Company: EAI
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0000065984-25-000132
Chunk: 375

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 1
Chunk 375
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4.In second quarter 2025, Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy determined, based on current analysis and evolving regulatory developments, that it was appropriate to record zero-emission nuclear production tax credits under Internal Revenue Code section 45U for electricity generated in 2024 by their respective nuclear power facilities.  Such credits have been claimed on the Entergy 2024 federal income tax return.  Because the U.S. Treasury and the IRS have not issued final guidance regarding the application of Internal Revenue Code section 45U, including the definition of “gross receipts,” Entergy treated the full amount of the Internal Revenue Code section 45U credits as an uncertain tax position in accordance with the income tax accounting standards.The value of the nuclear production tax credits was calculated based on the amount of electricity generated and sold by each nuclear generating unit owned by Entergy Arkansas, Entergy Louisiana, and System Energy during 2024, multiplied by the applicable credit rate (i.e. dollars per kWh).  The applicable credit rate included the incremental amount of credit for meeting the “prevailing wages” criteria under the Inflation Reduction Act.  Entergy also applied the statutorily required reduction amount in arriving at the value of the nuclear production tax credits.  This reduction amount was driven by the “gross receipts” received by each unit for its 2024 energy production.  Entergy Arkansas, Entergy Louisiana, and System Energy recognized nuclear production tax credits of $221.4 million, $208.9 million, and $140.9 million, respectively, resulting in Entergy consolidated nuclear production tax credits of $571.2 million recognized in second quarter 2025.  To the extent future guidance allows Entergy to realize the value of the credits under the provisions of income tax accounting standards, the monetized value of the production tax credits, net of applicable expenses, is expected to be shared with customers.In September 2025, Entergy Arkansas, Entergy Louisiana, and System Energy transferred nuclear production tax credits to third parties and received cash of $155.1 million, $146.4 million, and $98.7 million, respectively, resulting in total Entergy cash receipts of $400.2 million.  The proceeds from the transfers reflected a market-based discount.  In addition, Entergy Arkansas sold its solar production tax credits to a third party and received cash receipts of approximately $5.1 million.  Entergy Arkansas, Entergy Louisiana