Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 395

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 395
---
% GasEntergy Mississippi9.91% - 11.92%Entergy New Orleans8.85% - 9.85%Entergy Texas9.57%

Rate regulation and related regulatory proceedings and fuel and purchased power cost recovery proceedings for the Utility operating companies are discussed in Note 2 to the financial statements.

Federal Regulation

The FERC regulates wholesale sales of electricity rates and interstate transmission of electricity, including rates for System Energy’s sales of capacity and energy from Grand Gulf to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales Agreement.  The current return on equity under the Unit Power Sales Agreement is 9.65%.  See Note 2 and Note 8 to the financial statements for discussion of Entergy Louisiana’s divestiture from the Unit Power Sales Agreement.

Market and Credit Risk Sensitive Instruments

Market risk is the risk of changes in the value of commodity and financial instruments, or in future net income or cash flows, in response to changing market conditions.  Entergy holds commodity and financial instruments that are exposed to the following significant market risks:

•The commodity price risk associated with the sale of electricity by Entergy’s non-utility operations business.

26

Table of ContentsEntergy Corporation and SubsidiariesManagement’s Financial Discussion and Analysis

•The interest rate and equity price risk associated with Entergy’s investments in qualified pension and other postretirement benefits trust funds.  See Note 11 to the financial statements for details regarding Entergy’s qualified pension and other postretirement benefits trust funds.

•The interest rate and equity price risk associated with Entergy’s investments in nuclear plant decommissioning trust funds.  See Note 16 to the financial statements for details regarding Entergy’s decommissioning trust funds.

•The interest rate risk associated with changes in interest rates as a result of Entergy’s outstanding indebtedness.  Entergy manages its interest rate exposure by monitoring current interest rates and its debt outstanding in relation to total capitalization.  See Notes 4 and 5 to the financial statements for the details of Entergy’s debt outstanding.

The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation.  To the extent approved by their retail regulators, the Utility operating companies use commodity and financial instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs that are recovered from customers.

Entergy’s commodity and financial instruments are also exposed