin in 2019, subject to approval by the MPSC, with deployment of the communications network expected to begin in 2018. Entergy Mississippi proposed to include the AMI deployment costs and the quantified benefits in existing rate mechanisms, primarily through future formula rate plan filings and/or future energy cost recovery rider schedule re-determinations, as applicable. In May 2017 the Mississippi Public Utilities Staff and Entergy Mississippi entered into and filed a joint stipulation supporting Entergy Mississippi’s filing, and the MPSC issued an order approving the filing without material changes, finding that Entergy Mississippi’s deployment of AMI is in the public interest and granting a certificate of public convenience and necessity. The MPSC order also confirmed that Entergy Mississippi shall continue to include in rate base the remaining book value of existing meters that will be retired as part of the AMI deployment and also to depreciate those assets using current depreciation rates.
Sources of Capital
Entergy Mississippi’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt or preferred stock issuances; and |

| • | bank financing under new or existing facilities. |

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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Entergy Mississippi may refinance, redeem, or otherwise retire debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.
All debt and common and preferred stock issuances by Entergy Mississippi require prior regulatory approval. Preferred stock and debt issuances are also subject to issuance tests set forth in its corporate charter, bond indenture, and other agreements. Entergy Mississippi has sufficient capacity under these tests to meet its foreseeable capital needs.
Entergy Mississippi’s receivables from the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| $1,633 | $10,595 | $25,930 | $644 |

See Note 4 to the financial statements for a description of the money pool.
Entergy Mississippi has four separate credit facilities in the aggregate amount of $102.5 million scheduled to expire May 2018. No borrowings were outstanding under the credit facilities as of December 31, 2017. In addition, Entergy Mississippi is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2017, a $15.3 million letter of credit was outstanding under Entergy Mississippi’s uncommitted letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy Mississippi obtained authorizations from the FERC through October 2019 for short-term borrowings not to exceed an aggregate amount of $175 million at any time outstanding and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Mississippi’s short-term borrowing limits.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Mississippi charges for electricity significantly influence its financial position, results of operations, and liquidity. Entergy Mississippi is regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the MPSC, is primarily responsible for approval of the rates charged to customers.
Formula Rate Plan
In March 2016, Entergy Mississippi submitted its formula rate plan 2016 test year filing showing Entergy Mississippi’s projected earned return for the 2016 calendar year to be below the formula rate plan bandwidth. The filing showed a $32.6 million rate increase was necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 9.96%, within the formula rate plan bandwidth. In June 2016 the MPSC approved Entergy Mississippi’s joint stipulation with the Mississippi Public Utilities Staff. The joint stipulation provided for a total revenue increase of $23.7 million. The revenue increase includes a $19.4 million increase through the formula rate plan, resulting in a return on common equity point of adjustment of 10.07%. The revenue increase also includes $4.3 million in incremental ad valorem tax expenses to be collected through an updated ad valorem tax adjustment rider. The revenue increase and ad valorem tax adjustment rider were effective with the July 2016 bills.
In March 2017, Entergy Mississippi submitted its formula rate plan 2017 test year filing and 2016 look-back filing showing Entergy Mississippi’s earned return for the historical 2016 calendar year and projected earned return for the 2017 calendar year to be within the formula rate plan bandwidth, resulting in no change in rates. In June 2017, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a stipulation that confirmed that Entergy
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Mississippi’s earned returns for both the 2016 look-back filing and 2017 test year were within the respective formula rate plan bandwidths. In June 2017 the MPSC approved the stipulation, which resulted in no change in rates.
Fuel and Purchased Power Cost Recovery
Entergy Mississippi’s rate schedules include an energy cost recovery rider that is adjusted annually to reflect accumulated over- or under-recoveries. Entergy Mississippi’s fuel cost recoveries are subject to annual audits conducted pursuant to the authority of the MPSC.
Entergy Mississippi had a deferred fuel over-recovery balance of $58.3 million as of May 31, 2015, along with an under-recovery balance of $12.3 million under the power management rider. Pursuant to those tariffs, in July 2015, Entergy Mississippi filed for interim adjustments under both the energy cost recovery rider and the power management rider to flow through to customers the approximately $46 million net over-recovery over a six-month period. In August 2015, the MPSC approved the interim adjustments effective with September 2015 bills. In November 2015, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included a projected over-recovery balance of $48 million projected through January 31, 2016. In January 2016 the MPSC approved the redetermined annual factor effective February 1, 2016. The MPSC further ordered, however, that due to the significant change in natural gas price forecasts since Entergy Mississippi’s filing in November 2015 Entergy Mississippi should file a revised fuel factor with the MPSC no later than February 1, 2016. Pursuant to that order, Entergy Mississippi submitted a revised fuel factor. Additionally, because Entergy Mississippi’s projected over-recovery balance for the period ending January 31, 2016 was $68 million, in February 2016, Entergy Mississippi filed for another interim adjustment to the energy cost factor effective April 2016 to flow through to customers the projected over-recovery balance over a six-month period. That interim adjustment was approved by the MPSC in February 2016 effective for April 2016 bills.
In November 2016, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an over-recovery of less than $2 million as of September 30, 2016. In January 2017 the MPSC approved the annual factor effective with February 2017 bills. Also in January 2017 the MPSC certified to the Mississippi Legislature the audit reports of its independent auditors for the fuel year ending September 30, 2016. In its order, the MPSC expressly reserved the right to review and determine the recoverability of any and all purchased power expenditures made during fiscal year 2016. The MPSC hired independent auditors to conduct an annual operations audit and a financial audit. The independent auditors issued their audit reports in December 2017. The audit reports included several recommendations for action by Entergy Mississippi but did not recommend any cost disallowances. In January 2018 the MPSC certified the audit reports to the Mississippi Legislature. In November 2017 the Public Utilities Staff separately engaged a consultant to review the outage at the Grand Gulf Nuclear Station that began in 2016. The review is currently in progress.
In November 2017, Entergy Mississippi filed its annual redetermination of the annual factor to be applied under the energy cost recovery rider. The calculation of the annual factor included an under-recovery of approximately $61.5 million as of September 30, 2017. Entergy Mississippi proposed a two-tiered energy cost factor designed to promote overall rate stability throughout 2018 particularly during the summer months. In January 2018 the MPSC approved the proposed energy cost factors effective for February 2018 bills.
Mississippi Attorney General Complaint
The Mississippi attorney general filed a complaint in state court in December 2008 against Entergy Corporation, Entergy Mississippi, Entergy Services, and Entergy Power alleging, among other things, violations of Mississippi statutes, fraud, and breach of good faith and fair dealing, and requesting an accounting and restitution. The complaint is wide ranging and relates to tariffs and procedures under which Entergy Mississippi purchases power not generated in Mississippi to meet electricity demand. Entergy believes the complaint is unfounded. In December 2008 the defendant Entergy companies removed the Attorney General’s lawsuit to U.S. District Court in Jackson, Mississippi. The Mississippi attorney general moved to remand the matter to state court. In August 2012 the District
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Court issued an opinion denying the Attorney General’s motion for remand, finding that the District Court has subject matter jurisdiction under the Class Action Fairness Act.
The defendant Entergy companies answered the complaint and filed a counterclaim for relief based upon the Mississippi Public Utilities Act and the Federal Power Act. In May 2009 the defendant Entergy companies filed a motion for judgment on the pleadings asserting grounds of federal preemption, the exclusive jurisdiction of the MPSC, and factual errors in the Attorney General’s complaint. In September 2012 the District Court heard oral argument on Entergy’s motion for judgment on the pleadings.
In January 2014 the U.S. Supreme Court issued a decision in which it held that cases brought by attorneys general as the sole plaintiff to enforce state laws were not considered “mass actions” under the Class Action Fairness Act, so as to establish federal subject matter jurisdiction. One day later the Attorney General renewed his motion to remand the Entergy case back to state court, citing the U.S. Supreme Court’s decision. The defendant Entergy companies responded to that motion reiterating the additional grounds asserted for federal question jurisdiction, and the District Court held oral argument on the renewed motion to remand in February 2014. In April 2015 the District Court entered an order denying the renewed motion to remand, holding that the District Court has federal question subject matter jurisdiction. The Attorney General appealed to the U.S. Fifth Circuit Court of Appeals the denial of the motion to remand. In July 2015 the Fifth Circuit issued an order denying the appeal, and the Attorney General subsequently filed a petition for rehearing of the request for interlocutory appeal, which was also denied. In December 2015 the District Court ordered that the parties submit to the court undisputed and disputed facts that are material to the Entergy defendants’ motion for judgment on the pleadings, as well as supplemental briefs regarding the same. Those filings were made in January 2016.
In September 2016 the Attorney General filed a mandamus petition with the U.S. Fifth Circuit Court of Appeals in which the Attorney General asked the Fifth Circuit to order the chief judge to reassign this case to another judge. In September 2016 the District Court denied the Entergy companies’ motion for judgment on the pleadings. The Entergy companies filed a motion seeking to amend the District Court’s order denying the Entergy companies’ motion for judgment on the pleadings and allowing an interlocutory appeal. In October 2016 the Fifth Circuit granted the Attorney General’s motion for writ of mandamus and directed the chief judge to assign the case to a new judge. The case was reassigned in October 2016. In January 2017 the District Court denied the Entergy companies’ motion to amend the order denying the motion for judgment on the pleadings. In June 2017 the District Court issued a case management order setting a trial date in November 2018. Discovery is currently in progress.
Storm Damage Provision
Entergy Mississippi has approval from the MPSC to collect a storm damage provision of $1.75 million per month. If Entergy Mississippi’s accumulated storm damage provision balance exceeds $15 million, the collection of the storm damage provision ceases until such time that the accumulated storm damage provision becomes less than $10 million. As of April 30, 2016, Entergy Mississippi’s storm damage provision balance was less than $10 million, therefore Entergy Mississippi resumed billing the monthly storm damage provision effective with June 2016 bills. As of September 30, 2016, however, Entergy Mississippi’s storm damage provision balance again exceeded $15 million. Accordingly the storm damage provision was reset to zero beginning with November 2016 bills. As of July 31, 2017, the balance in Entergy Mississippi’s accumulated storm damage provision was again less than $10 million, therefore Entergy Mississippi resumed billing the monthly storm damage provision effective with September 2017 bills.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Environmental Risks
Entergy Mississippi’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Mississippi is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy Mississippi’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and there is the potential for future changes in the assumptions and measurements that could produce estimates that would have a material impact on the presentation of Entergy Mississippi’s financial position or results of operations.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Unbilled Revenue
See “Unbilled Revenue” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the unbilled revenue amounts.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Mississippi’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Projected Qualified Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $874 | $13,479 |
| Rate of return on plan assets | (0.25%) | $867 | $— |
| Rate of increase in compensation | 0.25% | $381 | $1,848 |

The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated Postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $184 | $2,561 |
| Health care cost trend | 0.25% | $296 | $2,024 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for Entergy Mississippi in 2017 was $8.5 million. Entergy Mississippi anticipates 2018 qualified pension cost to be $10.8 million. In 2016, Entergy Mississippi refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $3.8 million. Entergy Mississippi contributed $19.1 million to its qualified pension plans in 2017 and estimates 2018 pension contributions will be approximately $14.9 million, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total postretirement health care and life insurance benefit income for Entergy Mississippi in 2017 was $1 million. Entergy Mississippi expects 2018 postretirement health care and life insurance benefit income of approximately $1.5 million. In 2016, Entergy Mississippi refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $770 thousand. In 2017, Entergy Mississippi’s contributions (that is, contributions to the external trusts plus claims payments) were offset by trust claims reimbursements, resulting in a net reimbursement of $2 thousand. Entergy Mississippi estimates that 2018 contributions will be approximately $110 thousand.
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Entergy Mississippi, Inc.Management’s Financial Discussion and Analysis
Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
368
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Mississippi, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Entergy Mississippi, Inc. (the “Company”) as of December 31, 2017 and 2016, the related statements of income, cash flows and changes in common equity (pages 370 through 374 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
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| ENTERGY MISSISSIPPI, INC. |
| INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $1,198,229 | $1,094,649 | $1,396,985 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 185,816 | 95,090 | 291,666 |
| Purchased power | 328,463 | 297,902 | 389,950 |
| Other operation and maintenance | 243,480 | 250,443 | 261,255 |
| Taxes other than income taxes | 95,051 | 94,482 | 94,152 |
| Depreciation and amortization | 143,479 | 136,214 | 129,029 |
| Other regulatory charges (credits) - net | (19,134 | ) | (3,721 | ) | 19,027 |
| TOTAL | 977,155 | 870,410 | 1,185,079 |
| OPERATING INCOME | 221,074 | 224,239 | 211,906 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 9,667 | 5,801 | 3,095 |
| Interest and investment income | 85 | 656 | 195 |
| Miscellaneous - net | 510 | (3,531 | ) | (4,418 | ) |
| TOTAL | 10,262 | 2,926 | (1,128 | ) |
| INTEREST EXPENSE |
| Interest expense | 51,260 | 57,114 | 57,842 |
| Allowance for borrowed funds used during construction | (3,875 | ) | (2,987 | ) | (1,644 | ) |
| TOTAL | 47,385 | 54,127 | 56,198 |
| INCOME BEFORE INCOME TAXES | 183,951 | 173,038 | 154,580 |
| Income taxes | 73,919 | 63,854 | 61,872 |
| NET INCOME | 110,032 | 109,184 | 92,708 |
| Preferred dividend requirements and other | 953 | 2,443 | 2,828 |
| EARNINGS APPLICABLE TO COMMON STOCK | $109,079 | $106,741 | $89,880 |
| See Notes to Financial Statements. |

370
| ENTERGY MISSISSIPPI, INC. |
| STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $110,032 | $109,184 | $92,708 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation and amortization | 143,479 | 136,214 | 129,029 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 84,816 | 60,986 | 18,673 |
| Changes in assets and liabilities: |
| Receivables | (29,528 | ) | (28,819 | ) | 50,199 |
| Fuel inventory | 5,266 | 401 | (8,537 | ) |
| Accounts payable | 3,595 | 33,733 | (26,682 | ) |
| Taxes accrued | 18,803 | 20,579 | (10,104 | ) |
| Interest accrued | 1,248 | 822 | (2,341 | ) |
| Deferred fuel costs | (25,487 | ) | (114,711 | ) | 105,560 |
| Other working capital accounts | 5,115 | (5,222 | ) | (663 | ) |
| Provisions for estimated losses | (9,676 | ) | 6,378 | (2,080 | ) |
| Other regulatory assets | (17,412 | ) | (3,626 | ) | 39,582 |
| Other regulatory liabilities | 405,395 | (2,986 | ) | 9,172 |
| Deferred tax rate change recognized as regulatory liability/asset | (452,429 | ) | — | — |
| Pension and other postretirement liabilities | (8,055 | ) | (10,648 | ) | (14,939 | ) |
| Other assets and liabilities | (8,577 | ) | 9,995 | (7,298 | ) |
| Net cash flow provided by operating activities | 226,585 | 212,280 | 372,279 |
| INVESTING ACTIVITIES |
| Construction expenditures | (427,616 | ) | (310,356 | ) | (235,894 | ) |
| Allowance for equity funds used during construction | 9,667 | 5,801 | 3,095 |
| Insurance proceeds | — | — | 12,932 |
| Changes in money pool receivable - net | 8,962 | 15,335 | (25,286 | ) |
| Payment for purchase of assets | (6,958 | ) | — | — |
| Other | (1,281 | ) | (224 | ) | 26 |
| Net cash flow used in investing activities | (417,226 | ) | (289,444 | ) | (245,127 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | 148,185 | 623,812 | — |
| Retirement of long-term debt | — | (562,400 | ) | — |
| Redemption of preferred stock | — | (30,000 | ) | — |
| Dividends paid: |
| Common stock | (26,000 | ) | (24,000 | ) | (40,000 | ) |
| Preferred stock | (953 | ) | (2,755 | ) | (2,828 | ) |
| Other | (1,329 | ) | 3,736 | (352 | ) |
| Net cash flow provided by (used in) financing activities | 119,903 | 8,393 | (43,180 | ) |
| Net increase (decrease) in cash and cash equivalents | (70,738 | ) | (68,771 | ) | 83,972 |
| Cash and cash equivalents at beginning of period | 76,834 | 145,605 | 61,633 |
| Cash and cash equivalents at end of period | $6,096 | $76,834 | $145,605 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $47,631 | $53,693 | $57,576 |
| Income taxes | ($25,043 | ) | ($12,487 | ) | $61,333 |
| See Notes to Financial Statements. |

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| ENTERGY MISSISSIPPI, INC. |
| BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents: |
| Cash | $1,607 | $16 |
| Temporary cash investments | 4,489 | 76,818 |
| Total cash and cash equivalents | 6,096 | 76,834 |
| Accounts receivable: |
| Customer | 72,039 | 51,218 |
| Allowance for doubtful accounts | (574 | ) | (549 | ) |
| Associated companies | 45,081 | 45,973 |
| Other | 9,738 | 12,006 |
| Accrued unbilled revenues | 54,256 | 51,327 |
| Total accounts receivable | 180,540 | 159,975 |
| Deferred fuel costs | 32,444 | 6,957 |
| Fuel inventory - at average cost | 45,606 | 50,872 |
| Materials and supplies - at average cost | 42,571 | 41,146 |
| Prepayments and other | 7,041 | 8,873 |
| TOTAL | 314,298 | 344,657 |
| OTHER PROPERTY AND INVESTMENTS |
| Non-utility property - at cost (less accumulated depreciation) | 4,592 | 4,608 |
| Escrow accounts | 31,969 | 31,783 |
| TOTAL | 36,561 | 36,391 |
| UTILITY PLANT |
| Electric | 4,660,297 | 4,321,214 |
| Property under capital lease | 125 | 1,590 |
| Construction work in progress | 149,367 | 118,182 |
| TOTAL UTILITY PLANT | 4,809,789 | 4,440,986 |
| Less - accumulated depreciation and amortization | 1,681,306 | 1,602,711 |
| UTILITY PLANT - NET | 3,128,483 | 2,838,275 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Regulatory asset for income taxes - net | — | 38,284 |
| Other regulatory assets | 397,909 | 342,213 |
| Other | 2,124 | 2,320 |
| TOTAL | 400,033 | 382,817 |
| TOTAL ASSETS | $3,879,375 | $3,602,140 |
| See Notes to Financial Statements. |

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| ENTERGY MISSISSIPPI, INC. |
| BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Accounts payable: |
| Associated companies | $55,689 | $43,647 |
| Other | 77,326 | 80,227 |
| Customer deposits | 83,654 | 84,112 |
| Taxes accrued | 82,843 | 64,040 |
| Interest accrued | 22,901 | 21,653 |
| Other | 12,785 | 9,554 |
| TOTAL | 335,198 | 303,233 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 488,806 | 861,331 |
| Accumulated deferred investment tax credits | 8,867 | 8,667 |
| Regulatory liability for income taxes - net | 411,011 | — |
| Asset retirement cost liabilities | 9,219 | 8,722 |
| Accumulated provisions | 44,764 | 54,440 |
| Pension and other postretirement liabilities | 101,498 | 109,551 |
| Long-term debt | 1,270,122 | 1,120,916 |
| Other | 11,639 | 20,108 |
| TOTAL | 2,345,926 | 2,183,735 |
| Commitments and Contingencies |
| Preferred stock without sinking fund | 20,381 | 20,381 |
| COMMON EQUITY |
| Common stock, no par value, authorized 12,000,000 shares; issued and outstanding 8,666,357 shares in 2017 and 2016 | 199,326 | 199,326 |
| Capital stock expense and other | 167 | 167 |
| Retained earnings | 978,377 | 895,298 |
| TOTAL | 1,177,870 | 1,094,791 |
| TOTAL LIABILITIES AND EQUITY | $3,879,375 | $3,602,140 |
| See Notes to Financial Statements. |

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| ENTERGY MISSISSIPPI, INC. |
| STATEMENTS OF CHANGES IN COMMON EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Common Equity |
| Common Stock | Capital Stock Expense and Other | Retained Earnings | Total |
| (In Thousands) |
| Balance at December 31, 2014 | $199,326 | ($690 | ) | $763,534 | $962,170 |
| Net income | — | — | 92,708 | 92,708 |
| Common stock dividends | — | — | (40,000 | ) | (40,000 | ) |
| Preferred stock dividends | — | — | (2,828 | ) | (2,828 | ) |
| Balance at December 31, 2015 | $199,326 | ($690 | ) | $813,414 | $1,012,050 |
| Net income | — | — | 109,184 | 109,184 |
| Common stock dividends | — | — | (24,000 | ) | (24,000 | ) |
| Preferred stock dividends | — | — | (2,443 | ) | (2,443 | ) |
| Preferred stock redemption | — | 857 | (857 | ) | — |
| Balance at December 31, 2016 | $199,326 | $167 | $895,298 | $1,094,791 |
| Net income | — | — | 110,032 | 110,032 |
| Common stock dividends | — | — | (26,000 | ) | (26,000 | ) |
| Preferred stock dividends | — | — | (953 | ) | (953 | ) |
| Balance at December 31, 2017 | $199,326 | $167 | $978,377 | $1,177,870 |
| See Notes to Financial Statements. |

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| ENTERGY MISSISSIPPI, INC. |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (In Thousands) |
| Operating revenues | $1,198,229 | $1,094,649 | $1,396,985 | $1,524,193 | $1,334,540 |
| Net income | $110,032 | $109,184 | $92,708 | $74,821 | $82,159 |
| Total assets | $3,879,375 | $3,602,140 | $3,477,407 | $3,358,625 | $3,234,875 |
| Long-term obligations (a) | $1,290,503 | $1,141,924 | $972,058 | $1,097,182 | $1,092,786 |
| (a) Includes long-term debt (excluding currently maturing debt), non-current capital lease obligations, and preferred stock without sinking fund. |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Millions) |
| Electric Operating Revenues: |
| Residential | $502 | $459 | $565 | $585 | $527 |
| Commercial | 423 | 374 | 465 | 481 | 432 |
| Industrial | 159 | 134 | 164 | 175 | 156 |
| Governmental | 41 | 38 | 47 | 47 | 42 |
| Total retail | 1,125 | 1,005 | 1,241 | 1,288 | 1,157 |
| Sales for resale: |
| Associated companies | — | 1 | 75 | 153 | 92 |
| Non-associated companies | 18 | 30 | 10 | 14 | 24 |
| Other | 55 | 59 | 71 | 69 | 62 |
| Total | $1,198 | $1,095 | $1,397 | $1,524 | $1,335 |
| Billed Electric Energy Sales (GWh): |
| Residential | 5,308 | 5,617 | 5,661 | 5,672 | 5,629 |
| Commercial | 4,783 | 4,894 | 4,913 | 4,821 | 4,815 |
| Industrial | 2,536 | 2,493 | 2,283 | 2,297 | 2,265 |
| Governmental | 421 | 439 | 433 | 414 | 409 |
| Total retail | 13,048 | 13,443 | 13,290 | 13,204 | 13,118 |
| Sales for resale: |
| Associated companies | — | — | 1,419 | 2,657 | 1,543 |
| Non-associated companies | 857 | 1,021 | 261 | 193 | 304 |
| Total | 13,905 | 14,464 | 14,970 | 16,054 | 14,965 |

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ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Internal Restructuring
In July 2016, Entergy New Orleans filed an application with the City Council seeking authorization to undertake a restructuring that would result in the transfer of substantially all of the assets and operations of Entergy New Orleans, Inc. to a new entity, which would ultimately be owned by an existing Entergy subsidiary holding company. The restructuring was subject to regulatory review and approval by the City Council and the FERC. In May 2017 the City Council adopted a resolution approving the proposed internal restructuring pursuant to an agreement in principle with the City Council advisors and certain intervenors. Pursuant to the agreement in principle, Entergy New Orleans would credit retail customers $10 million in 2017, $1.4 million in the first quarter of the year after the transaction closes, and $117,500 each month in the second year after the transaction closes until such time as new base rates go into effect as a result of the anticipated 2018 base rate case. Entergy New Orleans began crediting retail customers in June 2017. In June 2017 the FERC approved the transaction and, pursuant to the agreement in principle, Entergy New Orleans will provide additional credits to retail customers of $5 million in each of the years 2018, 2019, and 2020.
In November 2017, pursuant to the agreement in principle, Entergy New Orleans undertook a multi-step restructuring, including the following:
| • | Entergy New Orleans, Inc. redeemed its outstanding preferred stock at a price of approximately $21 million, which included a call premium of approximately $819,000, plus any accumulated and unpaid dividends. |

| • | Entergy New Orleans, Inc. converted from a Louisiana corporation to a Texas corporation. |

| • | Under the Texas Business Organizations Code (TXBOC), Entergy New Orleans, Inc. allocated substantially all of its assets to a new subsidiary, Entergy New Orleans Power, LLC, a Texas limited liability company (Entergy New Orleans Power), and Entergy New Orleans Power assumed substantially all of the liabilities of Entergy New Orleans, Inc. in a transaction regarded as a merger under the TXBOC. Entergy New Orleans, Inc. remained in existence and held the membership interests in Entergy New Orleans Power. |

| • | Entergy New Orleans, Inc. contributed the membership interests in Entergy New Orleans Power to an affiliate (Entergy Utility Holding Company, LLC, a Texas limited liability company and subsidiary of Entergy Corporation). As a result of the contribution, Entergy New Orleans Power is a wholly-owned subsidiary of Entergy Utility Holding Company, LLC. |

In December 2017, Entergy New Orleans, Inc. changed its name to Entergy Utility Group, Inc., and Entergy New Orleans Power then changed its name to Entergy New Orleans, LLC. Entergy New Orleans, LLC holds substantially all of the assets, and has assumed substantially all of the liabilities, of Entergy New Orleans, Inc. The restructuring was accounted for as a transaction between entities under common control.
Results of Operations
Net Income
2017 Compared to 2016
Net income decreased $4.3 million primarily due to higher taxes other than income taxes, lower net revenue, and a higher effective income tax rate, partially offset by lower other operation and maintenance expenses and higher other income.
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
2016 Compared to 2015
Net income increased $3.9 million primarily due to higher net revenue, partially offset by higher depreciation and amortization expenses, higher interest expense, and lower other income.
Net Revenue
2017 Compared to 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenue comparing 2017 to 2016.
| Amount |
| (In Millions) |
| 2016 net revenue | $317.2 |
| Retail electric price | (6.4 | ) |
| Volume/weather | (4.3 | ) |
| Other | 5.4 |
| 2017 net revenue | $311.9 |

The retail electric price variance is primarily due to a net decrease in the purchased power and capacity acquisition cost recovery rider. There was an increase in the rider primarily due to credits to customers as part of the Entergy New Orleans internal restructuring agreement in principle, effective with the first billing cycle of June 2017, partially offset by lower credits to customers in 2017 related to the retirement of Michoud Units 2 and 3. See Note 2 to the financial statements for further discussion of the credits associated with Entergy New Orleans’s internal restructuring and the Michoud retirement.
The volume/weather variance is primarily due to the effect of less favorable weather on residential and commercial sales, partially offset by an increase in residential and commercial usage resulting from a 1% increase in the average number of residential and commercial electric customers.
2016 Compared to 2015
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenue comparing 2016 to 2015.
| Amount |
| (In Millions) |
| 2015 net revenue | $293.9 |
| Retail electric price | 39.0 |
| Net gas revenue | (2.5 | ) |
| Volume/weather | (5.1 | ) |
| Other | (8.1 | ) |
| 2016 net revenue | $317.2 |

The retail electric price variance is primarily due to an increase in the purchased power and capacity acquisition cost recovery rider, as approved by the City Council, effective with the first billing cycle of March 2016, primarily
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
related to the purchase of Power Block 1 of the Union Power Station. See Note 14 to the financial statements for discussion of the Union Power Station purchase.
The net gas revenue variance is primarily due to the effect of less favorable weather on residential and commercial sales.
The volume/weather variance is primarily due to a decrease of 112 GWh, or 2%, in billed electricity usage, partially offset by the effect of favorable weather on commercial sales and a 2% increase in the average number of electric customers.
Other Income Statement Variances
2017 Compared to 2016
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $7.9 million in fossil-fueled generation expenses primarily due to lower outage costs at Power Block 1 of the Union Power Station in 2017 as compared to 2016, the deactivation of Michoud Units 2 and 3 effective May 2016, and asbestos loss provisions in 2016; |

| • | a decrease of $4.5 million in other loss provisions; and |

| • | a decrease of $2.8 million due to lower write-offs of uncollectible customer accounts. |

The decrease was partially offset by:
| • | an increase of $4 million in distribution expenses primarily due to higher labor costs, including contract labor, and higher vegetation maintenance costs; and |

| • | an increase of $1.3 million in energy efficiency costs. |

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes and higher local franchise taxes. Ad valorem taxes increased primarily due to higher assessments, including the assessment of Arkansas ad valorem taxes on the Union Power Station beginning in 2017. Local franchise taxes increased primarily due to higher electric retail revenues in 2017 as compared to 2016.
Other income increased primarily due to a decrease in charitable contributions made in 2017 as compared to 2016.
2016 Compared to 2015
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $6.1 million due to lower transmission equalization expenses, as allocated under the System Agreement as compared to the same period in 2015 primarily due to the termination of the System Agreement. See Note 2 to the financial statements for further discussion on the System Agreement termination; |

| • | a decrease of $4.4 million due to the cessation of storm damage provisions in August 2015. See Note 2 to the financial statements for further discussion of storm cost recovery; and |

| • | a decrease of $3.1 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits costs as a result of an increase in the discount rate used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “Critical Accounting Estimates” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefit costs. |

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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
The decrease was partially offset by:
| • | an increase of $5.7 million in fossil-fueled generation expenses primarily due to an increase as a result of the purchase of Power Block 1 of the Union Power Station in March 2016, partially offset by a decrease as a result of the deactivation of Michoud Units 2 and 3 effective May 2016. See Note 14 to the financial statements for discussion of the Union Power Station purchase; |

| • | an increase of $3.1 million in loss provisions; and |

| • | an increase of $2.8 million due to higher write-offs of uncollectible customer accounts in 2016 as compared to 2015. |

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the purchase of Power Block 1 of the Union Power Station in March 2016, partially offset by the retirement of Michoud Units 2 and 3 effective May 2016.
Interest expense increased primarily due to the issuance of $110 million of 5.50% Series first mortgage bonds in March 2016 and the issuance of $98.7 million of storm cost recovery bonds in July 2015. See Note 5 to the financial statements for details on long-term debt.
Other income decreased primarily due to an increase in charitable contributions made in 2016 as compared to 2015.
Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 42.8%, 37.0% and 35.9%, respectively. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $103,068 | $88,876 | $42,389 |
| Net cash provided by (used in): |
| Operating activities | 127,797 | 205,211 | 105,068 |
| Investing activities | (109,500 | ) | (322,681 | ) | (173,460 | ) |
| Financing activities | (88,624 | ) | 131,662 | 114,879 |
| Net increase (decrease) in cash and cash equivalents | (70,327 | ) | 14,192 | 46,487 |
| Cash and cash equivalents at end of period | $32,741 | $103,068 | $88,876 |

Operating Activities
Net cash flow provided by operating activities decreased $77.4 million in 2017 primarily due to a decrease of $77.3 million in income tax refunds in 2017 compared to 2016 and the timing of collections from customers and payments to vendors. Entergy New Orleans had income tax refunds in 2017 and 2016 in accordance with an intercompany income tax allocation agreement. The 2016 income tax refunds resulted primarily from deductible temporary differences. The decrease was partially offset by an increase due to the timing of recovery of fuel and purchased power costs.
Net cash flow provided by operating activities increased $100.1 million in 2016 primarily due to income tax refunds of $86 million in 2016 as compared to income tax payments of $8.1 million in 2015. Entergy New Orleans had income tax refunds in 2016 and income tax payments in 2015 in accordance with an intercompany income tax allocation agreement. The 2016 income tax refunds resulted primarily from deductible temporary differences.
Investing Activities
Net cash flow used in investing activities decreased $213.2 million in 2017 primarily due to the purchase of Power Block 1 of the Union Power Station for approximately $237 million in March 2016. See Note 14 to the financial statements for discussion of the Union Power Station purchase. The decrease was partially offset by an increase of $16.7 million in distribution construction expenditures primarily due to a higher scope of work performed in 2017 as compared to 2016.
Net cash flow used in investing activities increased $149.2 million in 2016 primarily due to the purchase of Power Block 1 of the Union Power Station for approximately $237 million in March 2016. The increase was partially offset by a deposit of $63.9 million into the storm reserve escrow account in July 2015 and money pool activity. See Note 14 to the financial statements for discussion of the Union Power Station purchase. See Note 5 to the financial statements for a discussion of the issuance in July 2015 of securitization bonds to recover storm costs.
Decreases in Entergy New Orleans’s receivable from the money pool are a source of cash flow, and Entergy New Orleans’s receivable from the money pool decreased $1.6 million in 2016 compared to increasing $15.4 million in 2015. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Financing Activities
Entergy New Orleans’s financing activities used $88.6 million of cash in 2017 compared to providing $131.7 million in 2016 primarily due to the following activity:
| • | the issuance of $110 million of 5.50% Series first mortgage bonds in March 2016; |

| • | an increase of $55.5 million in common equity distributions in 2017 as compared to 2016. Common equity distributions in 2017 increased primarily as a result of Entergy New Orleans’s cash position in excess of its working capital requirements. There were no common equity distributions in first quarter 2016 in anticipation of the purchase of Power Block 1 of the Union Power Station in March 2016; |

| • | a decrease of $27.8 million in capital contributions received from Entergy Corporation in 2017 compared to 2016. The 2017 contribution was made in consideration of Entergy New Orleans’s upcoming capital requirements. The 2016 contribution was made in anticipation of Entergy New Orleans’s purchase of Power Block 1 of the Union Power Station; and |

| • | the redemptions of $7.8 million of 4.75% Series preferred stock, $6 million of 5.56% Series preferred stock, and $6 million of 4.36% Series preferred stock in 2017 in connection with the internal restructuring, as discussed above. |

See Note 14 to the financial statements for discussion of the Union Power Station purchase.
Net cash flow provided by financing activities increased $16.8 million in 2016 primarily due to:
| • | the purchase of Entergy Louisiana’s Algiers assets in September 2015. The cash portion of the purchase is reflected as a repayment of a long-term payable due to Entergy Louisiana in the cash flow statement. See Note 2 to the financial statements and “Algiers Asset Transfer” below for further discussion of the Algiers asset transfer and accounting for the transaction; |

| • | the issuance of $110 million of 5.50% Series first mortgage bonds in March 2016; and |

| • | the issuance of $85 million of 4% Series first mortgage bonds in May 2016. Entergy New Orleans used the proceeds to pay, prior to maturity, its $33.271 million of 5.6% Series first mortgage bonds due September 2024 and to pay, prior to maturity, its $37.772 million of 5.65% Series first mortgage bonds due September 2029. |

The increase was offset by:
| • | the issuance of $98.7 million of storm costs recovery bonds in July 2015; |

| • | a $47.8 million capital contribution received from Entergy Corporation in 2016 as compared to an $87.5 million capital contribution received from Entergy Corporation in 2015, both in anticipation of Entergy New Orleans’s purchase of Power Block 1 of the Union Power Station; and |

| • | an increase of $11.5 million in common equity distributions in 2016. Common equity distributions were lower in 2015 in anticipation of the purchase of Power Block 1 of the Union Power Station. |

See Note 5 to the financial statements for more details on long-term debt.
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Capital Structure
Entergy New Orleans’s capitalization is balanced between equity and debt as shown in the following table. The increase in the debt to capital ratio is primarily due to the redemptions of preferred stock in 2017.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 51.3 | % | 50.1 | % |
| Effect of excluding securitization bonds | (4.7 | %) | (5.2 | %) |
| Debt to capital, excluding securitization bonds (a) | 46.6 | % | 44.9 | % |
| Effect of subtracting cash | (2.4 | %) | (8.0 | %) |
| Net debt to net capital, excluding securitization bonds (a) | 44.2 | % | 36.9 | % |

(a) Calculation excludes the securitization bonds, which are non-recourse to Entergy New Orleans.
Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings, long-term debt, including the currently maturing portion, and the long-term payable to Entergy Louisiana. Capital consists of debt, preferred stock without sinking fund, and common equity. Net capital consists of capital less cash and cash equivalents. Entergy New Orleans uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because the securitization bonds are non-recourse to Entergy New Orleans, as more fully described in Note 5 to the financial statements. Entergy New Orleans also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy New Orleans’s financial condition because net debt indicates Entergy New Orleans’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy New Orleans seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy New Orleans may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure. In addition, in certain infrequent circumstances, such as large transactions that would materially alter the capital structure if financed entirely with debt and reducing dividends, Entergy New Orleans may receive equity contributions to maintain the targeted capital structure.
Uses of Capital
Entergy New Orleans requires capital resources for:
| • | construction and other capital investments; |

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

| • | debt maturities or retirements; and |

| • | distribution and interest payments. |

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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Following are the amounts of Entergy New Orleans’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $115 | $80 | $15 |
| Transmission | 15 | 10 | 5 |
| Distribution | 80 | 85 | 80 |
| Utility Support | 20 | 15 | 15 |
| Total | $230 | $190 | $115 |

Following are the amounts of Entergy New Orleans’s existing debt and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | After 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $31 | $87 | $59 | $674 | $851 |
| Operating leases | $2 | $3 | $1 | $2 | $8 |
| Purchase obligations (b) | $245 | $480 | $463 | $3,669 | $4,857 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For Entergy New Orleans, almost all of the total consists of unconditional fuel and purchased power obligations, including its obligations under the Unit Power Sales Agreement, which is discussed in Note 8 to the financial statements. |

In addition to the contractual obligations given above, Entergy New Orleans currently expects to contribute approximately $7.3 million to its qualified pension plan and approximately $3.7 million to other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
Also in addition to the contractual obligations, Entergy New Orleans has $238.2 million of unrecognized tax benefits and interest net of unused tax attributes and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy New Orleans includes specific investments such as the New Orleans Power Station discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including investment to support advanced metering; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital. Management provides more information on long-term debt and preferred stock maturities in Notes 5 and 6 to the financial statements.
As a wholly-owned subsidiary of Entergy Utility Holding Company, LLC, Entergy New Orleans pays distributions from its earnings at a percentage determined monthly.
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New Orleans Power Station
In June 2016, Entergy New Orleans filed an application with the City Council seeking a public interest determination and authorization to construct the New Orleans Power Station, a 226 MW advanced combustion turbine in New Orleans, Louisiana, at the site of the existing Michoud generating facility, which was retired effective May 31, 2016. In January 2017 several intervenors filed testimony opposing the construction of the New Orleans Power Station on various grounds. In July 2017, Entergy New Orleans submitted a supplemental and amending application to the City Council seeking approval to construct either the originally proposed 226 MW advanced combustion turbine, or alternatively, a 128 MW unit composed of natural gas-fired reciprocating engines and a related cost recovery plan. The application included an updated cost estimate of $232 million for the 226 MW advanced combustion turbine. The cost estimate for the alternative 128 MW unit is $210 million. In addition, the application renewed the commitment to pursue up to 100 MW of renewable resources to serve New Orleans. In testimony filed subsequent to Entergy New Orleans’s supplemental and amending application, several intervenors oppose City Council approval of either alternative, while the City Council advisors and one intervenor support the smaller alternative. A contested hearing was held in December 2017 and post-hearing briefs were filed in January 2018. In February 2018 the City Council Utility Committee adopted a resolution approving construction of the 128 MW unit. The full City Council is expected to vote on the resolution in March 2018. The commercial operation date is dependent on the alternative selected by the City Council and the receipt of other permits and approvals.
Gas Infrastructure Rebuild Plan
In September 2016, Entergy New Orleans submitted to the City Council a request for authorization for Entergy New Orleans to proceed with annual incremental capital funding of $12.5 million for its gas infrastructure rebuild plan, which would replace of all of Entergy New Orleans’s low pressure cast iron, steel, and vintage plastic pipe over a ten-year period commencing in 2017. Entergy New Orleans also proposed that recovery of the investment to fund its gas infrastructure replacement plan be determined in connection with its next base rate case, which is anticipated to be filed in 2018. The City Council has authorized Entergy New Orleans to proceed with its replacement plans at the requested pace until such time that rates resulting from the anticipated 2018 rate case are implemented (approximately 13 months after filing). As a result of the anticipated 2018 rate case, the City Council may establish new overall gas base rates to allow Entergy New Orleans to continue to recover these replacement costs. The City Council has established a schedule for proceedings in advance of the rate case intended to provide an opportunity for evaluation of the gas infrastructure replacement plan that would best serve the public interest and the effect on customers of the approval of any such plan.
Advanced Metering Infrastructure (AMI)
In October 2016, Entergy New Orleans filed an application seeking a finding from the City Council that Entergy New Orleans’s deployment of advanced electric and gas metering infrastructure is in the public interest. Entergy New Orleans proposed to deploy advanced meters that enable two-way data communication; design and build a secure and reliable network to support such communications; and implement support systems. AMI is intended to serve as the foundation of Entergy New Orleans’s modernized power grid. The filing included an estimate of implementation costs for AMI of $75 million. The filing identified a number of quantified and unquantified benefits, and Entergy New Orleans provided a cost/benefit analysis showing that its combined electric and gas AMI deployment is expected to produce a nominal net benefit to customers of $101 million. Entergy New Orleans also sought to continue to include in rate base the remaining book value, approximately $21 million at December 31, 2015, of the existing electric meters and also to depreciate those assets using current depreciation rates. Entergy New Orleans proposed a 15-year depreciable life for the new advanced meters, the three-year deployment of which is expected to begin in 2019. Deployment of the information technology infrastructure began in 2017 and deployment of the communications network is expected to begin in 2018. Entergy New Orleans proposed to recover the cost of AMI through the implementation of a customer charge, net of certain benefits, phased in over the period 2019 through 2022. The City Council’s advisors filed testimony in May 2017 recommending the adoption of AMI subject to certain modifications, including the denial of Entergy New Orleans’s proposed customer charge as a cost recovery mechanism. In January 2018 a settlement was reached between
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the City Council’s advisors and Entergy New Orleans. In February 2018 the City Council approved the settlement, which deferred cost recovery to the 2018 Entergy New Orleans rate case, but also stated that an adjustment for 2018-2019 AMI costs can be filed in the rate case and that, for all subsequent AMI costs, the mechanism to be approved in the 2018 rate case will allow for the timely recovery of such costs.
Sources of Capital
Entergy New Orleans’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt and preferred membership interest issuances; and |

| • | bank financing under new or existing facilities. |

Entergy New Orleans may refinance, redeem, or otherwise retire debt prior to maturity, to the extent market conditions and interest rates are favorable.
Entergy New Orleans’s receivables from the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| $12,723 | $14,215 | $15,794 | $442 |

