Company: EAI
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0000065984-25-000087
Chunk: 302

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-08-01
Form: 10-Q
Item: Item 1
Chunk 302
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ativesEntergy designates a significant portion of its derivative instruments as normal purchase/normal sale transactions due to their physical settlement provisions, including power purchase and sales agreements, fuel purchase agreements, and capacity contracts.  Certain derivative instruments do not qualify for designation as normal purchase/normal sale transactions due to their financial settlement provisions.  See further discussion below regarding the accounting for these derivative instruments.Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub.  These swaps are marked-to-market through fuel expense with offsetting regulatory assets or liabilities.  All benefits or costs of the program are recorded in fuel costs.  The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans.  The maximum length of time over which Entergy has executed natural gas swaps as of June 30, 2025 is 9 months for Entergy Mississippi.  The total volume of natural gas swaps outstanding as of June 30, 2025 is 9,493,000 MMBtu for Entergy and Entergy Mississippi.  As of June 30, 2025, Entergy Louisiana and Entergy New Orleans had no outstanding natural gas swaps.  Credit support for these natural gas swaps is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral.

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

During the second quarter 2025, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2025 through May 31, 2026.  Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load.  They are not designated as hedging instruments.  Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement.  Unrealized gains or losses on financial transmission rights held by the non-utility operations are included in operating revenues.  The Utility operating companies recognize regulatory liabilities or assets for unrealized