Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 523

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 523
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, for the benefit of customers, and 99% will be distributed to Entergy Louisiana, net of storm trust expenses.  The preferred membership interests have a stated annual cumulative cash dividend rate of 7% and a liquidation price of $100 per unit.  The terms of the preferred membership interests include certain financial covenants to which Entergy Finance Company is subject.  Semi-annual redemptions of the preferred membership interests, subject to certain conditions, are expected to occur over the next 15 years.Entergy and Entergy Louisiana do not report the bonds issued by the LCDA on their balance sheets because the bonds are the obligation of the LCDA.  The bonds are secured by system restoration property, which is the right granted by law to the LURC to collect a system restoration charge from customers.  The system restoration charge is adjusted at least semi-annually to ensure that it is sufficient to service the bonds.  Entergy Louisiana collects the system restoration charge on behalf of the LURC and remits the collections to the bond indenture trustee.  Entergy Louisiana began collecting the system restoration charge effective with the first billing cycle of June 2022 and the system restoration charge is expected to remain in place for up to 15 years.  Entergy and Entergy Louisiana do not report the collections as revenue because Entergy Louisiana is merely acting as a billing and collection agent for the LCDA and the LURC.  In the remote possibility that the system restoration charge, as well as any funds in the excess subaccount and funds in the debt service reserve account, are insufficient to service the bonds resulting in a payment default, the storm trust I is required to liquidate Entergy Finance Company preferred membership interests in an amount equal to what would be required to cure the default.  The estimated value of this indirect guarantee is immaterial.From the proceeds from the issuance of the preferred membership interests, Entergy Finance Company distributed $1.4 billion to its parent, Entergy Holdings Company, LLC, a company wholly-owned and consolidated by Entergy.  Subsequently, Entergy Holdings Company liquidated, distributing the $1.4 billion it received from Entergy Finance Company to Entergy Louisiana as holder of 6,843,780.24 units of Class A, 4,126,940.15 units of Class B, and 2,935,152.69 units of Class C preferred membership interests.  Entergy Louisiana had acquired these preferred membership interests with proceeds from