See Note 4 to the financial statements for a description of the money pool.
Entergy New Orleans has a credit facility in the amount of $25 million scheduled to expire in November 2018. The credit facility allows Entergy New Orleans to issue letters of credit against $10 million of the borrowing capacity of the facility. As of December 31, 2017, there were no cash borrowings and a $0.8 million letter of credit was outstanding under the facility. In addition, Entergy New Orleans is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2017, a $1.4 million letter of credit was outstanding under Entergy New Orleans’s letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy New Orleans obtained authorization from the FERC through October 2019 for short-term borrowings not to exceed an aggregate amount of $150 million at any time outstanding and long-term borrowings and securities issuances. See Note 4 to the financial statements for further discussion of Entergy New Orleans’s short-term borrowing limits. The long-term securities issuances of Entergy New Orleans are limited to amounts authorized not only by the FERC, but also by the City Council, and the current City Council authorization extends through June 2018.
State and Local Rate Regulation
The rates that Entergy New Orleans charges for electricity and natural gas significantly influence its financial position, results of operations, and liquidity. Entergy New Orleans is regulated and the rates charged to its customers are determined in regulatory proceedings. A governmental agency, the City Council, is primarily responsible for approval of the rates charged to customers.
Retail Rates
See “Algiers Asset Transfer” below for discussion of the Algiers asset transfer. As a provision of the settlement agreement approved by the City Council in May 2015 providing for the Algiers asset transfer, it was agreed that, with limited exceptions, no action may be taken with respect to Entergy New Orleans’s base rates until rates are implemented
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from a base rate case that must be filed for its electric and gas operations in 2018. This provision eliminated the formula rate plan applicable to Algiers operations. The limited exceptions included continued implementation of the then-remaining two years of the four-year phased-in rate increase for the Algiers area and certain exceptional cost increases or decreases in the base revenue requirement. An additional provision of the settlement agreement allowed for continued recovery of the revenue requirement associated with the capacity and energy from Ninemile 6 received by Entergy New Orleans under a power purchase agreement with Entergy Louisiana (Algiers PPA). The settlement authorized Entergy New Orleans to recover the remaining revenue requirement related to the Algiers PPA through base rates charged to Algiers customers. The settlement also provided for continued implementation of the Algiers MISO recovery rider.
In addition to the Algiers PPA, Entergy New Orleans has a separate power purchase agreement with Entergy Louisiana for 20% of the capacity and energy from Ninemile 6 (Ninemile PPA), which commenced operation in December 2014. Initially, recovery of the non-fuel costs associated with the Ninemile PPA was authorized through a special Ninemile 6 rider billed only to Entergy New Orleans customers outside of Algiers.
In August 2015, Entergy New Orleans filed an application with the City Council seeking authorization to proceed with the purchase of Union Power Block 1, with an expected base purchase price of approximately $237 million, subject to adjustments, and seeking approval of the recovery of the associated costs. In November 2015 the City Council issued written resolutions and an order approving an agreement in principle between Entergy New Orleans and City Council advisors providing that the purchase of Union Power Block 1 and related assets by Entergy New Orleans is prudent and in the public interest. The City Council authorized expansion of the terms of the purchased power and capacity acquisition cost recovery rider to recover the non-fuel purchased power expense from Ninemile 6, the revenue requirement associated with the purchase of Power Block 1 of the Union Power Station, and a credit to customers of $400 thousand monthly beginning June 2016 in recognition of the decrease in other operation and maintenance expenses that would result with the deactivation of Michoud Units 2 and 3. In March 2016, Entergy New Orleans purchased Power Block 1 of the Union Power Station for approximately $237 million and initiated recovery of these costs with March 2016 bills. In July 2016, Entergy New Orleans and the City Council Utility Committee agreed to a temporary increase in the Michoud credit to customers to a total of $1.4 million monthly for August 2016 through December 2016.
A 2008 rate case settlement included $3.1 million per year in electric rates to fund the Energy Smart energy efficiency programs. The rate settlement provided an incentive for Entergy New Orleans to meet or exceed energy savings targets set by the City Council and provided a mechanism for Entergy New Orleans to recover lost contribution to fixed costs associated with the energy savings generated from the energy efficiency programs. In January 2015 the City Council approved funding for the Energy Smart program from April 2015 through March 2017 using the remainder of the approximately $12.8 million of 2014 rough production cost equalization funds, with any remaining costs being recovered through the fuel adjustment clause. This funding methodology was modified in November 2015 when the City Council directed Entergy New Orleans to use a combination of guaranteed customer savings related to a prior agreement with the City Council and rough production cost equalization funds to cover program costs prior to recovering any costs through the fuel adjustment clause. In April 2017 the City Council approved an implementation plan for the Energy Smart program from April 2017 through December 2019. The City Council directed that the $11.8 million balance reported for Energy Smart funds be used to continue funding the program for Entergy New Orleans’s legacy customers and that the Energy Smart Algiers program continue to be funded through the Algiers fuel adjustment clause, until additional customer funding is required for the legacy customers. In September 2017, Entergy New Orleans filed a supplemental plan and proposed several options for an interim cost recovery mechanism necessary to recover program costs during the period between when existing funds directed to Energy Smart programs are depleted (estimated to be June 2018) and when new rates from the anticipated 2018 combined rate case, which will include a cost recovery mechanism for Energy Smart funding, take effect (estimated to be August 2019). Entergy New Orleans requested that the City Council approve a cost recovery mechanism prior to June 2018. In December 2017 the City Council approved an energy efficiency cost recovery rider as an interim funding mechanism for Energy Smart, subject to verification that no additional funding sources exist.
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Fuel and Purchased Power Cost Recovery
Entergy New Orleans’s electric rate schedules include a fuel adjustment tariff designed to reflect no more than targeted fuel and purchased power costs, adjusted by a surcharge or credit for deferred fuel expense arising from the monthly reconciliation of actual fuel and purchased power costs incurred with fuel cost revenues billed to customers, including carrying charges.
Entergy New Orleans’s gas rate schedules include a purchased gas adjustment to reflect estimated gas costs for the billing month, adjusted by a surcharge or credit similar to that included in the electric fuel adjustment clause, including carrying charges.
Due to higher fuel costs associated in part with the extended Grand Gulf outage and the partially simultaneous Union Power Block 1 planned outage, for the December 2016, January 2017, and February 2017 billing months, the City Council authorized Entergy New Orleans to cap the fuel adjustment charge billed to customers at $0.035 per kWh and to defer billing of all fuel costs in excess of the capped amount by including such costs in the over- or under-recovery account.
Due to higher fuel costs for the operating month of January 2018 resulting in part from recent cold weather, higher Henry Hub prices, and an increase in total fuel and purchased power costs associated in part with certain plant outages, Entergy New Orleans has proposed to cap the fuel adjustment charge to be billed in March 2018 to non-transmission Entergy New Orleans legacy customers and Entergy New Orleans Algiers customers at $0.035323 per kWh and $0.025446 per kWh, respectively. Entergy New Orleans has also proposed to cap the fuel adjustment charge to be billed in March 2018 for Entergy New Orleans legacy transmission customers at $0.034609 per kWh and to defer billing of all fuel costs in excess of the capped amount by including such costs in the over- or under-recovery account.
Algiers Asset Transfer
In October 2014, Entergy Louisiana and Entergy New Orleans filed an application with the City Council seeking authorization to undertake a transaction that would result in the transfer from Entergy Louisiana to Entergy New Orleans of certain assets that supported the provision of service to Entergy Louisiana’s customers in Algiers. In April 2015 the FERC issued an order approving the Algiers assets transfer. In May 2015 the parties filed a settlement agreement authorizing the Algiers assets transfer and the settlement agreement was approved by a City Council resolution in May 2015. On September 1, 2015, Entergy Louisiana transferred its Algiers assets to Entergy New Orleans for a purchase price of approximately $85 million. Entergy New Orleans paid Entergy Louisiana $59.6 million, including final true-ups, from available cash and issued a note payable to Entergy Louisiana in the amount of $25.5 million.
Show Cause Order
In July 2016 the City Council approved the issuance of a show cause order, which directed Entergy New Orleans to make a filing on or before September 29, 2016 to demonstrate the reasonableness of its actions or positions with regard to certain issues in four existing dockets that relate to Entergy New Orleans’s: (i) storm hardening proposal; (ii) 2015 integrated resource plan; (iii) gas infrastructure rebuild proposal; and (iv) proposed sizing of the New Orleans Power Station and its community outreach prior to the filing. In September 2016, Entergy New Orleans filed its response to the City Council’s show cause order. The City Council has not established any further procedural schedule with regard to this proceeding.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
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Entergy New Orleans, LLC and SubsidiariesManagement’s Financial Discussion and Analysis
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Environmental Risks
Entergy New Orleans’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous solid wastes, and other environmental matters. Management believes that Entergy New Orleans is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of Entergy New Orleans’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and there is the potential for future changes in the assumptions and measurements that could produce estimates that would have a material impact on the presentation of Entergy New Orleans’s financial position or results of operations.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Unbilled Revenue
See “Unbilled Revenue” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the unbilled revenue amounts.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy New Orleans’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified
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Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Projected Qualified Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $348 | $6,153 |
| Rate of return on plan assets | (0.25%) | $399 | $— |
| Rate of increase in compensation | 0.25% | $159 | $729 |

The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated Postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | ($12 | ) | $1,406 |
| Health care cost trend | 0.25% | $54 | $1,074 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for Entergy New Orleans in 2017 was $5.1 million. Entergy New Orleans anticipates 2018 qualified pension cost to be $5.8 million. In 2016, Entergy New Orleans refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $1.7 million. Entergy New Orleans contributed $9.9 million to its pension plans in 2017 and estimates 2018 pension contributions will be approximately $7.3 million, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total postretirement health care and life insurance benefit income for Entergy New Orleans in 2017 was $2.5 million. Entergy New Orleans expects 2018 postretirement health care and life insurance benefit income of approximately $3.7 million. In 2016, Entergy New Orleans refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $548 thousand. Entergy New Orleans contributed $3.7 million to its other postretirement plans in 2017 and estimates 2018 contributions will be approximately $3.7 million.
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Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
390
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the members and Board of Directors of
Entergy New Orleans, LLC and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy New Orleans, LLC and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, cash flows, and changes in common equity (pages 392 through 396 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
391
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $631,744 | $586,820 | $584,322 |
| Natural gas | 84,326 | 78,643 | 87,124 |
| TOTAL | 716,070 | 665,463 | 671,446 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 111,082 | 40,489 | 96,307 |
| Purchased power | 282,178 | 299,551 | 277,851 |
| Other operation and maintenance | 109,270 | 117,471 | 119,087 |
| Taxes other than income taxes | 54,590 | 48,078 | 46,660 |
| Depreciation and amortization | 52,945 | 51,737 | 43,205 |
| Other regulatory charges - net | 10,889 | 8,258 | 3,366 |
| TOTAL | 620,954 | 565,584 | 586,476 |
| OPERATING INCOME | 95,116 | 99,879 | 84,970 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 2,418 | 1,178 | 1,404 |
| Interest and investment income | 707 | 256 | 73 |
| Miscellaneous - net | 24 | (3,144 | ) | 339 |
| TOTAL | 3,149 | (1,710 | ) | 1,816 |
| INTEREST EXPENSE |
| Interest expense | 21,281 | 21,061 | 17,312 |
| Allowance for borrowed funds used during construction | (847 | ) | (446 | ) | (641 | ) |
| TOTAL | 20,434 | 20,615 | 16,671 |
| INCOME BEFORE INCOME TAXES | 77,831 | 77,554 | 70,115 |
| Income taxes | 33,278 | 28,705 | 25,190 |
| NET INCOME | 44,553 | 48,849 | 44,925 |
| Preferred dividend requirements and other | 841 | 965 | 965 |
| EARNINGS APPLICABLE TO COMMON EQUITY | $43,712 | $47,884 | $43,960 |
| See Notes to Financial Statements. |

392
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $44,553 | $48,849 | $44,925 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation and amortization | 52,945 | 51,737 | 43,205 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 64,036 | 140,283 | 22,180 |
| Changes in assets and liabilities: |
| Receivables | (18,058 | ) | (3,888 | ) | 7,878 |
| Fuel inventory | (49 | ) | 71 | 1,104 |
| Accounts payable | 1,874 | 15,434 | 2,738 |
| Prepaid taxes and taxes accrued | (22,100 | ) | (1,685 | ) | (1,050 | ) |
| Interest accrued | 44 | 534 | 1,270 |
| Deferred fuel costs | 12,592 | (33,839 | ) | (182 | ) |
| Other working capital accounts | (2,711 | ) | 4,165 | (1,945 | ) |
| Provisions for estimated losses | (3,430 | ) | 4,326 | 58,310 |
| Other regulatory assets | 16,673 | (2,784 | ) | (70,471 | ) |
| Other regulatory liabilities | 110,147 | (3,997 | ) | (7,359 | ) |
| Deferred tax rate change recognized as regulatory liability/asset | (111,170 | ) | — | — |
| Pension and other postretirement liabilities | (15,994 | ) | (6,859 | ) | (18,831 | ) |
| Other assets and liabilities | (1,555 | ) | (7,136 | ) | 23,296 |
| Net cash flow provided by operating activities | 127,797 | 205,211 | 105,068 |
| INVESTING ACTIVITIES |
| Construction expenditures | (115,584 | ) | (90,512 | ) | (91,928 | ) |
| Allowance for equity funds used during construction | 2,418 | 1,178 | 1,404 |
| Payment for purchase of plant | — | (237,335 | ) | — |
| Investments in affiliates | — | (38 | ) | — |
| Changes in money pool receivable - net | 1,492 | 1,579 | (15,352 | ) |
| Payments to storm reserve escrow account | (597 | ) | (438 | ) | (68,886 | ) |
| Receipts from storm reserve escrow account | 2,488 | 3 | 5,922 |
| Changes in securitization account | 283 | 2,882 | (4,620 | ) |
| Net cash flow used in investing activities | (109,500 | ) | (322,681 | ) | (173,460 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | — | 240,604 | 95,367 |
| Retirement of long-term debt | (10,600 | ) | (132,526 | ) | — |
| Repayment of long-term payable due to Entergy Louisiana | (2,104 | ) | (4,973 | ) | (59,610 | ) |
| Redemption of preferred stock | (20,599 | ) | — | — |
| Capital contributions from parent | 20,000 | 47,750 | 87,500 |
| Distributions/dividends paid: |
| Common equity | (74,250 | ) | (18,720 | ) | (7,250 | ) |
| Preferred stock | (1,083 | ) | (965 | ) | (965 | ) |
| Other | 12 | 492 | (163 | ) |
| Net cash flow provided by (used in) financing activities | (88,624 | ) | 131,662 | 114,879 |
| Net increase (decrease) in cash and cash equivalents | (70,327 | ) | 14,192 | 46,487 |
| Cash and cash equivalents at beginning of period | 103,068 | 88,876 | 42,389 |
| Cash and cash equivalents at end of period | $32,741 | $103,068 | $88,876 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $20,180 | $19,317 | $14,951 |
| Income taxes | ($8,660 | ) | ($85,962 | ) | $8,110 |
| See Notes to Financial Statements. |

393
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents |
| Cash | $30 | $28 |
| Temporary cash investments | 32,711 | 103,040 |
| Total cash and cash equivalents | 32,741 | 103,068 |
| Securitization recovery trust account | 1,455 | 1,738 |
| Accounts receivable: |
| Customer | 51,006 | 43,536 |
| Allowance for doubtful accounts | (3,057 | ) | (3,059 | ) |
| Associated companies | 22,976 | 16,811 |
| Other | 6,471 | 5,926 |
| Accrued unbilled revenues | 20,638 | 18,254 |
| Total accounts receivable | 98,034 | 81,468 |
| Deferred fuel costs | — | 4,818 |
| Fuel inventory - at average cost | 1,890 | 1,841 |
| Materials and supplies - at average cost | 10,381 | 8,416 |
| Prepaid taxes | 26,479 | 4,379 |
| Prepayments and other | 8,030 | 6,587 |
| TOTAL | 179,010 | 212,315 |
| OTHER PROPERTY AND INVESTMENTS |
| Non-utility property at cost (less accumulated depreciation) | 1,016 | 1,016 |
| Storm reserve escrow account | 79,546 | 81,437 |
| Other | 2,373 | 7,160 |
| TOTAL | 82,935 | 89,613 |
| UTILITY PLANT |
| Electric | 1,302,235 | 1,258,934 |
| Natural gas | 261,263 | 240,408 |
| Construction work in progress | 46,993 | 24,975 |
| TOTAL UTILITY PLANT | 1,610,491 | 1,524,317 |
| Less - accumulated depreciation and amortization | 631,178 | 604,825 |
| UTILITY PLANT - NET | 979,313 | 919,492 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Deferred fuel costs | 4,080 | 4,080 |
| Other regulatory assets (includes securitization property of $72,095 as of December 31, 2017 and $82,272 as of December 31, 2016) | 251,433 | 268,106 |
| Other | 1,065 | 963 |
| TOTAL | 256,578 | 273,149 |
| TOTAL ASSETS | $1,497,836 | $1,494,569 |
| See Notes to Financial Statements. |

394
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Payable due to Entergy Louisiana | $2,077 | $2,104 |
| Accounts payable: |
| Associated companies | 47,472 | 39,260 |
| Other | 29,777 | 35,920 |
| Customer deposits | 28,442 | 28,667 |
| Interest accrued | 5,487 | 5,443 |
| Deferred fuel costs | 7,774 | — |
| Other | 7,351 | 11,415 |
| TOTAL CURRENT LIABILITIES | 128,380 | 122,809 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 283,302 | 334,953 |
| Accumulated deferred investment tax credits | 2,323 | 622 |
| Regulatory liability for income taxes - net | 119,259 | 9,074 |
| Asset retirement cost liabilities | 3,076 | 2,875 |
| Accumulated provisions | 85,083 | 88,513 |
| Pension and other postretirement liabilities | 20,755 | 36,750 |
| Long-term debt (includes securitization bonds of $74,419 as of December 31, 2017 and $84,776 as of December 31, 2016) | 418,447 | 428,467 |
| Long-term payable due to Entergy Louisiana | 16,346 | 18,423 |
| Other | 5,317 | 5,357 |
| TOTAL NON-CURRENT LIABILITIES | 953,908 | 925,034 |
| Commitments and Contingencies |
| Preferred stock without sinking fund | — | 19,780 |
| EQUITY |
| Member's equity | 415,548 | 426,946 |
| TOTAL | 415,548 | 426,946 |
| TOTAL LIABILITIES AND EQUITY | $1,497,836 | $1,494,569 |
| See Notes to Financial Statements. |

395
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER'S EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Member’s Equity |
| (In Thousands) |
| Balance at December 31, 2014 | $228,025 |
| Net income | 44,925 |
| Net income attributable to Entergy Louisiana | (2,203 | ) |
| Capital contributions from parent | 87,500 |
| Common equity distributions | (7,250 | ) |
| Preferred stock dividends | (965 | ) |
| Balance at December 31, 2015 | $350,032 |
| Net income | 48,849 |
| Capital contributions from parent | 47,750 |
| Common equity distributions | (18,720 | ) |
| Preferred stock dividends | (965 | ) |
| Balance at December 31, 2016 | $426,946 |
| Net income | 44,553 |
| Capital contributions from parent | 20,000 |
| Common equity distributions | (74,250 | ) |
| Preferred stock dividends | (841 | ) |
| Other | (860 | ) |
| Balance at December 31, 2017 | $415,548 |
| See Notes to Financial Statements. |

396
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (In Thousands) |
| Operating revenues | $716,070 | $665,463 | $671,446 | $735,192 | $659,746 |
| Net income | $44,553 | $48,849 | $44,925 | $31,030 | $12,608 |
| Total assets | $1,497,836 | $1,494,569 | $1,215,144 | $1,014,916 | $964,482 |
| Long-term obligations (a) | $434,793 | $466,670 | $357,687 | $323,280 | $318,034 |
| (a) Includes long-term debt (including the long-term payable to Entergy Louisiana and excluding currently maturing debt) and preferred stock without sinking fund. |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Millions) |
| Electric Operating Revenues: |
| Residential | $250 | $231 | $220 | $230 | $221 |
| Commercial | 228 | 206 | 186 | 196 | 194 |
| Industrial | 36 | 33 | 30 | 33 | 35 |
| Governmental | 77 | 69 | 64 | 67 | 69 |
| Total retail | 591 | 539 | 500 | 526 | 519 |
| Sales for resale: |
| Associated companies | — | 30 | 66 | 78 | 27 |
| Non-associated companies | 29 | 3 | — | 4 | — |
| Other | 12 | 15 | 18 | 17 | 19 |
| Total | $632 | $587 | $584 | $625 | $565 |
| Billed Electric Energy Sales (GWh): |
| Residential | 2,155 | 2,231 | 2,301 | 2,262 | 2,152 |
| Commercial | 2,248 | 2,268 | 2,257 | 2,181 | 2,130 |
| Industrial | 429 | 441 | 463 | 455 | 484 |
| Governmental | 790 | 794 | 825 | 783 | 778 |
| Total retail | 5,622 | 5,734 | 5,846 | 5,681 | 5,544 |
| Sales for resale: |
| Associated companies | — | 1,071 | 1,644 | 1,379 | 517 |
| Non-associated companies | 1,703 | 141 | 11 | 18 | 14 |
| Total | 7,325 | 6,946 | 7,501 | 7,078 | 6,075 |

397
ENTERGY TEXAS, INC. AND SUBSIDIARIES
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
Results of Operations
Net Income
2017 Compared to 2016
Net income decreased $31.4 million primarily due to lower net revenue, higher depreciation and amortization expenses, higher other operation and maintenance expenses, and higher taxes other than income taxes.
2016 Compared to 2015
Net income increased $37.9 million primarily due to lower other operation and maintenance expenses, the asset write-off of its receivable associated with the Spindletop gas storage facility in 2015, and higher net revenue.
Net Revenue
2017 Compared to 2016
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenue comparing 2017 to 2016.
| Amount |
| (In Millions) |
| 2016 net revenue | $644.2 |
| Net wholesale revenue | (35.1 | ) |
| Purchased power capacity | (5.9 | ) |
| Transmission revenue | (5.4 | ) |
| Reserve equalization | 5.6 |
| Retail electric price | 19.0 |
| Other | 4.4 |
| 2017 net revenue | $626.8 |

The net wholesale revenue variance is primarily due to lower net capacity revenues resulting from the termination of the purchased power agreements between Entergy Louisiana and Entergy Texas in August 2016.
The purchased power capacity variance is primarily due to increased expenses due to capacity cost changes
for ongoing purchased power capacity contracts.
The transmission revenue variance is primarily due to a decrease in the amount of transmission revenues allocated by MISO.
The reserve equalization variance is due to the absence of reserve equalization expenses in 2017 as a result of Entergy Texas’s exit from the System Agreement in August 2016. See Note 2 to the financial statements for a discussion of the System Agreement.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
The retail electric price variance is primarily due to the implementation of the transmission cost recovery factor rider in September 2016 and an increase in the transmission cost recovery factor rider rate in March 2017, each as approved by the PUCT. See Note 2 to the financial statements for further discussion of the transmission cost recovery factor rider filing.
2016 Compared to 2015
Net revenue consists of operating revenues net of: 1) fuel, fuel-related expenses, and gas purchased for resale, 2) purchased power expenses, and 3) other regulatory charges. Following is an analysis of the change in net revenue comparing 2016 to 2015.
| Amount |
| (In Millions) |
| 2015 net revenue | $637.2 |
| Reserve equalization | 14.3 |
| Purchased power capacity | 12.4 |
| Transmission revenue | 7.0 |
| Retail electric price | 5.4 |
| Net wholesale revenue | (27.8 | ) |
| Other | (4.3 | ) |
| 2016 net revenue | $644.2 |

The reserve equalization variance is primarily due to a reduction in reserve equalization expense primarily due to changes in the Entergy System generation mix compared to the same period in 2015 as a result of the execution of a new purchased power agreement and Entergy Mississippi’s exit from the System Agreement, each in November 2015, and Entergy Texas’s exit from the System Agreement in August 2016. See Note 2 to the financial statements for a discussion of the System Agreement.
The purchased power capacity variance is primarily due to decreased expenses due to the termination of the purchased power agreements between Entergy Louisiana and Entergy Texas in August 2016, as well as capacity cost changes for ongoing purchased power capacity contracts.
The transmission revenue variance is primarily due to an increase in Attachment O rates charged by MISO to transmission customers and a settlement of Attachment O rates previously billed to transmission customers by MISO.
The retail electric price variance is primarily due to the implementation of the transmission cost recovery factor rider, as approved by the PUCT and implemented in September 2016, and the increase in the distribution cost recovery rider, as approved by the PUCT and implemented in January 2016. This increase was partially offset by a decrease in energy efficiency revenues. See Note 2 to the financial statements for further discussion of the transmission cost recovery factor rider and distribution cost recovery factor rider filings.
The net wholesale revenue variance is primarily due to lower capacity revenues resulting from the termination of the purchased power agreements between Entergy Louisiana and Entergy Texas in August 2016.
399
Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Other Income Statement Variances
2017 Compared to 2016
Other operation and maintenance expenses increased primarily due to:
| • | an increase of $5.1 million in transmission and distribution expenses primarily due to higher vegetation maintenance costs; |

| • | an increase of $4.3 million in fossil-fueled generation expenses primarily due to a higher scope of work performed during plant outages in 2017 as compared to 2016; and |

| • | an increase of $2.8 million in compensation and benefits costs primarily due to higher incentive-based compensation accruals in 2017 as compared to 2016. |

The increase was partially offset by a decrease of $4.5 million due to the absence of transmission equalization expenses, as allocated under the System Agreement, as a result of Entergy Texas’s exit from the System Agreement in August 2016.
Taxes other than income taxes increased primarily due to an increase in ad valorem taxes resulting from higher assessments and a true-up to the sales and use tax accruals recorded in 2016 resulting from an audit settlement.
Depreciation and amortization expenses increased primarily due to additions to plant in service.
2016 Compared to 2015
Other operation and maintenance expenses decreased primarily due to:
| • | a decrease of $11.2 million in fossil-fueled generation expenses primarily due to an overall lower scope of work performed in 2016 as compared to 2015; |

| • | a decrease of $7 million in transmission expenses primarily due to lower transmission equalization expenses, as allocated under the System Agreement, as compared to the same period in 2015 as a result of Entergy Mississippi’s exit from the System Agreement in November 2015 and Entergy Texas’s exit from the System Agreement in August 2016; |

| • | a decrease of $5.7 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits costs as a result of an increase in the discount rate used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below and Note 11 to the financial statements for further discussion of pension and other postretirement benefit costs; |

| • | the write-off in the third quarter 2015 of $4.3 million of rate case expenses and acquisition costs related to the proposed Union Power Station acquisition upon Entergy Texas’s withdrawal of its 2015 rate case and dismissal of its certificate of convenience and necessity filing; and |

| • | a decrease of $4.2 million in energy efficiency costs. |

The asset write-off variance is due to the $23.5 million ($15.3 million net-of-tax) write-off recorded in 2015 of the receivable associated with the Spindletop gas storage facility. See Note 2 to the financial statements for discussion of the write-off.
Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 38.9%, 37.0%, and 34.9%, respectively. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $6,181 | $2,182 | $30,441 |
| Net cash provided by (used in): |
| Operating activities | 301,396 | 306,601 | 284,268 |
| Investing activities | (383,176 | ) | (330,191 | ) | (315,293 | ) |
| Financing activities | 191,112 | 27,589 | 2,766 |
| Net increase (decrease) in cash and cash equivalents | 109,332 | 3,999 | (28,259 | ) |
| Cash and cash equivalents at end of period | $115,513 | $6,181 | $2,182 |

Operating Activities
Net cash flow provided by operating activities decreased $5.2 million in 2017 primarily due to lower net income, the timing of recovery of fuel and purchased power costs, and an increase of $13.7 million in storm spending primarily as a result of Hurricane Harvey. The decrease was partially offset by income tax refunds of $21.1 million in 2017 compared to income tax payments of $28.5 million in 2016. Entergy Texas had income tax refunds in 2017 and income tax payments in 2016 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 primarily resulted from deductible temporary differences. The income tax payments in 2016 resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit. See Note 3 to the financial statements for a discussion of the income tax audit.
Net cash flow provided by operating activities increased $22.3 million in 2016 primarily due to increased net income and a decrease of $31.8 million in income tax payments in 2016. Entergy Texas had income tax payments in 2016 and 2015 in accordance with an intercompany income tax allocation agreement. The income tax payments in 2016 resulted primarily from adjustments associated with the settlement of the 2010-2011 IRS audit. The income tax payments in 2015 resulted primarily from the results of operations and the reversal of taxable temporary differences. See Note 3 to the financial statements for a discussion of the income tax audit. The increase was partially offset by an increase of $5.2 million in interest paid in 2016 due to the issuance of $125 million of 2.55% Series first mortgage bonds in March 2016 and the timing of collections from customers.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Investing Activities
Net cash flow used in investing activities increased $53 million in 2017 primarily due to:
| • | money pool activity; |

| • | an increase of $34.9 million in distribution construction expenditures primarily due to increased storm spending primarily as a result of Hurricane Harvey and spending on digital technology improvements within the customer contact centers; |

| • | an increase of $24.4 million in fossil-fueled generation construction expenditures primarily due to a higher scope of work performed in 2017 as compared to 2016; and |

| • | an increase of $8.5 million in spending on advanced metering infrastructure. |

The increase was partially offset by a decrease of $51.7 million in transmission construction expenditures primarily due to a lower scope of work performed in 2017 as compared to 2016.
Increases in Entergy Texas’s receivable from the money pool are a use of cash flow, and Entergy Texas’s receivable from the money pool increased by $44.2 million in 2017 compared to increasing by $0.7 million in 2016. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Net cash flow used in investing activities increased $14.9 million in 2016 primarily due to increases of $27.7 million in transmission construction expenditures and $11.7 million in distribution construction expenditures primarily due to a greater scope of projects in 2016 as compared to the same period in 2015. The increase was partially offset by a $21.4 million decrease in fossil-fueled generation construction expenditures primarily due to a decreased scope of work performed during plant outages in 2016 as compared to the same period in 2015.
Financing Activities
Net cash flow provided by financing activities increased $163.5 million in 2017 primarily due to:
| • | a $115 million capital contribution received from Entergy Corporation in December 2017 in anticipation of upcoming construction expenditures; |

| • | the issuance of $150 million of 2.55% Series first mortgage bonds in December 2017 compared to the issuance of $125 million of 2.55% Series first mortgage bonds in March 2016; and |

| • | money pool activity. |

Decreases in Entergy Texas’s payable to the money pool are a use of cash flow, and Entergy Texas’s payable to the money pool decreased by $22.1 million in 2016.
Net cash flow provided by financing activities increased $24.8 million in 2016 primarily due to the retirement of $200 million of 3.6% Series first mortgage bonds in June 2015 and the issuance of $125 million of 2.55% Series first mortgage bonds in March 2016, partially offset by the issuance of $250 million of 5.15% Series first mortgage bonds in May 2015 and money pool activity.
Decreases in Entergy Texas’s payable to the money pool are a use of cash flow, and Entergy Texas’s payable to the money pool decreased by $22.1 million in 2016 compared to increasing by $22.1 million in 2015.
402
Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Capital Structure
Entergy Texas’s capitalization is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio for Entergy Texas is primarily due to the capital contribution received from Entergy Corporation and an increase in retained earnings.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 55.7 | % | 58.5 | % |
| Effect of excluding the securitization bonds | (6.3 | %) | (8.3 | %) |
| Debt to capital, excluding securitization bonds (a) | 49.4 | % | 50.2 | % |
| Effect of subtracting cash | (2.5 | %) | (0.1 | %) |
| Net debt to net capital, excluding securitization bonds (a) | 46.9 | % | 50.1 | % |

| (a) | Calculation excludes the securitization bonds, which are non-recourse to Entergy Texas. |

Net debt consists of debt less cash and cash equivalents. Debt consists of long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. Entergy Texas uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because the securitization bonds are non-recourse to Entergy Texas, as more fully described in Note 5 to the financial statements. Entergy Texas also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy Texas’s financial condition because net debt indicates Entergy Texas’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
Entergy Texas seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, Entergy Texas may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure. In addition, Entergy Texas may receive equity contributions to maintain the targeted capital structure for certain circumstances such as large transactions that would materially alter the capital structure if financed entirely with debt and reduced dividends.
Uses of Capital
Entergy Texas requires capital resources for:
| • | construction and other capital investments; |

| • | debt maturities or retirements; |

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

| • | dividend and interest payments. |

403
Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Following are the amounts of Entergy Texas’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $175 | $385 | $265 |
| Transmission | 195 | 240 | 165 |
| Distribution | 105 | 165 | 145 |
| Utility Support | 55 | 30 | 30 |
| Total | $530 | $820 | $605 |

Following are the amounts of Entergy Texas’s existing debt and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | After 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $159 | $749 | $385 | $1,168 | $2,461 |
| Operating leases (b) | $4 | $5 | $2 | $2 | $13 |
| Purchase obligations (c) | $279 | $555 | $527 | $1,188 | $2,549 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Does not include power purchase agreements that are accounted for as leases that are included in purchase obligations. |

| (c) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For Entergy Texas, it primarily includes unconditional fuel and purchased power obligations. |

In addition to the contractual obligations given above, Entergy Texas expects to contribute approximately $10.9 million to its qualified pension plans and approximately $3.2 million to other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018. See “Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
Also in addition to the contractual obligations, Entergy Texas has $15.8 million of unrecognized tax benefits and interest net of unused tax attributes and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition to routine capital spending to maintain operations, the planned capital investment estimate for Entergy Texas includes specific investments such as the Montgomery County Power Station, discussed below; transmission projects to enhance reliability, reduce congestion, and enable economic growth; distribution spending to enhance reliability and improve service to customers, including investment to support advanced metering; system improvements; and other investments. Estimated capital expenditures are subject to periodic review and modification and may vary based on the ongoing effects of regulatory constraints and requirements, environmental compliance, business opportunities, market volatility, economic trends, business restructuring, changes in project plans, and the ability to access capital. Management provides more information on long-term debt in Note 5 to the financial statements.
As discussed above in “Capital Structure,” Entergy Texas routinely evaluates its ability to pay dividends to Entergy Corporation from its earnings.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Montgomery County Power Station
In October 2016, Entergy Texas filed an application with the PUCT seeking certification that the public convenience and necessity would be served by the construction of the Montgomery County Power Station, a nominal 993 MW combined-cycle generating unit in Montgomery County, Texas on land adjacent to the existing Lewis Creek plant. The current estimated cost of the Montgomery County Power Station is $937 million, including approximately $111 million of transmission interconnection and network upgrades and other related costs. The independent monitor, who oversaw the request for proposal process, filed testimony and a report affirming that the Montgomery County Power Station was selected through an objective and fair request for proposal process that showed no undue preference to any proposal. In June 2017 parties to the proceeding filed an unopposed stipulation and settlement agreement. The stipulation contemplates that Entergy Texas’s level of cost-recovery for generation construction costs for Montgomery County Power Station is capped at $831 million, subject to certain exclusions such as force majeure events. Transmission interconnection and network upgrades and other related costs are not subject to the $831 million cap. In July 2017 the PUCT approved the stipulation. Subject to the timely receipt of other permits and approvals, commercial operation is estimated to occur by mid-2021.
Advanced Metering Infrastructure (AMI)
In April 2017 the Texas legislature enacted legislation that extends statutory support for AMI deployment to Entergy Texas and directs that if Entergy Texas elects to deploy AMI, it shall do so as rapidly as practicable. In July 2017, Entergy Texas filed an application seeking an order from the PUCT approving Entergy Texas’s deployment of AMI. Entergy Texas proposed to replace existing meters with advanced meters that enable two-way data communication; design and build a secure and reliable network to support such communications; and implement support systems. AMI is intended to serve as the foundation of Entergy Texas’s modernized power grid. The filing included an estimate of implementation costs for AMI of $132 million. The filing identified a number of quantified and unquantified benefits, with Entergy Texas showing that its AMI deployment is expected to produce nominal net operational cost savings to customers of $33 million. Entergy Texas also sought to continue to include in rate base the remaining book value, approximately $41 million at December 31, 2016, of existing meters that will be retired as part of the AMI deployment and also to depreciate those assets using current depreciation rates. Entergy Texas proposed a seven-year depreciable life for the new advanced meters, the three-year deployment of which is expected to begin in 2019. Entergy Texas also proposed a surcharge tariff to recover the reasonable and necessary costs it has and will incur under the deployment plan for the full deployment of advanced meters. Further, Entergy Texas sought approval of fees that would be charged to customers who choose to opt out of receiving service through an advanced meter and instead receive electric service with a non-standard meter. In October 2017, Entergy Texas and other parties entered into and filed an unopposed stipulation and settlement agreement, permitting deployment of AMI with limited modifications. The PUCT approved the stipulation and settlement agreement in December 2017. Consistent with the approval, deployment of the communications network is expected to begin in 2018. Entergy Texas expects to recover the remaining net book value of its existing meters through a regulatory asset to be amortized at current depreciation rates.
Sources of Capital
Entergy Texas’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt or preferred stock issuances; and |

| • | bank financing under new or existing facilities. |

Entergy Texas may refinance, redeem, or otherwise retire debt prior to maturity, to the extent market conditions and interest and dividend rates are favorable.
405
Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
All debt and common and preferred stock issuances by Entergy Texas require prior regulatory approval. Debt issuances are also subject to issuance tests set forth in its bond indenture and other agreements. Entergy Texas has sufficient capacity under these tests to meet its foreseeable capital needs.
Entergy Texas’s receivables from or (payables to) the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| $44,903 | $681 | ($22,068) | $306 |

