Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 12

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1
Chunk 12
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 of fuel.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.DerivativesEntergy 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 

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Table of ContentsEntergy Corporation and SubsidiariesNotes to Financial Statements

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 and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub.  These swaps and options 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 and options as of December 31, 2024 is 10 months for Entergy Mississippi.  The total volume of natural gas swaps and options outstanding as of December 31, 2024 is 9,603,850 MMBtu for Entergy and Entergy Mississippi.  As of December 31, 2024, Entergy Louisiana and Entergy New Orleans had no outstanding natural gas swaps or options.  Credit support for these natural gas swaps and options 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.During the second quarter 2024, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2024 through May 31, 2025.  Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Ent