See Note 4 to the financial statements for a description of the money pool.
Entergy Texas has a credit facility in the amount of $150 million scheduled to expire in August 2022. The credit facility allows Entergy Texas to issue letters of credit against $30 million of the borrowing capacity of the facility. As of December 31, 2017, there were no cash borrowings and $25.6 million of letters of credit outstanding under the credit facility. In addition, Entergy Texas is a party to an uncommitted letter of credit facility as a means to post collateral to support its obligations to MISO. As of December 31, 2017, a $22.8 million letter of credit was outstanding under Entergy Texas’s letter of credit facility. See Note 4 to the financial statements for additional discussion of the credit facilities.
Entergy Texas obtained authorizations from the FERC through October 2019 for short-term borrowings, not to exceed an aggregate amount of $200 million at any time outstanding, and long-term borrowings and security issuances. See Note 4 to the financial statements for further discussion of Entergy Texas’s short-term borrowing limits.
State and Local Rate Regulation and Fuel-Cost Recovery
The rates that Entergy Texas charges for its services significantly influence its financial position, results of operations, and liquidity. Entergy Texas is regulated and the rates charged to its customers are determined in regulatory proceedings. The PUCT, a governmental agency, is primarily responsible for approval of the rates charged to customers.
Filings with the PUCT
2011 Rate Case
In November 2011, Entergy Texas filed a rate case requesting a $112 million base rate increase reflecting a 10.6% return on common equity based on an adjusted June 2011 test year. The rate case also proposed a purchased power recovery rider. On January 12, 2012, the PUCT voted not to address the purchased power recovery rider in the rate case, but the PUCT voted to set a baseline in the rate case proceeding that would be applicable if a purchased power capacity rider is approved in a separate proceeding. In April 2012 the PUCT Staff filed direct testimony recommending a base rate increase of $66 million and a 9.6% return on common equity. The PUCT Staff, however, subsequently filed a statement of position in the proceeding indicating that it was still evaluating the position it would ultimately take in the case regarding Entergy Texas’s recovery of purchased power capacity costs and Entergy Texas’s proposal to defer its MISO transition expenses. In April 2012, Entergy Texas filed rebuttal testimony indicating a revised request for a $105 million base rate increase. A hearing was held in late-April through early-May 2012.
In September 2012 the PUCT issued an order approving a $28 million rate increase, effective July 2012. The order included a finding that “a return on common equity (ROE) of 9.80 percent will allow [Entergy Texas] a reasonable opportunity to earn a reasonable return on invested capital.” The order also provided for increases in depreciation rates and the annual storm reserve accrual. The order also reduced Entergy Texas’s proposed purchased power capacity costs, stating that they are not known and measurable; reduced Entergy Texas’s regulatory assets associated with Hurricane Rita; excluded from rate recovery capitalized financially-based incentive compensation; included $1.6 million of MISO transition expense in base rates; and reduced Entergy’s Texas’s fuel reconciliation recovery by $4
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
million because the PUCT disagreed with the line-loss factor used in the calculation. After considering the progress of the proceeding in light of the PUCT order, Entergy Texas recorded in the third quarter 2012 an approximate $24 million charge to recognize that assets associated with Hurricane Rita, financially-based incentive compensation, and fuel recovery are no longer probable of recovery. Entergy Texas believed that it was entitled to recover these prudently incurred costs, however, and it filed a motion for rehearing regarding these and several other issues in the PUCT’s order on October 4, 2012. Several other parties also filed motions for rehearing of the PUCT’s order. The PUCT subsequently denied rehearing of substantive issues. Several parties, including Entergy Texas, appealed various aspects of the PUCT’s order to the Travis County District Court. A hearing was held in July 2014. In October 2014 the Travis County District Court issued an order upholding the PUCT’s decision except as to the line-loss factor issue referenced above, which was found in favor of Entergy Texas. In November 2014, Entergy Texas and other parties, including the PUCT, appealed the Travis County District Court decision to the Third Court of Appeals. Oral argument before the court panel was held in September 2015. In April 2016 the Third Court of Appeals issued its opinion affirming the District Court’s decision on all points. Entergy Texas petitioned the Texas Supreme Court to hear its appeal of the Third Court’s ruling. In September 2017 the Texas Supreme Court denied the petitions for review. Entergy Texas filed a motion for rehearing of the Texas Supreme Court’s denial of the petition for review. In January 2018 the Texas Supreme Court denied Entergy Texas’s motion for rehearing.
Distribution cost recovery factor (DCRF) rider
In September 2015, Entergy Texas filed to amend its DCRF rider. Entergy Texas requested an increase in recovery under the rider of $6.5 million, for a total collection of $10.1 million annually from retail customers. In October 2015 intervenors and PUCT staff filed testimony opposing, in part, Entergy Texas’s request. In November 2015, Entergy Texas and the parties filed an unopposed settlement agreement and supporting documents. The settlement established an annual revenue requirement of $8.65 million for the amended DCRF rider, with the resulting rates effective for usage on and after January 1, 2016. The PUCT approved the settlement agreement in February 2016.
In June 2017, Entergy Texas filed an application to amend its DCRF rider by increasing the total collection from $8.65 million to approximately $19 million. In July 2017, Entergy Texas, the PUCT, and the two other parties in the proceeding entered into an unopposed stipulation and settlement agreement resulting in an amended DCRF annual revenue requirement of $18.3 million, with the resulting rates effective for usage no later than October 1, 2017. In September 2017 the PUCT issued its final order approving the unopposed stipulation and settlement agreement. The amended DCRF rider rates became effective for usage on and after September 1, 2017.
Transmission cost recovery factor (TCRF) rider
In September 2015, Entergy Texas filed for a TCRF rider requesting a $13 million increase, incremental to base rates. Testimony was filed in November 2015, with the PUCT staff and other parties proposing various disallowances involving, among other things, MISO charges, vegetation management costs, and bad debt expenses that would reduce the requested increase by approximately $2 million. In addition to those recommended disallowances, a number of parties recommended that Entergy Texas’s request be reduced by an additional $3.4 million to account for load growth since base rates were last set. A hearing on the merits was held in December 2015. In February 2016 a State Office of Administrative Hearings ALJ issued a proposal for decision recommending that the PUCT disallow approximately $2 million from Entergy Texas’s $13 million request, but recommending that the PUCT not accept the load growth offset. In June 2016 the PUCT indicated that it would take up in a future rulemaking project the issue of whether a load growth adjustment should apply to a TCRF. In July 2016 the PUCT issued an order generally accepting the proposal for decision but declining to adjust the TCRF baseline in two instances as recommended by the ALJ, which resulted in a total annual allowance of approximately $10.5 million. The PUCT also ordered its staff and Entergy Texas to track all spare autotransformer transfers going forward so that it could address the appropriate accounting treatment and prudence of such transfers in Entergy Texas’s next base rate case. Entergy Texas implemented the TCRF rider beginning with September 2016 bills.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
In September 2016, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed amended TCRF rider is designed to collect approximately $29.5 million annually from Entergy Texas’s retail customers. This amount includes the approximately $10.5 million annually that Entergy Texas is currently authorized to collect through the TCRF rider, as discussed above. In December 2016, concurrent with the 2016 fuel reconciliation stipulation and settlement agreement discussed above, Entergy Texas and the PUCT reached a settlement agreeing to the amended TCRF annual revenue requirement of $29.5 million. As discussed below, the terms of the two settlements are interdependent. The PUCT approved the settlement and issued a final order in March 2017. Entergy Texas implemented the amended TCRF rider beginning with bills covering usage on and after March 20, 2017.
Fuel and Purchased Power Cost Recovery
Entergy Texas’s rate schedules include a fixed fuel factor to recover fuel and purchased power costs, including interest, not recovered in base rates. Semi-annual revisions of the fixed fuel factor are made in March and September based on the market price of natural gas and changes in fuel mix. The amounts collected under Entergy Texas’s fixed fuel factor and any interim surcharge or refund are subject to fuel reconciliation proceedings before the PUCT.
In August 2014, Entergy Texas filed an application seeking PUCT approval to implement an interim fuel refund of approximately $24.6 million for over-collected fuel costs incurred during the months of November 2012 through April 2014. This refund resulted from (i) applying $48.6 million in bandwidth remedy payments that Entergy Texas received in May 2014 related to the June - December 2005 period to Entergy Texas’s $8.7 million under-recovered fuel balance as of April 30, 2014 and (ii) netting that fuel balance against the $15.3 million bandwidth remedy payment that Entergy Texas made related to calendar year 2013 production costs. Also in August 2014, Entergy Texas filed an unopposed motion for interim rates to implement these refunds for most customers over a two-month period commencing with September 2014. The PUCT issued its order approving the interim relief in August 2014 and Entergy Texas completed the refunds in October 2014. Parties intervened in this matter, and all parties agreed that the proceeding should be bifurcated such that the proposed interim refund would become final in a separate proceeding, which refund was approved by the PUCT in March 2015. In July 2015 certain parties filed briefs in the open proceeding asserting that Entergy Texas should refund to retail customers an additional $10.9 million in bandwidth remedy payments Entergy Texas received related to calendar year 2006 production costs. In October 2015 an ALJ issued a proposal for decision recommending that the additional $10.9 million in bandwidth remedy payments be refunded to retail customers. In January 2016 the PUCT issued its order affirming the ALJ’s recommendation, and Entergy Texas filed a motion for rehearing of the PUCT’s decision, which the PUCT denied. In March 2016, Entergy Texas filed a complaint in Federal District Court for the Western District of Texas and a petition in the Travis County (State) District Court appealing the PUCT’s decision. The pending appeals did not stay the PUCT’s decision. In April 2016, Entergy Texas filed with the PUCT an application to refund to customers approximately $56.2 million. The refund resulted from (i) $41.8 million of fuel cost recovery over-collections through February 2016, (ii) the $10.9 million in bandwidth remedy payments, discussed above, that Entergy Texas received related to calendar year 2006 production costs, and (iii) $3.5 million in bandwidth remedy payments that Entergy Texas received related to 2006-2008 production costs. In June 2016, Entergy Texas filed an unopposed settlement agreement that added additional over-recovered fuel costs for the months of March and April 2016. The settlement resulted in a $68 million refund. The ALJ approved the refund on an interim basis to be made to most customers over a four-month period beginning with the first billing cycle of July 2016. In July 2016 the PUCT issued an order approving the interim refund. The federal appeal of the PUCT’s January 2016 decision was heard in December 2016, and the Federal District Court granted Entergy Texas’s requested relief. In January 2017 the PUCT and an intervenor filed petitions for appeal to the U.S. Court of Appeals for the Fifth Circuit of the Federal District Court ruling. Oral argument was held before the U.S. Court of Appeals for the Fifth Circuit in February 2018, and a decision is pending. The State District Court appeal of the PUCT’s January 2016 decision also remains pending.
In July 2016, Entergy Texas filed an application to reconcile its fuel and purchased power costs for the period April 1, 2013 through March 31, 2016. Under a recent PUCT rule change, a fuel reconciliation is required to be filed at least once every three years and outside of a base rate case filing. During the reconciliation period, Entergy Texas incurred approximately $1.77 billion in Texas jurisdictional eligible fuel and purchased power expenses, net of certain revenues credited to such expenses and other adjustments. Entergy Texas estimated an over-recovery balance of
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
approximately $19.3 million, including interest, which Entergy Texas requested authority to carry over as the beginning balance for the subsequent reconciliation period beginning Apri1 2016. Entergy Texas also noted, however, that the estimated $19.3 million over collection was being refunded to customers as a portion of the interim fuel refund beginning with the first billing cycle of July 2016, discussed above. Entergy Texas also requested a prudence finding for each of the fuel-related contracts and arrangements entered into or modified during the reconciliation period that have not been reviewed by the PUCT in a prior proceeding. In December 2016, Entergy Texas entered into a stipulation and settlement agreement resulting in a $6 million disallowance not associated with any particular issue raised and a refund of the over-recovery balance of $21 million as of November 30, 2016, to most customers beginning April 2017 through June 2017. This settlement was developed concurrently with the stipulation and settlement agreement in the 2016 transmission cost recovery factor rider amendment discussed above, and the terms and conditions in both settlements are interdependent. The fuel reconciliation settlement was approved by the PUCT in March 2017 and the refunds were made.
In June 2017, Entergy Texas filed an application for a fuel refund of approximately $30.7 million for the months of December 2016 through April 2017. For most customers, the refunds flowed through bills for the months of July 2017 through September 2017. The fuel refund was approved by the PUCT in August 2017.
In December 2017, Entergy Texas filed an application for a fuel refund of approximately $30.5 million for the months of May 2017 through October 2017. Also in December 2017, the PUCT’s ALJ approved the refund on an interim basis. For most customers, the refunds flowed through bills beginning January 2018 and will continue through March 2018. A final decision in this matter remains pending.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Nuclear Matters
See the “Nuclear Matters” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of nuclear matters.
Industrial and Commercial Customers
Entergy Texas’s large industrial and commercial customers continually explore ways to reduce their energy costs. In particular, cogeneration is an option available to a portion of Entergy Texas’s industrial customer base. Entergy Texas responds by working with industrial and commercial customers and negotiating electric service contracts to provide, under existing rate schedules, competitive rates that match specific customer needs and load profiles. Entergy Texas actively participates in economic development, customer retention, and reclamation activities to increase industrial and commercial demand, from both new and existing customers.
Environmental Risks
Entergy Texas’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that Entergy Texas is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Critical Accounting Estimates
The preparation of Entergy Texas’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and the potential for future changes in the assumptions and measurements that could produce estimates that would have a material effect on the presentation of Entergy Texas’s financial position or results of operations.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Unbilled Revenue
See “Unbilled Revenue” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the unbilled revenue amounts.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets.
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
Entergy Texas’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries’ Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
410
Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension and qualified projected benefit obligation cost to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Qualified Projected Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $701 | $11,425 |
| Rate of return on plan assets | (0.25%) | $868 | $— |
| Rate of increase in compensation | 0.25% | $301 | $1,488 |

The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated Postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $231 | $3,481 |
| Health care cost trend | 0.25% | $413 | $2,907 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for Entergy Texas in 2017 was $3.5 million. Entergy Texas anticipates 2018 qualified pension income to be $4.2 million. In 2016, Entergy Texas refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $3.6 million. Entergy Texas contributed $17 million to its qualified pension plans in 2017 and estimates 2018 pension contributions will be approximately $10.9 million, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total postretirement health care and life insurance benefit income for Entergy Texas in 2017 was $1.8 million. Entergy Texas expects 2018 postretirement health care and life insurance benefit income to approximate $6.2 million. In 2016, Entergy Texas refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $1.1 million. Entergy Texas contributed $3.1 million to its other postretirement plans in 2017 and estimates 2018 contributions will be approximately $3.2 million.
Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
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Entergy Texas, Inc. and SubsidiariesManagement’s Financial Discussion and Analysis
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
412
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and Board of Directors of
Entergy Texas, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Entergy Texas, Inc. and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of income, cash flows, and changes in common equity (pages 414 through 418 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
413
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $1,544,893 | $1,615,619 | $1,707,203 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 225,517 | 271,968 | 277,810 |
| Purchased power | 610,279 | 616,597 | 709,947 |
| Other operation and maintenance | 230,616 | 220,566 | 254,731 |
| Asset write-off | — | — | 23,472 |
| Taxes other than income taxes | 79,254 | 70,973 | 72,945 |
| Depreciation and amortization | 117,520 | 107,026 | 102,410 |
| Other regulatory charges - net | 82,328 | 82,879 | 82,243 |
| TOTAL | 1,345,514 | 1,370,009 | 1,523,558 |
| OPERATING INCOME | 199,379 | 245,610 | 183,645 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 6,722 | 7,617 | 5,678 |
| Interest and investment income | 981 | 987 | 684 |
| Miscellaneous - net | 193 | (746 | ) | (798 | ) |
| TOTAL | 7,896 | 7,858 | 5,564 |
| INTEREST EXPENSE |
| Interest expense | 86,719 | 87,776 | 86,024 |
| Allowance for borrowed funds used during construction | (4,098 | ) | (4,943 | ) | (3,690 | ) |
| TOTAL | 82,621 | 82,833 | 82,334 |
| INCOME BEFORE INCOME TAXES | 124,654 | 170,635 | 106,875 |
| Income taxes | 48,481 | 63,097 | 37,250 |
| NET INCOME | $76,173 | $107,538 | $69,625 |
| See Notes to Financial Statements. |

414
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $76,173 | $107,538 | $69,625 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation and amortization | 117,520 | 107,026 | 102,410 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 42,119 | 20,794 | (23,292 | ) |
| Changes in assets and liabilities: |
| Receivables | (15,934 | ) | (9,300 | ) | 21,443 |
| Fuel inventory | (25,054 | ) | 9,765 | 2,960 |
| Accounts payable | 32,842 | (22,462 | ) | (16,913 | ) |
| Prepaid taxes and taxes accrued | 30,308 | 10,018 | 3,484 |
| Interest accrued | (421 | ) | (3,229 | ) | (551 | ) |
| Deferred fuel costs | 12,758 | 29,419 | 36,985 |
| Other working capital accounts | (7,852 | ) | (3,354 | ) | 2,468 |
| Provisions for estimated losses | 2,531 | (1,735 | ) | (2,899 | ) |
| Other regulatory assets | 184,574 | 74,389 | 125,133 |
| Other regulatory liabilities | 410,968 | 2,106 | 1,271 |
| Deferred tax rate change recognized as regulatory liability/asset | (520,547 | ) | — | — |
| Pension and other postretirement liabilities | (49,445 | ) | (10,204 | ) | (33,474 | ) |
| Other assets and liabilities | 10,856 | (4,170 | ) | (4,382 | ) |
| Net cash flow provided by operating activities | 301,396 | 306,601 | 284,268 |
| INVESTING ACTIVITIES |
| Construction expenditures | (348,027 | ) | (337,963 | ) | (320,408 | ) |
| Allowance for equity funds used during construction | 6,874 | 7,743 | 5,751 |
| Insurance proceeds | 2,431 | — | — |
| Changes in money pool receivable - net | (44,222 | ) | (681 | ) | 306 |
| Changes in securitization account | (232 | ) | 710 | (942 | ) |
| Net cash flow used in investing activities | (383,176 | ) | (330,191 | ) | (315,293 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | 148,277 | 123,502 | 246,607 |
| Retirement of long-term debt | (71,683 | ) | (68,593 | ) | (265,734 | ) |
| Capital contributions from parent | 115,000 | — | — |
| Change in money pool payable - net | — | (22,068 | ) | 22,068 |
| Other | (482 | ) | (5,252 | ) | (175 | ) |
| Net cash flow provided by financing activities | 191,112 | 27,589 | 2,766 |
| Net increase (decrease) in cash and cash equivalents | 109,332 | 3,999 | (28,259 | ) |
| Cash and cash equivalents at beginning of period | 6,181 | 2,182 | 30,441 |
| Cash and cash equivalents at end of period | $115,513 | $6,181 | $2,182 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $84,556 | $88,489 | $83,290 |
| Income taxes | ($21,107 | ) | $28,523 | $60,359 |
| See Notes to Financial Statements. |

415
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents: |
| Cash | $32 | $1,216 |
| Temporary cash investments | 115,481 | 4,965 |
| Total cash and cash equivalents | 115,513 | 6,181 |
| Securitization recovery trust account | 37,683 | 37,451 |
| Accounts receivable: |
| Customer | 74,382 | 71,803 |
| Allowance for doubtful accounts | (463 | ) | (828 | ) |
| Associated companies | 90,629 | 39,447 |
| Other | 9,831 | 14,756 |
| Accrued unbilled revenues | 50,682 | 39,727 |
| Total accounts receivable | 225,061 | 164,905 |
| Fuel inventory - at average cost | 42,731 | 37,177 |
| Materials and supplies - at average cost | 38,605 | 36,631 |
| Prepayments and other | 19,710 | 18,599 |
| TOTAL | 479,303 | 300,944 |
| OTHER PROPERTY AND INVESTMENTS |
| Investments in affiliates - at equity | 457 | 600 |
| Non-utility property - at cost (less accumulated depreciation) | 376 | 376 |
| Other | 19,235 | 18,801 |
| TOTAL | 20,068 | 19,777 |
| UTILITY PLANT |
| Electric | 4,569,295 | 4,274,069 |
| Construction work in progress | 102,088 | 111,227 |
| TOTAL UTILITY PLANT | 4,671,383 | 4,385,296 |
| Less - accumulated depreciation and amortization | 1,579,387 | 1,526,057 |
| UTILITY PLANT - NET | 3,091,996 | 2,859,239 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Regulatory asset for income taxes - net | — | 105,816 |
| Other regulatory assets (includes securitization property of $313,123 as of December 31, 2017 and $384,609 as of December 31, 2016) | 661,398 | 740,156 |
| Other | 26,973 | 7,149 |
| TOTAL | 688,371 | 853,121 |
| TOTAL ASSETS | $4,279,738 | $4,033,081 |
| See Notes to Financial Statements. |

416
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Accounts payable: |
| Associated companies | $59,347 | $47,867 |
| Other | 126,095 | 77,342 |
| Customer deposits | 40,925 | 44,419 |
| Taxes accrued | 45,659 | 15,351 |
| Interest accrued | 25,556 | 25,977 |
| Deferred fuel costs | 67,301 | 54,543 |
| Other | 8,132 | 9,388 |
| TOTAL | 373,015 | 274,887 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 544,642 | 1,027,647 |
| Accumulated deferred investment tax credits | 11,983 | 12,934 |
| Regulatory liability for income taxes - net | 412,620 | — |
| Other regulatory liabilities | 6,850 | 8,502 |
| Asset retirement cost liabilities | 6,835 | 6,470 |
| Accumulated provisions | 10,115 | 7,584 |
| Pension and other postretirement liabilities | 17,853 | 67,313 |
| Long-term debt (includes securitization bonds of $358,104 as of December 31, 2017 and $429,043 as of December 31, 2016) | 1,587,150 | 1,508,407 |
| Other | 48,508 | 50,343 |
| TOTAL | 2,646,556 | 2,689,200 |
| Commitments and Contingencies |
| COMMON EQUITY |
| Common stock, no par value, authorized 200,000,000 shares; issued and outstanding 46,525,000 shares in 2017 and 2016 | 49,452 | 49,452 |
| Paid-in capital | 596,994 | 481,994 |
| Retained earnings | 613,721 | 537,548 |
| TOTAL | 1,260,167 | 1,068,994 |
| TOTAL LIABILITIES AND EQUITY | $4,279,738 | $4,033,081 |
| See Notes to Financial Statements. |

417
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Common Equity |
| Common Stock | Paid-in Capital | Retained Earnings | Total |
| (In Thousands) |
| Balance at December 31, 2014 | $49,452 | $481,994 | $360,385 | $891,831 |
| Net income | — | — | 69,625 | 69,625 |
| Balance at December 31, 2015 | $49,452 | $481,994 | $430,010 | $961,456 |
| Net income | — | — | 107,538 | 107,538 |
| Balance at December 31, 2016 | $49,452 | $481,994 | $537,548 | $1,068,994 |
| Net income | — | — | 76,173 | 76,173 |
| Capital contributions from parent | — | 115,000 | — | 115,000 |
| Balance at December 31, 2017 | $49,452 | $596,994 | $613,721 | $1,260,167 |
| See Notes to Financial Statements. |

418
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (In Thousands) |
| Operating revenues | $1,544,893 | $1,615,619 | $1,707,203 | $1,851,982 | $1,728,799 |
| Net income | $76,173 | $107,538 | $69,625 | $74,804 | $57,881 |
| Total assets | $4,279,738 | $4,033,081 | $3,898,582 | $3,897,989 | $3,909,470 |
| Long-term obligations (a) | $1,587,150 | $1,508,407 | $1,451,967 | $1,268,835 | $1,544,549 |
| (a) Includes long-term debt (excluding currently maturing debt). |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Millions) |
| Electric Operating Revenues: |
| Residential | $636 | $613 | $633 | $654 | $596 |
| Commercial | 378 | 356 | 369 | 384 | 327 |
| Industrial | 384 | 365 | 372 | 422 | 325 |
| Governmental | 25 | 24 | 25 | 26 | 24 |
| Total retail | 1,423 | 1,358 | 1,399 | 1,486 | 1,272 |
| Sales for resale: |
| Associated companies | 58 | 178 | 259 | 316 | 369 |
| Non-associated companies | 22 | 40 | 14 | 23 | 47 |
| Other | 42 | 40 | 35 | 27 | 41 |
| Total | $1,545 | $1,616 | $1,707 | $1,852 | $1,729 |
| Billed Electric Energy Sales (GWh): |
| Residential | 5,716 | 5,836 | 5,889 | 5,810 | 5,726 |
| Commercial | 4,548 | 4,570 | 4,548 | 4,471 | 4,402 |
| Industrial | 7,521 | 7,493 | 7,036 | 7,140 | 6,404 |
| Governmental | 273 | 283 | 276 | 277 | 282 |
| Total retail | 18,058 | 18,182 | 17,749 | 17,698 | 16,814 |
| Sales for resale: |
| Associated companies | 1,534 | 4,625 | 5,853 | 4,763 | 6,287 |
| Non-associated companies | 729 | 1,086 | 254 | 200 | 712 |
| Total | 20,321 | 23,893 | 23,856 | 22,661 | 23,813 |

419
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS
System Energy’s principal asset currently consists of an ownership interest and a leasehold interest in Grand Gulf. The capacity and energy from its 90% interest is sold under the Unit Power Sales Agreement to its only four customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. System Energy’s operating revenues are derived from the allocation of the capacity, energy, and related costs associated with its 90% interest in Grand Gulf pursuant to the Unit Power Sales Agreement. Payments under the Unit Power Sales Agreement are System Energy’s only source of operating revenues.
Results of Operations
Net Income
2017 Compared to 2016
Net income decreased $18.1 million primarily due to provisions against revenue recorded in 2017 in connection with the complaint against System Energy’s return on equity and a higher effective income tax rate in 2017. See “Federal Regulation - Complaint Against System Energy” below for further discussion of the complaint against System Energy.
2016 Compared to 2015
Net income decreased $14.6 million primarily due to a higher effective income tax rate in 2016.
Income Taxes
The effective income tax rates for 2017, 2016, and 2015 were 47.1%, 42.3%, and 32.3%, respectively. The difference in the effective income tax rate of 47.1% for 2017 versus the statutory rate of 35% for 2017 was primarily due to certain book and tax differences related to utility plant items and state income taxes. See Note 3 to the financial statements for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.
Income Tax Legislation
See the “Income Tax Legislation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the Tax Cuts and Jobs Act, the federal income tax legislation enacted in December 2017. Note 3 to the financial statements contains additional discussion of the effect of the Act on 2017 results of operations and financial position, the provisions of the Act, and the uncertainties associated with accounting for the Act, and Note 2 to the financial statements discusses proceedings commenced or other responses by Entergy’s regulators to the Act.
420
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
Liquidity and Capital Resources
Cash Flow
Cash flows for the years ended December 31, 2017, 2016, and 2015 were as follows:
| 2017 | 2016 | 2015 |
| (In Thousands) |
| Cash and cash equivalents at beginning of period | $245,863 | $230,661 | $223,179 |
| Net cash provided by (used in): |
| Operating activities | 371,278 | 341,939 | 502,536 |
| Investing activities | (174,250 | ) | (232,602 | ) | (137,562 | ) |
| Financing activities | (155,704 | ) | (94,135 | ) | (357,492 | ) |
| Net increase in cash and cash equivalents | 41,324 | 15,202 | 7,482 |
| Cash and cash equivalents at end of period | $287,187 | $245,863 | $230,661 |

Operating Activities
Net cash flow provided by operating activities increased $29.3 million in 2017 primarily due to:
| • | a decrease in spending of $35.7 million on nuclear refueling outages in 2017 as compared to the prior year; |

| • | the timing of collection of receivables; and |

| • | a decrease of $9.9 million in interest paid in 2017. |

The increase was partially offset by:
| • | proceeds of $28.4 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements for a discussion of the spent nuclear fuel litigation; and |

| • | a decrease of $21.3 million in income tax refunds in 2017. System Energy received income tax refunds in 2017 and 2016 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2017 and 2016 resulted primarily from the adoption of a new accounting method for income tax purposes in which System Energy will treat its nuclear decommissioning costs as production costs of electricity includable in cost of goods sold. See Note 3 to the financial statements for further discussion of the adoption of the new accounting method. |

Net cash flow provided by operating activities decreased $160.6 million in 2016 primarily due to:
| • | a decrease of $90.5 million in income tax refunds in 2016. System Energy received income tax refunds in 2016 and 2015 in accordance with an intercompany income tax allocation agreement. The income tax refunds in 2016 and 2015 resulted primarily from the adoption of a new accounting method for income tax purposes in which System Energy will treat its nuclear decommissioning costs as production costs of electricity includable in cost of goods sold. See Note 3 to the financial statements for further discussion of the adoption of the new accounting method; and |

| • | an increase in spending of $35.1 million on nuclear refueling outages in 2016 as compared to 2015. |

The decrease was partially offset by proceeds of $28.4 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously expensed. See Note 8 to the financial statements for a discussion of the spent nuclear fuel litigation.
421
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
Investing Activities
Net cash flow used in investing activities decreased $58.4 million in 2017 primarily due to a decrease of $159.4 million as a result of fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle. The decrease was partially offset by money pool activity and proceeds of $15.8 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation.
Increases in System Energy’s receivable from the money pool are a use of cash flow and System Energy’s receivable from the money pool increased by $77.9 million in 2017 compared to decreasing by $6.1 million in 2016. The money pool is an inter-company borrowing arrangement designed to reduce the Utility subsidiaries’ need for external short-term borrowings.
Net cash flow used in investing activities increased $95 million in 2016 primarily due to:
| • | fluctuations in nuclear fuel activity because of variations from year to year in the timing and pricing of fuel reload requirements in the Utility business, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and |

| • | an increase in nuclear construction expenditures primarily as a result of a higher scope of work performed in 2016 on Grand Gulf outage projects, partially offset by decreased spending in 2016 on compliance with NRC post-Fukushima requirements. |

The increase was partially offset by money pool activity and proceeds of $15.8 million received in August 2016 from the DOE resulting from litigation regarding spent nuclear fuel storage costs that were previously capitalized. See Note 8 to the financial statements for discussion of the spent nuclear fuel litigation.
Decreases in System Energy’s receivable from the money pool are a source of cash flow and System Energy’s receivable from the money pool decreased by $6.1 million in 2016 compared to increasing by $37.6 million in 2015.
Financing Activities
Net cash flow used in financing activities increased $61.6 million in 2017 primarily due to:
| • | net repayments of short-term borrowings of $49.1 million on the nuclear fuel company variable interest entity’s credit facility in 2017 as compared to net short-term borrowings of $66.9 million on the nuclear fuel variable interest entity’s credit facility in 2016; and |

| • | the payment in February 2017, at maturity, of $50 million of the System Energy nuclear fuel company variable interest entity’s 4.02% Series H notes. |

The increase was partially offset by:
| • | net long-term borrowings of $50 million in 2017 on the nuclear fuel company variable interest entity’s credit facility; |

| • | a decrease of $32.4 million in common stock dividends and distributions in 2017 in order to maintain System Energy’s targeted capital structure; and |

| • | the repayment in May 2016 of $22 million of 5.875% pollution control revenue bonds due 2022 issued on behalf of System Energy. |

422
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
Net cash flow used in financing activities decreased $263.4 million in 2016 primarily due to:
| • | net borrowings of $66.9 million on the nuclear fuel company variable interest entity’s credit facility in 2016 compared to net repayments of $20.4 million on the nuclear fuel company variable interest entity’s credit facility in 2015; |

| • | a decrease of $61.8 million in common stock dividends and distributions as a result of lower operating cash flows and higher nuclear fuel purchases in 2016 as compared to the prior year; |

| • | the redemption in April 2015, at maturity, of $60 million of System Energy nuclear fuel company variable interest entity’s 5.33% Series G notes; and |

| • | redemption in May 2015 of $35 million and in November 2015 of $25 million of System Energy’s 5.875% Series governmental bonds due 2022. |

The decrease was partially offset by the repayment in May 2016 of $22 million of 5.875% pollution control revenue bonds due 2022 issued on behalf of System Energy.
See Note 5 to the financial statements for details of long-term debt.
Capital Structure
System Energy’s capitalization is balanced between equity and debt, as shown in the following table. The decrease in the debt to capital ratio for System Energy is primarily due to the payment in February 2017, at maturity, of $50 million of the System Energy nuclear fuel company variable interest entity’s 4.02% Series H notes.
| December 31, 2017 | December 31, 2016 |
| Debt to capital | 44.5 | % | 45.5 | % |
| Effect of subtracting cash | (16.0 | %) | (12.0 | %) |
| Net debt to net capital | 28.5 | % | 33.5 | % |

Net debt consists of debt less cash and cash equivalents. Debt consists of short-term borrowings and long-term debt, including the currently maturing portion. Capital consists of debt and common equity. Net capital consists of capital less cash and cash equivalents. System Energy uses the debt to capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition. System Energy uses the net debt to net capital ratio in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating System Energy’s financial condition because net debt indicates System Energy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.
System Energy seeks to optimize its capital structure in accordance with its regulatory requirements and to control its cost of capital while also maintaining equity capitalization at a level consistent with investment-grade debt ratings. To the extent that operating cash flows are in excess of planned investments, cash may be used to reduce outstanding debt or may be paid as a dividend, or both, in appropriate amounts to maintain the targeted capital structure. To the extent that operating cash flows are insufficient to support planned investments, System Energy may issue incremental debt or reduce dividends, or both, to maintain its targeted capital structure.
Uses of Capital
System Energy requires capital resources for:
| • | construction and other capital investments; |

| • | debt maturities or retirements; |

423
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
| • | working capital purposes, including the financing of fuel costs; and |

| • | dividend, distribution, and interest payments. |

Following are the amounts of System Energy’s planned construction and other capital investments.
| 2018 | 2019 | 2020 |
| (In Millions) |
| Planned construction and capital investment: |
| Generation | $180 | $130 | $150 |
| Utility Support | 15 | 15 | 10 |
| Total | $195 | $145 | $160 |

Following are the amounts of System Energy’s existing debt and lease obligations (includes estimated interest payments) and other purchase obligations.
| 2018 | 2019-2020 | 2021-2022 | After 2022 | Total |
| (In Millions) |
| Long-term debt (a) | $124 | $121 | $199 | $493 | $937 |
| Purchase obligations (b) | $38 | $39 | $34 | $— | $111 |

| (a) | Includes estimated interest payments. Long-term debt is discussed in Note 5 to the financial statements. |

| (b) | Purchase obligations represent the minimum purchase obligation or cancellation charge for contractual obligations to purchase goods or services. For System Energy, it includes nuclear fuel purchase obligations. |

In addition to the contractual obligations given above, System Energy expects to contribute approximately $13.8 million to its qualified pension plans and approximately $16 thousand to other postretirement health care and life insurance plans in 2018, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018. See “Critical Accounting Estimates – Qualified Pension and Other Postretirement Benefits” below for a discussion of qualified pension and other postretirement benefits funding.
Also in addition to the contractual obligations, System Energy has $433 million of unrecognized tax benefits and interest net of unused tax attributes and payments for which the timing of payments beyond 12 months cannot be reasonably estimated due to uncertainties in the timing of effective settlement of tax positions. See Note 3 to the financial statements for additional information regarding unrecognized tax benefits.
In addition to routine spending to maintain operations, the planned capital investment estimate includes specific Grand Gulf investments and initiatives.
As a wholly-owned subsidiary, System Energy dividends its earnings to Entergy Corporation at a percentage determined monthly.
Sources of Capital
System Energy’s sources to meet its capital requirements include:
| • | internally generated funds; |

| • | cash on hand; |

| • | debt issuances; and |

| • | bank financing under new or existing facilities. |

424
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
System Energy may refinance, redeem, or otherwise retire debt prior to maturity, to the extent market conditions and interest and dividend rates are favorable.
All debt and common stock issuances by System Energy require prior regulatory approval. Debt issuances are also subject to issuance tests set forth in its bond indentures and other agreements. System Energy has sufficient capacity under these tests to meet its foreseeable capital needs.
System Energy’s receivables from the money pool were as follows as of December 31 for each of the following years.
| 2017 | 2016 | 2015 | 2014 |
| (In Thousands) |
| $111,667 | $33,809 | $39,926 | $2,373 |

See Note 4 to the financial statements for a description of the money pool.
The System Energy nuclear fuel company variable interest entity has a credit facility in the amount of $120 million scheduled to expire in May 2019. As of December 31, 2017, $17.8 million in letters of credit to support a like amount of commercial paper issued and $50 million in loans were outstanding under the System Energy nuclear fuel company variable interest entity credit facility. See Note 4 to the financial statements for additional discussion of the variable interest entity credit facility.
System Energy obtained authorizations from the FERC through October 2019 for the following:
| • | short-term borrowings not to exceed an aggregate amount of $200 million at any time outstanding; |

| • | long-term borrowings and security issuances; and |

| • | long-term borrowings by its nuclear fuel company variable interest entity. |

See Note 4 to the financial statements for further discussion of System Energy’s short-term borrowing limits.
Federal Regulation
See the “Rate, Cost-recovery, and Other Regulation – Federal Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 2 to the financial statements for a discussion of federal regulation.
Complaint Against System Energy
In January 2017 the APSC and MPSC filed a complaint with the FERC against System Energy. The complaint seeks a reduction in the return on equity component of the Unit Power Sales Agreement pursuant to which System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Entergy Arkansas also sells some of its Grand Gulf capacity and energy to Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under separate agreements. The current return on equity under the Unit Power Sales Agreement is 10.94%. The complaint alleges that the return on equity is unjust and unreasonable because current capital market and other considerations indicate that it is excessive. The complaint requests the FERC to institute proceedings to investigate the return on equity and establish a lower return on equity, and also requests that the FERC establish January 23, 2017 as a refund effective date. The complaint includes return on equity analysis that purports to establish that the range of reasonable return on equity for System Energy is between 8.37% and 8.67%. System Energy answered the complaint in February 2017 and disputes that a return on equity of 8.37% to 8.67% is just and reasonable. The LPSC and the City Council intervened in the proceeding expressing support for the complaint. System Energy is recording a provision against revenue for the potential outcome of this proceeding. In September 2017 the FERC established a refund effective date of January 23, 2017, consolidated the return on equity complaint with the proceeding described in Unit Power Sales Agreement below, and directed the parties to engage in settlement
425
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
proceedings before an ALJ. If the parties fail to come to an agreement during settlement proceedings, a prehearing conference will be held to establish a procedural schedule for hearing proceedings.
Unit Power Sales Agreement
In August 2017, System Energy submitted to the FERC proposed amendments to the Unit Power Sales Agreement pursuant to which System Energy sells its Grand Gulf capacity and energy to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The filing proposes limited amendments to the Unit Power Sales Agreement to adopt (1) updated rates for use in calculating Grand Gulf plant depreciation and amortization expenses and (2) updated nuclear decommissioning cost annual revenue requirements, both of which are recovered through the Unit Power Sales Agreement rate formula. The proposed amendments would result in lower charges to the Utility operating companies that buy capacity and energy from System Energy under the Unit Power Sales Agreement. The proposed changes are based on updated depreciation and nuclear decommissioning studies that take into account the renewal of Grand Gulf’s operating license for a term through November 1, 2044. System Energy requested that the FERC accept the amendments effective October 1, 2017.
In September 2017 the FERC accepted System Energy’s proposed Unit Power Sales Agreement amendments, subject to further proceedings to consider the justness and reasonableness of the amendments. Because the amendments propose a rate decrease, the FERC also initiated an investigation under Section 206 of the Federal Power Act to determine if the rate decrease should be lower than proposed. The FERC accepted the proposed amendments effective October 1, 2017, subject to refund pending the outcome of the further settlement and/or hearing proceedings, and established a refund effective date of October 11, 2017 with respect to the rate decrease. The FERC also consolidated the Unit Power Sales Agreement amendment proceeding with the proceeding described in Complaint Against System Energy above, and directed the parties to engage in settlement proceedings before an ALJ. If the parties fail to come to an agreement during settlement proceedings, a prehearing conference will be held to establish a procedural schedule for hearing proceedings.
Nuclear Matters
System Energy owns and, through an affiliate, operates Grand Gulf. System Energy is, therefore, subject to the risks related to owning and operating a nuclear plant. These include risks related to: the use, storage, and handling and disposal of high-level and low-level radioactive materials; the substantial financial requirements, both for capital investments and operational needs, to position Entergy’s nuclear fleet to meet its operational goals, including the financial requirements to address emerging issues like stress corrosion cracking of certain materials within the plant systems and the Fukushima event; regulatory requirements and potential future regulatory changes, including changes affecting the regulations governing nuclear plant ownership, operations, license renewal and amendments, and decommissioning; the performance and capacity factors of these nuclear plants; the availability of interim or permanent sites for the disposal of spent nuclear fuel and nuclear waste, including the fees charged for such disposal; the sufficiency of nuclear decommissioning trust fund assets and earnings to complete decommissioning of each site when required; and limitations on the amounts and types of insurance commercially available for losses in connection with nuclear plant operations and catastrophic events such as a nuclear accident. In the event of an unanticipated early shutdown of Grand Gulf, System Energy may be required to provide additional funds or credit support to satisfy regulatory requirements for decommissioning. In December 2016, the NRC granted the extension of Grand Gulf’s operating license to 2044.
Grand Gulf Outage and NRC review
Grand Gulf began a maintenance outage on September 8, 2016 to replace a residual heat removal pump. Although the pump had been replaced, on September 27, 2016 management decided to keep the plant in an outage for additional training and other steps to support management’s operational goals. Grand Gulf returned to service on January 31, 2017.
426
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
Based on the plant’s performance indicators, in November 2016 the NRC placed Grand Gulf in the “regulatory response column,” or Column 2, of its Reactor Oversight Process Action Matrix. Entergy is implementing a plan to restore Grand Gulf to Column 1, including addressing the issues related to the three very low safety significance non-cited violations identified in the NRC’s report on the results of its October 2016 special inspection. Depending on the success of implementing that plan and the plant’s performance indicators, there is risk that the NRC could move Grand Gulf into the “degraded cornerstone column,” or Column 3, of the NRC’s Reactor Oversight Process Action Matrix.
Environmental Risks
System Energy’s facilities and operations are subject to regulation by various governmental authorities having jurisdiction over air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. Management believes that System Energy is in substantial compliance with environmental regulations currently applicable to its facilities and operations, with reference to possible exceptions noted in “Regulation of Entergy’s Business - Environmental Regulation” in Part I, Item 1. Because environmental regulations are subject to change, future compliance costs cannot be precisely estimated.
Critical Accounting Estimates
The preparation of System Energy’s financial statements in conformity with generally accepted accounting principles requires management to apply appropriate accounting policies and to make estimates and judgments that can have a significant effect on reported financial position, results of operations, and cash flows. Management has identified the following accounting policies and estimates as critical because they are based on assumptions and measurements that involve a high degree of uncertainty, and there is the potential for future changes in the assumptions and measurements that could produce estimates that would have a material impact on the presentation of System Energy’s financial position or results of operations.
Nuclear Decommissioning Costs
See “Nuclear Decommissioning Costs” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates inherent in accounting for nuclear decommissioning costs.
In the second quarter 2017, System Energy recorded a revision to its estimated decommissioning cost liability for Grand Gulf as a result of a revised decommissioning cost study. The revised estimate resulted in a $35.9 million reduction in its decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset that will be depreciated over the remaining life of the unit.
Utility Regulatory Accounting
See “Utility Regulatory Accounting” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of accounting for the effects of rate regulation.
Impairment of Long-lived Assets and Trust Fund Investments
See “Impairment of Long-lived Assets and Trust Fund Investments” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for discussion of the estimates associated with the impairment of long-lived assets and trust fund investments.
427
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
Taxation and Uncertain Tax Positions
See “Taxation and Uncertain Tax Positions” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion.
Qualified Pension and Other Postretirement Benefits
System Energy’s qualified pension and other postretirement reported costs, as described in Note 11 to the financial statements, are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various actuarial calculations, assumptions, and accounting mechanisms. See the “Qualified Pension and Other Postretirement Benefits” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for further discussion. Because of the complexity of these calculations, the long-term nature of these obligations, and the importance of the assumptions utilized, Entergy’s estimate of these costs is a critical accounting estimate.
Cost Sensitivity
The following chart reflects the sensitivity of qualified pension cost and qualified projected benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Qualified Pension Cost | Impact on 2017 Projected Qualified Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $820 | $11,922 |
| Rate of return on plan assets | (0.25%) | $664 | $— |
| Rate of increase in compensation | 0.25% | $329 | $1,473 |

The following chart reflects the sensitivity of postretirement benefit cost and accumulated postretirement benefit obligation to changes in certain actuarial assumptions (dollars in thousands).
| Actuarial Assumption | Change in Assumption | Impact on 2018 Postretirement Benefit Cost | Impact on 2017 Accumulated Postretirement Benefit Obligation |
| Increase/(Decrease) |
| Discount rate | (0.25%) | $154 | $2,042 |
| Health care cost trend | 0.25% | $239 | $1,704 |

Each fluctuation above assumes that the other components of the calculation are held constant.
Costs and Funding
Total qualified pension cost for System Energy in 2017 was $11.7 million. System Energy anticipates 2018 qualified pension cost to be $14.9 million. In 2016, System Energy refined its approach to estimating the service cost and interest cost components of qualified pension costs, which had the effect of lowering qualified pension costs by $2.8 million. System Energy contributed $18.2 million to its pension plans in 2017 and estimates 2018 pension contributions will approximate $13.8 million, although the 2018 required pension contributions will be known with more certainty when the January 1, 2018 valuations are completed, which is expected by April 1, 2018.
Total postretirement health care and life insurance benefit cost for System Energy in 2017 was $692 thousand. System Energy expects 2018 postretirement health care and life insurance benefit income to approximate $490 thousand.
428
System Energy Resources, Inc.Management’s Financial Discussion and Analysis
In 2016, System Energy refined its approach to estimating the service cost and interest cost components of other postretirement costs, which had the effect of lowering qualified other postretirement costs by $555 thousand. System Energy contributed $570 thousand to its other postretirement plans in 2017 and expects 2018 contributions to approximate $16 thousand.
Federal Healthcare Legislation
See “Qualified Pension and Other Postretirement Benefits - Federal Healthcare Legislation” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of Federal Healthcare Legislation.
Other Contingencies
See “Other Contingencies” in the “Critical Accounting Estimates” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis for a discussion of the estimates associated with environmental, litigation, and other risks.
New Accounting Pronouncements
See “New Accounting Pronouncements” section of Note 1 to the financial statements for a discussion of new accounting pronouncements.
429
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholder and Board of Directors of
System Energy Resources, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of System Energy Resources, Inc. (the “Company”) as of December 31, 2017 and 2016, the related statements of income, cash flows, and changes in common equity (pages 431 through 436 and applicable items in pages 55 through 230), for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
We have served as the Company’s auditor since 2001.
430
| SYSTEM ENERGY RESOURCES, INC. |
| INCOME STATEMENTS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING REVENUES |
| Electric | $633,458 | $548,291 | $632,405 |
| OPERATING EXPENSES |
| Operation and Maintenance: |
| Fuel, fuel-related expenses, and gas purchased for resale | 71,700 | 27,416 | 89,598 |
| Nuclear refueling outage expenses | 17,968 | 19,512 | 21,654 |
| Other operation and maintenance | 213,534 | 153,064 | 156,552 |
| Decommissioning | 43,347 | 50,797 | 47,993 |
| Taxes other than income taxes | 26,180 | 25,195 | 27,281 |
| Depreciation and amortization | 137,767 | 136,195 | 143,133 |
| Other regulatory credits - net | (37,831 | ) | (45,041 | ) | (39,434 | ) |
| TOTAL | 472,665 | 367,138 | 446,777 |
| OPERATING INCOME | 160,793 | 181,153 | 185,628 |
| OTHER INCOME |
| Allowance for equity funds used during construction | 6,345 | 7,944 | 8,494 |
| Interest and investment income | 17,538 | 14,793 | 14,437 |
| Miscellaneous - net | (521 | ) | (556 | ) | (876 | ) |
| TOTAL | 23,362 | 22,181 | 22,055 |
| INTEREST EXPENSE |
| Interest expense | 37,141 | 37,529 | 45,532 |
| Allowance for borrowed funds used during construction | (1,551 | ) | (2,000 | ) | (2,244 | ) |
| TOTAL | 35,590 | 35,529 | 43,288 |
| INCOME BEFORE INCOME TAXES | 148,565 | 167,805 | 164,395 |
| Income taxes | 69,969 | 71,061 | 53,077 |
| NET INCOME | $78,596 | $96,744 | $111,318 |
| See Notes to Financial Statements. |

431
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432
| SYSTEM ENERGY RESOURCES, INC. |
| STATEMENTS OF CASH FLOWS |
| For the Years Ended December 31, |
| 2017 | 2016 | 2015 |
| (In Thousands) |
| OPERATING ACTIVITIES |
| Net income | $78,596 | $96,744 | $111,318 |
| Adjustments to reconcile net income to net cash flow provided by operating activities: |
| Depreciation, amortization, and decommissioning, including nuclear fuel amortization | 240,962 | 224,879 | 270,514 |
| Deferred income taxes, investment tax credits, and non-current taxes accrued | 7,827 | 99,531 | 200,797 |
| Changes in assets and liabilities: |
| Receivables | 9,210 | (15,846 | ) | 5,879 |
| Accounts payable | 15,969 | 2,720 | (352 | ) |
| Prepaid taxes and taxes accrued | 62,466 | (6,555 | ) | (32,594 | ) |
| Interest accrued | (660 | ) | (134 | ) | (19,013 | ) |
| Other working capital accounts | 12,083 | (15,470 | ) | 13,576 |
| Other regulatory assets | 60,012 | (58,279 | ) | (4,565 | ) |
| Other regulatory liabilities | 331,251 | 33,438 | (33,686 | ) |
| Deferred tax rate change recognized as regulatory liability/asset | (325,707 | ) | — | — |
| Pension and other postretirement liabilities | 4,024 | 5,586 | (16,888 | ) |
| Other assets and liabilities | (124,755 | ) | (24,675 | ) | 7,550 |
| Net cash flow provided by operating activities | 371,278 | 341,939 | 502,536 |
| INVESTING ACTIVITIES |
| Construction expenditures | (91,705 | ) | (88,037 | ) | (70,358 | ) |
| Allowance for equity funds used during construction | 6,345 | 7,944 | 8,494 |
| Nuclear fuel purchases | (49,728 | ) | (151,068 | ) | (64,977 | ) |
| Proceeds from the sale of nuclear fuel | 69,516 | 11,467 | 57,681 |
| Proceeds from nuclear decommissioning trust fund sales | 565,416 | 499,252 | 390,371 |
| Investment in nuclear decommissioning trust funds | (596,236 | ) | (534,083 | ) | (421,220 | ) |
| Changes in money pool receivable - net | (77,858 | ) | 6,117 | (37,553 | ) |
| Litigation proceeds for reimbursement of spent nuclear fuel storage costs | — | 15,806 | — |
| Net cash flow used in investing activities | (174,250 | ) | (232,602 | ) | (137,562 | ) |
| FINANCING ACTIVITIES |
| Proceeds from the issuance of long-term debt | 150,100 | — | — |
| Retirement of long-term debt | (150,103 | ) | (22,002 | ) | (136,310 | ) |
| Changes in credit borrowings - net | (49,063 | ) | 66,893 | (20,404 | ) |
| Common stock dividends and distributions | (106,610 | ) | (139,000 | ) | (200,750 | ) |
| Other | (28 | ) | (26 | ) | (28 | ) |
| Net cash flow used in financing activities | (155,704 | ) | (94,135 | ) | (357,492 | ) |
| Net increase in cash and cash equivalents | 41,324 | 15,202 | 7,482 |
| Cash and cash equivalents at beginning of period | 245,863 | 230,661 | 223,179 |
| Cash and cash equivalents at end of period | $287,187 | $245,863 | $230,661 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
| Cash paid (received) during the period for: |
| Interest - net of amount capitalized | $26,251 | $36,152 | $47,864 |
| Income taxes | ($2,227 | ) | ($23,565 | ) | ($114,092 | ) |
| See Notes to Financial Statements. |

433
| SYSTEM ENERGY RESOURCES, INC. |
| BALANCE SHEETS |
| ASSETS |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT ASSETS |
| Cash and cash equivalents: |
| Cash | $78 | $786 |
| Temporary cash investments | 287,109 | 245,077 |
| Total cash and cash equivalents | 287,187 | 245,863 |
| Accounts receivable: |
| Associated companies | 170,149 | 104,390 |
| Other | 6,526 | 3,637 |
| Total accounts receivable | 176,675 | 108,027 |
| Materials and supplies - at average cost | 88,424 | 82,469 |
| Deferred nuclear refueling outage costs | 7,908 | 24,729 |
| Prepayments and other | 2,489 | 20,111 |
| TOTAL | 562,683 | 481,199 |
| OTHER PROPERTY AND INVESTMENTS |
| Decommissioning trust funds | 905,686 | 780,496 |
| TOTAL | 905,686 | 780,496 |
| UTILITY PLANT |
| Electric | 4,327,849 | 4,331,668 |
| Property under capital lease | 588,281 | 585,084 |
| Construction work in progress | 69,937 | 43,888 |
| Nuclear fuel | 207,513 | 259,635 |
| TOTAL UTILITY PLANT | 5,193,580 | 5,220,275 |
| Less - accumulated depreciation and amortization | 3,175,018 | 3,063,249 |
| UTILITY PLANT - NET | 2,018,562 | 2,157,026 |
| DEFERRED DEBITS AND OTHER ASSETS |
| Regulatory assets: |
| Regulatory asset for income taxes - net | — | 93,127 |
| Other regulatory assets | 444,327 | 411,212 |
| Other | 7,629 | 4,652 |
| TOTAL | 451,956 | 508,991 |
| TOTAL ASSETS | $3,938,887 | $3,927,712 |
| See Notes to Financial Statements. |

434
| SYSTEM ENERGY RESOURCES, INC. |
| BALANCE SHEETS |
| LIABILITIES AND EQUITY |
| December 31, |
| 2017 | 2016 |
| (In Thousands) |
| CURRENT LIABILITIES |
| Currently maturing long-term debt | $85,004 | $50,003 |
| Short-term borrowings | 17,830 | 66,893 |
| Accounts payable: |
| Associated companies | 16,878 | 5,843 |
| Other | 62,868 | 50,558 |
| Taxes accrued | 46,584 | — |
| Interest accrued | 13,389 | 14,049 |
| Other | 2,434 | 2,957 |
| TOTAL | 244,987 | 190,303 |
| NON-CURRENT LIABILITIES |
| Accumulated deferred income taxes and taxes accrued | 776,420 | 1,112,865 |
| Accumulated deferred investment tax credits | 39,406 | 41,663 |
| Regulatory liability for income taxes - net | 246,122 | — |
| Other regulatory liabilities | 455,991 | 370,862 |
| Decommissioning | 861,664 | 854,202 |
| Pension and other postretirement liabilities | 121,874 | 117,850 |
| Long-term debt | 466,484 | 501,129 |
| Other | 15,130 | 15 |
| TOTAL | 2,983,091 | 2,998,586 |
| Commitments and Contingencies |
| COMMON EQUITY |
| Common stock, no par value, authorized 1,000,000 shares; issued and outstanding 789,350 shares in 2017 and 2016 | 658,350 | 679,350 |
| Retained earnings | 52,459 | 59,473 |
| TOTAL | 710,809 | 738,823 |
| TOTAL LIABILITIES AND EQUITY | $3,938,887 | $3,927,712 |
| See Notes to Financial Statements. |

435
| SYSTEM ENERGY RESOURCES, INC. |
| STATEMENTS OF CHANGES IN COMMON EQUITY |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| Common Equity |
| Common Stock | Retained Earnings | Total |
| (In Thousands) |
| Balance at December 31, 2014 | $789,350 | $81,161 | $870,511 |
| Net income | — | 111,318 | 111,318 |
| Common stock dividends and distributions | (70,000 | ) | (130,750 | ) | (200,750 | ) |
| Balance at December 31, 2015 | $719,350 | $61,729 | $781,079 |
| Net income | — | 96,744 | 96,744 |
| Common stock dividends and distributions | (40,000 | ) | (99,000 | ) | (139,000 | ) |
| Balance at December 31, 2016 | $679,350 | $59,473 | $738,823 |
| Net income | — | 78,596 | 78,596 |
| Common stock dividends and distributions | (21,000 | ) | (85,610 | ) | (106,610 | ) |
| Balance at December 31, 2017 | $658,350 | $52,459 | $710,809 |
| See Notes to Financial Statements. |

436
| SYSTEM ENERGY RESOURCES, INC. |
| SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON |
| 2017 | 2016 | 2015 | 2014 | 2013 |
| (Dollars In Thousands) |
| Operating revenues | $633,458 | $548,291 | $632,405 | $664,364 | $735,089 |
| Net income | $78,596 | $96,744 | $111,318 | $96,334 | $113,664 |
| Total assets | $3,938,887 | $3,927,712 | $3,728,875 | $3,826,193 | $3,537,414 |
| Long-term obligations (a) | $466,484 | $501,129 | $572,665 | $630,603 | $702,273 |
| Electric energy sales (GWh) | 6,675 | 5,384 | 10,547 | 9,219 | 9,794 |
| (a) Includes long-term debt (excluding currently maturing debt). |

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Item 2.
Properties
Information regarding the registrant’s properties is included in Part I. Item 1. - Entergy’s Business under the sections titled “Utility - Property and Other Generation Resources” and “Entergy Wholesale Commodities - Property” in this report.
Item 3.
Legal Proceedings
Details of the registrant’s material environmental regulation and proceedings and other regulatory proceedings and litigation that are pending or those terminated in the fourth quarter of 2017 are discussed in Part I. Item 1. - Entergy’s Business under the sections titled “Retail Rate Regulation,” “Environmental Regulation,” and “Litigation” and “Impairment of Long-lived Assets” in Note 14 to the financial statements.
Item 4.
Mine Safety Disclosures
Not applicable.
EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Executive Officers
| Name | Age | Position | Period |
| Leo P. Denault (a) | 58 | Chairman of the Board and Chief Executive Officer of Entergy Corporation | 2013-Present |
| Executive Vice President and Chief Financial Officer of Entergy Corporation | 2004-2013 |
| Director of Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, and System Energy | 2004-2013 |
| Director of Entergy Texas | 2007-2013 |
| Director of Entergy New Orleans | 2011-2013 |
| A. Christopher Bakken, III (a) | 56 | Executive Vice President and Chief Nuclear Officer of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, and System Energy | 2016-Present |
| Project Director, Hinkley Point C of EDF Energy | 2009-2016 |
| Marcus V. Brown (a) | 56 | Executive Vice President and General Counsel of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | 2013-Present |
| Senior Vice President and General Counsel of Entergy Corporation, Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | 2012-2013 |
| Vice President and Deputy General Counsel of Entergy Services, Inc. | 2009-2012 |
| Associate General Counsel of Entergy Services, Inc. | 2007-2009 |

438
| Name | Age | Position | Period |
| Andrew S. Marsh (a) | 46 | Executive Vice President and Chief Financial Officer of Entergy Corporation | 2013-Present |
| Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | 2013-Present |
| Chief Financial Officer of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | 2014-Present |
| Vice President, System Planning of Entergy Services, Inc. | 2010-2013 |
| Vice President, Planning and Financial Communications of Entergy Services, Inc. | 2007-2010 |
| Roderick K. West (a) | 49 | Group President Utility Operations of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy Texas | 2017-Present |
| President, Chief Executive Officer, and Director of System Energy | 2017-Present |
| Executive Vice President of Entergy Corporation | 2010-2017 |
| Chief Administrative Officer of Entergy Corporation | 2010-2016 |
| President and Chief Executive Officer of Entergy New Orleans | 2007-2010 |
| Director of Entergy New Orleans | 2005-2011 |
| Paul D. Hinnenkamp (a) | 56 | Executive Vice President and Chief Operating Officer of Entergy Corporation | 2017-Present |
| Director of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas | 2015-Present |
| Senior Vice President and Chief Operating Officer of Entergy Corporation | 2015-2017 |
| Senior Vice President, Capital Project Management and Technology of Entergy Services, Inc. | 2015 |
| Vice President, Capital Project Management and Technology of Entergy Services, Inc. | 2013-2015 |
| Vice President of Fossil Generation Development and Support of Entergy Services, Inc. | 2010-2013 |
| Alyson M. Mount (a) | 47 | Senior Vice President and Chief Accounting Officer of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy | 2012-Present |
| Vice President Corporate Controller of Entergy Services, Inc. | 2010-2012 |
| Director, Corporate Reporting and Accounting Policy of Entergy Services, Inc. | 2002-2010 |
| Andrea Coughlin Rowley (a) | 52 | Senior Vice President, Human Resources of Entergy Corporation | 2016-Present |
| President and Chief Executive Officer of Advance/Evolve LLC | 2013-2016 |
| Vice President, Human Resources of Dover Corporation | 2012-2013 |

439
| Name | Age | Position | Period |
| Donald W. Vinci (a) | 59 | Executive Vice President and Chief Administrative Officer of Entergy Corporation | 2016-Present |
| Senior Vice President, Human Resources and Chief Diversity Officer of Entergy Corporation | 2013-2016 |
| Vice President, Human Capital Management of Entergy Services, Inc. | 2013 |
| Vice President, Gas Distribution Business of Entergy Services, Inc. | 2010-2013 |
| Vice President, Business Development of Entergy Services, Inc. | 2008-2010 |

| (a) | In addition, this officer is an executive officer and/or director of various other wholly owned subsidiaries of Entergy Corporation and its operating companies. |

Each officer of Entergy Corporation is elected yearly by the Board of Directors. Each officer’s age and title is provided as of December 31, 2017.
PART II
Item 5.
Market for Registrants’ Common Equity and Related Stockholder Matters
Entergy Corporation
The shares of Entergy Corporation’s common stock are listed on the New York Stock and Chicago Stock Exchanges under the ticker symbol ETR.
The high and low prices of Entergy Corporation’s common stock for each quarterly period in 2017 and 2016 were as follows:
| 2017 | 2016 |
| High | Low | High | Low |
| (In Dollars) |
| First | 77.51 | 69.63 | 79.72 | 65.38 |
| Second | 80.61 | 74.88 | 81.36 | 72.67 |
| Third | 80.49 | 74.83 | 82.09 | 75.99 |
| Fourth | 87.95 | 75.01 | 76.56 | 66.71 |

Consecutive quarterly cash dividends on common stock were paid to stockholders of Entergy Corporation in 2017 and 2016. Quarterly dividends of $0.85 per share were paid through third quarter 2016. In fourth quarter 2016 and through third quarter 2017, dividends of $0.87 per share were paid. In fourth quarter 2017, dividends of $0.89 per share were paid.
As of January 31, 2018, there were 26,213 stockholders of record of Entergy Corporation.
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Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities (1)
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan | Maximum $ Amount of Shares that May Yet be Purchased Under a Plan (2) |
| 10/01/2017 | -10/31/2017 | — | $— | — | $350,052,918 |
| 11/01/2017 | -11/30/2017 | — | $— | — | $350,052,918 |
| 12/01/2017 | -12/31/2017 | — | $— | — | $350,052,918 |
| Total | — | $— | — |

In accordance with Entergy’s stock-based compensation plans, Entergy periodically grants stock options to key employees, which may be exercised to obtain shares of Entergy’s common stock. According to the plans, these shares can be newly issued shares, treasury stock, or shares purchased on the open market. Entergy’s management has been authorized by the Board to repurchase on the open market shares up to an amount sufficient to fund the exercise of grants under the plans. In addition to this authority, the Board has authorized share repurchase programs to enable opportunistic purchases in response to market conditions. In October 2010 the Board granted authority for a $500 million share repurchase program. The amount of share repurchases under these programs may vary as a result of material changes in business results or capital spending or new investment opportunities. In addition, in the first quarter 2017, Entergy withheld 1,054 shares of its common stock at $70.58 per share, 122,148 shares of its common stock at $70.61 per share, and 31,243 shares of its common stock at $71.89 per share to pay income taxes due upon vesting of restricted stock granted and payout of performance units as part of its long-term incentive program.
| (1) | See Note 12 to the financial statements for additional discussion of the stock-based compensation plans. |

| (2) | Maximum amount of shares that may yet be repurchased relates only to the $500 million plan does not include an estimate of the amount of shares that may be purchased to fund the exercise of grants under the stock-based compensation plans. |

Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy
There is no market for the common equity of the Registrant Subsidiaries. Cash dividends and distributions on common equity paid by the Registrant Subsidiaries during 2017 and 2016, were as follows:
| 2017 | 2016 |
| (In Millions) |
| Entergy Arkansas | $15.0 | $— |
| Entergy Louisiana | $91.3 | $285.5 |
| Entergy Mississippi | $26.0 | $24.0 |
| Entergy New Orleans | $74.3 | $18.7 |
| Entergy Texas | $— | $— |
| System Energy | $106.6 | $139.0 |

Information with respect to restrictions that limit the ability of the Registrant Subsidiaries to pay dividends or distributions is presented in Note 7 to the financial statements.
441
Item 6.
Selected Financial Data
Refer to “SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC. AND SUBSIDIARIES, ENTERGY LOUISIANA, LLC AND SUBSIDIARIES, ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES, ENTERGY TEXAS, INC. AND SUBSIDIARIES, and SYSTEM ENERGY RESOURCES, INC.” which follow each company’s financial statements in this report, for information with respect to selected financial data and certain operating statistics.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, INC. AND SUBSIDIARIES, ENTERGY LOUISIANA, LLC AND SUBSIDIARIES, ENTERGY MISSISSIPPI, INC., ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES, ENTERGY TEXAS, INC. AND SUBSIDIARIES, and SYSTEM ENERGY RESOURCES, INC.”
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Refer to “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS OF ENTERGY CORPORATION AND SUBSIDIARIES - Market and Credit Risk Sensitive Instruments.”
Item 8.
Financial Statements and Supplementary Data
Refer to “TABLE OF CONTENTS - Entergy Corporation, Entergy Arkansas, Inc., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, LLC, Entergy Texas, Inc., and System Energy Resources, Inc.”
Item 9.
Changes In and Disagreements With Accountants On Accounting and Financial Disclosure
No event that would be described in response to this item has occurred with respect to Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, or System Energy.
Item 9A.
Controls and Procedures
Disclosure Controls and Procedures
As of December 31, 2017, evaluations were performed under the supervision and with the participation of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) management, including their respective Principal Executive Officers (PEO) and Principal Financial Officers (PFO). The evaluations assessed the effectiveness of the Registrants’ disclosure controls and procedures. Based on the evaluations, each PEO and PFO has concluded that, as to the Registrant or Registrants for which they serve as PEO or PFO, the Registrant’s or Registrants’ disclosure controls and procedures are effective to ensure that information required to be disclosed by each Registrant in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms; and that the Registrant’s or Registrants’ disclosure controls and procedures are also effective in reasonably assuring that such information is accumulated and communicated to the Registrant’s or Registrants’ management, including their respective PEOs and PFOs, as appropriate to allow timely decisions regarding required disclosure.
442
Internal Control over Financial Reporting
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
The managements of Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy (individually “Registrant” and collectively the “Registrants”) are responsible for establishing and maintaining adequate internal control over financial reporting for the Registrants. Each Registrant’s internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of each Registrant’s financial statements presented in accordance with generally accepted accounting principles.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Each Registrant’s management assessed the effectiveness of each Registrant’s internal control over financial reporting as of December 31, 2017. In making this assessment, each Registrant’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. The 2013 COSO Framework was utilized for management’s assessment.
Based on each management’s assessment and the criteria set forth by the 2013 COSO Framework, each Registrant’s management believes that each Registrant maintained effective internal control over financial reporting as of December 31, 2017.
The report of Deloitte & Touche LLP, Entergy Corporation’s independent registered public accounting firm, regarding Entergy Corporation’s internal control over financial reporting is included herein. The report of Deloitte & Touche LLP is not applicable to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy because these Registrants are non-accelerated filers.
Changes in Internal Controls over Financial Reporting
Under the supervision and with the participation of each Registrant’s management, including its respective PEO and PFO, each Registrant evaluated changes in internal control over financial reporting that occurred during the quarter ended December 31, 2017 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.
443
Attestation Report of Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2017, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017 of the Corporation and our report dated February 26, 2018 expressed an unqualified opinion of those consolidated financial statements.
Basis for Opinion
The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 9A, Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
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PART III
Availability of SEC filings and other information on Entergy’s website
Entergy electronically files reports with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxies, and amendments to such reports. The public may read and copy any materials that Entergy files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.
Entergy uses its website, http://www.entergy.com, as a routine channel for distribution of important information, including news releases, analyst presentations and financial information. Filings made with the SEC are posted and available without charge on Entergy’s website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. These filings include annual and quarterly reports on Forms 10-K and 10-Q (including related filings in XBRL format) and current reports on Form 8-K; proxy statements; and any amendments to those reports or statements. All such postings and filings are available on Entergy’s Investor Relations website free of charge. Entergy is providing the address to its internet site solely for the information of investors and does not intend the address to be an active link. The contents of the website are not incorporated into this report.
274
Item 10.
Directors and Executive Officers of the Registrants
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas)
Information required by this item concerning directors of Entergy Corporation is set forth under the heading “Item 1 – Election of Directors” contained in the Proxy Statement of Entergy Corporation, to be filed in connection with its Annual Meeting of Stockholders to be held May 4, 2018, and is incorporated herein by reference.
All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report, unless otherwise noted.
| Name | Age | Position | Period |
| ENTERGY ARKANSAS, INC. |
| Directors |
| Richard C. Riley | 55 | President and Chief Executive Officer of Entergy Arkansas | 2016-Present |
| Director of Entergy Arkansas | 2016-Present |
| Group Vice President, Customer Service and Operations of Entergy Arkansas | 2015-2016 |
| Vice President, Transmission of Entergy Services, Inc. | 2010-2015 |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |
| Officers |
| A. Christopher Bakken, III | See information under the Entergy Corporation Officers Section in Part I. |
| Marcus V. Brown | See information under the Entergy Corporation Officers Section in Part I. |
| Leo P. Denault | See information under the Entergy Corporation Officers Section in Part I. |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Alyson M. Mount | See information under the Entergy Corporation Officers Section in Part I. |
| Richard C. Riley | See information under the Entergy Arkansas Directors Section above. |
| Andrea Coughlin Rowley | See information under the Entergy Corporation Officers Section in Part I. |
| Donald W. Vinci | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

445
| ENTERGY LOUISIANA, LLC |
| Directors |
| Phillip R. May, Jr. | 55 | President and Chief Executive Officer of Entergy Louisiana | 2013-Present |
| Director of Entergy Louisiana | 2013-Present |
| Vice President, Regulatory Services of Entergy Services, Inc. | 2002-2013 |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |
| Officers |
| A. Christopher Bakken, III | See information under the Entergy Corporation Officers Section in Part I. |
| Marcus V. Brown | See information under the Entergy Corporation Officers Section in Part I. |
| Leo P. Denault | See information under the Entergy Corporation Officers Section in Part I. |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Phillip R. May, Jr. | See information under the Entergy Louisiana Directors Section above. |
| Alyson M. Mount | See information under the Entergy Corporation Officers Section in Part I. |
| Andrea Coughlin Rowley | See information under the Entergy Corporation Officers Section in Part I. |
| Donald W. Vinci | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

| ENTERGY MISSISSIPPI, INC. |
| Directors |
| Haley R. Fisackerly | 52 | President and Chief Executive Officer of Entergy Mississippi | 2008-Present |
| Director of Entergy Mississippi | 2008-Present |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

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| Officers |
| Marcus V. Brown | See information under the Entergy Corporation Officers Section in Part I. |
| Leo P. Denault | See information under the Entergy Corporation Officers Section in Part I. |
| Haley R. Fisackerly | See information under the Entergy Mississippi Directors Section above. |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Alyson M. Mount | See information under the Entergy Corporation Officers Section in Part I. |
| Andrea Coughlin Rowley | See information under the Entergy Corporation Officers Section in Part I. |
| Donald W. Vinci | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

| ENTERGY NEW ORLEANS, LLC |
| Directors |
| Charles L. Rice, Jr. | 53 | President and Chief Executive Officer of Entergy New Orleans | 2010-Present |
| Director of Entergy New Orleans | 2010-Present |
| Director, Utility Strategy of Entergy Services, Inc. | 2009-2010 |
| Partner, Barrasso, Usdin, Kupperman, Freeman & Sarver, LLC | 2005-2009 |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

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| Officers |
| Marcus V. Brown | See information under the Entergy Corporation Officers Section in Part I. |
| Leo P. Denault | See information under the Entergy Corporation Officers Section in Part I. |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Alyson M. Mount | See information under the Entergy Corporation Officers Section in Part I. |
| Charles L. Rice, Jr. | See information under the Entergy New Orleans Directors Section above. |
| Andrea Coughlin Rowley | See information under the Entergy Corporation Officers Section in Part I. |
| Donald W. Vinci | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

| ENTERGY TEXAS, INC. |
| Directors |
| Sallie T. Rainer | 56 | President and Chief Executive Officer of Entergy Texas | 2012-Present |
| Director of Entergy Texas | 2012-Present |
| Vice President, Federal Policy of Entergy Services, Inc. | 2011-2012 |
| Director, Regulatory Affairs and Energy Settlements of Entergy Services, Inc. | 2006-2011 |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

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| Officers |
| Marcus V. Brown | See information under the Entergy Corporation Officers Section in Part I. |
| Leo P. Denault | See information under the Entergy Corporation Officers Section in Part I. |
| Paul D. Hinnenkamp | See information under the Entergy Corporation Officers Section in Part I. |
| Andrew S. Marsh | See information under the Entergy Corporation Officers Section in Part I. |
| Alyson M. Mount | See information under the Entergy Corporation Officers Section in Part I. |
| Sallie T. Rainer | See information under the Entergy Texas Directors Section above. |
| Andrea Coughlin Rowley | See information under the Entergy Corporation Officers Section in Part I. |
| Donald W. Vinci | See information under the Entergy Corporation Officers Section in Part I. |
| Roderick K. West | See information under the Entergy Corporation Officers Section in Part I. |

Each director and officer of the applicable Entergy company is elected yearly to serve by the unanimous consent of the sole common stockholder with the exception of the directors and officers of Entergy Louisiana, LLC and Entergy New Orleans, LLC, who are elected yearly to serve by the unanimous consent of the sole common membership owner, Entergy Utility Holding Company, LLC. Entergy Corporation’s directors are elected annually at the annual meeting of shareholders. Entergy Corporation’s officers are elected at the annual organizational meeting of the Board of Directors.
Corporate Governance Guidelines and Committee Charters
Each of the Audit, Corporate Governance, and Personnel Committees of Entergy Corporation’s Board of Directors operates under a written charter. In addition, the full Board has adopted Corporate Governance Guidelines. Each charter and the guidelines are available through Entergy’s website (www.entergy.com) or upon written request.
Audit Committee of the Entergy Corporation Board
The following directors are members of the Audit Committee of Entergy Corporation’s Board of Directors:
Patrick J. Condon (Chairman)
Maureen S. Bateman
Philip L. Frederickson
Blanche L. Lincoln
Karen A. Puckett
All Audit Committee members are independent. In addition to the general independence requirements, all Audit Committee members must meet the heightened independence standards imposed by the SEC and NYSE. All Audit Committee members possess the level of financial literacy and accounting or related financial management expertise required by the NYSE rules. The Board has determined that each of Patrick J. Condon and Philip L. Frederickson is an “audit committee financial expert” as such term is defined by the rules of the SEC.
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Code of Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics for Members of the Board of Directors. The code is available through Entergy’s website (www.entergy.com) or upon written request. The Board has also adopted a Code of Business Conduct and Ethics for Employees that includes Special Provisions Relating to Principal Executive Officer and Senior Financial Officers. The Code of Business Conduct and Ethics for Employees is to be read in conjunction with Entergy’s omnibus code of integrity under which Entergy operates called the Code of Entegrity as well as system policies. All employees are expected to abide by the Codes. Non-bargaining employees are required to acknowledge annually that they understand and abide by the Code of Entegrity. The Code of Business Conduct and Ethics for Employees, including any amendments or any waivers thereto, and the Code of Entegrity are available through Entergy’s website (www.entergy.com) or upon written request.
Source of Nominations to the Board of Directors; Nominating Procedure
The Corporate Governance Committee will consider candidates identified by current directors, management, third-party search firms engaged by the Corporate Governance Committee and Entergy Corporation’s shareholders. Shareholders wishing to recommend a candidate to the Corporate Governance Committee should do so by submitting the recommendation in writing to Entergy Corporation’s Secretary at 639 Loyola Avenue, P.O. Box 61000, New Orleans, LA 70161, and it will be forwarded to the Corporate Governance Committee members for their consideration. Any recommendation should include:
| • | the number of shares of Entergy Corporation stock held by the shareholder; |

| • | the name and address of the candidate; |

| • | a brief biographical description of the candidate, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements discussed in the Proxy Statement under “Corporate Governance at Entergy - Our Board Structure - Identifying Director Candidates”; and |

| • | the candidate’s signed consent to be named in the Proxy Statement and to serve as a director if elected. |

Once the Corporate Governance Committee receives the recommendation, it may request additional information from the candidate about the candidate’s independence, qualifications, and other information that would assist the Corporate Governance Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in the Proxy Statement, if nominated. The Corporate Governance Committee will apply the same standards in considering director candidates recommended by shareholders as it applies to other candidates.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders to be held on May 4, 2018, under the heading “Section 16(a) Beneficial Ownership Reporting Compliance,” which information is incorporated herein by reference.
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Item 11.
Executive Compensation
ENTERGY CORPORATION
Information concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement under the headings “Compensation Discussion and Analysis,” “Executive Compensation Tables,” “Nominees for the Board of Directors,” and “Non-Employee Director Compensation,” all of which information is incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, AND ENTERGY TEXAS
COMPENSATION DISCUSSION AND ANALYSIS
In this section, the compensation earned by the following Named Executive Officers in 2017 is discussed. Each officer’s title is provided as of December 31, 2017.
| Name(1) | Title |
| A. Christopher Bakken, III | Executive Vice President and Chief Nuclear Officer |
| Marcus V. Brown | Executive Vice President and General Counsel |
| Leo P. Denault | Chairman of the Board and Chief Executive Officer |
| Haley R. Fisackerly | President and Chief Executive Officer, Entergy Mississippi |
| Andrew S. Marsh | Executive Vice President and Chief Financial Officer Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas |
| Phillip R. May, Jr. | President and Chief Executive Officer, Entergy Louisiana |
| Sallie T. Rainer | President and Chief Executive Officer, Entergy Texas |
| Charles L. Rice, Jr. | President and Chief Executive Officer, Entergy New Orleans |
| Richard C. Riley | President and Chief Executive Officer, Entergy Arkansas |
| Roderick K. West | Group President Utility Operations |

| (1) | Messrs. Bakken, Brown, Denault, Marsh, and West hold the positions referenced above as executive officers |

of Entergy Corporation and are members of Entergy Corporation’s Office of the Chief Executive. No additional compensation was paid in 2017 to any of these officers for their service as Named Executive Officers of the Utility operating companies.
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CD&A Highlights
Executive Compensation Programs and Practices
Entergy Corporation regularly reviews its executive compensation programs to align them with commonly viewed best practices in the market and to reflect feedback from discussions with investors on executive compensation.
Sound Program Design
Entergy Corporation’s executive compensation programs are designed to:
| • | Pay for performance |

| • | Attract, retain, and motivate key executive officers who drive Entergy Corporation’s success and industry leadership |

| • | Provide market compensation payout opportunities |

| • | Align with the interests of Entergy Corporation’s long-term shareholders |

| • | Reflect best practices in the market |

Executive Compensation Best Practices:
| Changes Since 2017 Annual Meeting | * | To align with compensation best practices, and in response to investor feedback, beginning with the 2018-2020 performance period, added a cumulative utility earnings performance measure to the Long-Term Performance Incentive Program supplementing the relative total shareholder return measure historically used in this program |
| What Entergy Corporation Does | * | Double trigger for severance payments or equity acceleration in the event of a change in control |
| * | Clawback policy that goes beyond Sarbanes-Oxley requirements |
| * | Maximum payout capped at 200% of target under the Long-Term Performance Unit Program and under the Annual Incentive Plan for members of the Office of the Chief Executive |
| * | Minimum vesting periods for equity-based awards |
| * | Long-term compensation mix weighted more toward performance units than service-based equity awards |
| * | All long-term performance units settled in shares of Entergy Corporation common stock |
| * | Rigorous stock ownership requirements |
| * | Executives required to hold substantially all equity compensation received by Entergy Corporation until stock ownership guidelines are met |
| * | Annual Say on Pay vote |
| What Entergy Corporation Doesn’t Do | * | No 280G tax “gross up” payments in the event of a change in control |
| * | No tax “gross up” payments on any executive perquisites, other than relocation benefits available to all eligible employees, and club dues for some of the Named Executive Officers. |
| * | No option repricing or cash buy-outs for underwater options |
| * | No agreements providing for severance payments to executive officers that exceed 2.99 times annual base salary and annual incentive awards without shareholder approval |
| * | No hedging or pledging of Entergy Corporation common stock |
| * | No unusual or excessive perquisites |
| * | New officers are excluded from participation in the System Executive Retirement Plan |
| * | No grants of supplemental service credit to newly-hired officers under any of Entergy Corporation’s non-qualified retirement plans |

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Entergy Corporation’s Pay for Performance Philosophy
Entergy Corporation’s executive compensation programs are based on a philosophy of pay for performance that is embodied in the design of its annual and long-term incentive plans. It believes the executive pay programs described in this section and in the accompanying tables have played a significant role in its ability to drive strong financial and operational results and to attract and retain a highly experienced and successful management team. The Annual Incentive Plan incentivizes and rewards the achievement of financial metrics that are deemed by the Personnel Committee to be consistent with the overall goals and strategic direction that the Entergy Corporation Board has approved for Entergy Corporation. The long-term incentive programs further align the interests of Entergy Corporation’s executives and its shareholders by directly tying the value of the equity awards granted to executives under these programs to Entergy Corporation’s stock price performance and total shareholder return. By incentivizing officers to achieve important financial and operational objectives and create long-term shareholder value, these programs play a key role in creating sustainable value for the benefit of all of Entergy Corporation’s stakeholders, including owners, customers, employees, and communities.
Incentive Programs and 2017 Incentive Pay Outcomes
Entergy Corporation believes that the 2017 incentive pay outcomes for the Named Executive Officers demonstrated the application of its pay for performance philosophy.
Annual Incentive Plan
Awards under the Executive Annual Incentive Plan, or Annual Incentive Plan, are tied to Entergy Corporation’s financial and operational performance through the Entergy Achievement Multiplier (EAM), which is the performance metric used to determine the maximum funding available for awards under the plan. The 2017 EAM was determined based in equal part on Entergy Corporation’s success in achieving its consolidated operational earnings per share and consolidated operational operating cash flow goals set at the beginning of the year. These goals were approved by the Personnel Committee based on Entergy Corporation’s financial plan and the Board’s overall goals for Entergy Corporation and were consistent with its published earnings guidance.
| • | 2017 Annual Incentive Plan Payout. For 2017, the Personnel Committee, based on a recommendation of the Finance Committee, determined that management exceeded its consolidated operational earnings per share goal of $5.05 per share by $2.17, but fell short of its consolidated operational operating cash flow goal of $3.000 billion by approximately $227 million. Based on the targets and ranges previously established by the Committee, these results resulted in a calculated EAM of 129%. This determined the maximum funding level for the plan and the maximum award, as a percentage of target, that could be received by any of the executive officers, subject to downward adjustment based on individual performance. After considering individual performance, including the role played by each of the Named Executive Officers, who are members of the Office of the Chief Executive, in advancing Entergy Corporation’s strategies and delivering the strong financial results in 2017, the Personnel Committee approved payouts of 129% of target for each of the Named Executive Officers, who are members of the Office of the Chief Executive. |

After the EAM was established to determine overall funding for the Annual Incentive Plan, Entergy Corporation’s Chief Executive Officer allocated incentive award funding to individual business units based on business unit results. Individual awards were determined for the Named Executive Officers who are not members of the Office of the Chief Executive by their immediate supervisor based on the individual officer’s key accountabilities, accomplishments, and performance. This resulted in payouts that ranged from 79% of target to 204% of target for the Named Executive Officers who are not members of Entergy Corporation’s Office of the Chief Executive.
Long-Term Incentives
Long term incentives consist of three components to incentivize long-term value creation - performance units, stock options, and restricted stock. Performance under the Long-Term Performance Unit Program is measured over
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a three-year period by assessing Entergy Corporation’s total shareholder return in relation to the total shareholder return of the companies included in the Philadelphia Utility Index. Payouts, if any, are based on Entergy Corporation’s total shareholder return performance in relation to its peers and are not subject to adjustment by the Personnel Committee. Beginning with the 2018-2020 performance period, Entergy Corporation will be using a cumulative utility earnings measure, as well as relative total shareholder return to assess performance under the Long-Term Performance Unit Program. Entergy Corporation also uses stock options, which reward increases in the market value of its common stock, and restricted stock, which is an effective retention mechanism.
| • | Long-Term Performance Unit Program Payout. For the three-year performance period ending in 2017, Entergy Corporation’s total shareholder return was in the third quartile, resulting in a payout of 31% of target for its executive officers. Payouts were made in shares of Entergy Corporation common stock which are required to be held by executive officers until they satisfy the executive stock ownership guidelines. |

What Entergy Corporation Pays and Why
How Entergy Corporation Sets Target Pay
To develop a competitive compensation program, the Personnel Committee annually reviews compensation data from two sources:
Use of Competitive Data
The Personnel Committee uses published and private compensation survey data to develop marketplace compensation levels for Entergy Corporation’s executive officers. The data compiled by the Committee’s independent compensation consultant, Pay Governance LLC, compare the current compensation opportunities provided to each of the executive officers against the compensation opportunities provided to executives holding similar positions at companies with corporate revenues similar to Entergy Corporation’s. The Committee reviews:
| • | For non-industry specific positions, general industry data for total cash compensation (base salary and annual incentive) since the market for talent is broader than the utility sector. |

| • | For management positions that are industry-specific, such as Group President, Utility Operations, data from utility companies for total cash compensation. |

| • | For all positions, utility market data for long-term incentives. |

The survey data reviewed by the Committee cover hundreds of companies across a broad range of industries and approximately 60 investor-owned utility companies. In evaluating compensation levels against the survey data, the Committee considers only the aggregated survey data. The identities of the companies participating in the compensation survey data are not disclosed to, or considered by, the Committee in its decision-making process and, thus, are not considered material by the Committee.
The Committee uses this survey data to develop compensation opportunities that are designed to deliver total target compensation at approximately the 50th percentile of the surveyed companies in the aggregate. The survey data are the primary data used for purposes of assessing target compensation. As a result, Mr. Denault, Entergy Corporation’s Chief Executive Officer, is compensated at a higher level than the other Named Executive Officers, reflecting market practices that compensate chief executive officers at greater potential compensation levels with more pay “at risk” than other Named Executive Officers, due to the greater responsibilities and accountability required of a Chief Executive Officer. In most cases, the Committee considers its objectives to have been met if Entergy Corporation’s Chief Executive Officer and the 7 other executive officers who constitute what is referred to as the Office of the Chief Executive each has a target compensation opportunity that falls within the range of 85% - 115% of the 50th percentile of the survey data. Promoted officers or officers who are new to their roles may be transitioned into the targeted market range over time. Actual compensation received by an individual officer may be above or below the targeted range based on an individual officer’s skills, performance, experience, and responsibilities, Entergy Corporation performance, and internal pay equity.
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Proxy Analysis
Although the survey data described above are the primary data used in benchmarking compensation, the Committee reviews data derived from the proxy statements of companies included in the Philadelphia Utility Index as an additional point of comparison. The Personnel Committee identified the Philadelphia Utility Index as the appropriate industry peer group because the companies included in this index, in the aggregate, are comparable to Entergy Corporation in terms of business and scale. The proxy data are used to compare the compensation levels of the Named Executive Officers with the compensation levels of the corresponding top five highest paid executive officers of the companies included in the Philadelphia Utility Index, as reported in their proxy statements. The Personnel Committee uses this analysis to evaluate the overall reasonableness of Entergy Corporation’s compensation programs. The following companies were included in the Philadelphia Utility Index at the time the proxy data from the 2016 filings were compiled:
|  | AES Corporation |  | El Paso Electric |
|  | Ameren Corporation |  | Eversource Energy |
|  | American Electric Power Co. Inc. |  | Exelon Corporation |
|  | American Water Works |  | FirstEnergy Corporation |
|  | CenterPoint Energy Inc. |  | NextEra Energy |
|  | Consolidated Edison Inc. |  | PG&E Corporation |
|  | Dominion Resources Inc. |  | Public Service Enterprise Group, Inc. |
|  | DTE Energy Company |  | Southern Company |
|  | Duke Energy Corporation |  | Xcel Energy |
|  | Edison International |

Executive Compensation Elements
The following table summarizes the elements of total direct compensation (TDC) granted or paid to the executive officers under Entergy Corporation’s 2017 executive compensation program. The program uses a mix of fixed and variable compensation elements and provides alignment with both short- and long-term business goals through annual and long-term incentives. The Personnel Committee establishes the performance measures and ranges of performance for the variable compensation elements. An individual’s award is based primarily on corporate performance, market-based compensation levels, and individual performance.
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| Element | Key Characteristics | Why This Element Is Paid | How This Amount Is Determined | 2017 Decisions |
| Base Salary | Fixed compensation component payable in cash. Reviewed annually and adjusted when appropriate. | Provides a base level of competitive cash compensation for executive talent. | Experience, job scope, market data, individual performance, and internal pay equity. | All of the Named Executive Officers received increases in their base salaries ranging from 1.5% to 7.3%. |
| Annual Incentive Awards | Variable compensation component payable in cash based on performance against goals established annually. | Motivate and reward executives for performance on key financial and operational measures during the year. | Target opportunity is determined based on job scope, market data, and internal pay equity.  For 2017, awards were determined based on success in meeting consolidated operational earnings per share and consolidated operational operating cash flow targets, subject to downward adjustment at the Personnel Committee’s discretion for members of the Office of the Chief Executive. | Mr. Denault's target annual incentive award for 2017 was 135% of base salary, and target awards were in the range of 40% to 70% of base salary for the other Named Executive Officers.Strong operational and financial performance and a review of individual performance resulted in an award at 129% of target for Entergy Corporation’s Chief Executive Officer, and awards that ranged from 79% to 204% of target for the other Named Executive Officers. |
| Long-TermPerformanceUnitProgram | Each performance unit equals one share of Entergy Corporation’s common stock. Performance is measured at the end of a three-year performance period. Each unit also earns the equivalent of the dividends paid during the performance period. Performance units granted under the Long-Term Performance Unit Program along with accrued dividend equivalents are settled in shares of Entergy Corporation common stock. | Focuses executive officers on building long-term shareholder value and increases executive officers’ ownership of Entergy Corporation common stock. | Formulaic. payout based on Entergy Corporation’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index. Beginning with the 2018-2020 performance period, payouts will be based on a cumulative utility earnings metric, as well as total shareholder return. | Performance unit grants for the 2017-2019 performance period represented approximately 39% of target TDC for Entergy Corporation’s Chief Executive Officer and approximately 21% to 31% of target for the other Named Executive Officers.Unfavorable relative total shareholder return in 2015 and 2016, partially offset by strong relative total shareholder return in 2017, resulted in performance in the third quartile with a 6.7% TSR for the 2015-2017 performance period, yielding a payout of 31% of target for the Named Executive Officers. |
| StockOptions | Non-qualified stock options are granted at fair market value, have a ten-year term, and vest over 3 years - 33 1/3% on each anniversary of the grant date. | Reward executives for absolute value creation and coupled with restricted stock provide competitive compensation, retain executive talent, and increase the executive officers’ ownership in Entergy Corporation’s common stock. | Job scope, market data, individual performance, and Entergy Corporation performance. | Stock options in 2017 represented approximately 13% of target TDC for Entergy Corporation’s Chief Executive Officer and approximately 7% to 10% for the other Named Executive Officers. |

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| RestrictedStockAwards | Restricted stock awards vest over 3 years - 33 1/3% on each anniversary of the grant date, have voting rights, and accrue dividends during the vesting period. | Coupled with stock options, align interests of executives with long-term shareholder value, provide competitive compensation, retain executive talent, and increase the executive officers’ ownership of Entergy Corporation common stock. | Job scope, market data, individual performance, and Entergy Corporation performance. | Restricted stock in 2017 represented approximately 13% of target TDC for Entergy Corporation’s Chief Executive Officer and approximately 7% - 10% for the other Named Executive Officers. |

Fixed Compensation
Base Salary
The Personnel Committee determines the base salaries for all of the Named Executive Officers who are members of the Office of the Chief Executive based on competitive compensation data, performance considerations, and advice provided by the Committee’s independent compensation consultant. For the other Named Executive Officers, their salaries are established by their immediate supervisors using the same criteria. The Committee also considers internal pay equity; however, the Committee has not established any predetermined formula against which the base salary of one Named Executive Officer is measured against another officer or employee.
In 2017, all of the Named Executive Officers received merit increases in their base salaries ranging from approximately 1.5% to 7.3%. The increases in base salary were based on the market data previously discussed in this CD&A under “What Entergy Corporation Pays and Why - How Entergy Corporation Sets Target Pay,” as well as an internal pay equity comparison.
The following table sets forth the 2016 and 2017 base salaries for the Named Executive Officers. Changes in base salaries for 2017 were effective in April 2017.
| Named Executive Officer | 2016 Base Salary | 2017 Base Salary |
| A. Christopher Bakken, III | $605,000 | $620,125 |
| Marcus V. Brown | $605,000 | $630,000 |
| Leo P. Denault | $1,200,000 | $1,230,000 |
| Haley R. Fisackerly | $350,000 | $355,300 |
| Andrew S. Marsh | $559,408 | $600,000 |
| Phillip R. May, Jr. | $356,650 | $366,150 |
| Sallie T. Rainer | $319,475 | $328,275 |
| Charles L. Rice, Jr. | $280,424 | $286,424 |
| Richard C. Riley | $335,000 | $344,200 |
| Roderick K. West | $659,120 | $675,598 |

Variable Compensation
Short-Term Incentive Compensation
Annual Incentive Plan
Entergy Corporation includes performance-based incentives in the Named Executive Officers’ compensation packages because it believes performance-based incentives encourage the Named Executive Officers to pursue objectives consistent with the overall goals and strategic direction that the Board has approved for Entergy Corporation. The EAM is the performance metric used to determine the maximum percentage of target annual plan opportunities that will be paid each year to each Named Executive Officer who are members of the Office of the Chief Executive under the Annual Incentive Plan. Once the EAM has been determined, individual awards for the Office of the Chief
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Executive members may be adjusted downward, but not upward, from the EAM at the Personnel Committee’s discretion, based on individual performance and other factors deemed relevant by the Personnel Committee. For 2017, the target Annual Incentive Plan opportunities for each of the Named Executive Officers, expressed as a percentage of the officer’s base salary, were:
| • | 135% for Mr. Denault; |

| • | 70% for Mr. Bakken, Mr. Brown, Mr. Marsh, and Mr. West; |

| • | 60% for Mr. May; and |

| • | 40% for Mr. Fisackerly, Ms. Rainer, Mr. Rice, and Mr. Riley. |

The target opportunities established for these officers were comparable to the target opportunities historically set for these positions and levels of responsibility. Target opportunities for the Named Executive Officers who are members of the Office of the Chief Executive are established by the Personnel Committee, and these Named Executive Officers may earn a maximum payout ranging from 0% to 200% of their target opportunity, calculated as described in the table below.
Target award opportunities are set based on an executive officer’s position and executive management level within the Entergy organization. Executive management levels at Entergy Corporation range from Level 1 through Level 4. At December 31, 2017, Mr. Denault held a Level 1 position, Messrs. Bakken, Brown, Marsh, and West held positions in Level 2, Mr. May held a Level 3 position, and the remaining Named Executive Officers held positions in Level 4. Accordingly, their respective incentive award opportunities differ from one another based on their management level and the external market data developed by the Committee’s independent compensation consultant.
Each year the Personnel Committee reviews the performance measures used to determine the EAM pool. In December 2016, the Personnel Committee decided to retain consolidated operational earnings per share and consolidated operational operating cash flow, each measure weighted equally, as the performance measures for determining the EAM pool. The Committee considered a variety of other potential measures, but determined that consolidated operational earnings per share and consolidated operational operating cash flow continued to be the best metrics to use because, among other things, they are objective measures that Entergy Corporation’s investors consider to be important in evaluating its financial performance and because Entergy Corporation’s goals in that regard are broadly communicated both internally and externally. This provides both discipline and transparency that the Committee believes are important objectives of any well designed incentive compensation plan.
The Personnel Committee also engages in a rigorous process each year to establish the target achievement levels for each of the EAM performance measures with a goal of establishing target achievement levels that are consistent with Entergy Corporation’s strategy and business objectives for the upcoming year, as reflected in its financial plan, and sufficient to drive results that represent a high level of achievement, taking into consideration the applicable business environment and specific challenges facing it. These targets are approved based on a comprehensive review by the full Board of Entergy Corporation’s financial plan, conducted in December of the preceding year and updated in January to reflect the most current information concerning changes in commodity market conditions and other key drivers of anticipated changes in performance from the preceding year. The Committee also reviews the effects on plan results of various risks and opportunities that are recognized at the time the plan is set, to assure that targets that are determined based on the plan reflect an appropriate balance of risks and opportunities. The Committee further confirms that the earnings target it approves is aligned with the earnings guidance that will be communicated to the financial markets, thus ensuring that the internal earnings target set for purposes of Entergy Corporation’s incentive compensation plans is aligned with the external expectations set and communicated to Entergy Corporation’s shareholders.
In January 2017, after full Board review of management’s 2017 financial plan for Entergy Corporation and engaging in the process discussed above, the Committee determined the Annual Incentive Plan targets to be used for purposes of determining Annual Incentive Plan awards for 2017. In keeping with its past practice, the Committee also determined that for purposes of measuring performance against such targets, the Committee would exclude the effect on reported results of any major storms that may occur during the year. This exclusion was viewed by the Committee
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as appropriate because although Entergy Corporation includes estimates for storm costs in its financial plan, it does not include estimates for a major storm event, such as a hurricane. The Committee also approved exclusions from reported results, for purposes of calculating achievement levels, for the impact of certain longstanding unresolved litigation relating to the System Agreement among the Utility operating companies, and for the potential effects of changes in tax laws, given the possibility that significant unanticipated changes in tax laws might be enacted during the year that could impact reported results. The Committee believed that each of these adjustments was appropriate because of the significant uncertainty around each such item and management’s inability to influence any of the related outcomes.
In determining the targets to set for 2017, the Committee reviewed anticipated drivers for consolidated operational earnings per share and consolidated operational operating cash flow for 2017 as set forth in Entergy Corporation’s financial plan and as reflected in its published earnings guidance. Under the plan, consolidated operational earnings per share were expected to decline from 2016 results due primarily to the significant impact on 2016 operational results of certain tax benefits and, to a lesser extent, favorable weather, which were not anticipated to recur in 2017. Together, these factors accounted for $2.06 of consolidated operational earnings per share for 2016. Under the plan, consolidated operational operating cash flow was expected to increase slightly in 2017 from 2016 results.
In evaluating the proposed targets, the Committee considered the potential impact on consolidated operational earnings per share and consolidated operational operating cash flow of certain risks and opportunities, including differences in wholesale energy prices and capacity factors at Entergy Wholesale Commodities, utility sales, operations and maintenance costs, interest expense, and certain tax and regulatory risks. This evaluation indicated that there was significantly more downside risk than upside opportunity in the targets and, as a result, that there was a reasonable degree of challenge embedded in the targets.
After adjusting to eliminate the impact of weather and tax benefits, the 2017 plan targets required management to achieve (i) slight growth in utility operational earnings despite higher nuclear and pension costs and the absence of certain favorable items from 2016 and (ii) modest growth in Entergy Wholesale Commodities operational earnings, despite an expectation for further declines in wholesale energy and capacity revenues due in part to the sale of FitzPatrick in the first quarter of 2017. While the resulting earnings target represented a decline from 2016 operational results, the Committee recognized that in addition to the favorable weather and tax items that were not expected to recur in 2017, management would be challenged in 2017 by significantly higher nuclear costs as they executed on its nuclear strategic plan. Thus, the Committee concluded, based on a careful review of the overall plan, that the targets derived from the plan challenged management appropriately to deliver growth in Entergy Corporation’s core business while continuing to manage the significant risks at Entergy Wholesale Commodities and represented an appropriate balancing of Entergy Corporation’s business risks and opportunities for 2017.
The following table shows the resulting Annual Incentive Plan targets established by the Personnel Committee in January 2017, and 2017 results:
Annual Incentive Plan Targets and Results
| Performance Goals(1) |
| Minimum | Target | Maximum | 2017 Results |
| Consolidated Operational Earnings Per Share | $4.55 | $5.05 | $5.55 | $7.22 |
| Consolidated Operational Operating Cash Flow ($ billion) | $2.600 | $3.000 | $3.400 | $2.773 |
| EAM as % of Target | 25% | 100% | 200% | 129% |

| (1) | Payouts for performance between minimum and target achievement levels and between target and maximum levels are calculated using straight-line interpolation. There is no payout for performance below minimum. |

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In January 2018, the Finance and Personnel Committees jointly reviewed Entergy Corporation’s financial results against the performance objectives reflected in the table above. Management discussed with the Committees the consolidated operational earnings per share and consolidated operational operating cash flow results for 2017, including primary factors explaining how those results compared to the 2017 business plan and Annual Incentive Plan targets. Consolidated operational earnings per share exceeded the operational earnings per share goal of $5.05 per share set at the beginning of the year by $2.17, due in large part to a non-cash restructuring tax benefit, but management fell short of achieving its consolidated operational operating cash flow goal of $3.000 billion by approximately $227 million, leading to a calculated EAM of 129%. Operational results excluded the impact of certain special items that were excluded from as-reported (GAAP) earnings per share and operating cash flow to determine consolidated operational earnings per share and consolidated operational operating cash flow, including asset impairments and related write-offs at Entergy Wholesale Commodities related to Entergy Corporation’s 2016 decision to close two nuclear generating plants, and certain costs associated with nuclear plant closings, and charges recorded at the end of 2017 relating to the impact of recently enacted federal income tax law changes. Consistent with determinations made by the Personnel Committee when the targets were set, adjustments were made to the reported results to exclude the impact of Hurricane Harvey and the resolution of certain longstanding System Agreement litigation, but these adjustments had only a negligible impact on the calculated EAM.
The Committee reviewed certain sensitivities as part of its review of the calculation of the EAM and noted that Entergy Corporation far exceeded its consolidated operational earnings per share goal in 2017, as noted, due in large part to a restructuring tax benefit, partially offset by unfavorable weather at the utility, and that unfavorable weather at the utility also accounted for approximately $128 million of the $227 million shortfall in consolidated operational operating cash flow. Had the EAM been calculated to exclude both the impact of the restructuring tax benefit and unfavorable weather, the calculated EAM would have been 140%. This indicated that the underlying performance of the core business, without regard to the impact of tax items and weather, was significantly stronger than implied by the calculated EAM. However, consistent with the plan design, the Personnel Committee did not make any adjustments for these factors to the consolidated operational earnings per share and consolidated operational operating cash flow results to determine the EAM for 2017. The Committee also noted that its utility, parent, and other adjusted earnings of $4.57 per share for 2017 were slightly above the high end of the guidance range Entergy Corporation had provided to investors at the beginning of the year for this extremely important measure of its core utility earnings.
In determining individual executive officer awards under the Annual Incentive Plan, for Entergy Corporation’s Chief Executive Officers and the Named Executive Officers, who are members of the Office of the Chief Executive, the Committee considered individual performance and, in particular, whether there were additional factors beyond those captured by the EAM measures that should be taken into account in determining whether to exercise negative discretion to reduce awards below the levels determined by the EAM. In determining the extent of negative discretion, if any, that it would exercise with respect to each executive officer, the Committee considered the executive’s key accountabilities and accomplishments, and individual performance executing on Entergy Corporation’s strategies in 2017. Based on these considerations, the Committee decided to award a payout equal to the EAM, or 129% of target, for Entergy Corporation’s Chief Executive Officer and the other Named Executive Officers who are members of the Office of the Chief Executive.
After the EAM was established to determine overall funding for the Annual Incentive Plan, Entergy Corporation’s Chief Executive Officer allocated incentive award funding to individual business units based on business unit results. Individual awards were determined for the remaining Named Executive Officers who are not members of the Office of the Chief Executive by their immediate supervisor based on the individual officer’s key accountabilities, accomplishments, and performance. This resulted in payouts that ranged from 79% of target to 204% of target for the Named Executive Officers who are not members of the Office of the Chief Executive.
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Based on the foregoing evaluation of management performance, the Personnel Committee approved the following Annual Incentive Plan payouts to each Named Executive Officer for 2017:
| Named Executive Officer | Base Salary | Target as Percentage of Base Salary | Payout as Percentage of Target | 2017 AnnualIncentive Award |
| A. Christopher Bakken, III | $620,125 | 70% | 129% | $559,973 |
| Marcus V. Brown | $630,000 | 70% | 129% | $568,890 |
| Leo P. Denault | $1,230,000 | 135% | 129% | $2,142,045 |
| Haley R. Fisackerly | $355,300 | 40% | 119% | $169,123 |
| Andrew S. Marsh | $600,000 | 70% | 129% | $541,800 |
| Phillip R. May, Jr. | $366,150 | 60% | 137% | $300,000 |
| Sallie T. Rainer | $328,275 | 40% | 119% | $156,259 |
| Charles L. Rice, Jr. | $286,424 | 40% | 79% | $91,000 |
| Richard C. Riley | $344,200 | 40% | 204% | $280,661 |
| Roderick K. West | $675,598 | 70% | 129% | $610,065 |

Nuclear Retention Plan
Mr. Bakken participates in the Nuclear Retention Plan, a retention plan for officers and other leaders with expertise in the nuclear industry. The Personnel Committee authorized this plan to attract and retain key management and employee talent in the nuclear power field, a field that requires unique technical and other expertise that is in great demand in the utility industry. The plan provides for bonuses to be paid annually over a three-year employment period with the bonus opportunity dependent on the participant’s management level and continued employment. Each annual payment is equal to an amount ranging from 15% to 30% of the employee’s base salary as of their date of enrollment in the plan. Mr. Bakken’s participation in the plan commenced in May 2016 and in accordance with the terms and conditions of the plan, in May 2017, 2018, and 2019, subject to his continued employment, Mr. Bakken will receive a cash bonus equal to 30% of his base salary as of May 1, 2016. This plan does not allow for accelerated or prorated payout upon termination of any kind. The three-year coverage period and percentage of base salary payable under the plan are consistent with the terms of participation of other senior nuclear officers who participate in this plan. In May 2017, Mr. Bakken received a cash bonus of $181,500 which equaled 30% of his May 1, 2016, base salary of $605,000.
Long-Term Incentive Compensation
Entergy Corporation’s goal for its long-term incentive compensation is to focus the executive officers on building shareholder value and to increase the executive officers’ ownership of Entergy Corporation’s common stock in order to more closely align their interest with those of Entergy Corporation’s shareholders. In its long-term incentive compensation programs, Entergy Corporation uses a mix of performance units, restricted stock, and stock options. Performance units are used to deliver more than a majority of the total target long-term incentive awards. For periods through the end of 2017, performance units reward the Named Executive Officers on the basis of total shareholder return, which is a measure of stock price appreciation and dividend payments, in relation to the companies in the Philadelphia Utility Index. Beginning with the 2018-2020 performance period, a cumulative utility earnings metric has been added to the Long-Term Performance Unit Program to supplement the relative total shareholder return measure that historically has been used in this program with each measure equally weighted. Restricted stock ties the executive officers’ long-term financial interest to the long-term financial interests of Entergy Corporation’s shareholders. Stock options provide a direct incentive to increase the value of Entergy Corporation’s common stock. In general, Entergy Corporation seeks to allocate the total value of long-term incentive compensation 60% to performance units and 40% to a combination of stock options and restricted stock, equally divided in value, based on the value the compensation model seeks to deliver. Awards for individual Named Executive Officers may vary from this target as a result of individual performance, promotions, and internal pay equity.
The performance units for the 2015-2017 performance period were awarded under the 2011 Equity Ownership Plan and Long-Term Cash Incentive Plan (the “2011 Equity Ownership Plan”) and the performance units for the
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2016-2018 and 2017-2019 performance periods and all of the shares of restricted stock and stock options granted to the Named Executive Officers in 2017 were granted pursuant to the 2015 Equity Ownership Plan (the “2015 Equity Ownership Plan,” and together with the 2011 Equity Ownership Plan (the “Equity Ownership Plans”). The Equity Ownership Plans require both a change in control and an involuntary job loss or substantial diminution of duties (a “double trigger”) for the acceleration of these awards upon a change in control.
Performance Unit Program
Entergy Corporation issues performance unit awards to the Named Executive Officers under its Long-Term Performance Unit Program. Each performance unit represents the value of one share of Entergy Corporation common stock at the end of the three-year performance period, plus dividends accrued during the performance period. The Personnel Committee sets payout opportunities for the program at the outset of each performance period, and the program is structured to reward Named Executive Officers only if performance goals approved by the Personnel Committee are met. The Personnel Committee has no discretion to make awards if minimum performance goals are not achieved.
The performance units granted under the Long-Term Performance Unit Program and accrued dividends on any shares earned during the performance period are settled in shares of Entergy Corporation common stock rather than cash. No shares are issued, including shares attributable to accrued dividends, unless performance goals are achieved. All shares paid out under the Long-Term Performance Unit Program are required to be retained by the officers until applicable executive stock ownership requirements are met.
The Long-Term Performance Unit Program specifies a minimum, target, and maximum achievement level, the achievement of which will determine the number of performance units that may be earned by each participant. Entergy Corporation measures performance by assessing Entergy Corporation’s total shareholder return relative to the total shareholder return of the companies in the Philadelphia Utility Index, which Entergy Corporation refers to as it peer companies. The Personnel Committee identified the Philadelphia Utility Index as the appropriate industry peer group for this purpose because the companies included in this index, in the aggregate, are comparable to Entergy Corporation in terms of business and scale. The Personnel Committee chose relative total shareholder return as a measure of performance because it reflects Entergy Corporation’s creation of shareholder value relative to other electric utilities over the performance period. It also takes into account dividends paid by the companies in this index and normalizes certain events that affect the industry as a whole. Minimum, target, and maximum performance levels are determined by reference to the ranking of Entergy Corporation’s total shareholder return against the total shareholder return of the companies in the Philadelphia Utility Index.
Performance Unit Program Grants. At any given time, a participant in the Long-Term Performance Unit Program may be participating in up to three performance periods. During 2017, eligible participants were participating in the 2015-2017, 2016-2018, and 2017-2019 performance periods. Subject to achievement of the applicable performance levels as described below, the Personnel Committee established the following target performance unit payout opportunities for each of the 2015-2017, 2016-2018, and 2017-2019 performance periods.
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| Named Executive Officer | 2015-2017Target | 2016-2018Target | 2017-2019 Target |
| A. Christopher Bakken, III (1) | 3,639 | 7,289 | 8,300 |
| Marcus V. Brown | 6,550 | 8,200 | 8,300 |
| Leo P. Denault | 33,100 | 41,700 | 48,700 |
| Haley R. Fisackerly | 1,450 | 1,800 | 1,850 |
| Andrew S. Marsh | 6,550 | 8,200 | 8,300 |
| Phillip R. May, Jr. | 2,050 | 2,700 | 3,150 |
| Sallie T. Rainer | 1,450 | 1,800 | 1,850 |
| Charles L. Rice, Jr. | 1,450 | 1,800 | 1,850 |
| Richard C. Riley | 1,450 | 1,800 | 1,850 |
| Roderick K. West | 6,550 | 8,200 | 8,300 |

| (1) | As a new hire in 2016, Mr. Bakken received pro-rated target award opportunities for the 2015-2017 and 2016-2018 performance periods. |

The range of potential payouts for the 2015-2017, 2016-2018, and 2017-2019 performance periods under the program is shown below.
| Performance Level | Zero | Minimum | Target | Maximum |
| Total Shareholder Return | Fourth Quartile | Bottom of Third Quartile | Median percentile | Top Quartile |
| Payout | No Payout | Minimum Payout of 25% of target | 100% of target | 200% of Target |

For all performance periods, there is no payout for performance that falls within the lowest quartile of performance of the peer companies, and for top quartile performance a maximum payout of 200% of target is earned. Payouts between minimum and target and between target and maximum are calculated by interpolating between the performance of the company at the top of the fourth quartile of performance of the peer companies and the median or between the median and the performance of the company at the bottom position of the top quartile of performance of the peer companies, respectively.
Payout for the 2015-2017 Performance Period. In January 2018, the Committee reviewed Entergy Corporation’s total shareholder return for the 2015-2017 performance period in order to determine the payout to participants. The Committee compared Entergy Corporation’s total shareholder return against the total shareholder return of the companies that comprise the Philadelphia Utility Index, with the performance measures and range of potential payouts for the 2015-2017 performance period similar to that discussed above. As recommended by the Finance Committee, the Personnel Committee concluded that Entergy Corporation’s relative total shareholder return for the 2015-2017 performance period fell in the bottom of the third quartile, yielding a payout of 31% of target for the Named Executive Officers.
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| Named Executive Officer | 2015-2017Target | Number of Shares Issued | Value of Shares Actually Issued(1) | Grant Date Fair Value |
| A. Christopher Bakken, III(2) | 3,639 | 1,212 | $95,154 | $360,334 |
| Marcus V. Brown | 6,550 | 2,287 | $179,552 | $648,581 |
| Leo P. Denault | 33,100 | 11,554 | $907,105 | $3,277,562 |
| Haley R. Fisackerly | 1,450 | 506 | $39,726 | $143,579 |
| Andrew S. Marsh | 6,550 | 2,287 | $179,552 | $648,581 |
| Phillip R. May, Jr. | 2,050 | 716 | $56,213 | $202,991 |
| Sallie T. Rainer | 1,450 | 506 | $39,726 | $143,579 |
| Charles L. Rice, Jr. | 1,450 | 506 | $39,726 | $143,579 |
| Richard C. Riley | 1,450 | 506 | $39,726 | $143,579 |
| Roderick K. West | 6,550 | 2,287 | $179,552 | $648,581 |

| (1) | Value determined based on the closing price of Entergy Corporation’s common stock on January 17, 2018 ($78.51), the date the Personnel Committee certified the 2015-2017 performance period results. |

| (2) | As a new hire in 2016, Mr. Bakken received pro-rated target award opportunities for the 2015-2017 performance period. |

Stock Options and Restricted Stock
Entergy Corporation grants stock options and restricted stock as a long-term incentive to its executive officers. As previously discussed, the Personnel Committee considers several factors in determining the number of stock options and shares of restricted stock it will grant to the Named Executive Officers, including Entergy Corporation and individual performance, internal pay equity, prevailing market practice, targeted long-term value created by the use of stock options and restricted stock, and the potential dilutive effect of stock option and restricted stock grants. Of these factors, the Committee’s assessment of individual performance of each Named Executive Officer is the most important factor in determining the number of shares of restricted stock and stock options awarded, except with respect to the Chief Executive Officer for whom comparative market data is the most important factor. The Committee, in consultation with Entergy Corporation’s Chief Executive Officer, reviews each of the other Named Executive Officer’s performance, role and responsibilities, strengths, and developmental opportunities. Stock option and restricted stock awards for Entergy Corporation’s Chief Executive Officer are determined solely by the Personnel Committee on the basis of the same considerations.
The following table sets forth the number of stock options and shares of restricted stock granted to each Named Executive Officer in 2017. The exercise price for each option was $70.53, which was the closing price of Entergy Corporation’s common stock on the date of grant.
| Named Executive Officer | Stock Options | Shares of Restricted Stock |
| A. Christopher Bakken, III | 37,600 | 5,200 |
| Marcus V. Brown | 44,000 | 6,100 |
| Leo P. Denault | 179,400 | 17,000 |
| Haley R. Fisackerly | 7,600 | 850 |
| Andrew S. Marsh | 44,000 | 6,100 |
| Phillip R. May, Jr. | 10,500 | 1,100 |
| Sallie T. Rainer | 7,800 | 900 |
| Charles L. Rice, Jr. | 3,900 | 550 |
| Richard C. Riley | 8,000 | 1,000 |
| Roderick K. West | 29,200 | 3,200 |

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Benefits and Perquisites
Entergy Corporation’s Named Executive Officers are eligible to participate in or receive the following benefits:
| Plan Type | Description |
| Retirement Plans | Entergy Corporation-sponsored:Entergy Retirement Plan - a tax-qualified final average pay defined benefit pension plan that covers a broad group of employees hired before July 1, 2014.Cash Balance Plan - a tax-qualified cash balance defined benefit pension plan that covers a broad group of employees hired on or after July 1, 2014.Pension Equalization Plan - a non-qualified pension restoration plan for a select group of management or highly compensated employees who participate in the Entergy Retirement Plan.Cash Balance Equalization Plan - a non-qualified restoration plan for a select group of management or highly compensated employees who participate in the Cash Balance Plan.System Executive Retirement Plan - a non-qualified supplemental retirement plan for individuals who became executive officers before July 1, 2014.See the 2017 Pension Benefits Table for additional information regarding the operation of the plans described above. |
| Savings Plan | Entergy Corporation-sponsored 401(k) Savings Plan that covers a broad group of employees. |
| Health & Welfare Benefits | Medical, dental, and vision coverage, life and accidental death and dismemberment insurance, business travel accident insurance, and long-term disability insurance. Eligibility, coverage levels, potential employee contributions, and other plan design features are the same for the Named Executive Officers as for the broad employee population. |
| 2017 Perquisites | Corporate aircraft usage, annual physical exams, relocation assistance, and event tickets. The Office of the Chief Executive members do not receive tax gross ups on any benefits, except for relocation assistance. Named Executive Officers who are not members of the Office of the Chief Executive also were provided in 2017 with club dues and tax gross up payments on some perquisites.For additional information regarding perquisites, see the “All Other Compensation” column in the 2017 Summary Compensation Table. |
| Deferred Compensation | The Named Executive Officers are eligible to defer up to 100% of their base salary and Annual Incentive Plan awards into an Entergy Corporation-sponsored Executive Deferred Compensation Plan. |
| Executive Disability Plan | Eligible individuals who become disabled under the terms of the plan are eligible for 65% of the difference between their annual base salary and $276,923 (i.e. the annual base salary that produces the maximum $15,000 monthly disability payment under the general long-term disability plan). |

Entergy Corporation provides these benefits to its Named Executive Officers as part of providing a competitive executive compensation program and because it believes that these benefits are important retention and recruitment tools since many of the companies with which it competes for executive talent provide similar arrangements to their senior executive officers.
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Compensation Arrangements
The Personnel Committee believes that retention and transitional compensation arrangements are an important part of overall compensation. The Committee believes that these arrangements help to secure the continued employment and dedication of the Named Executive Officers, notwithstanding any concern that they might have at the time of a change in control regarding their own continued employment. In addition, the Committee believes that these arrangements are important as recruitment and retention devices, as many of the companies with which Entergy Corporation competes for executive talent have similar arrangements in place for their senior employees.
To achieve these objectives, Entergy Corporation has established a System Executive Continuity Plan under which each of the Named Executive Officers is entitled to receive “change in control” payments and benefits if such officer’s employment is involuntarily terminated in connection with a change in control of Entergy Corporation and its subsidiaries. Severance payments under the System Executive Continuity Plan generally are based on a multiple of the sum of an executive officer’s annual base salary plus his or her average Annual Incentive Plan award for the two calendar years immediately preceding the calendar year in which the termination of employment occurs. Under Entergy Corporation’s policy, under no circumstances can this multiple exceed 2.99 times the sum of the executive officer’s annual base salary and his or her annual incentive, calculated in accordance with this policy. Entergy Corporation strives to ensure that the benefits and payment levels under the System Executive Continuity Plan are consistent with market practices. Entergy Corporation’s executive officers, including the Named Executive Officers, will not receive any tax gross up payments on any severance benefits received under this plan. For more information regarding the System Executive Continuity Plan, see “2017 Potential Payments Upon Termination or Change in Control-System Executive Continuity Plan.”
In certain cases, the Committee may approve the execution of a retention agreement with an individual executive officer. These decisions are made on a case by case basis to reflect specific retention needs or other factors, including market practice. If a retention agreement is entered into with an individual officer, the Committee considers the economic value associated with that agreement in making overall compensation decisions for that officer. Entergy Corporation has voluntarily adopted a policy that any employment or severance agreements providing severance benefits in excess of 2.99 times the sum of an officer’s annual base salary and annual incentive award (other than the value of the vesting or payment of an outstanding equity-based award or the pro rata vesting or payment of an outstanding long-term incentive award) must be approved by Entergy Corporation’s shareholders.
Entergy Corporation currently has a retention agreement with Mr. Denault. In general, Mr. Denault’s retention agreement provides for certain payments and benefits in the event of his termination of employment by his Entergy employer other than for cause, by Mr. Denault for good reason or on account of his death or disability. See “2017 Potential Payments Upon Termination or Change in Control - Mr. Denault’s 2006 Retention Agreement.” Because Mr. Denault has reached age 55, certain severance payment provisions in his retention agreement no longer apply. Mr. Denault will not receive tax gross up payments on any payments or benefits he may receive under his agreement. Mr. Denault’s retention agreement was entered into in 2006 when he was Entergy Corporation’s Chief Financial Officer and was designed to reflect the competition for chief financial officer talent in the marketplace at that time and the Committee’s assessment of the critical role this position played in executing Entergy Corporation’s long-term financial and other strategic objectives. Based on the market data provided by its former independent compensation consultant, the Committee, at the time the agreement was entered into, believed the benefits and payment levels under Mr. Denault’s retention agreement were consistent with market practices.
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Compensation Policies and Practices
Entergy Corporation strives to ensure that its compensation philosophy and practices are in line with the best practices of companies in its industry as well as other companies in the S&P 500. Some of these practices include the following:
Clawback Provisions
Entergy Corporation has adopted a clawback policy that covers all individuals subject to Section 16 of the Securities Exchange Act of 1934 (the Exchange Act), including the members of the Office of the Chief Executive. Under the policy, which goes beyond the requirements of Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), the Committee will require reimbursement of incentives paid to these executive officers where:
| • | (i) the payment was predicated upon the achievement of certain financial results with respect to the applicable performance period that were subsequently determined to be the subject of a material restatement other than a restatement due to changes in accounting policy; or (ii) a material miscalculation of a performance award occurs, whether or not the financial statements were restated and, in either such case, a lower payment would have been made to the executive officer based upon the restated financial results or correct calculation; or |

| • | in the Board of Directors’ view, the executive officer engaged in fraud that caused or partially caused the need for a restatement or caused a material miscalculation of a performance award, in each case, whether or not the financial statements were restated. |

The amount the Committee requires to be reimbursed is equal to the excess of the gross incentive payment made over the gross payment that would have been made if the original payment had been determined based on the restated financial results or correct calculation. Further, following a material restatement of Entergy Corporation’s financial statements, it will seek to recover any compensation received by its Chief Executive Officer and Chief Financial Officer that is required to be reimbursed under Sarbanes-Oxley.
Stock Ownership Guidelines and Share Retention Requirements
For many years, Entergy Corporation has had stock ownership guidelines for executives, including the Named Executive Officers. These guidelines are designed to align the executives’ long-term financial interests with those of shareholders. Annually, the Personnel Committee monitors the executive officers’ compliance with these guidelines.
Entergy Corporation’s ownership guidelines are as follows:
| Role | Value of Common Stock to be Owned |
| Chief Executive Officer | 6 times base salary |
| Executive Vice Presidents | 3 times base salary |
| Senior Vice Presidents | 2 times base salary |
| Vice Presidents | 1 time base salary |

Further, to ensure compliance with the guidelines, until an executive officer satisfies the stock ownership guidelines, the officer must retain:
| • | all net after-tax shares paid out under the Long-Term Performance Unit Program; |

| • | all net after-tax shares of restricted stock and restricted stock units received upon vesting; and |

| • | at least 75% of the after-tax net shares received upon the exercise of Entergy Corporation stock options, except for stock options granted before January 1, 2014, as to which the executive officer must retain at least 75% of the after-tax net shares until the earlier of achievement of the stock ownership guidelines or five years from the date of exercise. |

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Trading Controls and Anti-Pledging and Anti-Hedging Policies
Executive officers, including the Named Executive Officers, are required to receive the permission of Entergy Corporation’s General Counsel prior to entering into any transaction involving Entergy Corporation securities, including gifts, other than the exercise of employee stock options. Trading is generally permitted only during specified open trading windows beginning immediately following the release of earnings. Employees, who are subject to trading restrictions, including the Named Executive Officers, may enter into trading plans under Rule 10b5-1 of the Exchange Act, but these trading plans may be entered into only during an open trading window and must be approved by Entergy Corporation. The Named Executive Officer bears full responsibility if he or she violates the policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.
Entergy Corporation also prohibits its directors and executive officers, including the Named Executive Officers, from pledging any Entergy Corporation securities or entering into margin accounts involving Entergy Corporation securities. These transactions are prohibited because of the potential that sales of Entergy Corporation securities could occur outside trading periods and without the required approval of the General Counsel.
Entergy Corporation has also adopted an anti-hedging policy that prohibits officers, directors, and employees from entering into hedging or monetization transactions involving Entergy Corporation common stock. Prohibited transactions include, without limitation, zero-cost collars, forward sale contracts, purchase or sale of options, puts, calls, straddles or equity swaps or other derivatives that are directly linked to Entergy Corporation’s common stock or transactions involving “short-sales” of Entergy Corporation’s common stock. The Board adopted this policy to require officers, directors, and employees to continue to own Entergy Corporation’s common stock with the full risks and rewards of ownership, thereby ensuring continued alignment of their objectives with those of Entergy Corporation’s other shareholders.
How Entergy Corporation Makes Compensation Decisions
Role of the Personnel Committee
The Personnel Committee has overall responsibility for approving the compensation program for the Named Executive Officers and makes all final compensation decisions regarding Entergy Corporation’s Named Executive Officers. The Committee works with Entergy Corporation’s executive management to ensure that the compensation policies and practices are consistent with its values and support the successful recruitment, development, and retention of executive talent so that Entergy Corporation can achieve its business objectives and optimize its long-term financial returns. Annually, management presents the Personnel Committee with the proposed compensation model for the following year, including the compensation elements, mix of elements, and measures for each element, and consults with Entergy Corporation’s Chief Executive Officer on recommended compensation for senior executives. The Committee evaluates executive pay each year to ensure that Entergy Corporation’s compensation policies and practices are consistent with its philosophy. The Personnel Committee is responsible for, among its other duties, the following actions related to the Named Executive Officers:
| • | developing and implementing compensation policies and programs for hiring, evaluating, and setting compensation for executive officers, including any employment agreement with an executive officer; |

| • | evaluating the performance of Entergy Corporation’s Chairman and Chief Executive Officer; and |

| • | reporting, at least annually, to the Board on succession planning, including succession planning for the Chief Executive Officer. |

Role of the Chief Executive Officer
The Personnel Committee solicits recommendations from Entergy Corporation’s Chief Executive Officer with respect to compensation decisions for the other Named Executive Officers who are members of Entergy Corporation’s Office of the Chief Executive. Entergy Corporation’s Chief Executive Officer provides the Personnel Committee with an assessment of the performance of each of these Named Executive Officers and recommends compensation levels to be awarded to each of them. In addition, the Committee may request that the Chief Executive
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Officer provide management feedback and recommendations on changes in the design of compensation programs, such as special retention plans or changes in incentive program structure. However, the Chief Executive Officer does not play any role with respect to any matter affecting his own compensation, nor does he have any role determining or recommending the amount or form of director compensation. The Personnel Committee also relies on the recommendations of Entergy Corporation’s Senior Vice President, Human Resources with respect to compensation decisions, policies, and practices.
The Chief Executive Officer may attend meetings of the Personnel Committee only at the invitation of the chair of the Personnel Committee and cannot call a meeting of the Committee. Since he is not a member of the Committee, he has no vote on matters submitted to the Committee. During 2017, Mr. Denault attended 9 meetings of the Personnel Committee.
Role of the Compensation Consultant
Entergy Corporation’s Personnel Committee has the sole authority for the appointment, compensation, and oversight of its outside compensation consultant. The Committee conducts an annual review of the compensation consultant, and in 2017, it retained Pay Governance LLC as its independent compensation consultant to assist it in, among other things, evaluating different compensation programs and developing market data to assess Entergy Corporation’s compensation programs. Also in 2017, the Corporate Governance Committee retained Pay Governance to review and perform a competitive analysis of non-employee director compensation.
During 2017, Pay Governance assisted the Committee with its responsibilities related to Entergy Corporation’s compensation programs for its executives. The Committee directed Pay Governance to: (i) regularly attend meetings of the Committee; (ii) conduct studies of competitive compensation practices; (iii) identify Entergy Corporation’s market surveys and proxy peer group; (iv) review base salary, annual incentives, and long-term incentive compensation opportunities relative to competitive practices; and (v) develop conclusions and recommendations related to the executive compensation programs for consideration by the Committee. A senior consultant from Pay Governance attended all Personnel Committee meetings to which he was invited in 2017.
Compensation Consultant Independence
To maintain the independence of the Personnel Committee’s compensation consultant, the Board has adopted a policy that any consultant (including its affiliates) retained by the Board of Directors or any Committee of the Board of Directors to provide advice or recommendations on the amount or form of executive or director compensation should not be retained by Entergy Corporation or any of its affiliates to provide other services in an aggregate amount that exceeds $120,000 in any year. In 2017, the Personnel Committee’s independent compensation consultant, Pay Governance, did not provide any services to Entergy Corporation other than its services to the Personnel Committee and the Corporate Governance Committee in connection with Entergy Corporation’s non-employee director compensation program. Annually, the Committee reviews the relationship with its compensation consultant, including services provided, quality of those services, and fees associated with services in its evaluation of the executive compensation consultant’s independence. The Committee also assesses Pay Governance’s independence under NYSE rules and has concluded that no conflict of interests exists that would prevent Pay Governance from independently advising the Personnel Committee.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code (the Code) limits the tax deductibility by a publicly-held corporation of compensation in excess of $1 million paid to the Chief Executive Officer and any of its other Section 162(m) covered employees. Historically, an exception was provided for compensation that was “performance-based compensation” within the meaning of Section 162(m). Effective as of January 1, 2018, this exception no longer applies, other than with respect to certain grandfathered arrangements. In structuring the compensation packages that are provided to the Named Executive Officers, the Personnel Committee takes into account the tax effects of Section 162(m) and considers the financial accounting consequences. However, the Personnel Committee and the Board believe that it is in the best interest of Entergy Corporation that the Personnel Committee retains the discretion
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to make compensation awards, whether or not deductible. This flexibility is necessary to foster achievement of performance goals established by the Personnel Committee, as well as other corporate goals that the Committee deems important to Entergy Corporation’s success, such as encouraging employee retention and rewarding achievement of key corporate goals.
PERSONNEL COMMITTEE REPORT
The Personnel Committee Report included in the Entergy Corporation Proxy Statement is incorporated by reference, but will not be deemed to be “filed” in this Annual Report on Form 10-K. None of the Subsidiaries has a compensation committee or other board committee performing equivalent functions. The board of directors of each of the Subsidiaries is comprised of individuals who are officers or employees of Entergy Corporation or one of the Subsidiaries. These boards do not make determinations regarding the compensation paid to executive officers of the Subsidiaries.
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EXECUTIVE COMPENSATION TABLES
2017 Summary Compensation Tables
The following table summarizes the total compensation paid or earned by each of the Named Executive Officers for the fiscal year ended December 31, 2017, and to the extent required by SEC executive compensation disclosure rules, the fiscal years ended December 31, 2016 and 2015. For information on the principal positions held by each of the Named Executive Officers, see Item 10, “Directors and Executive Officers of the Registrants.”
The compensation set forth in the table represents the aggregate compensation paid by all Entergy System companies. For additional information regarding the material terms of the awards reported in the following tables, including a general description of the formula or criteria to be applied in determining the amounts payable, see “Compensation Discussion and Analysis.”
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name and Principal Position(1) | Year | Salary(2) | Bonus(3) | StockAwards (4) | OptionAwards (5) | Non-EquityIncentivePlanCompen-sation(6) | Change inPensionValue andNon-qualifiedDeferredCompen-sationEarnings (7) | AllOtherCompens-ation  (8) | Total |
| A. Christopher Bakken, III | 2017 | $615,791 | $181,500 | $959,376 | $245,904 | $559,973 | $33,000 | $114,494 | $2,710,038 |
| Chief Nuclear Officer of Entergy Corp. | 2016 | $426,990 | $650,000 | $3,292,700 | $— | $529,375 | $27,900 | $140,601 | $5,067,566 |
| Marcus V. Brown | 2017 | $622,788 | $— | $1,022,853 | $287,760 | $568,890 | $1,217,200 | $43,269 | $3,762,760 |
| General Counsel of Entergy Corp. | 2016 | $563,208 | $— | $1,144,648 | $333,000 | $550,550 | $934,600 | $34,381 | $3,560,387 |
| Leo P. Denault | 2017 | $1,221,346 | $— | $4,676,190 | $1,173,276 | $2,142,045 | $3,819,500 | $125,863 | $13,158,220 |
| Chairman of the | 2016 | $1,191,462 | $— | $4,632,276 | $1,235,800 | $2,154,600 | $4,166,800 | $97,786 | $13,478,724 |
| Board and CEO - | 2015 | $1,153,385 | $— | $4,356,362 | $1,004,080 | $1,681,875 | $4,802,400 | $88,795 | $13,086,897 |
| Entergy Corp. |
| Haley R. Fisackerly | 2017 | $354,451 | $— | $192,041 | $49,704 | $169,123 | $406,300 | $35,724 | $1,207,343 |
| CEO - Entergy | 2016 | $320,067 | $— | $229,752 | $49,580 | $168,000 | $268,600 | $34,243 | $1,070,242 |
| Mississippi | 2015 | $320,131 | $— | $219,994 | $51,345 | $190,000 | $102,300 | $43,987 | $927,757 |
| Andrew S. Marsh | 2017 | $588,291 | $— | $1,022,853 | $287,760 | $541,800 | $801,900 | $51,647 | $3,294,251 |
| Executive Vice | 2016 | $553,284 | $— | $1,144,648 | $333,000 | $509,061 | $593,700 | $47,484 | $3,181,177 |
| President and CFO - | 2015 | $532,245 | $— | $2,600,401 | $273,840 | $508,308 | $670,200 | $39,131 | $4,624,125 |
| Entergy Corp., |
| Entergy Arkansas, |
| Entergy Louisiana, |
| Entergy Mississippi, |
| Entergy New |
| Orleans, Entergy |
| Texas |
| Phillip R. May, Jr. | 2017 | $363,410 | $— | $302,493 | $68,670 | $300,000 | $503,400 | $26,981 | $1,564,954 |
| CEO - Entergy | 2016 | $353,690 | $— | $326,988 | $71,040 | $224,690 | $600,000 | $26,018 | $1,602,426 |
| Louisiana | 2015 | $344,035 | $— | $279,406 | $57,050 | $315,000 | $288,100 | $25,970 | $1,309,561 |

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| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name and Principal Position(1) | Year | Salary(2) | Bonus(3) | StockAwards (4) | OptionAwards (5) | Non-EquityIncentivePlanCompen-sation(6) | Change inPensionValue andNon-qualifiedDeferredCompen-sationEarnings (7) | AllOtherCompens-ation  (8) | Total |
| Sallie T. Rainer | 2017 | $325,737 | $— | $195,567 | $51,012 | $156,259 | $435,900 | $35,785 | $1,200,260 |
| CEO - Entergy | 2016 | $316,003 | $— | $229,752 | $49,580 | $153,348 | $346,300 | $53,797 | $1,148,780 |
| Texas | 2015 | $304,783 | $— | $211,004 | $43,358 | $190,000 | $189,100 | $41,565 | $979,810 |
| Charles L. Rice, Jr. | 2017 | $284,681 | $— | $170,882 | $25,506 | $91,000 | $221,200 | $30,842 | $824,111 |
| CEO - Entergy New | 2016 | $276,998 | $— | $229,752 | $49,580 | $67,302 | $177,600 | $33,807 | $835,039 |
| Orleans | 2015 | $266,752 | $— | $211,004 | $51,345 | $173,000 | $104,500 | $33,416 | $840,017 |
| Richard C. Riley | 2017 | $341,723 | $— | $202,620 | $52,320 | $280,661 | $437,700 | $38,695 | $1,353,719 |
| CEO - Entergy | 2016 | $325,020 | $— | $226,224 | $34,780 | $167,500 | $277,900 | $102,112 | $1,133,536 |
| Arkansas |
| Roderick K. West | 2017 | $670,876 | $— | $818,316 | $190,968 | $610,065 | $867,200 | $52,220 | $3,209,645 |
| Group President | 2016 | $654,514 | $— | $1,116,424 | $303,400 | $461,384 | $601,000 | $73,706 | $3,210,428 |
| Utility Operations of | 2015 | $638,876 | $— | $1,071,111 | $262,430 | $607,677 | $543,900 | $71,790 | $3,195,784 |
| Entergy Corp. |

| (1) | Mr. Bakken was named Executive Vice President and Chief Nuclear Officer in April 2016. Mr. Brown was not a Named Executive Officer in 2015. Mr. Riley was named Chief Executive Officer, Entergy Arkansas in May 2016. |

| (2) | The amounts in column (c) represent the actual base salary paid to the Named Executive Officers. The 2017 changes in base salaries noted in the Compensation Discussion and Analysis were effective in April 2017. |

| (3) | The amount in column (d) in 2017 for Mr. Bakken represents the cash bonus paid to him pursuant to the Nuclear Retention Plan. See “Nuclear Retention Plan” in Compensation Discussion and Analysis. The amount in column (d) in 2016 represents a cash sign-on bonus paid to Mr. Bakken in connection with his commencement of employment with Entergy Corporation. |

| (4) | The amounts in column (e) represent the aggregate grant date fair value of restricted stock, performance units, and restricted stock units granted under the Equity Ownership Plans, each calculated in accordance with FASB ASC Topic 718, without taking into account estimated forfeitures. The grant date fair value of the restricted stock and restricted stock units is based on the closing price of Entergy Corporation common stock on the date of grant. The grant date fair value of performance units is based on the probable outcome of the applicable performance conditions, measured using a Monte Carlo simulation valuation model. The simulation model applies a risk-free interest rate and an expected volatility assumption. The risk-free interest rate is assumed to equal the yield on a three-year treasury bond on the grant date. Volatility is based on historical volatility for the 36-month period preceding the grant date. If the highest achievement level is attained, the maximum amounts that will be received with respect to the performance units granted in 2017 are as follows: Mr. Bakken, $1,170,798; Mr. Brown, $1,170,798; Mr. Denault, $6,869,622; Mr. Fisackerly, $260,961; Mr. Marsh, $1,170,798; Mr. May, $444,339; Ms. Rainer, $260,961; Mr. Rice, $260,961; Mr. Riley, $260,961; and Mr. West, $1,170,798. The amount in 2016 for Mr. Bakken includes restricted stock units granted to him in connection with his commencement of employment as Chief Nuclear Officer. |

| (5) | The amounts in column (f) represent the aggregate grant date fair value of stock options granted under the Equity Ownership Plans calculated in accordance with FASB ASC Topic 718. For a discussion of the relevant assumptions used in valuing these awards, see Note 12 to the financial statements. |

| (6) | The amounts in column (g) represent cash payments made under the Annual Incentive Plan. |

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| (7) | For all Named Executive Officers, the amounts in column (h) include the annual actuarial increase in the present value of these Named Executive Officers’ benefits under all pension plans established by Entergy Corporation using interest rate and mortality rate assumptions consistent with those used in Entergy Corporation’s financial statements and include amounts which the Named Executive Officers may not currently be entitled to receive because such amounts are not vested (see “2017 Pension Benefits”). None of the increases for any of the Named Executive Officers is attributable to above-market or preferential earnings on non-qualified deferred compensation (see “2017 Non-qualified Deferred Compensation”). |

| (8) | The amounts in column (i) for 2017 include (a) matching contributions by Entergy Corporation under the Savings Plan to each of the Named Executive Officers; (b) dividends paid on restricted stock when vested; (c) life insurance premiums; (d) tax gross up payments on club dues and relocation expenses; and (e) perquisites and other compensation. The amounts are listed in the following table: |

| Named Executive Officer | Company Contribution – Savings Plan | Dividends Paid on Restricted Stock | Life Insurance Premium | Tax Gross Up Payments | Perquisites and Other Compensation | Total |
| A. Christopher Bakken, III | $16,200 | $— | $11,887 | $1,299 | $85,108 | $114,494 |
| Marcus V. Brown | $— | $35,517 | $7,482 | $— | $270 | $43,269 |
| Leo P. Denault | $11,340 | $93,206 | $7,482 | $— | $13,835 | $125,863 |
| Haley R. Fisackerly | $11,340 | $7,907 | $2,306 | $4,082 | $10,089 | $35,724 |
| Andrew S. Marsh | $11,139 | $35,517 | $4,991 | $— | $— | $51,647 |
| Phillip R. May, Jr. | $11,340 | $9,673 | $5,279 | $— | $689 | $26,981 |
| Sallie T. Rainer | $11,340 | $7,696 | $6,477 | $2,952 | $7,320 | $35,785 |
| Charles L. Rice, Jr. | $11,340 | $6,849 | $4,874 | $2,637 | $5,142 | $30,842 |
| Richard C. Riley | $11,340 | $8,756 | $5,040 | $4,832 | $8,727 | $38,695 |
| Roderick K. West | $11,340 | $38,270 | $2,610 | $— | $— | $52,220 |

Perquisites and Other Compensation
The amounts set forth in column (i) include perquisites and other personal benefits that Entergy Corporation provides to its Named Executive Officers as part of providing a competitive executive compensation program and for employee retention. The following perquisites were provided to the Named Executive Officers in 2017.
| Named Executive Officer | Relocation | Personal Use of Corporate Aircraft | Club Dues | Executive Physical Exams | Event Tickets |
| A. Christopher Bakken, III | X | X | X |
| Marcus V. Brown | X | X |
| Leo P. Denault | X | X |
| Haley R. Fisackerly | X | X |
| Andrew S. Marsh | X |
| Phillip R. May, Jr. | X |
| Sallie T. Rainer | X |
| Charles L. Rice, Jr. | X |
| Richard C. Riley | X |
| Roderick K. West | X |

For security and business reasons, Entergy Corporation permits its Chief Executive Officer to use its corporate aircraft for personal use at the expense of Entergy Corporation. The other Named Executive Officers may use the corporate aircraft for personal travel subject to the approval of Entergy Corporation’s Chief Executive Officer. The Personnel
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Committee reviews the level of usage throughout the year. Entergy Corporation believes that its officers’ ability to use its plane for limited personal use saves time and provides additional security for them, thereby benefiting Entergy Corporation. The amounts included in column (i) for the personal use of corporate aircraft, reflect the incremental cost to Entergy Corporation for use of the corporate aircraft, determined on the basis of the variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, communications, and fees, including flight planning, ground handling, and landing permits. In addition, Entergy Corporation offers its executives comprehensive annual physical exams at Entergy Corporation’s expense. Tickets to cultural and sporting events are purchased for business purposes, and if not utilized for business purposes, the tickets are made available to the employees, including the Named Executive Officers, for personal use.
Entergy Corporation also provides relocation benefits to a broad base of employees which include assistance with moving expenses, purchase and sale of homes, and transportation of household goods. In connection with his employment, and in accordance with its relocation policies and pursuant to certain additional relocation benefits including the purchase of his home, Entergy Corporation paid $77,897 in relocation expenses for Mr. Bakken in 2017. The relocation assistance amounts reported above represent the amounts paid to Entergy Corporation’s relocation service provider or Mr. Bakken, as applicable.
None of the other perquisites referenced above exceeded $25,000 for any of the other Named Executive Officers.
2017 Grants of Plan-Based Awards
The following table summarizes award grants during 2017 to the Named Executive Officers.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts under Equity Incentive Plan Awards (2) |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
| Name | Grant Date | Thresh-old | Target | Maximum | Thresh-old | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Under-lying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Awards |
| ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/Sh) | ($)(5) |
| A. Christopher | 1/26/17 | $- | $434,088 | $868,175 |
| Bakken, III | 1/26/17 | 2,075 | 8,300 | 16,600 | $592,620 |
| 1/26/17 | 5,200 | $366,756 |
| 1/26/17 | 37,600 | $70.53 | $245,904 |
| Marcus V. | 1/26/17 | $- | $441,000 | $882,000 |
| Brown | 1/26/17 | 2,075 | 8,300 | 16,600 | $592,620 |
| 1/26/17 | 6,100 | $430,233 |
| 1/26/17 | 44,000 | $70.53 | $287,760 |
| Leo P. | 1/26/17 | $- | $1,660,500 | $3,321,000 |
| Denault | 1/26/17 | 12,175 | 48,700 | 97,400 | $3,477,180 |
| 1/26/17 | 17,000 | $1,199,010 |
| 1/26/17 | 179,400 | $70.53 | $1,173,276 |

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| Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts under Equity Incentive Plan Awards (2) |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
| Name | Grant Date | Thresh-old | Target | Maximum | Thresh-old | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Under-lying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Awards |
| ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/Sh) | ($)(5) |
| Haley R. | 1/26/17 | $- | $142,120 | $284,240 |
| Fisackerly | 1/26/17 | 463 | 1,850 | 3,700 | $132,090 |
| 1/26/17 | 850 | $59,951 |
| 1/26/17 | 7,600 | $70.53 | $49,704 |
| Andrew S. | 1/26/17 | $- | $420,000 | $840,000 |
| Marsh | 1/26/17 | 2,075 | 8,300 | 16,600 | $592,620 |
| 1/26/17 | 6,100 | $430,233 |
| 1/26/17 | 44,000 | $70.53 | $287,760 |
| Phillip R. | 1/26/17 | $- | $219,690 | $439,380 |
| May, Jr. | 1/26/17 | 788 | 3,150 | 6,300 | $224,910 |
| 1/26/17 | 1,100 | $77,583 |
| 1/26/17 | 10,500 | $70.53 | $68,670 |
| Sallie T. | 1/26/17 | $- | $131,310 | $262,620 |
| Rainer | 1/26/17 | 463 | 1,850 | 3,700 | $132,090 |
| 1/26/17 | 900 | $63,477 |
| 1/26/17 | 7,800 | $70.53 | $51,012 |
| Charles L. | 1/26/17 | $- | $114,570 | $229,140 |
| Rice, Jr. | 1/26/17 | 463 | 1,850 | 3,700 | $132,090 |
| 1/26/17 | 550 | $38,792 |
| 1/26/17 | 3,900 | $70.53 | $25,506 |
| Richard C. | 1/26/17 | $- | $137,680 | $275,360 |
| Riley | 1/26/17 | 463 | 1,850 | 3,700 | $132,090 |
| 1/26/17 | 1,000 | $70,530 |
| 1/26/17 | 8,000 | $70.53 | $52,320 |
| Roderick K. | 1/26/17 | $- | $472,919 | $945,837 |
| West | 1/26/17 | 2,075 | 8,300 | 16,600 | $592,620 |
| 1/26/17 | 3,200 | $225,696 |
| 1/26/17 | 29,200 | $70.53 | $190,968 |

| (1) | The amounts in columns (c), (d), and (e) represent minimum, target, and maximum payment levels under the Annual Incentive Plan. The actual amounts awarded are reported in column (g) of the Summary Compensation Table. |

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| (2) | The amounts in columns (f), (g), and (h) represent the minimum, target, and maximum payment levels under the Long-Term Performance Unit Program. Performance under the program is measured by Entergy Corporation’s total shareholder return relative to the total shareholder returns of the companies included in the Philadelphia Utility Index. There is no payout under the program if Entergy Corporation’s total shareholder return falls within the lowest quartile of the peer companies in the Philadelphia Utility Index. Subject to the achievement of performance targets, each unit will be converted into one share of Entergy Corporation’s common stock on the last day of the performance period (December 31, 2019.) Accrued dividends on the shares earned will also be paid in Entergy Corporation common stock. |

| (3) | The amounts in column (i) represent shares of restricted stock granted under the 2015 Equity Ownership Plan. Shares of restricted stock vest one-third on each of the first through third anniversaries of the grant date, have voting rights, and accrue dividends during the vesting period. |

| (4) | The amounts in column (j) represent options to purchase shares of Entergy Corporation’s common stock. The options vest one-third on each of the first through third anniversaries of the grant date and have a ten-year term from the date of grant. The options were granted under the 2015 Equity Ownership Plan. |

| (5) | The amounts in column (l) are valued based on the aggregate grant date fair value of the award calculated in accordance with FASB ASC Topic 718 and, in the case of the performance units, are based on the probable outcome of the applicable performance conditions. See Notes 4 and 5 to the 2017 Summary Compensation Table for a discussion of the relevant assumptions used in calculating the grant date fair value. |

2017 Outstanding Equity Awards at Fiscal Year-End
The following table summarizes, for each Named Executive Officer, unexercised options, restricted stock that has not vested, and equity incentive plan awards outstanding as of December 31, 2017.
| Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (#) | (#) | (#) | ($) | (#) | ($) | (#) | ($) |
| A. Christopher Bakken, III | — | 37,600(1) | $70.53 | 1/26/2027 |
| 8,300(4) | $675,537 |
| 7,289(5) | $593,252 |
| 5,200(6) | $423,228 |
| 30,000(9) | $2,441,700 |
| Marcus V. Brown | — | 44,000(1) | $70.53 | 1/26/2027 |
| 15,000 | 30,000(2) | $70.56 | 1/28/2026 |
| 16,000 | 8,000(3) | $89.90 | 1/29/2025 |
| 30,500 | — | $63.17 | 1/30/2024 |
| 16,000 | — | $64.60 | 1/31/2023 |
| 4,600 | — | $71.30 | 1/26/2022 |

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| Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (#) | (#) | (#) | ($) | (#) | ($) | (#) | ($) |
| 2,800 | — | $72.79 | 1/27/2021 |
| 7,500 | — | $77.10 | 1/28/2020 |
| 4,300 | — | $108.20 | 1/24/2018 |
| 8,300(4) | $675,537 |
| 8,200(5) | $667,398 |
| 6,100(6) | $496,479 |
| 4,267(7) | $347,291 |
| 1,667(8) | $135,677 |
| Leo P. Denault | — | 179,400(1) | $70.53 | 1/26/2027 |
| 55,666 | 111,334(2) | $70.56 | 1/28/2026 |
| 58,666 | 29,334(3) | $89.90 | 1/29/2025 |
| 106,000 | — | $63.17 | 1/30/2024 |
| 50,000 | — | $64.60 | 1/31/2023 |
| 30,000 | — | $71.30 | 1/26/2022 |
| 25,000 | — | $72.79 | 1/27/2021 |
| 50,000 | — | $77.10 | 1/28/2020 |
| 45,000 | — | $77.53 | 1/29/2019 |
| 50,000 | — | $108.20 | 1/24/2018 |
| 48,700(4) | $3,963,693 |
| 41,700(5) | $3,393,963 |
| 17,000(6) | $1,383,630 |
| 10,467(7) | $851,909 |
| 4,000(8) | $325,560 |
| Haley R. Fisackerly | — | 7,600(1) | $70.53 | 1/26/2027 |
| 2,233 | 4,467(2) | $70.56 | 1/28/2026 |
| 3,000 | 1,500(3) | $89.90 | 1/29/2025 |
| 1,534 | — | $71.30 | 1/26/2022 |
| 2,900 | — | $72.79 | 1/27/2021 |
| 6,000 | — | $77.10 | 1/28/2020 |
| 5,000 | — | $108.20 | 1/24/2018 |
| 1,850(4) | $150,572 |
| 1,800(5) | $146,502 |

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| Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (#) | (#) | (#) | ($) | (#) | ($) | (#) | ($) |
| 850(6) | $69,182 |
| 734(7) | $59,740 |
| 284(8) | $23,115 |
| Andrew S. Marsh | — | 44,000(1) | $70.53 | 1/26/2027 |
| 15,000 | 30,000(2) | $70.56 | 1/28/2026 |
| 16,000 | 8,000(3) | $89.90 | 1/29/2025 |
| 35,000 | — | $63.17 | 1/30/2024 |
| 32,000 | — | $64.60 | 1/31/2023 |
| 10,000 | — | $71.30 | 1/26/2022 |
| 4,000 | — | $72.79 | 1/27/2021 |
| 9,100 | — | $77.10 | 1/28/2020 |
| 8,000 | — | $77.53 | 1/29/2019 |
| 10,000 | — | $108.20 | 1/24/2018 |
| 8,300(4) | $675,537 |
| 8,200(5) | $667,398 |
| 6,100(6) | $496,479 |
| 4,267(7) | $347,291 |
| 1,667(8) | $135,677 |
| 21,100(10) | $1,717,329 |
| Phillip R. May, Jr. | — | 10,500(1) | $70.53 | 1/26/2027 |
| 3,200 | 6,400(2) | $70.56 | 1/28/2026 |
| 3,333 | 1,667(3) | $89.90 | 1/29/2025 |
| 8,000 | — | $63.17 | 1/30/2024 |
| 6,000 | — | $64.60 | 1/31/2023 |
| 4,600 | — | $71.30 | 1/26/2022 |
| 2,900 | — | $72.79 | 1/27/2021 |
| 6,000 | — | $77.10 | 1/28/2020 |
| 4,700 | — | $77.53 | 1/29/2019 |
| 6,500 | — | $108.20 | 1/24/2018 |
| 3,150(4) | $256,379 |
| 2,700(5) | $219,753 |
| 1,100(6) | $89,529 |
| 934(7) | $76,018 |
| 284(8) | $23,115 |

478
| Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (#) | (#) | (#) | ($) | (#) | ($) | (#) | ($) |
| Sallie T. Rainer | — | 7,800(1) | $70.53 | 1/26/2027 |
| 2,233 | 4,467(2) | $70.56 | 1/28/2026 |
| 2,533 | 1,267(3) | $89.90 | 1/29/2025 |
| 2,000 | — | $63.17 | 1/30/2024 |
| 2,000 | — | $64.60 | 1/31/2023 |
| 2,300 | — | $108.20 | 1/24/2018 |
| 1,850(4) | $150,572 |
| 1,800(5) | $146,502 |
| 900(6) | $73,251 |
| 734(7) | $59,740 |
| 250(8) | $20,348 |
| Charles L. Rice, Jr. | — | 3,900(1) | $70.53 | 1/26/2027 |
| 2,233 | 4,467(2) | $70.56 | 1/28/2026 |
| 3,000 | 1,500(3) | $89.90 | 1/29/2025 |
| 1,850(4) | $150,572 |
| 1,800(5) | $146,502 |
| 550(6) | $44,765 |
| 734(7) | $59,740 |
| 250(8) | $20,348 |
| Richard C. Riley | — | 8,000(1) | $70.53 | 1/26/2027 |
| 1,566 | 3,134(2) | $70.56 | 1/28/2026 |
| 3,000 | 1,500(3) | $89.90 | 1/29/2025 |
| 5,334 | — | $63.17 | 1/30/2024 |
| 1,334 | — | $64.60 | 1/31/2023 |
| 4,000 | — | $108.20 | 1/24/2018 |
| 1,850(4) | $150,572 |
| 1,800(5) | $146,502 |
| 1,000(6) | $81,390 |
| 700(7) | $56,973 |
| 367(8) | $29,870 |

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| Option Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested |
| (#) | (#) | (#) | ($) | (#) | ($) | (#) | ($) |
| Roderick K. West | — | 29,200(1) | $70.53 | 1/26/2027 |
| 13,666 | 27,334(2) | $70.56 | 1/28/2026 |
| 15,333 | 7,667(3) | $89.90 | 1/29/2025 |
| 12,000 | — | $63.17 | 1/30/2024 |
| 30,000 | — | $71.30 | 1/26/2022 |
| 7,000 | — | $77.10 | 1/28/2020 |
| 5,000 | — | $77.53 | 1/29/2019 |
| 8,000 | — | $108.20 | 1/24/2018 |
| 8,300(4) | $675,537 |
| 8,200(5) | $667,398 |
| 3,200(6) | $260,448 |
| 4,000(7) | $325,560 |
| 1,567(8) | $127,538 |
| 21,000(11) | $1,709,190 |

| (1) | Consists of options that vested or will vest as follows: 1/3 of the remaining unexercisable options vest on each of January 26, 2018, January 26, 2019, and January 26, 2020. |

| (2) | Consists of options that vested or will vest as follows: 1/2 of the remaining unexercisable options vest on each of January 28, 2018 and January 28, 2019. |

| (3) | The remaining unexercisable options vested on January 29, 2018. |

| (4) | Consists of performance units that will vest on December 31, 2019 based on Entergy Corporation’s total shareholder return performance over the 2017-2019 performance period, as described under “What Entergy Corporation Pays and Why- Executive Compensation Elements - Variable - Long-Term Incentive Compensation - Performance Unit Program” in Compensation Discussion and Analysis. |

| (5) | Consists of performance units that will vest on December 31, 2018 based on Entergy Corporation’s total shareholder return performance over the 2016-2018 performance period. |

| (6) | Consists of shares of restricted stock that vested or will vest as follows: 1/3 of the shares of restricted stock granted vest on each of January 26, 2018, January 26, 2019, and January 26, 2020. |

| (7) | Consists of shares of restricted stock that vested or will vest as follows: 1/2 of the shares of restricted stock granted vest on each of January 28, 2018 and January 28, 2019. |

| (8) | Consists of shares of restricted stock that vested on January 29, 2018. |

| (9) | Consists of restricted stock units granted under the 2015 Equity Ownership Plan which will vest one third on April 6, 2019, April 6, 2022, and April 6, 2025. |

| (10) | Consists of restricted stock units granted under the 2015 Equity Ownership Plan which will vest on August 3, 2020. |

| (11) | Consists of restricted stock units granted under the 2011 Equity Ownership Plan which will vest on May 1, 2018. |

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2017 Option Exercises and Stock Vested
The following table provides information concerning each exercise of stock options and each vesting of stock during 2017 for the Named Executive Officers.
| Options Awards | Stock Awards |
| (a) | (b) | (c) | (d) | (e) |
| Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting (1) |
| (#) | ($) | (#) | ($) |
| A. Christopher Bakken, III | — | $— | 1,212 | $95,154 |
| Marcus V. Brown | 5,000 | $35,850 | 8,224 | $598,764 |
| Leo P. Denault | — | $— | 26,741 | $1,979,459 |
| Haley R. Fisackerly | 10,734 | $134,837 | 1,734 | $126,435 |
| Andrew S. Marsh | — | $— | 8,224 | $598,764 |
| Phillip R. May, Jr. | — | $— | 2,202 | $161,139 |
| Sallie T. Rainer | 11,300 | $169,289 | 1,698 | $123,893 |
| Charles L. Rice, Jr. | 9,234 | $147,762 | 1,603 | $117,185 |
| Richard C. Riley | 4,500 | $67,559 | 1,847 | $134,414 |
| Roderick K. West | — | $— | 8,396 | $610,908 |

| (1) | Represents the value of performance units for the 2015-2017 performance period (payable solely in shares based on the closing stock price of Entergy Corporation on the date of vesting) under the Performance Unit Program and the vesting of shares of restricted stock in 2017. |

481
2017 Pension Benefits
The following table shows the present value as of December 31, 2017, of accumulated benefits payable to each of the Named Executive Officers, including the number of years of service credited to each Named Executive Officer, under the retirement plans sponsored by Entergy Corporation, determined using interest rate and mortality rate assumptions set forth in Note 11 to the financial statements. Additional information regarding these retirement plans follows this table.
| Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit | Payments During 2017 |
| A. Christopher Bakken, III | Cash Balance Equalization Plan | 1.74 | $30,600 | $— |
| Cash Balance Plan | 1.74 | $30,300 | $— |
| Marcus V. Brown(1) | System Executive Retirement Plan | 22.74 | $4,793,900 | $— |
| Entergy Retirement Plan | 22.74 | $907,400 | $— |
| Leo P. Denault (1)(2) | System Executive Retirement Plan | 33.83 | $22,072,300 | $— |
| Entergy Retirement Plan | 18.83 | $802,000 | $— |
| Haley R. Fisackerly | System Executive Retirement Plan | 22.08 | $1,370,100 | $— |
| Entergy Retirement Plan | 22.08 | $789,100 | $— |
| Andrew S. Marsh | System Executive Retirement Plan | 19.37 | $3,493,700 | $— |
| Entergy Retirement Plan | 19.37 | $548,400 | $— |
| Phillip R. May, Jr. (1) | System Executive Retirement Plan | 31.56 | $2,398,400 | $— |
| Entergy Retirement Plan | 31.56 | $1,227,800 | $— |
| Sallie T. Rainer (1)(3) | System Executive Retirement Plan | 33.38 | $1,356,000 | $— |
| Entergy Retirement Plan | 33.00 | $1,415,200 | $— |
| Charles L. Rice, Jr. | System Executive Retirement Plan | 8.47 | $609,100 | $— |
| Entergy Retirement Plan | 8.47 | $307,800 | $— |
| Richard C. Riley (1)(4) | System Executive Retirement Plan | 28.01 | $1,688,200 | $— |
| Entergy Retirement Plan | 22.55 | $866,000 | $— |
| Roderick K. West | System Executive Retirement Plan | 18.75 | $4,636,200 | $— |
| Entergy Retirement Plan | 18.75 | $594,100 | $— |

| (1) | As of December 31, 2017, Mr. Brown, Mr. Denault, Mr. May, Ms. Rainer, and Mr. Riley were retirement eligible. |

| (2) | In 2006, Mr. Denault entered into a retention agreement granting him an additional 15 years of service and permission to retire under the non-qualified System Executive Retirement Plan in the event his employment is terminated by his Entergy employer other than for cause (as defined in the retention agreement), by Mr. Denault for good reason (as defined in the retention agreement), or on account of his death or disability. His retention agreement also provides that if he terminates employment for any other reason, he shall be entitled to the additional 15 years of service under the non-qualified System Executive Retirement Plan only if his Entergy employer grants him permission to retire. The additional 15 years of service increases the present value of his benefit by $3,967,700. |

| (3) | Service under the non-qualified System Executive Retirement Plan is granted from the date of hire. Qualified plan benefit service is granted from the later of the date of hire or the plan participation date. |

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| (4) | Mr. Riley separated from Entergy Corporation and was subsequently rehired in June 1995. The Entergy Retirement Plan does not include any credit service prior to his rehire date, however, the System Executive Retirement Plan reflects a net credited service date of December 28, 1989. |

The tables below contain summaries of the pension benefit plans sponsored by Entergy Corporation that the Named Executive Officers participated in during 2017. Benefits for the Named Executive Officers who participate in these plans are determined using the same formulas as for other eligible employees.
Qualified Retirement Benefits
| Entergy Retirement Plan | Cash Balance Plan |
| Eligible Named Executive Officers | Marcus V. BrownHaley R. Fisackerly Leo P. Denault Andrew S. MarshPhillip R. May, Jr. | Sallie T. Rainer Charles L. Rice, Jr.Richard C. RileyRoderick K. West | A. Christopher Bakken, III |
| Eligibility | Non-bargaining employees hired on or before July 1, 2014 | Non-bargaining employees hired on or after July 1, 2014 |
| Vesting | A participant becomes vested in the Entergy Retirement Plan upon attainment of at least 5 years of vesting service or upon attainment of age 65 while actively employed by an Entergy system company. | A participant becomes vested in the Cash Balance Plan upon attainment of at least 3 years of vesting service or upon attainment of age 65 while actively employed by an Entergy system company. |
| Form of Payment Upon Retirement | Benefits are payable as an annuity. For employees who separate from service on or after January 1, 2018, a single lump sum distribution may be elected by the participant if eligibility criteria are met. | Benefits are payable as an annuity or single lump sum distribution. |
| Retirement Benefit Formula | Benefits are calculated as a single life annuity payable at age 65 and generally are equal to 1.5% of a participant’s Final Average Monthly Earnings (FAME) multiplied by years of service (not to exceed 40). “Earnings” for the purpose of calculating FAME generally includes the employee’s base salary and eligible annual incentive awards subject to Internal Revenue Code limitations, and excludes all other bonuses. Executive Annual Incentive Awards are not eligible for inclusion in Earnings under this plan.FAME is calculated using the employee’s average monthly Earnings for the 60 consecutive months in which the employee’s earnings were highest during the 120 month period immediately preceding the employee’s retirement and includes up to 5 eligible annual incentive awards paid during the 60 month period. | The normal retirement benefit at age 65 is determined by converting the sum of an employee’s annual pay credits and his or her annual interest credits, into an actuarially equivalent annuity. Pay credits ranging from 4-8% of an employee’s eligible Earnings are allocated annually to a notional account for the employee based on an employee’s age and years of service. Earnings for purposes of calculating an employee’s pay credit include the employee’s base salary and annual incentive awards subject to Code limitations and exclude all other bonuses. Executive Annual Incentive Awards are eligible for inclusion in Earnings under this plan.Interest credits are calculated based upon the annual rate of interest on 30-year U.S. Treasury securities, as specified by the Internal Revenue Service, for the month of August preceding the first day of the applicable calendar year subject to a minimum rate of 2.6% and a maximum rate of 9%. |

483
| Benefit Timing | Normal retirement age under the plan is 65.A reduced vested benefit may be commenced as early as age 55. The amount of this benefit is determined by reducing the normal retirement benefit by 7% per year for the first 5 years commencement precedes age 65, and 6% per year for each additional year commencement precedes age 65.A subsidized early retirement benefit may be commenced by employees who are at least age 55 with 10 years of service at the time they separate from service. The amount of this benefit is determined by reducing the normal retirement benefit by 2% per year for each year that early retirement precedes age 65. | Normal retirement age under the plan is 65.A vested cash balance benefit can be commenced as early as the first day of the month following separation from service. The amount of the benefit is determined in the same manner as the normal retirement benefit described above in the “Retirement Benefit Formula” section. |

Non-qualified Retirement Benefits
The Named Executive Officers are eligible to participate in certain non-qualified retirement benefit plans that provide retirement income, including the Pension Equalization Plan, the Cash Balance Equalization Plan, and the System Executive Retirement Plan. Each of these plans is an unfunded non-qualified defined benefit pension plan that provides benefits to key management employees. In these plans, as described below, an executive is typically enrolled in one or more non-qualified plans, but is only paid the amount due under the plan that provides the highest benefit. In general, upon disability, participants in the Pension Equalization Plan and the System Executive Retirement Plan remain eligible for continued service credits until the earlier of recovery, separation from service due to disability, or retirement eligibility. Generally, spouses of participants who die before commencement of benefits may be eligible for a portion of the participant’s accrued benefit.
| Pension Equalization Plan | Cash Balance Equalization Plan | System Executive Retirement Plan |
| Eligible Named Executive Officers | Marcus V. BrownHaley R. Fisackerly Leo P. Denault Andrew S. MarshPhillip R. May, Jr. | Sallie T. Rainer Charles L. Rice, Jr.Richard C. RileyRoderick K. West | A. Christopher Bakken, III | Marcus V. BrownHaley R. Fisackerly Leo P. Denault Andrew S. MarshPhillip R. May, Jr. | Sallie T. Rainer Charles L. Rice, Jr.Richard C. RileyRoderick K. West |
| Eligibility | Management or highly compensated employees who participate in the Entergy Retirement Plan | Management or highly compensated employees who participate in the Cash Balance Plan | Certain individuals who became executive officers before July 1, 2014 |
| Form of Payment Upon Retirement | Single lump sum distribution | Single lump sum distribution | Single lump sum distribution |
| Retirement Benefit Formula | Benefits generally are equal to the actuarial present value of the difference between (1) the amount that would have been payable as an annuity under the Entergy Retirement Plan, including Executive Annual Incentive Awards as eligible earnings and without applying Internal Revenue Code limitations on pension benefits and earnings that may be considered in calculating tax-qualified pension benefits, and (2) the amount actually payable as an annuity under the Entergy Retirement Plan. | Benefits generally are equal to the difference between the amount that would have been payable as a lump sum under the Cash Balance Plan, but for Internal Revenue Code limitations on pension benefits and earnings that may be considered in calculating tax-qualified cash balance plan benefits, and the amount actually | Benefits generally are equal to the actuarial present value of a specified percentage, based on the participant’s years of service (including supplemental service granted under the plan) and management level of the participant’s “Final Average Monthly Compensation” (which is generally 1/36th of the sum of the participant’s base salary and Annual Incentive Plan award for the 3 highest years during the last 10 years preceding separation from service), after first being reduced by the |

484
| Pension Equalization Plan | Cash Balance Equalization Plan | System Executive Retirement Plan |
| Executive Annual Incentive Awards are taken into account as eligible earnings under this plan. | payable as a lump sum under the Cash Balance Plan. | value of the participant’s Entergy Retirement Plan benefit. |
| Benefit timing | Payable at age 65Benefits payable prior to age 65 are subject to the same reduced terminated vested or early retirement reduction factors as benefits payable under the Entergy Retirement Plan as described above. An employee with supplemental credited service who terminates employment prior to age 65 must receive prior written consent of the Entergy employer in order to receive the portion of their benefit attributable to their supplemental credited service agreement. Benefits payable upon separation from service subject to the 6 month delay required under Code Section 409A. | Payable upon separation from service subject to 6 month delay required under Code Section 409A. | Payable at age 65Prior to age 65, vesting is conditioned on the prior written consent of the officer’s Entergy employer.Benefits payable prior to age 65 are subject to the same reduced terminated vested or subsidized early retirement reduction factors as benefits payable under the Entergy Retirement Plan as described above. Benefits payable upon separation from service subject to the 6 month delay required under Code Section 409A. |

Additional Information
| (1) | Effective July 1, 2014, (a) no new grants of supplemental service may be provided to participants in the Pension Equalization Plan; (b) supplemental credited service granted prior to July 1, 2014 was grandfathered; and (c) participants in Entergy Corporation’s Cash Balance Plan are not eligible to participate in the Pension Equalization Plan and instead may be eligible to participate in the Cash Balance Equalization Plan. |

| (2) | Benefits already accrued under the System Executive Retirement Plan, Pension Equalization Plan, and Cash Balance Equalization Plan, if any, will become fully vested if a participant is involuntarily terminated without cause or terminates his or her employment for good reason in connection with a change in control with payment generally made in a lump-sum payment as soon as reasonably practicable following the first day of the month after the termination of employment, unless delayed 6 months under Code Section 409A. |

| (3) | The System Executive Retirement Plan was closed to new executive officers effective July 1, 2014. |

485
2017 Non-qualified Deferred Compensation
As of December 31, 2017, Mr. May had a deferred account balance under a frozen Defined Contribution Restoration Plan. The amount is deemed invested, as chosen by the participant, in certain T. Rowe Price investment funds that are also available to the participant under the Savings Plan. Mr. May has elected to receive the deferred account balance after he retires. The Defined Contribution Restoration Plan, until it was frozen in 2005, credited eligible employees’ deferral accounts with employer contributions to the extent contributions under the qualified savings plan in which the employee participated were subject to limitations imposed by the Code.
Defined Contribution Restoration Plan
| Name | Executive Contributions in 2017 | Registrant Contributions in 2017 | Aggregate Earnings in 2017(1) | Aggregate Withdrawals/Distributions | Aggregate Balance at December 31, 2017 |
| (a) | (b) | (c) | (d) | (e) | (f) |
| Phillip R. May, Jr. | $— | $— | $362 | $— | $2,113 |

| (1) | Amounts in this column are not included in the Summary Compensation Table. |

486
2017 Potential Payments Upon Termination or Change in Control
Entergy Corporation has plans and other arrangements that provide compensation to a Named Executive Officer if his or her employment terminates under specified conditions, including following a change in control of Entergy Corporation or its subsidiaries. The tables below reflect the amount of compensation each of the Named Executive Officers would have received if his or her employment with an Entergy employer had been terminated under various scenarios as of December 31, 2017. For purposes of these tables, a stock price of $81.39 was used, which was the closing market price on December 29, 2017, the last trading day of the year.
| Benefits and Payments Upon Termination | Voluntary Resignation | For Cause | Termination for Good Reason or Not for Cause | Retirement | Disability | Death | Termination Related to a Change in Control |
| A. Christopher Bakken, III(1) |
| Severance Payment(5) | — | — | — | — | — | — | $2,511,506 |
| Performance Units(7) | — | — | — | — | $620,680 | $620,680 | $1,530,132 |
| Stock Options(8) | — | — | — | — | $408,336 | $408,336 | $408,336 |
| Restricted Stock(9) | — | — | — | — | $442,029 | $442,029 | $442,029 |
| Welfare Benefits(10) | — | — | — | — | — | — | $20,358 |
| Unvested Restricted Stock Units(12) | — | — | $813,900 | — | $813,900 | $813,900 | $2,441,700 |
| Marcus V. Brown(2) |
| Severance Payment(5) | — | — | — | — | — | — | $3,213,000 |
| Performance Units(7) | — | — | — | $670,165 | $670,165 | $670,165 | $1,530,132 |
| Stock Options(8) | — | — | — | $802,740 | $802,740 | $802,740 | $802,740 |
| Restricted Stock(9) | — | — | — | — | $1,041,711 | $1,041,711 | $1,054,082 |
| Welfare Benefits(11) | — | — | — | — | — | — | — |
| Leo P. Denault(3) |
| Severance Payment(5) | — | — | — | — | — | — | $10,119,954 |
| Performance Units(6)(7) | — | — | $3,174,210 | $3,583,846 | $3,583,846 | $3,583,846 | $6,511,200 |
| Stock Options(8) | — | — | $3,154,024 | $3,154,024 | $3,154,024 | $3,154,024 | $3,154,024 |
| Restricted Stock(9) | — | — | $2,750,413 | — | $2,750,413 | $2,750,413 | $2,750,413 |
| Welfare Benefits(11) | — | — | — | — | — | — | — |
| Haley R. Fisackerly(4) |
| Severance Payment(5) | — | — | — | — | — | — | $497,420 |
| Performance Units(7) | — | — | — | — | $147,886 | $147,886 | $358,116 |
| Stock Options(8) | — | — | — | — | $130,910 | $130,910 | $130,910 |
| Restricted Stock(9) | — | — | — | — | $161,966 | $161,966 | $164,163 |
| Welfare Benefits(10) | — | — | — | — | — | — | $18,252 |
| Andrew S. Marsh(4) |
| Severance Payment(5) | — | — | — | — | — | — | $3,060,000 |
| Performance Units(7) | — | — | — | — | $670,165 | $670,165 | $1,530,132 |
| Stock Options(8) | — | — | — | — | $802,740 | $802,740 | $802,740 |
| Restricted Stock(9) | — | — | — | — | $1,041,711 | $1,041,711 | $1,054,082 |
| Welfare Benefits(10) | — | — | — | — | — | — | $27,378 |
| Unvested Restricted Stock Units(13) | — | — | — | — | $1,717,329 | $1,717,329 | $1,717,329 |

487
| Benefits and Payments Upon Termination | Voluntary Resignation | For Cause | Termination for Good Reason or Not for Cause | Retirement | Disability | Death | Termination Related to a Change in Control |
| Phillip R. May, Jr.(2) |
| Severance Payment(5) | — | — | — | — | — | — | $1,171,680 |
| Performance Units(7) | — | — | — | $231,962 | $231,962 | $231,962 | $504,618 |
| Stock Options(8) | — | — | — | $183,342 | $183,342 | $183,342 | $183,342 |
| Restricted Stock(9) | — | — | — | — | $201,034 | $201,034 | $203,231 |
| Welfare Benefits(11) | — | — | — | — | — | — | — |
| Sallie T. Rainer(2) |
| Severance Payment(5) | — | — | — | — | — | — | $459,585 |
| Performance Units(7) | — | — | — | $147,886 | $147,886 | $147,886 | $358,116 |
| Stock Options(8) | — | — | — | $133,082 | $133,082 | $133,082 | $133,082 |
| Restricted Stock(9) | — | — | — | — | $163,269 | $163,269 | $165,222 |
| Welfare Benefits(11) | — | — | — | — | — | — | — |
| Charles R. Rice, Jr(4) |
| Severance Payment(5) | — | — | — | — | — | — | $400,993 |
| Performance Units(7) | — | — | — | — | $147,886 | $147,886 | $358,116 |
| Stock Options(8) | — | — | — | — | $90,728 | $90,728 | $90,728 |
| Restricted Stock(9) | — | — | — | — | $133,480 | $133,480 | $135,433 |
| Welfare Benefits(10) | — | — | — | — | — | — | $18,252 |
| Richard C. Riley(2) |
| Severance Payment(5) | — | — | — | — | — | — | $481,880 |
| Performance Units(7) | — | — | — | $147,886 | $147,886 | $147,886 | $358,116 |
| Stock Options(8) | — | — | — | $120,814 | $120,814 | $120,814 | $120,814 |
| Restricted Stock(9) | — | — | — | — | $178,896 | $178,896 | $181,663 |
| Welfare Benefits(11) | — | — | — | — | — | — | — |
| Roderick K. West(4) |
| Severance Payment(5) | — | — | — | — | — | — | $3,434,065 |
| Performance Units(7) | — | — | — | — | $670,165 | $670,165 | $1,530,132 |
| Stock Options(8) | — | — | — | — | $613,132 | $613,132 | $613,132 |
| Restricted Stock(9) | — | — | — | — | $762,624 | $762,624 | $774,344 |
| Welfare Benefits(10) | — | — | — | — | — | — | $27,378 |
| Unvested Restricted Stock Units(14) | — | — | $1,709,190 | — | — | — | $1,709,190 |

Pension Benefits
| 1) | In addition to the payments and benefits in the table, if Mr. Bakken’s employment were terminated under certain conditions relating to a change in control, on the first day of the month following the Qualifying Event (as defined in the Cash Balance Equalization Plan) he would have become vested in and would have been entitled to receive his vested pension benefits accumulated in the Cash Balance Equalization Plan as of the date of the Qualifying Event so long as a forfeiture event does not occur as described in the plan. For a description of the pension benefits under the Cash Balance Equalization Plan, see “2017 Pension Benefits.” |

| 2) | As of December 31, 2017, Messrs. Brown, May, and Riley and Ms. Rainer are retirement eligible and would retire rather than voluntarily resign, and in addition to the payments and benefits in the table, each also would be entitled to receive his or her vested pension benefits under the Entergy Retirement Plan. For a description of the pension |

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benefits available, see “2017 Pension Benefits.” In the event their termination by their Entergy employer without cause or by Mr. Brown, Mr. May, Ms. Rainer, or Mr. Riley for good reason in connection with a change in control, each would be eligible for subsidized early retirement benefits under the System Executive Retirement Plan even if they do not have company permission to separate from employment. If Mr. Brown’s, Mr. May’s, Ms. Rainer’s, or Mr. Riley’s employment were terminated for cause in connection with a change in control, they would not be entitled to receive a benefit under the System Executive Retirement Plan. If their employment were terminated for any reason not in connection with a change in control, or they were to retire from their Entergy employer before age 65 without the permission of their Entergy employer, they would not be entitled to receive a benefit under the System Executive Retirement Plan.
| 3) | As of December 31, 2017, Mr. Denault is retirement eligible and would retire rather than voluntarily resign, and in addition to the payments and benefits in the table, Mr. Denault also would be entitled to receive his vested pension benefits under the Entergy Retirement Plan. For a description of the pension benefits available, see “2017 Pension Benefits.” If Mr. Denault’s employment was terminated by his Entergy employer other than for cause, by Mr. Denault for good reason or on account of his death or disability, he would also be eligible for certain additional retirement benefits. For a description of these benefits, see “2017 Pension Benefits.” Otherwise, if Mr. Denault’s employment was terminated for cause or he was to retire from his Entergy employer before age 65 without the permission of his Entergy employer, he would not receive a benefit under the System Executive Retirement Plan. |

| 4) | In addition to the payments and benefits in the table, if Mr. Fisackerly’s, Mr. Marsh’s, Mr. Rice’s, or Mr. West’s employment were terminated under certain conditions relating to a change in control, each also would have been entitled to receive his vested pension benefits upon attainment of age 55 under the Entergy Retirement Plan and would have been eligible for early retirement benefits under the System Executive Retirement Plan calculated using early retirement reduction factors. For a description of the pension benefits, see “2017 Pension Benefits.” Mr. Fisackerly’s, Mr. Marsh’s, Mr. Rice’s, or Mr. West’s employment were terminated for cause in connection with a change in control, he would not be entitled to receive a benefit under the System Executive Retirement Plan. If his employment were terminated for any reason not in connection with a change in control, or each were to resign from his Entergy employer before age 65 without the permission of his Entergy employer, each would not be entitled to receive a benefit under the System Executive Retirement Plan. |

Severance Payments:
| 5) | In the event of a termination by the executive for good reason or by his or her Entergy system employer not for cause during the period beginning upon the occurrence of a “potential change in control” (as defined in the System Executive Continuity Plan) and ending on the 2nd anniversary of a change in control, each Named Executive Officer would be entitled to receive pursuant to the System Executive Continuity Plan a lump sum severance payment equal to a multiple of the sum of (1) his or her annual base salary as in effect at any time within one year prior to the commencement of a change of control period or, if higher, immediately prior to a circumstance constituting good reason plus (2) his or her annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for 2015 and 2016 (the two calendar years immediately preceding the calendar year in which termination occurs), but in no event shall the severance payment exceed the product of 2.99 times the sum of (a) his or her annual base salary as in effect at any time within one year prior to the commencement of a change in control period or, if higher, immediately prior to a circumstance constituting good reason plus (b) the higher of his or her actual annual incentive payment under the Annual Incentive Plan for the 2016 performance year or his or her annual incentive, calculated using the average annual target opportunity derived under the Annual Incentive Plan for 2015 and 2016 (the two calendar years immediately preceding the calendar year in which termination occurs). For purposes of this table, the following target opportunity and base salary were assumed: |

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| Named Executive Officer | Target Opportunity | Base Salary |
| A. Christopher Bakken III | 35% | $620,125 |
| Marcus V. Brown | 70% | $630,000 |
| Leo P. Denault | 130% | $1,230,000 |
| Haley R. Fisackerly | 40% | $355,300 |
| Andrew S. Marsh | 70% | $600,000 |
| Phillip R. May Jr, | 60% | $366,150 |
| Sallie T. Rainer | 40% | $328,275 |
| Charles L. Rice, Jr. | 40% | $286,424 |
| Richard C. Riley | 40% | $344,200 |
| Roderick K. West | 70% | $675,598 |

Performance Units:
| 6) | With respect to Mr. Denault, in the event of a Termination Event (as defined in Mr. Denault’s 2006 retention agreement), he is entitled to a Target LTIP Award, as defined in his 2006 retention agreement, calculated by using the average annual number of performance units with respect to the two most recent performance periods preceding the calendar year in which his employment termination occurs, assuming all performance goals were achieved at target. For purposes of the table, the value of Mr. Denault’s retention payment was calculated by taking an average of the target performance units from the 2013-2015 Performance Unit Program (38,000) and from the 2014-2016 Performance Unit Program (40,000). This average number of units (39,000) multiplied by the closing price of Entergy Corporation’s common stock on December 29, 2017 ($81.39) would equal a payment of $3,174,210. In the event of death or disability, Mr. Denault receives the greater of the Target LTIP Award calculated as described above or the sum of the amount that would be payable under the provisions of each open Performance Unit Program as described in Note 7 below. |

| 7) | In the event of a qualifying termination related to a change in control, each Named Executive Officer would have forfeited his or her performance units for the 2016-2018 and 2017-2019 performance periods and would have been entitled to receive, pursuant to the 2015 Equity Ownership Plan, a single-lump sum payment in lieu of any payment for each performance award that would not be based on any outstanding performance period. The payments for the 2016-2018 and the 2017-2019 performance periods would have been calculated using the most recent performance period preceding (but not including) the calendar year in which his or her termination occurs. For purposes of the table, the value of Mr. Denault’s payments was calculated by multiplying the target performance units for the 2014-2016 Performance Unit Program (40,000) by the closing price of Entergy Corporation’s common stock on December 29, 2017 ($81.39), which would equal a payment of $3,255,600 for the forfeited performance units for each performance period. The value of the payments for the other Named Executive Officers was calculated by multiplying the target performance units for the 2014-2016 Performance Unit Program (9,400) by the closing price of Entergy Corporation’s common stock on December 29, 2017 ($81.39), which would equal a payment of $765,066 for the forfeited performance units for each performance period. In the event his death or disability, Mr. Denault would receive the greater of the target Long-Term Performance Incentive award as described in note 6 above or a pro-rated number of performance units for all open performance periods, based on the number of months of his participation in each open performance period. |

In the event of retirement in the case of Mr. Brown, Mr. Denault, Mr. May, Ms. Rainer, or Mr. Riley, or upon death or disability, other than Mr. Denault, each Named Executive Officer would not have forfeited his or her performance units for all open performance periods, but rather such performance unit awards would have been pro-rated based on his or her number of months of participation in each open Performance Unit Program performance period, in accordance with his grant agreement under the Performance Unit Program. The amount of the award is based on actual performance achieved, with a stock price set as of the end of the performance period, and payable in the form of a lump sum after the completion of the performance period. For purposes of the table, the values of the awards were calculated as follows:
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Mr. Denault’s:
2016 - 2018 Plan - 27,800 (24/36*41,700) performance units at target, assuming a stock price of $81.39
2017 - 2019 Plan - 16,233 (12/36*48,700) performance units at target, assuming a stock price of $81.39
Mr. Bakken’s:
2016 - 2018 Plan - 4,859 (24/36*7,289) performance units at target, assuming a stock price of $81.39
2017 - 2019 Plan - 2,767 (12/36*8,300) performance units at target, assuming a stock price of $81.39
Messrs. Brown’s, Marsh’s, and West’s:
2016 - 2018 Plan - 5,467 (24/36*8,200) performance units at target, assuming a stock price of $81.39
2017 - 2019 Plan - 2,767 (12/36*8,300) performance units at target, assuming a stock price of $81.39
Mr. May’s:
2016 - 2018 Plan - 1,800 (24/36*2,700) performance units at target, assuming a stock price of $81.39
2017 - 2019 Plan - 1,050 (12/36*3,150) performance units at target, assuming a stock price of $81.39
Messrs. Fisackerly’s, Rice’s, Riley’s, and Ms. Rainer’s:
2016 - 2018 Plan - 1,200 (24/36*1,800) performance units at target, assuming a stock price of $81.39
2017 - 2019 Plan - 617 (12/36*1,850) performance units at target, assuming a stock price of $81.39
Stock Options:
| 8) | In the event of death or disability or qualifying termination related to a change in control, or retirement in the case of Mr. Brown, Mr. Denault, Mr. May, Ms. Rainer, or Mr. Riley, all of the unvested stock options of each Named Executive Officer would immediately vest pursuant to the Equity Ownership Plans. In addition, with respect to grants under the 2011 Equity Ownership Plan, each Named Executive Officer would be entitled to exercise his or her stock options for the remainder of the ten-year period extending from the grant date of the options, and with respect to grants under the 2015 Equity Ownership Plan, within the lesser of five years or the remaining term of the option grant. For purposes of this table, it is assumed that the Named Executive Officers exercised their options immediately upon vesting and received proceeds equal to the difference between the closing price of common stock on December 29, 2017, and the applicable exercise price of each option share. |

In the event of a Termination Event as defined in his 2006 retention agreement, Mr. Denault will immediately vest in all unvested stock options.
Restricted Stock:
| 9) | In the event of death or disability pursuant to the 2011 Equity Ownership Plan, each Named Executive Officer would immediately vest in a pro-rated portion of his or her unvested restricted stock that was otherwise scheduled to become vested on the immediately following 12-month grant date anniversary date, as well as dividends declared on the pro-rated portion of such restricted stock pursuant to the 2011 Equity Ownership Plan. The pro-rated vested portion would be determined based on the number of days between the most recent preceding 12-month grant date anniversary date and the date of his or her death or disability. In the event of his or her qualifying termination related to a change in control, a Named Executive Officer would immediately vest in all of their unvested restricted stock, as well as dividends declared on such restricted stock granted pursuant the 2011 Equity Ownership Plan. In the event of death, disability, or qualifying termination related to a change in control, each Named Executive Officer would vest in all of their unvested restricted stock as well as dividends declared pursuant to the 2015 Equity Ownership Plan. |

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In the event of a Termination Event as defined in his 2006 retention agreement, Mr. Denault will immediately vest in all unvested restricted stock.
Welfare Benefits:
| 10) | Pursuant to the System Executive Continuity Plan, in the event of a termination related to a change in control, Mr. Bakken, Mr. Marsh, and Mr. West would be eligible to receive Entergy-sponsored COBRA benefits for 18 months and Mr. Fisackerly and Mr. Rice would be eligible to receive Entergy-sponsored COBRA benefits for 12 months. |

| 11) | Upon retirement, Mr. Brown, Mr. Denault, Mr. May, Ms. Rainer, and Mr. Riley would be eligible for retiree medical and dental benefits, the same as all other retirees. |

Unvested Restricted Stock Units:
| 12) | Mr.Bakken’s 30,000 restricted stock units vest 1/3rd on each of April 6, 2019, April 6, 2022, and April 6, 2025. Pursuant to his restricted stock unit agreement, if Mr. Bakken’s employment terminates due to total disability or death or, prior to April 6, 2019, Mr. Bakken’s employment is terminated by his Entergy employer other than for cause, then he will vest in and be paid the 10,000 restricted stock units that otherwise would have vested had he satisfied the vesting conditions of the restricted stock unit agreement through the next vesting date to occur following his date of total disability, death, or termination other than for cause prior to April 6, 2019 subject, in the case of a termination without cause, to Mr. Bakken timely executing and not revoking a release of claims against Entergy Corporation and its affiliates. In the event of a change in control, the unvested restricted stock units will fully vest upon Mr. Bakken’s termination of employment by his Entergy employer without cause or by Mr. Bakken with good reason during a change in control period (as defined in the 2015 Equity Ownership Plan). Otherwise, if Mr. Bakken voluntarily resigns or is terminated, he would forfeit these units. Pursuant to his restricted stock unit agreement, Mr. Bakken is subject to certain restrictions on his ability to compete with Entergy Corporation and its affiliates or solicit its employees or customers during and for 12 months after his employment with his Entergy employer. In addition, the restricted stock unit agreement limits Mr. Bakken’s ability to disparage Entergy Corporation and its affiliates. In the event of a breach of these restrictions, other than following certain constructive terminations of his employment, Mr. Bakken will forfeit any restricted stock units that are not yet vested and paid, and must repay to Entergy Corporation any shares of Entergy Corporation’s common stock paid to him in respect of the restricted stock units and any amounts he received upon the sale or transfer of any such shares. |

| 13) | Mr. Marsh’s 21,100 restricted stock units vest 100% in 2020. Pursuant to his restricted stock unit agreement, any unvested restricted stock units will vest immediately in the event of his termination of employment due to Mr. Marsh’s total disability or death. In the event of a change in control, the units will vest upon termination of Mr. Marsh’s employment by his Entergy employer without cause or by Mr. Marsh with good reason during a change in control period (as defined in the 2015 Equity Ownership Plan). Otherwise, if Mr. Marsh voluntarily resigns or is terminated, he would forfeit these units. Pursuant to his restricted stock unit agreement, Mr. Marsh is subject to certain restrictions on his ability to compete with Entergy Corporation and its affiliates during and for 12 months after his employment with Entergy Corporation, or to solicit its employees or customers during and for 24 months after his employment with it. In addition, the restricted stock unit agreement limits Mr. Marsh’s ability to disparage Entergy Corporation and its affiliates. In the event of a breach of these restrictions, Mr. Marsh will forfeit any restricted stock units that are not yet vested and paid, and must repay to Entergy Corporation any shares of Entergy Corporation’s common stock paid to him in respect of the restricted stock units and any amounts he received upon the sale or transfer of any such shares. |

| 14) | Mr. West’s 21,000 restricted stock units vest 100% in 2018. Pursuant to his restricted stock unit agreement, any unvested restricted stock units will vest immediately in the event of a termination other than for cause. In the event of a change in control, the units will vest upon termination of Mr. West’s employment by his Entergy employer without cause or by Mr. West with good reason during a change in control period (as defined in the 2011 Equity Ownership Plan). Otherwise, if Mr. West voluntarily resigns, is terminated for cause, dies, or becomes disabled, he would forfeit these units. |

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Mr. Denault’s 2006 Retention Agreement
Under the terms of his 2006 retention agreement, Mr. Denault’s employment may be terminated for cause upon Mr. Denault’s:
| • | continuing failure to substantially perform his duties (other than because of physical or mental illness or after he has given notice of termination for good reason) that remains uncured for 30 days after receiving a written notice from the Personnel Committee; |

| • | willfully engaging in conduct that is demonstrably and materially injurious to Entergy Corporation; |

| • | conviction of or entrance of a plea of guilty or nolo contendere to a felony or other crime that has or may have a material adverse effect on his ability to carry out his duties or upon Entergy Corporation’s reputation; |

| • | material violation of any agreement that he has entered into with Entergy Corporation; or |

| • | unauthorized disclosure of Entergy Corporation’s confidential information. |

Mr. Denault may terminate his employment for good reason upon:
| • | the substantial reduction in the nature or status of his duties or responsibilities from those in effect immediately prior to the date of the retention agreement, other than de minimis acts that are remedied after notice from Mr. Denault; |

| • | a reduction of 5% or more in his base salary as in effect on the date of the retention agreement; |

| • | the relocation of his principal place of employment to a location other than the corporate headquarters; |

| • | the failure to continue to allow him to participate in programs or plans providing opportunities for equity awards, stock options, restricted stock, stock appreciation rights, incentive compensation, bonus and other plans on a basis not materially less favorable than enjoyed at the time of the retention agreement (other than changes similarly affecting all senior executives); |

| • | the failure to continue to allow him to participate in programs or plans with opportunities for benefits not materially less favorable than those enjoyed by him under any of Entergy Corporation’s pension, savings, life insurance, medical, health and accident, disability, or vacation plans or policies at the time of the retention agreement (other than changes similarly affecting all senior executives); or |

| • | any purported termination of his employment not taken in accordance with his retention agreement. |

System Executive Continuity Plan
Termination Related to a Change in Control
Entergy Corporation’s Named Executive Officers will be entitled to the benefits described in the tables above under the System Executive Continuity Plan in the event of a termination related to a change in control if a change in control occurs and their employment is terminated by their Entergy employer other than for cause or if they terminate their employment for good reason, in each case within a period beginning on the occurrence of a potential change in control and ending 24 months following the effective date of a change in control.
A change in control includes the following events:
| • | the purchase of 30% or more of either Entergy Corporation’s common stock or the combined voting power of Entergy Corporation’s voting securities; |

| • | the merger or consolidation of Entergy Corporation (unless its Board members constitute at least a majority of the board members of the surviving entity); |

| • | the liquidation, dissolution, or sale of all or substantially all of Entergy Corporation’s assets; or |

| • | a change in the composition of Entergy Corporation’s Board such that, during any two-year period, the individuals serving at the beginning of the period no longer constitute a majority of Entergy Corporation’s Board at the end of the period. |

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A potential change in control includes the following events:
| • | Entergy Corporation or an affiliate enters into an agreement the consummation of which would constitute a change in control; |

| • | the Entergy Corporation Board adopts resolutions determining that, for purposes of the System Executive Continuity Plan, a potential change in control has occurred; |

| • | a System Company or other person or entity publicly announces an intention to take actions that would constitute a change in control; or |

| • | any person or entity becomes the beneficial owner (directly or indirectly) of outstanding shares of Entergy Corporation’s common stock constituting 20% or more of the voting power or value of Entergy Corporation’s outstanding common stock. |

A Named Executive Officer’s employment may be terminated for cause under the System Executive Continuity Plan if he or she:
| • | willfully and continuously fails to substantially perform his or her duties after receiving a 30-day written demand for performance from Entergy Corporation’s Board; |

| • | engages in conduct that is materially injurious to Entergy Corporation or any of its subsidiaries; |

| • | is convicted or pleads guilty or nolo contendere to a felony or other crime that materially and adversely affects his or her ability to perform his or her duties or Entergy Corporation’s reputation; |

| • | materially violates any agreement with Entergy Corporation or any of its subsidiaries; or |

| • | discloses any of Entergy Corporation’s confidential information without authorization. |

A Named Executive Officer may terminate his or her employment with his or her Entergy employer for good reason under the System Executive Continuity Plan if, without his or her consent:
| • | the nature or status of his or her duties and responsibilities is substantially altered or reduced compared to the period prior to the change in control; |

| • | his or her salary is reduced by 5% or more; |

| • | he or she is required to be based outside of the continental United States at somewhere other than his or her primary work location prior to the change in control; |

| • | any of his or her compensation plans are discontinued without an equitable replacement; |

| • | his or her benefits or number of vacation days are substantially reduced; or |

| • | his or her Entergy employer purports to terminate his or her employment other than in accordance with the System Executive Continuity Plan. |

In addition to participation in the System Executive Continuity Plan, benefits already accrued under the System Executive Retirement Plan, Pension Equalization Plan, and Cash Balance Equalization Plan, if any, will become fully vested if the executive is involuntarily terminated without cause or the executive terminates his or her employment for good reason within two years after the occurrence of a change in control. Any awards granted under the Equity Ownership Plans will become fully vested if the executive is involuntarily terminated without cause or terminates employment for good reason within two years after the occurrence of a change in control.
Under certain circumstances described below, the payments and benefits received by a Named Executive Officer pursuant to the System Executive Continuity Plan may be forfeited and, in certain cases, subject to repayment. Benefits are no longer payable under the System Executive Continuity Plan, and unvested performance units under the Performance Unit Program are subject to forfeiture, if the executive:
| • | accepts employment with Entergy Corporation or any of its subsidiaries; |

| • | elects to receive the benefits of another severance or separation program; |

| • | removes, copies or fails to return any property belonging to Entergy Corporation or any of its subsidiaries; |

| • | discloses non-public data or information concerning Entergy Corporation or any of its subsidiaries; or |

| • | violates his or her non-compete provision, which generally runs for two years but extends to three years if permissible under applicable law. |

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Furthermore, if the executive discloses non-public data or information concerning Entergy Corporation or any of its subsidiaries or violates his or her non-compete provision, he or she will be required to repay any benefits previously received under the System Executive Continuity Plan.
Voluntary Resignation
If a Named Executive Officer voluntarily resigns from his or her Entergy employer:
| • | all unvested stock options, shares of restricted stock and restricted stock units as well as any perquisites to which he or she is entitled as an officer are forfeited; |

| • | incentive payments under any outstanding performance periods under the Long-Term Performance Unit Program or the Annual Incentive Plan are forfeited; provided however, if an officer resigns after the completion of an Annual Incentive Plan or Long-Term Performance Unit Program performance period, he or she could receive a payout under the Long-Term Performance Unit Program based on the outcome of the performance period and could, at Entergy Corporation’s discretion, receive an annual incentive payment under the Annual Incentive Plan; |

| • | any vested stock options held by the officer as of the separation date will expire the earlier of ten years from date of grant or 90 days from the last day of active employment; and |

| • | he or she is entitled to all vested accrued benefits and compensation as of the separation date, including qualified pension benefits (if any) and other post-employment benefits on terms consistent with those generally available to other salaried employees. |

Termination for Cause
If a Named Executive Officer’s employment is terminated for “cause” (as defined in the System Executive Continuity Plan and described above under “Termination Related to a Change in Control”), he or she is generally entitled to the same compensation and separation benefits described above under “Voluntary Resignation,” except that all options are no longer exercisable.
Retirement
Upon a Named Executive Officer’s retirement:
| • | the annual incentive payment under the Annual Incentive Plan is generally pro-rated based on the actual number of days employed during the performance year in which the retirement date occurs, subject to negative discretion that may be applied to reduce or disallow the payment; payments are delivered at the conclusion of the annual period, consistent with the timing of payments to active participants in the Annual Incentive Plan; |

| • | payments under the Long-Term Performance Unit Program for those retiring with a minimum of 12 months of participation are pro-rated based on the actual full months of participation in each outstanding performance period in which the retirement date occurs, and payments are delivered at the conclusion of each performance period, consistent with the timing of payments to active participants in the Long-Term Performance Unit Program; |

| • | unvested stock options issued under the 2011 Equity Ownership Plan vest on the retirement date and expire ten years from the grant date of the options; |

| • | unvested stock options issued under the 2015 Equity Ownership Plan vest on the retirement date and expire the earlier of five years from the grant date of the options or the original term of ten years; |

| • | any unvested restricted stock and restricted stock units held by the executive upon his retirement are forfeited; and |

| • | he or she is generally entitled to all vested accrued benefits and compensation as of the separation date, including qualified pension benefits and other post-employment benefits consistent with those generally available to salaried employees. |

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Disability
If a Named Executive Officer’s employment is terminated due to disability, he or she generally is entitled to the same compensation and separation benefits described above under “Retirement,” except that unvested restricted stock and restricted stock units may be subject to specific disability benefits as noted, where applicable, in the tables above.
Death
If a Named Executive Officer dies while actively employed by an Entergy employer, he or she generally is entitled to the same compensation and separation benefits described above under “Retirement,” except that unvested restricted stock and restricted stock units may be subject to specific death benefits as noted, where applicable, in the tables above.
Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the following disclosure is being provided about the relationship of the annual total compensation of the employees of each of the Utility operating companies to the annual total compensation of their respective Presidents and Chief Executive Officers.
Identification of Median Employee
For each of the Utility operating companies, October 6, 2017 was selected as the date on which to determine the median employee. To identify the median employee from each of the Utility operating companies’ employee population base, all compensation included in Box 5 of Form W-2 was considered with all before-tax deductions added back to this compensation (Box 5 Compensation). For purposes of determining the median employee of each Utility operating company, Box 5 Compensation was selected as it is believed it is representative of the compensation received by the employees of each respective Utility operating company and is readily available. The calculation of annual total compensation of the median employee for each Utility operating company is the same calculation used to determine total compensation for purposes of the 2017 Summary Compensation Table with respect to each of the Named Executive Officers.
Entergy Arkansas Ratio
For 2017,
| • | Mr. Riley’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $1,353,719. |

| • | The annual total compensation of the median employee was $127,560. |

| • | Based on this information, the ratio of the annual total compensation of Mr. Riley to the median employee is estimated to be 11:1. |

Entergy Louisiana Ratio
For 2017,
| • | Mr. May’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $1,564,954. |

| • | The annual total compensation of the median employee was $144,954. |

| • | Based on this information, the ratio of the annual total compensation of Mr. May to the median employee is estimated to be 11:1. |

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Entergy Mississippi Ratio
For 2017,
| • | Mr. Fisackerly’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $1,207,343. |

| • | The annual total compensation of the median employee was $112,110. |

| • | Based on this information, the ratio of the annual total compensation of Mr. Fisackerly to the median employee is estimated to be 11:1. |

Entergy New Orleans Ratio
For 2017,
| • | Mr. Rice’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $824,111. |

| • | The annual total compensation of the median employee was $91,346. |

| • | Based on this information, the ratio of the annual total compensation of Mr. Rice to the median employee is estimated to be 9:1. |

Entergy Texas Ratio
For 2017,
| • | Ms. Rainer’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $1,200,260. |

| • | The annual total compensation of the median employee was $129,877. |

| • | Based on this information, the ratio of the annual total compensation of Ms. Rainer to the median employee is estimated to be 9:1. |

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Item 12.
Security Ownership of Certain Beneficial Owners and Management
Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Entergy Mississippi, Entergy Texas, and indirectly 100% of the outstanding common membership interests of registrant Entergy Louisiana and Entergy New Orleans. The information with respect to persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation’s outstanding common stock is included under the heading “Entergy Share Ownership - Beneficial Owners of More Than Five Percent” in the Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.
The following table sets forth the beneficial ownership of common stock of Entergy Corporation and stock-based units as of January 31, 2018 for all non-employee directors and Named Executive Officers. Unless otherwise noted, each person had sole voting and investment power over the number of shares of common stock and stock-based units of Entergy Corporation set forth across from his or her name.
498
| Name | Shares (1)(2) | Options Exercisable Within 60 Days | Stock Units (3) |
| Entergy Corporation |
| A. Christopher Bakken, III** | 10,710 | 12,533 | — |
| Maureen S. Bateman* | 22,716 | — | — |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Patrick J. Condon* | 4,460 | — | — |
| Leo P. Denault*** | 133,457 | 565,133 | — |
| Kirkland H. Donald* | 5,736 | — | 1,389 |
| Philip L. Frederickson* | 2,775 | — | 805 |
| Alexis M. Herman* | 12,581 | — | — |
| Donald C. Hintz* | 15,096 | — | 3,942 |
| Stuart L. Levenick* | 18,047 | — | — |
| Blanche L. Lincoln* | 11,004 | — | — |
| Andrew S. Marsh** | 60,425 | 166,766 | — |
| Karen A. Puckett* | 4,460 | — | — |
| W. J. Tauzin* | 17,809 | — | — |
| Roderick K. West** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (19 persons) | 444,591 | 1,112,495 | 6,136 |
| Entergy Arkansas |
| A. Christopher Bakken, III** | 10,710 | 12,533 | — |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Leo P. Denault** | 133,457 | 565,133 | — |
| Andrew S. Marsh*** | 60,425 | 166,766 | — |
| Richard C. Riley*** | 11,169 | 16,967 | — |
| Roderick K. West*** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (10 persons) | 341,076 | 1,129,462 | — |
| Entergy Louisiana |
| A. Christopher Bakken, III** | 10,710 | 12,533 | — |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Leo P. Denault** | 133,457 | 565,133 | — |
| Andrew S. Marsh*** | 60,425 | 166,766 | — |
| Phillip R. May, Jr.*** | 18,203 | 47,100 | 12 |
| Roderick K. West*** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (10 persons) | 348,110 | 1,159,595 | 12 |

499
| Name | Shares (1)(2) | Options Exercisable Within 60 Days | Stock Units (3) |
| Entergy Mississippi |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Leo P. Denault** | 133,457 | 565,133 | — |
| Haley R. Fisackerly*** | 6,605 | 21,933 | — |
| Andrew S. Marsh*** | 60,425 | 166,766 | — |
| Roderick K. West*** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (9 persons) | 325,802 | 1,121,895 | — |
| Entergy New Orleans |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Leo P. Denault** | 133,457 | 565,133 | — |
| Andrew S. Marsh*** | 60,425 | 166,766 | — |
| Charles L. Rice, Jr.*** | 5,855 | 10,266 | — |
| Roderick K. West*** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (9 persons) | 325,052 | 1,110,228 | — |
| Entergy Texas |
| Marcus V. Brown** | 27,803 | 130,066 | — |
| Leo P. Denault** | 133,457 | 565,133 | — |
| Andrew S. Marsh*** | 60,425 | 166,766 | — |
| Sallie T. Rainer*** | 7,884 | 14,866 | — |
| Roderick K. West*** | 42,475 | 114,066 | — |
| All directors and executive officers as a group (9 persons) | 327,081 | 1,114,828 | — |

| * | Director of the respective Company |
| ** | Named Executive Officer of the respective Company |
| *** | Director and Named Executive Officer of the respective Company |

| (1) | The number of shares of Entergy Corporation common stock owned by each individual and by all non-employee directors and executive officers as a group does not exceed one percent of the outstanding shares of Entergy Corporation common stock. |

| (2) | For the non-employee directors, the balances include phantom units that are issued under the Service Recognition Program. All non-employee directors are credited with phantom units for each year of service on the Entergy Corporation Board. These phantom units do not have voting rights, accrue dividends, and will be settled in shares of Entergy Corporation common stock following the non-employee director’s separation from the Board. |

| (3) | Represents the balances of phantom units each executive holds under the defined contribution restoration plan and the deferral provisions of the Equity Ownership Plan. These units will be paid out in either Entergy Corporation Common Stock or cash equivalent to the value of one share of Entergy Corporation common stock per unit on the date of payout, including accrued dividends. The deferral period is determined by the individual and is at least two years from the award of the bonus. Messrs. Donald, Hintz, and Frederickson have deferred receipt of some of their quarterly stock grants. The deferred shares will be settled in cash in an amount equal to the market value of Entergy Corporation common stock at the end of the deferral period. |

500
Equity Compensation Plan Information
The following table summarizes the equity compensation plan information as of December 31, 2017. Information is included for equity compensation plans approved by the stockholders and equity compensation plans not approved by the stockholders.
| Plan | Number of Securities to be Issued Upon Exercise of Outstanding Options (a) | Weighted Average Exercise Price (b) | Number of Securities Remaining Available for Future Issuance (excluding securities reflected in column (a))(c) |
| Equity compensation plans approved by security holders (1) | 5,164,854 | $83.26 | 3,498,788 |
| Equity compensation plans not approved by security holders(2) | — | — | — |
| Total | 5,164,854 | $83.26 | 3,498,788 |

| (1) | Includes the 2007 Equity Ownership Plan, the 2011 Equity Ownership Plan, and the 2015 Equity Ownership Plan. The 2007 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 12, 2006, and only applied to awards granted between January 1, 2007 and May 5, 2011. The 2011 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 6, 2011, and only applied to awards granted between May 6, 2011 and May 7, 2015. The 2015 Equity Ownership Plan was approved by Entergy Corporation shareholders on May 8, 2015, and 6,900,000 shares of Entergy Corporation common stock can be issued from the 2015 Equity Ownership Plan, with no more than 1,500,000 shares available for incentive stock option grants. The 2015 Plan applies to awards granted on or after May 8, 2015. The 2007 Equity Ownership Plan, the 2011 Equity Ownership Plan, and the 2015 Equity Ownership Plan (the “Plans”) are administered by the Personnel Committee of the Board of Directors (other than with respect to awards granted to non-employee directors, which awards are administered by the entire Board of Directors). Eligibility under the Plans is limited to the non-employee directors and to the officers and employees of an Entergy employer and any corporation 80% or more of whose stock (based on voting power) or value is owned, directly or indirectly, by Entergy Corporation. The Plans provide for the issuance of stock options, restricted stock, equity awards (units whose value is related to the value of shares of the common stock but do not represent actual shares of common stock), performance awards (performance shares or units valued by reference to shares of common stock or performance units valued by reference to financial measures or property other than common stock), restricted stock unit awards, and other stock-based awards. |

| (2) | Entergy has a Board-approved stock-based compensation plan. However, effective May 9, 2003, the Board has directed that no further awards be issued under that plan. As of December 31, 2017, all options outstanding under the plan were either exercised or expired. |

501
Item 13.
Certain Relationships and Related Party Transactions and Director Independence
For information regarding certain relationship, related transactions and director independence of Entergy Corporation, see the Proxy Statement under the headings “Corporate Governance at Entergy - Director Independence” and “Corporate Governance at Entergy - Governance Policies - Our Transactions with Related Party Persons Policy.”
Entergy Corporation’s Board of Directors has adopted written policies and procedures for the review, approval or ratification of any transaction involving an amount in excess of $120,000 in which any director or executive officer of Entergy Corporation, any nominee for director, or any immediate family member of the foregoing has or will have a material interest as contemplated by Item 404(a) of Regulation S-K (“Related Person Transactions”). Under these policies and procedures, Entergy Corporation’s Corporate Governance Committee or a subcommittee of its Board of Directors consisting entirely of independent directors reviews the transaction and either approves or rejects the transaction after taking into account the following factors:
| • | Whether the proposed transaction is on terms that are at least as favorable to Entergy Corporation as those achievable with an unaffiliated third party; |

| • | Size of the transaction and amount of consideration; |

| • | Nature of the interest; |

| • | Whether the transaction involves a conflict of interest; |

| • | Whether the transaction involves services available from unaffiliated third parties; and |

| • | Any other factors that the Corporate Governance Committee or subcommittee deems relevant. |

The policy does not apply to (a) compensation and related person transactions involving a director or an executive officer solely resulting from that person’s service as a director or employment with Entergy Corporation so long as the compensation is approved by the Board of Directors (or an appropriate committee), (b) transactions involving public utility services at rates or charges fixed in conformity with law or governmental authority, or (c) any other categories of transactions currently or in the future excluded from the reporting requirements of Item 404(a) of Regulation S-K.
Related Party Transactions
Since January 1, 2017, neither Entergy Corporation nor any of its affiliates has participated in any Related Person Transaction.
502
Item 14.
Principal Accountant Fees and Services
(Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Aggregate fees billed to Entergy Corporation (consolidated), Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy for the years ended December 31, 2017 and 2016 by Deloitte & Touche LLP were as follows:
| 2017 | 2016 |
| Entergy Corporation (consolidated) |
| Audit Fees | $8,401,895 | $8,932,000 |
| Audit-Related Fees (a) | 875,000 | 865,000 |
| Total audit and audit-related fees | 9,276,895 | 9,797,000 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $9,276,895 | $9,797,000 |
| Entergy Arkansas |
| Audit Fees | $1,018,860 | $1,056,881 |
| Audit-Related Fees (a) | — | — |
| Total audit and audit-related fees | 1,018,860 | 1,056,881 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $1,018,860 | $1,056,881 |
| Entergy Louisiana |
| Audit Fees | $1,887,719 | $2,138,762 |
| Audit-Related Fees (a) | 500,000 | 450,000 |
| Total audit and audit-related fees | 2,387,719 | 2,588,762 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $2,387,719 | $2,588,762 |
| Entergy Mississippi |
| Audit Fees | $933,860 | $971,881 |
| Audit-Related Fees (a) | — | — |
| Total audit and audit-related fees | 933,860 | 971,881 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $933,860 | $971,881 |

503
| 2017 | 2016 |
| Entergy New Orleans |
| Audit Fees | $953,860 | $1,056,881 |
| Audit-Related Fees (a) | — | — |
| Total audit and audit-related fees | 953,860 | 1,056,881 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $953,860 | $1,056,881 |
| Entergy Texas |
| Audit Fees | $1,093,860 | $1,076,881 |
| Audit-Related Fees (a) | — | — |
| Total audit and audit-related fees | 1,093,860 | 1,076,881 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $1,093,860 | $1,076,881 |
| System Energy |
| Audit Fees | $868,860 | $861,881 |
| Audit-Related Fees (a) | — | — |
| Total audit and audit-related fees | 868,860 | 861,881 |
| Tax Fees | — | — |
| All Other Fees | — | — |
| Total Fees (b) | $868,860 | $861,881 |

| (a) | Includes fees for employee benefit plan audits, consultation on financial accounting and reporting, and other attestation services. |

| (b) | 100% of fees paid in 2017 and 2016 were pre-approved by the Entergy Corporation Audit Committee. |

504
Entergy Audit Committee Guidelines for Pre-approval of Independent Auditor Services
The Audit Committee has adopted the following guidelines regarding the engagement of Entergy’s independent auditor to perform services for Entergy:
| 1. | The independent auditor will provide the Audit Committee, for approval, an annual engagement letter outlining the scope of services proposed to be performed during the fiscal year, including audit services and other permissible non-audit services (e.g. audit-related services, tax services, and all other services). |

| 2. | For other permissible services not included in the engagement letter, Entergy management will submit a description of the proposed service, including a budget estimate, to the Audit Committee for pre-approval. Management and the independent auditor must agree that the requested service is consistent with the SEC’s rules on auditor independence prior to submission to the Audit Committee. The Audit Committee, at its discretion, will pre-approve permissible services and has established the following additional guidelines for permissible non-audit services provided by the independent auditor: |

| • | Aggregate non-audit service fees are targeted at fifty percent or less of the approved audit service fee. |

| • | All other services should only be provided by the independent auditor if it is a highly qualified provider of that service or if the Audit Committee pre-approves the independent audit firm to provide the service. |

| 3. | The Audit Committee will be informed quarterly as to the status of pre-approved services actually provided by the independent auditor. |

| 4. | To ensure prompt handling of unexpected matters, the Audit Committee delegates to the Audit Committee Chair or its designee the authority to approve permissible services and fees. The Audit Committee Chair or designee will report action taken to the Audit Committee at the next scheduled Audit Committee meeting. |

| 5. | The Vice President and General Auditor will be responsible for tracking all independent auditor fees and will report quarterly to the Audit Committee. |

505
PART IV
Item 15.
Exhibits and Financial Statement Schedules
| (a)1. | Financial Statements and Independent Auditors’ Reports for Entergy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Table of Contents. |
| (a)2. | Financial Statement Schedules |
| Report of Independent Registered Public Accounting Firm (see page 530) |
| Financial Statement Schedules are listed in the Index to Financial Statement Schedules (see page S-1) |
| (a)3. | Exhibits |
| Exhibits for Entergy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy are listed in the Exhibit Index (see page 507). Each management contract or compensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by footnote in the Exhibit Index. |

Item 16. Form 10-K Summary (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
None.
506
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed with the SEC as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) are management contracts or compensatory plans or arrangements required to be filed herewith and required to be identified as such by Item 15 of Form 10-K.
Some of the agreements included or incorporated by reference as exhibits to this Form 10-K contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of “materiality” that are different from the standard of “materiality” under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
Entergy acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-K not misleading.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Entergy Louisiana
| (a) 1 -- | Plan of Merger of Entergy Gulf States Power, LLC and Entergy Gulf States Louisiana, LLC (2.1 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (a) 2 -- | Plan of Merger of Entergy Louisiana, LLC and Entergy Louisiana Power, LLC (2.2 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (a) 3 -- | Plan of Merger of Entergy Gulf States Power, LLC and Entergy Louisiana Power, LLC (2.3 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (a) 4 -- | Plan of Merger of Entergy New Orleans, Inc. and Entergy New Orleans Power, LLC (2.1 to Form 8-K12B filed December 1, 2017 in 1-35747). |

(3) Articles of Incorporation and By-laws
Entergy Corporation
| (a) 1 -- | Restated Certificate of Incorporation of Entergy Corporation dated October 10, 2006 (3(a) to Form 10-Q for the quarter ended September 30, 2006 in 1-11299). |
| (a) 2 -- | Bylaws of Entergy Corporation as amended January 27, 2017, and as presently in effect (3.1 to Form 8-K filed January 30, 2017 in 1-11299). |

System Energy
| *(b) 1 -- | Amended and Restated Articles of Incorporation of System Energy and amendments thereto through April 28, 1989. |
| (b) 2 -- | By-Laws of System Energy effective July 6, 1998, and as presently in effect (3(f) to Form 10-Q for the quarter ended June 30, 1998 in 1-9067). |

507
Entergy Arkansas
| (c) 1 -- | Articles of Amendment and Restatement for the Second Amended and Restated Articles of Incorporation of Entergy Arkansas effective August 19, 2009 (3 to Form 8-K filed August 24, 2009 in 1-10764). |
| (c) 2 -- | By-Laws of Entergy Arkansas effective November 26, 1999, and as presently in effect (3(ii)(c) to Form 10-K for the year ended December 31, 1999 in 1-10764). |

Entergy Louisiana
| (d) 1 -- | Certificate of Formation of Entergy Louisiana Power, LLC (including Certificate of Amendment to Certificate of Formation to change the company name to Entergy Louisiana, LLC) effective July 7, 2015 (3.3 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (d) 2 -- | Company Agreement of Entergy Louisiana Power, LLC (including First Amendment to Company Agreement to change the company name to Entergy Louisiana, LLC) effective July 7, 2015 (3.4 to Form 8-K12B filed October 1, 2015 in 1-32718). |

Entergy Mississippi
| (e) 1 -- | Second Amended and Restated Articles of Incorporation of Entergy Mississippi effective July 21, 2009 (99.1 to Form 8-K filed July 27, 2009 in 1-31508). |
| (e) 2 -- | By-Laws of Entergy Mississippi effective November 26, 1999, and as presently in effect (3(ii)(f) to Form 10-K for the year ended December 31, 1999 in 0-320). |

Entergy New Orleans
| (f) 1 -- | Certificate of Formation of Entergy New Orleans, LLC effective July 18, 2017 (3.3 to Form 8-K12B filed December 1, 2017 in 1-35747). |
| (f) 2 -- | Company Agreement of Entergy New Orleans, LLC effective July 18, 2017 (3.4 to Form 8-K12B filed December 1, 2017 in 1-35747). |

Entergy Texas
| (g) 1 -- | Certificate of Formation of Entergy Texas effective December 31, 2007 (3(i) to Form 10 filed March 14, 2008 in 000-53134). |
| (g) 2 -- | Bylaws of Entergy Texas effective December 31, 2007 (3(ii) to Form 10 filed March 14, 2008 in 000-53134). |

(4)Instruments Defining Rights of Security Holders, Including Indentures
Entergy Corporation
| (a) 1 -- | See (4)(b) through (4)(g) below for instruments defining the rights of security holders of System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. |
| (a) 2 -- | Indenture (For Unsecured Debt Securities), dated as of September 1, 2010, between Entergy Corporation and Wells Fargo Bank, National Association (4.01 to Form 8-K filed September 16, 2010 in 1-11299). |
| (a) 3 -- | Officer’s Certificate for Entergy Corporation relating to 5.125% Senior Notes due September 15, 2020 (4.02(b) to Form 8-K filed September 16, 2010 in 1-11299). |
| (a) 4 -- | Officer’s Certificate for Entergy Corporation relating to 4.50% Senior Note due December 16, 2028 (4(a)7 to Form 10-K for the year ended December 31, 2013 in 1-11299). |

508
| (a) 5 -- | Officer’s Certificate for Entergy Corporation relating to 2.95% Senior Notes due September 1, 2026 (4.02 to Form 8-K filed August 19, 2016 in 1-11299). |
| (a) 6 -- | Officer’s Certificate for Entergy Corporation relating to 4.0% Senior Notes due July 15, 2022 (4.02 to Form 8-K filed July 1, 2015 in 1-11299). |
| (a) 7 -- | Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(g) to Form 10-Q for the quarter ended September 30, 2015 in 1-11299). |
| (a) 8 -- | Amendment dated as of August 28, 2015, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(h) to Form 10-Q for the quarter ended September 30, 2015 in 1-11299). |
| (a) 9 -- | Extension Agreement, dated August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(l) to Form 10-Q for the quarter ended September 30, 2016 in 1-11299). |
| (a) 10 -- | Amendment dated as of August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(m) to Form 10-Q for the quarter ended September 30, 2016 in 1-11299). |
| (a) 11 -- | Extension Agreement, dated August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(a) to Form 10-Q for the quarter ended September 30, 2017). |
| (a) 12 -- | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(b) to Form 10-Q for the quarter ended September 30, 2017). |
| (a) 13 -- | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Corporation, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(c) to Form 10-Q for the quarter ended September 30, 2017). |

System Energy
| (b) 1 -- | Mortgage and Deed of Trust, dated as of June 15, 1977, as amended and restated by the following Supplemental Indenture: (4.42 to Form 8-K filed September 25, 2012 in 1-9067 (Twenty-fourth)). |
| (b) 2 -- | Loan Agreement, dated as of October 15, 1998, between System Energy and Mississippi Business Finance Corporation (B-6(b) to Rule 24 Certificate filed November 12, 1998 in 70-8511). |
| *(b) 3 -- | Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy. |

509
Entergy Arkansas
| (c) 1 -- | Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by the following Supplemental Indentures: (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 4(a)-7 in 2-10261 (Seventh); 2(b)-10 in 2-15767 (Tenth); 2(c) in 2-28869 (Sixteenth); 2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth); * Filed herewith (Thirtieth); * Filed herewith (Thirty-first); * Filed herewith (Thirty-ninth); * Filed herewith (Forty-first); 4(d)(2) in 33-54298 (Forty-sixth); C-2 to Form U5S for the year ended December 31,1995 (Fifty-third); 4.06 to Form 8-K filed October 8, 2010 in 1-10764 (Sixty-ninth); 4.06 to Form 8-K filed November 12, 2010 in 1-10764 (Seventieth); 4.06 to Form 8-K filed December 13, 2012 in 1-10764 (Seventy-first); 4(e) to Form 8-K filed January 9, 2013 in 1-10764 (Seventy-second); 4.06 to Form 8-K filed May 30, 2013 in 1-10764 (Seventy-third); 4.06 to Form 8-K filed June 4, 2013 in 1-10764 (Seventy-fourth); 4.05 to Form 8-K filed March 14, 2014 in 1-10764 (Seventy-sixth); 4.05 to Form 8-K filed December 9, 2014 in 1-10764 (Seventy-seventh); 4.05 to Form 8-K filed January 8, 2016 in 1-10764 (Seventy-eighth); and 4.05 to Form 8-K filed August 16, 2016 in 1-10764 (Seventy-ninth)). |
| (c) 2 -- | Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Arkansas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(i) to Form 10-Q for the quarter ended September 30, 2015 in 1-10764). |
| (c) 3 -- | Amendment dated as of August 28, 2015, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Arkansas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(j) to Form 10-Q for the quarter ended September 30, 2015 in 1-10764). |
| (c) 4 -- | Extension Agreement, dated August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Arkansas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(n) to Form 10-Q for the quarter ended September 30, 2016 in 1-10764). |
| (c) 5 -- | Amendment dated as of August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Arkansas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(o) to Form 10-Q for the quarter ended September 30, 2016 in 1-10764). |
| (c) 6 -- | Extension Agreement, dated August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(d) to Form 10-Q for the quarter ended September 30, 2017 in 1-10764). |
| (c) 7 -- | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(e) to Form 10-Q for the quarter ended September 30, 2017 in 1-10764). |
| (c) 8-- | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Arkansas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(f) to Form 10-Q for the quarter ended September 30, 2017 in 1-10764). |
| *(c) 9 -- | Fuel Lease, dated as of December 22, 1988, between River Fuel Trust #1 and Entergy Arkansas. |
| (c) 10 -- | Loan Agreement, dated as of January 1, 2013, between Independence County, Arkansas and Entergy Arkansas relating to Revenue Bonds (Entergy Arkansas, Inc. Project) Series 2013 (4(d) to Form 8-K filed January 9, 2013 in 1-10764). |

510
Entergy Louisiana
| (d) 1 -- | Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by the following Supplemental Indentures: (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); * Filed herewith (Sixth); 2(c) in 2-34659 (Twelfth); * Filed herewith (Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); * Filed herewith (Twenty-first); * Filed herewith (Twenty-fifth); * Filed herewith (Twenty-ninth); * Filed herewith (Forty-second); A-2(a) to Rule 24 Certificate filed April 4, 1996 in 70-8487 (Fifty-first); B-4(i) to Rule 24 Certificate filed January 10, 2006 in 70-10324 (Sixty-third); B-4(ii) to Rule 24 Certificate filed January 10, 2006 in 70-10324 (Sixty-fourth); 4(a) to Form 10-Q for the quarter ended September 30, 2008 in 1-32718 (Sixty-fifth); 4(e)1 to Form 10-K for the year ended December 31, 2009 in 1-132718 (Sixty-sixth); 4.08 to Form 8-K filed September 24, 2010 in 1-32718 (Sixty-eighth); 4.08 to Form 8-K filed March 24, 2011 in 1-32718 (Seventy-first); 4(a) to Form 10-Q for the quarter ended June 30, 2011 in 1-32718 (Seventy-second); 4.08 to Form 8-K filed July 3, 2012 in 1-32718 (Seventy-fifth); 4.08 to Form 8-K filed December 4, 2012 in 1-32718 (Seventy-sixth); 4.08 to Form 8-K filed May 21, 2013 in 1-32718 (Seventy-seventh); 4.08 to Form 8-K filed August 23, 2013 in 1-32718 (Seventy-eighth); 4.08 to Form 8-K filed June 24, 2014 in 1-32718 (Seventy-ninth); 4.08 to Form 8-K filed July 1, 2014 in 1-32718 (Eightieth); 4.08 to Form 8-K filed November 21, 2014 (Eighty-first); 4.1 to Form 8-K12B filed October 1, 2015 (Eighty-second); 4(g) to Form 8-K filed March 18, 2016 in 1-32718 (Eighty-third); 4.33 to Form 8-K filed March 24, 2016 in 1-32718 (Eighty-fourth); 4.33 to Form 8-K filed August 17, 2016 in 1-32718 (Eighty-sixth); 4.33 to Form 8-K filed October 4, 2016 in 1-32718 (Eighty-seventh); and 4.43 to Form 8-K filed May 23, 2017 in 1-32718 (Eighty-eighth)). |
| (d) 2 -- | Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Louisiana [Old Entergy Louisiana] and Entergy Gulf States Louisiana, as the Borrowers, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4.4 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (d) 3 -- | Amendment dated as of August 28, 2015, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Louisiana [Old Entergy Louisiana] and Entergy Gulf States Louisiana, as the Borrowers, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4.5 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (d) 4 -- | Borrower Assumption Agreement dated as of October 1, 2015 of Entergy Louisiana [New Entergy Louisiana] under Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Louisiana [Old Entergy Louisiana] and Entergy Gulf States Louisiana, as the Borrowers, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto, as amended (4.6 to Form 8-K12B filed October 1, 2015 in 1-32718). |
| (d) 5 -- | Extension Agreement, dated August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Louisiana, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(p) to Form 10-Q for the quarter ended September 30, 2016 in 1-32718). |
| (d) 6 -- | Amendment dated as of August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Louisiana, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(q) to Form 10-Q for the quarter ended September 30, 2016 in 1-32718). |
| (d) 7 -- | Extension Agreement, dated August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(g) to Form 10-Q for the quarter ended September 30, 2017 in 1-32718). |

511
| (d) 8 -- | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(h) to Form 10-Q for the quarter ended September 30, 2017 in 1-32718). |
| (d) 9 -- | Agreement, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Louisiana, LLC, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(i) to Form 10-Q for the quarter ended September 30, 2017 in 1-32718). |
| *(d) 10 -- | Fuel Lease, dated as of January 31, 1989, between River Fuel Company #2, Inc., and Entergy Louisiana. |
| *(d) 11 -- | Nuclear Fuel Lease Agreement between Entergy Gulf States, Inc. and River Bend Fuel Services, Inc. to lease the fuel for River Bend Unit 1, dated February 7, 1989. |
| *(d) 12 -- | Exhibit A to Trust Indenture dated as of February 7, 1989 between River Bend Fuel Services, Inc. and U.S. Bank National Association (as successor Trustee). |
| (d) 13 -- | Loan Agreement, dated as of March 1, 2016, between the Louisiana Public Facilities Authority and Entergy Louisiana relating to Refunding Revenue Bonds (Entergy Louisiana, LLC Project) Series 2016A (4(b) to Form 8-K filed March 18, 2016 in 1-32718). |
| (d) 14 -- | Loan Agreement, dated as of March 1, 2016, between Louisiana Public Facilities Authority and Entergy Louisiana relating to Refunding Revenue Bonds (Entergy Louisiana, LLC Project) Series 2016B (4(d) to Form 8-K filed March 18, 2016 in 1-32718). |
| (d) 15 -- | Indenture of Mortgage, dated September 1, 1926, as amended by the following Supplemental Indentures: (7-A-9 in Registration No. 2-6893 (Seventh); * Filed herewith (Eighteenth); 2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4(b) to Form 10-Q for the quarter ended March 31,1999 in 1-27031 (Fifty-eighth); 4(a) to Form 10-Q for the quarter ended June 30, 2008 in 333-148557 (Seventy-sixth); 4(a) to Form 10-Q for the quarter ended September 30, 2009 in 0-20371 (Seventy-seventh); 4.07 to Form 8-K filed October 1, 2010 in 0-20371 (Seventy-eighth); 4.07 to Form 8-K filed July 1, 2014 in 0-20371 (Eighty-first); 4.2 to Form 8-K12B filed October 1, 2015 in 1-32718 (Eighty-second); 4.3 to Form 8-K12B filed October 1, 2015 in 1-32718 (Eighty-third); 4.42 to Form 8-K filed March 24, 2016 in 1-32718 (Eighty-fourth); 4.42 to Form 8-K filed May 19, 2016 in 1-32718 (Eighty-fifth); 4.42 to Form 8-K filed August 17, 2016 in 1-32718 (Eighty-sixth); 4.42 to Form 8-K filed October 4, 2016 in 1-32718 (Eighty-seventh); and 4.42 to Form 8-K filed May 23, 2017 in 1-32718 (Eighty-eighth)). |
| (d) 16 -- | Agreement of Resignation, Appointment and Acceptance, dated as of October 3, 2007, among Entergy Gulf States, Inc., JPMorgan Chase Bank, National Association, as resigning trustee, and The Bank of New York, as successor trustee (4(a) to Form 10-Q for the quarter ended September 30, 2007 in 1-27031). |
| (d) 17 -- | Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015, as amended by the following Supplemental Indentures: (4.38 in Registration No. 333-190911-07 (Mortgage); 4(f) to Form 8-K filed March 18, 2016 in 1-32718 (First); 4.40 to Form 8-K filed March 24, 2016 in 1-32718 (Second); 4(h) to Form 10-Q for the quarter ended March 31, 2016 in 1-32718 (Fourth); 4.40 to Form 8-K filed May 19, 2016 in 1-32718 (Fifth); 4.40 to Form 8-K filed August 17, 2016 in 1-32718 (Sixth); 4.41 to Form 8-K filed October 4, 2016 in 1-32718 (Seventh); and 4.41 to Form 8-K filed May 23, 2017 in 1-32718 (Eighth)). |
| (d) 18 -- | Officer’s Certificate No. 1-B-1, dated March 18, 2016, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4(e) to Form 8-K filed March 18, 2016 in 1-32718). |
| (d) 19 -- | Officer’s Certificate No. 2-B-2, dated March 17, 2016, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.39 to Form 8-K filed March 24, 2016 in 1-32718). |
| (d) 20 -- | Officer’s Certificate No. 4-B-4, dated May 16, 2016, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.39 to Form 8-K filed May 19, 2016 in 1-32718). |

512
| (d) 21 -- | Officer’s Certificate No. 6-B-5, dated August 10, 2016, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.39 to Form 8-K filed August 17, 2016 in 1-32718). |
| (d) 22 -- | Officer’s Certificate No. 7-B-6, dated September 28, 2016, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.40 to Form 8-K filed October 4, 2016 in 1-32718). |
| (d) 23 -- | Officer’s Certificate No. 8-B-7, dated May 17, 2017, supplemental to Mortgage and Deed of Trust of Entergy Louisiana, dated as of November 1, 2015 (4.40 to Form 8-K filed May 23, 2017 in 1-32718). |

Entergy Mississippi
| (e) 1 -- | Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by the following Supplemental Indentures: (* Filed herewith (Mortgage); * Filed herewith (Sixth); A-2(c) to Rule 24 Certificate filed May 14, 1999 in 70-8719 (Thirteenth); 4(b) to Form 10-Q for the quarter ended June 30, 2009 in 1-31508 (Twenty-sixth); 4.38 to Form 8-K filed December 11, 2012 in 1-31508 (Thirtieth); 4.05 to Form 8-K filed March 21, 2014 in 1-31508 (Thirty-first); 4.05 to Form 8-K filed May 13, 2016 in 1-31508 (Thirty-second); 4.16 to Form 8-K filed September 15, 2016 in 1-31508 (Thirty-third); and 4.16 to Form 8-K filed November 14, 2017 in 1-31508 (Thirty-fourth)). |

Entergy New Orleans
| (f) 1 -- | Mortgage and Deed of Trust, dated as of May 1, 1987, as amended by the following Supplemental Indentures: (* Filed herewith (Mortgage); * Filed herewith (Third); 4(b) to Form 10-Q for the quarter ended June 30, 1998 in 0-5807 (Seventh); 4.02 to Form 8-K filed November 23, 2010 in 0-5807 (Fifteenth); 4.02 to Form 8-K filed November 29, 2012 in 1-35747 (Sixteenth); 4.02 to Form 8-K filed June 21, 2013 in 1-35747 (Seventeenth); 4(m) to Form 10-Q for the quarter ended March 31, 2016 in 1-35747 (Eighteenth); 4.02 to Form 8-K filed March 22, 2016 in 1-35747 (Nineteenth); 4.02 to Form 8-K filed May 24, 2016 in 1-35747 (Twentieth); and 4.1 to Form 8-K12B filed December 1, 2017 in 1-35747 (Twenty-first)). |
| (f) 2 -- | Amended and Restated Credit Agreement ($25,000,000), dated as of November 20, 2015, among Entergy New Orleans, as the Borrower, the banks and other financial institutions party thereto as Lenders, and Bank of America, N.A., as Administrative Agent (4(f)2 to Form 10-K for the year ended December 31, 2015 in 1-35747). |
| (f) 3 -- | Amendment, dated as of June 30, 2016, to Amended and Restated Credit Agreement, dated as of November 20, 2015, among Entergy New Orleans, as the Borrower, the banks and other financial institutions party thereto as Lenders, and Bank of America, N.A., as Administrative Agent (4(f) to Form 10-Q for the quarter ended June 30, 2016 in 1-35747). |
| (f) 4 -- | Amendment, dated as of September 26, 2017, to Amended and Restated Credit Agreement, dated as of November 20, 2015, as amended, among Entergy New Orleans, as the Borrower, the banks and other financial institutions party thereto as Lenders, and Bank of America, N.A., as Administrative Agent (4(j) to Form 10-Q for the quarter ending September 30, 2017 in 1-35747). |
| (f) 5 -- | Borrower Assumption Agreement, dated as of November 30, 2017, of Entergy New Orleans Power, LLC under the Amended and Restated Credit Agreement dated as of November, 2015, as amended, among Entergy New Orleans, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Bank of America, N.A., as Administrative Agent (4.2 to Form 8-K12B filed December 1, 2017 in 1-35747). |

Entergy Texas
| (g) 1 -- | Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4(h)2 to Form 10-K for the year ended December 31, 2008 in 0-53134). |

513
| (g) 2 -- | Officer’s Certificate No. 1-B-1 dated January 27, 2009, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4(h)3 to Form 10-K for the year ended December 31, 2008 in 0-53134). |
| (g) 3 -- | Officer’s Certificate No. 5-B-4 dated September 7, 2011, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4.40 to Form 8-K filed September 13, 2011 in 1-34360). |
| *(g) 4 -- | Officer’s Certificate No. 7-B-5 dated May 13, 2014, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee. |
| (g) 5 -- | Officer’s Certificate No. 8-B-6 dated May 18, 2015, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4.40 to Form 8-K filed May 21, 2015 in 1-34360). |
| (g) 6 -- | Officer’s Certificate No. 9-B-7 dated March 8, 2016, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4.40 to Form 8-K filed March 11, 2016 in 1-34360). |
| (g) 7 -- | Officer’s Certificate No. 10-B-8 dated November 14, 2017, supplemental to Indenture, Deed of Trust and Security Agreement dated as of October 1, 2008, between Entergy Texas and The Bank of New York Mellon, as trustee (4.48 to Form 8-K filed November 17, 2017 in 1-34360). |
| (g) 8 -- | Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Texas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(k) to Form 10-Q for the quarter ended September 30, 2015 in 1-34360). |
| (g) 9 -- | Amendment dated as of August 28, 2015, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Texas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(l) to Form 10-Q for the quarter ended September 30, 2015 in 1-34360). |
| (g) 10 -- | Extension Agreement, dated August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Texas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(r) to Form 10-Q for the quarter ended September 30, 2016 in 1-34360). |
| (g) 11 -- | Amendment dated as of August 8, 2016, to Amended and Restated Credit Agreement dated as of August 14, 2015, among Entergy Texas, as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(s) to Form 10-Q for the quarter ended September 30, 2016 in 1-34360). |
| (g) 12 -- | Extension Agreement, dated August 7, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(k) to Form 10-Q for the quarter ended September 30, 2017 in 1-34360). |
| (g) 13 -- | Amendment, dated as of October 17, 2017, to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(l) to Form 10-Q for the quarter ended September 30, 2017 in 1-34360). |

514
| (g) 14 -- | Amendment, dated as of October 17, 2017, pursuant to Amended and Restated Credit Agreement dated as of August 14, 2015, as amended, among Entergy Texas, Inc., as the Borrower, the banks and other financial institutions party thereto as Lenders, Citibank, N.A., as Administrative Agent and as an LC Issuing Bank, and the other LC Issuing Banks party thereto (4(m) to Form 10-Q for the quarter ended September 30, 2017 in 1-34360). |

(10) Material Contracts
Entergy Corporation
| +(a) 1 -- | 2007 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries (Effective for Grants and Elections On or After January 1, 2007) (Appendix B to Entergy Corporation’s Definitive Proxy Statement filed on March 24, 2006 in 1-11299). |
| +(a) 2 -- | First Amendment of the 2007 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries effective October 26, 2006 (10(a)50 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 3 -- | Second Amendment of the 2007 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries effective January 1, 2009 (10(a)51 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 4 -- | Third Amendment of the 2007 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries effective December 30, 2010 (10(a)52 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 5 -- | 2011 Equity Ownership and Long Term Cash Incentive Plan of Entergy Corporation and Subsidiaries (Annex A to Entergy Corporation’s Definitive Proxy Statement filed on March 24, 2011 in 1-11299). |
| +(a) 6 -- | 2015 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Appendix C to 2015 Entergy Corporation’s Definitive Proxy Statement filed on March 20, 2015 in 1-11299). |
| +(a) 7 -- | First Amendment to The 2015 Entergy Corporation Non-Employee Director Stock Program Established under the 2015 Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a) to Form 10-Q for the quarter ended June 30, 2017 in 1-11299). |
| +(a) 8 -- | Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, as amended and restated effective January 1, 2009 (10(a)57 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 9 -- | First Amendment of the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)58 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 10 -- | Second Amendment of the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)57 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 11 -- | Third Amendment of the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, effective July 25, 2013 (10(b) to Form 10-Q for the quarter ended September 30, 2014 in 1-11299). |
| +(a) 12 -- | Fourth Amendment of the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries, effective July 1, 2014 (10(c) to Form 10-Q for the quarter ended September 30, 2014 in 1-11299). |
| +(a) 13 -- | Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries, as amended and restated effective January 1, 2009 (10(a)59 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 14 -- | First Amendment of the Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)60 to Form 10-K for the year ended December 31, 2010 in 1-11299). |

515
| +(a) 15 -- | Second Amendment of the Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)60 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 16 -- | Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)74 to Form 10-K for the year ended December 31, 2001 in 1-11299). |
| +(a) 17 -- | Executive Deferred Compensation Plan of Entergy Corporation and Subsidiaries, as amended and restated effective January 1, 2009 (10(a)62 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 18 -- | First Amendment of the Executive Deferred Compensation Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)63 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 19 -- | Second Amendment of the Executive Deferred Compensation Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)64 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 20 -- | System Executive Continuity Plan of Entergy Corporation and Subsidiaries, effective January 1, 2009 (10(a)77 to Form 10-K for the year ended December 31, 2009 in 1-11299). |
| +(a) 21 -- | First Amendment of the System Executive Continuity Plan of Entergy Corporation and Subsidiaries, effective January 1, 2010 (10(a)78 to Form 10-K for the year ended December 31, 2009 in 1-11299). |
| +(a) 22 -- | Second Amendment of the System Executive Continuity Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)69 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 23 -- | Third Amendment of the System Executive Continuity Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)71 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 24 -- | Post-Retirement Plan of Entergy Corporation and Subsidiaries, as amended effective January 1, 2000 (10(a)80 to Form 10-K for the year ended December 31, 2001 in 1-11299). |
| +(a) 25 -- | First Amendment of the Post-Retirement Plan of Entergy Corporation and Subsidiaries effective December 28, 2001 (10(a)81 to Form 10-K for the year ended December 31, 2001 in 1-11299). |
| +(a) 26 -- | Pension Equalization Plan of Entergy Corporation and Subsidiaries, as amended and restated effective January 1, 2009 (10(a)74 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 27 -- | First Amendment of the Pension Equalization Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)75 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 28 -- | Second Amendment of the Pension Equalization Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)76 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 29 -- | Third Amendment of the Pension Equalization Plan of Entergy Corporation and Subsidiaries, effective June 19, 2013 (10(b) to Form 10-Q for the quarter ended June 30, 2013 in 1-11299). |
| +(a) 30 -- | Fourth Amendment of the Pension Equalization Plan of Entergy Corporation and Subsidiaries, effective July 25, 2013 (10(c) to Form 10-Q for the quarter ended June 30, 2013 in 1-11299). |
| +(a) 31 -- | Fifth Amendment of the Pension Equalization Plan of Entergy Corporation and Subsidiaries, effective July 1, 2014 (10(a) to Form 10-Q for the quarter ended September 30, 2014 in 1-11299). |
| +(a) 32 -- | Executive Income Security Plan of Gulf States Utilities Company, as amended effective March 1, 1991 (10(a)86 to Form 10-K for the year ended December 31, 2001 in 1-11299). |

516
| +(a) 33 -- | System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective January 1, 2009 (10(a)78 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 34 -- | First Amendment of the System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective December 30, 2010 (10(a)79 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 35 -- | Second Amendment of the System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective January 27, 2011 (10(a)81 to Form 10-K for the year ended December 31, 2011 in 1-11299). |
| +(a) 36 -- | Third Amendment of the System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective January 1, 2009 (10(a)81 to Form 10-K for the year ended December 31, 2013 in 1-11299). |
| +(a) 37 -- | Fourth Amendment of the System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective July 25, 2013 (10(d) to Form 10-Q for the quarter ended June 30, 2013 in 1-11299). |
| +(a) 38 -- | Fifth Amendment of the System Executive Retirement Plan of Entergy Corporation and Subsidiaries, effective July 1, 2014 (10(d) to Form 10-Q for the quarter ended September 30, 2014 in 1-11299). |
| +(a) 39 -- | Retention Agreement effective August 3, 2006 between Leo P. Denault and Entergy Corporation (10(b) to Form 10-Q for the quarter ended June 30, 2006 in 1-11299). |
| +(a) 40 -- | Amendment to Retention Agreement effective January 1, 2009 between Leo P. Denault and Entergy Corporation (10(a)93 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 41 -- | Amendment to Retention Agreement effective January 1, 2010 between Leo P. Denault and Entergy Corporation (10(a)101 to Form 10-K for the year ended December 31, 2009 in 1-11299). |
| +(a) 42 -- | Amendment to Retention Agreement effective December 30, 2010 between Leo P. Denault and Entergy Corporation (10(a)95 to Form 10-K for the year ended December 31, 2010 in 1-11299). |
| +(a) 43 -- | Shareholder Approval of Future Severance Agreements Policy, effective March 8, 2004 (10(f) to Form 10-Q for the quarter ended March 31, 2004 in 1-11299). |
| +(a) 44 -- | First Amendment to The 2015 Entergy Corporation Non-Employee Director Stock Program Established under the 2015 Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a) to Form 10-Q for the quarter ended June 30, 2017 in 1-11299). |
| +(a) 45 -- | Entergy Nuclear Retention Plan, as amended and restated effective January 1, 2007 (10(a)107 to Form 10-K for the year ended December 31, 2007 in 1-11299). |
| *+(a) 46 -- | Form of Stock Option Grant Agreement. |
| *+(a) 47 -- | Form of Long Term Incentive Program Performance Unit Agreement. |
| *+(a) 48 -- | Form of Restricted Stock Grant Agreement. |
| *+(a) 49 -- | Form of Restricted Stock Units Grant Agreement. |
| +(a) 50 -- | Restricted Units Agreement between Roderick K. West and Entergy Corporation (10(a) to Form 10-Q for the quarter ended June 30, 2013 in 1-11299). |
| +(a) 51 -- | Restricted Stock Unit Agreement between Andrew Marsh and Entergy Corporation (10(a)102 to Form 10-K for the year ended December 31, 2015 in 1-11299). |

517
| +(a) 52 -- | Executive Annual Incentive Plan of Entergy Corporation and Subsidiaries as amended and restated effective January 1, 2016 (Appendix B to 2015 Entergy Corporation’s Definitive Proxy Statement filed on March 20, 2015 in 1-11299). |
| +(a) 53 -- | Entergy Corporation Service Recognition Program for Non-Employee Directors, as amended and restated effective June 1, 2015 (10(d) to Form 10-Q for the quarter ended June 30, 2015 in 1-11299). |
| +(a) 54 -- | Restricted Stock Units Agreement by and between A. Christopher Bakken, III and Entergy Corporation effective April 6, 2016 (10(a)54 to Form 10-K for the year ended December 31, 2016 in 1-11299). |
| +(a) 55 -- | Offer Letter, dated January 28, 2016, by and between A. Christopher Bakken, III and Entergy Services (10(a)55 to Form 10-K for the year ended December 31, 2016 in 1-11299) |

System Energy
| *(b) 1 -- | Availability Agreement, dated June 21, 1974, among System Energy and certain other System companies. |
| *(b) 2 -- | First Amendment to Availability Agreement, dated as of June 30, 1977. |
| *(b) 3 -- | Second Amendment to Availability Agreement, dated as of June 15, 1981. |
| *(b) 4 -- | Third Amendment to Availability Agreement, dated as of June 28, 1984. |
| *(b) 5 -- | Fourth Amendment to Availability Agreement, dated as of June 1, 1989. |
| (b) 6 -- | Thirty-seventh Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 2012, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and The Bank of New York Mellon, as successor trustee (10(a)15 to Form 10-K for the year ended December 31, 2012 in 1-11299). |
| (b) 7 -- | Amendment to the Thirty-seventh Assignment of Availability Agreement, Consent and Agreement, dated as of September 18, 2015, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and The Bank of New York Mellon, as successor trustee (4.25 to Form S-3 filed October 2, 2015). |
| *(b) 8 -- | Capital Funds Agreement, dated June 21, 1974, between Entergy Corporation and System Energy. |
| *(b) 9 -- | First Amendment to Capital Funds Agreement, dated as of June 1, 1989. |
| (b) 10 -- | Thirty-seventh Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 2012, among Entergy Corporation, System Energy, and The Bank of New York Mellon, as successor trustee (10(a)19 to Form 10-K for the year ended December 31, 2012 in 1-11299). |
| *(b) 11 -- | Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy. |
| (b) 12 -- | Lease Supplement No. 4, dated as of January 15, 2014, to Facility Lease No. 1 (10(b)12 to Form 10-K for the year ended December 31, 2016 in 1-11299). |
| *(b) 13 -- | Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy. |
| (b) 14 -- | Lease Supplement No. 4, dated as of May 28, 2014, to Facility Lease No. 2 (10(b)14 to Form 10-K for the year ended December 31, 2016 in 1-11299). |
| *(b) 15 -- | Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies. |

518
| (b) 16 -- | Unit Power Sales Agreement among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans dated as of June 10, 1982, as amended and revised (10(b)16 to Form 10-K for the year ended December 31, 2016 in 1-11299). |

| *(c) 1 -- | Amendment to Limited Liability Company Agreement, effective as of May 26, 2017, and amends the Fourth Amended and Restated Limited Liability Company Agreement of Entergy Holdings Company LLC effective as of September 19, 2015. |

(12) Statement Re Computation of Ratios
| *(a) | Entergy Arkansas’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined. |
| *(b) | Entergy Louisiana’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Distributions, as defined. |
| *(c) | Entergy Mississippi’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined. |
| *(d) | Entergy New Orleans’s Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined. |
| *(e) | Entergy Texas’s Computation of Ratios of Earnings to Fixed Charges, as defined. |
| *(f) | System Energy’s Computation of Ratios of Earnings to Fixed Charges, as defined. |

*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
| *(a) | The consent of Deloitte & Touche LLP is contained herein at page 529. |

*(24) Powers of Attorney
(31) Rule 13a-14(a)/15d-14(a) Certifications
| *(a) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. |
| *(b) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Corporation. |
| *(c) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas. |
| *(d) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Arkansas. |
| *(e) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana. |
| *(f) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Louisiana. |
| *(g) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi. |
| *(h) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Mississippi. |
| *(i) | Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans. |

519
| *(j) | Rule 13a-14(a)/15d-14(a) Certification for Entergy New Orleans. |
| *(k) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas. |
| *(l) | Rule 13a-14(a)/15d-14(a) Certification for Entergy Texas. |
| *(m) | Rule 13a-14(a)/15d-14(a) Certification for System Energy. |
| *(n) | Rule 13a-14(a)/15d-14(a) Certification for System Energy. |

(32) Section 1350 Certifications
| *(a) | Section 1350 Certification for Entergy Corporation. |
| *(b) | Section 1350 Certification for Entergy Corporation. |
| *(c) | Section 1350 Certification for Entergy Arkansas. |
| *(d) | Section 1350 Certification for Entergy Arkansas. |
| *(e) | Section 1350 Certification for Entergy Louisiana. |
| *(f) | Section 1350 Certification for Entergy Louisiana. |
| *(g) | Section 1350 Certification for Entergy Mississippi. |
| *(h) | Section 1350 Certification for Entergy Mississippi. |
| *(i) | Section 1350 Certification for Entergy New Orleans. |
| *(j) | Section 1350 Certification for Entergy New Orleans. |
| *(k) | Section 1350 Certification for Entergy Texas. |
| *(l) | Section 1350 Certification for Entergy Texas. |
| *(m) | Section 1350 Certification for System Energy. |
| *(n) | Section 1350 Certification for System Energy. |

520
(101) XBRL Documents
Entergy Corporation
| *INS - | XBRL Instance Document. |
| *SCH - | XBRL Taxonomy Extension Schema Document. |
| *CAL - | XBRL Taxonomy Extension Calculation Linkbase Document. |
| *DEF - | XBRL Taxonomy Extension Definition Linkbase Document. |
| *LAB - | XBRL Taxonomy Extension Label Linkbase Document. |
| *PRE - | XBRL Taxonomy Extension Presentation Linkbase Document. |

_________________
| * | Filed herewith. |
| + | Management contracts or compensatory plans or arrangements. |

521
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY CORPORATION |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Leo P. Denault (Chairman of the Board, Chief Executive Officer and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President and Chief Financial Officer; Principal Financial Officer); Maureen S. Bateman, Patrick J. Condon, Kirkland H. Donald, Philip L. Frederickson, Alexis M. Herman, Donald C. Hintz, Stuart L. Levenick, Blanche L. Lincoln, Karen A. Puckett, and W. J. Tauzin (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

522
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY ARKANSAS, INC. |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Richard C. Riley (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Paul D. Hinnenkamp and Roderick K. West (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

523
ENTERGY LOUISIANA, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY LOUISIANA, LLC |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Phillip R. May, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Paul D. Hinnenkamp and Roderick K. West (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

524
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY MISSISSIPPI, INC. |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Haley R. Fisackerly (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Paul D. Hinnenkamp and Roderick K. West (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

525
ENTERGY NEW ORLEANS, LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY NEW ORLEANS, LLC |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Charles L. Rice, Jr. (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Paul D. Hinnenkamp and Roderick K. West (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

526
ENTERGY TEXAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| ENTERGY TEXAS, INC. |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Sallie T. Rainer (Chair of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); Paul D. Hinnenkamp and Roderick K. West (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

527
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
| SYSTEM ENERGY RESOURCES, INC. |
| By /s/ Alyson M. Mount |
| Alyson M. Mount |
| Senior Vice President and Chief Accounting Officer |
| Date: February 26, 2018 |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
| Signature | Title | Date |
| /s/ Alyson M. Mount Alyson M. Mount | Senior Vice President andChief Accounting Officer(Principal Accounting Officer) | February 26, 2018 |

Roderick K. West (Chairman of the Board, President, Chief Executive Officer, and Director; Principal Executive Officer); Andrew S. Marsh (Executive Vice President, Chief Financial Officer, and Director; Principal Financial Officer); A. Christopher Bakken, III and Steven C. McNeal (Directors).
| By: /s/ Alyson M. Mount | February 26, 2018 |
| (Alyson M. Mount, Attorney-in-fact) |

528
EXHIBIT 23(a)
CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-213335 on Form S-3 and in Registration Statements Nos. 333-140183, 333-174148, 333-204546, and 333-206556 on Form S-8 of our reports dated February 26, 2018, relating to the consolidated financial statements and financial statement schedule of Entergy Corporation and Subsidiaries, and the effectiveness of Entergy Corporation and Subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Entergy Corporation for the year ended December 31, 2017.
We consent to the incorporation by reference in Registration Statement No. 333-213335-06 on Form S-3 of our reports dated February 26, 2018, relating to the consolidated financial statements and financial statement schedule of Entergy Arkansas, Inc. and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Arkansas, Inc. for the year ended December 31, 2017.
We consent to the incorporation by reference in Registration Statement No. 333-213335-03 on Form S-3 of our reports dated February 26, 2018, relating to the consolidated financial statements and financial statement schedule of Entergy Louisiana, LLC and Subsidiaries appearing in this Annual Report on Form 10‑K of Entergy Louisiana, LLC for the year ended December 31, 2017.
We consent to the incorporation by reference in Registration Statement No. 333-213335-05 on Form S-3 of our reports dated February 26, 2018, relating to the consolidated financial statements and financial statement schedule of Entergy Texas, Inc. and Subsidiaries appearing in this Annual Report on Form 10-K of Entergy Texas, Inc. for the year ended December 31, 2017.
We consent to the incorporation by reference in Registration Statement No. 333-213335-04 on Form S-3 of our report dated February 26, 2018, relating to the financial statements of System Energy Resources, Inc. appearing in this Annual Report on Form 10-K of System Energy Resources, Inc. for the year ended December 31, 2017.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
529
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Corporation and Subsidiaries
Opinion on the Financial Statement Schedule
We have audited the consolidated financial statements of Entergy Corporation and Subsidiaries (the “Corporation”) as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017, and the Corporation’s internal control over financial reporting as of December 31, 2017, and have issued our reports thereon dated February 26, 2018. Our audits also included the consolidated financial statement schedule of the Corporation listed in Item 15. This consolidated financial statement schedule is the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
530
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Entergy Arkansas, Inc. and Subsidiaries
Entergy Mississippi, Inc.
Entergy Texas, Inc. and Subsidiaries
To the members and Board of Directors of
Entergy Louisiana, LLC and Subsidiaries
Entergy New Orleans, LLC and Subsidiaries
Opinion on the Financial Statement Schedules
We have audited the consolidated financial statements of Entergy Arkansas, Inc. and Subsidiaries, Entergy Louisiana, LLC and Subsidiaries, Entergy New Orleans, LLC and Subsidiaries, and Entergy Texas, Inc. and Subsidiaries, and we have also audited the financial statements of Entergy Mississippi, Inc. (collectively the “Companies”) as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017, and have issued our reports thereon dated February 26, 2018. Our audits also included the financial statement schedules of the respective Companies listed in Item 15. These financial statement schedules are the responsibility of the respective Companies’ management. Our responsibility is to express an opinion on the Companies’ financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 26, 2018
531
INDEX TO FINANCIAL STATEMENT SCHEDULES
| Schedule | Page |
| II | Valuation and Qualifying Accounts 2017, 2016, and 2015: |
| Entergy Corporation and Subsidiaries | S-2 |
| Entergy Arkansas, Inc. and Subsidiaries | S-3 |
| Entergy Louisiana, LLC and Subsidiaries | S-4 |
| Entergy Mississippi, Inc. | S-5 |
| Entergy New Orleans, LLC and Subsidiaries | S-6 |
| Entergy Texas, Inc. and Subsidiaries | S-7 |

Schedules other than those listed above are omitted because they are not required, not applicable, or the required information is shown in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the information is not applicable.
S-1
| ENTERGY CORPORATION AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $11,924 | $4,211 | $2,548 | $13,587 |
| 2016 | $39,895 | $7,505 | $35,476 | $11,924 |
| 2015 | $35,663 | $6,926 | $2,694 | $39,895 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-2
| ENTERGY ARKANSAS, INC. AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $1,211 | $503 | $651 | $1,063 |
| 2016 | $34,226 | $902 | $33,917 | $1,211 |
| 2015 | $32,247 | $2,759 | $780 | $34,226 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-3
| ENTERGY LOUISIANA, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $6,277 | $3,108 | $955 | $8,430 |
| 2016 | $4,209 | $2,942 | $874 | $6,277 |
| 2015 | $1,609 | $3,464 | $864 | $4,209 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-4
| ENTERGY MISSISSIPPI, INC. |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $549 | $255 | $230 | $574 |
| 2016 | $718 | $259 | $428 | $549 |
| 2015 | $873 | $247 | $402 | $718 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-5
| ENTERGY NEW ORLEANS, LLC AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $3,059 | $152 | $154 | $3,057 |
| 2016 | $268 | $2,872 | $81 | $3,059 |
| 2015 | $262 | $217 | $211 | $268 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-6
| ENTERGY TEXAS, INC. AND SUBSIDIARIES |
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
| For the Years Ended December 31, 2017, 2016, and 2015 |
| (In Thousands) |
| Column A | Column B | Column C | Column D | Column E |
| Other |
| Balance at | Additions | Changes | Balance |
| Description | Beginning of Period | Charged to Income | Deductions (1) | at End of Period |
| Allowance for doubtful accounts |
| 2017 | $828 | $192 | $557 | $463 |
| 2016 | $474 | $531 | $177 | $828 |
| 2015 | $672 | $239 | $437 | $474 |
| Notes: |
| (1) Deductions represent write-offs of accounts receivable balances and are reduced by recoveries of amounts previously written off. |

S-7

Question: What is the percentage increase of the total Allowance for doubtful accounts from 2016 to 2017 across all entities, measured in thousands?

Python solution:
def solution():
    #Define variables name and value
    corp_2017 = 13587
    corp_2016 = 11924
    arkansas_2017 = 1063
    arkansas_2016 = 1211
    Louisiana_2017 = 8430
    Louisiana_2016 = 6277
    Mississippi_2017 = 574
    Mississippi_2016 = 549
    NewOrleans_2017 = 3057
    NewOrleans_2016 = 3059
    Texas_2017 = 463
    Texas_2016 = 828

    #Do math calculation to get the answer
    total_2017 = corp_2017 + arkansas_2017 + Louisiana_2017 + Mississippi_2017 + NewOrleans_2017 + Texas_2017
    total_2016 = corp_2016 + arkansas_2016 + Louisiana_2016 + Mississippi_2016 + NewOrleans_2016 + Texas_2016
    percentage_increase = ((total_2017 - total_2016) / total_2016) * 100
    answer = percentage_increase
    return answer


Answer: 13.9466621939