Entergy Arkansas Earnings 2016-03-31

Entergy Arkansas Earnings 2016-03-31

EAE 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 etr-03x31x2016x10q.htm 10-Q 10-Q

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__________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended March 31, 2016
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ____________ to ____________



Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.	Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.
1-11299	ENTERGY CORPORATION (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 72-1229752	1-35747	ENTERGY NEW ORLEANS, INC. (a Louisiana corporation) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3700 72-0273040


1-10764	ENTERGY ARKANSAS, INC. (an Arkansas corporation) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 71-0005900	1-34360	ENTERGY TEXAS, INC. (a Texas corporation) 9425 Pinecroft The Woodlands, Texas 77380 Telephone (409) 981-2000 61-1435798


1-32718	ENTERGY LOUISIANA, LLC (a Texas limited liability company) 4809 Jefferson Highway Jefferson, Louisiana 70121 Telephone (504) 576-4000 47-4469646	1-09067	SYSTEM ENERGY RESOURCES, INC. (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 72-0752777


1-31508	ENTERGY MISSISSIPPI, INC. (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 64-0205830

__________________________________________________________________________________________

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Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes R No o

Indicate by check mark whether the registrants have submitted electronically and posted on Entergy’s corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.



	Large accelerated filer	Accelerated filer	Non- accelerated filer	Smaller reporting company
Entergy Corporation	ü
Entergy Arkansas, Inc.			ü
Entergy Louisiana, LLC			ü
Entergy Mississippi, Inc.			ü
Entergy New Orleans, Inc.			ü
Entergy Texas, Inc.			ü
System Energy Resources, Inc.			ü

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes o No R



Common Stock Outstanding		Outstanding at April 29, 2016
Entergy Corporation	($0.01 par value)	178,740,867

Entergy Corporation, Entergy Arkansas, Inc., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2015, filed by the individual registrants with the SEC, and should be read in conjunction therewith.

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ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2016



	Page Number

Forward-looking information	iii
Definitions	v
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis	1
Consolidated Income Statements	14
Consolidated Statements of Comprehensive Income	15
Consolidated Statements of Cash Flows	16
Consolidated Balance Sheets	18
Consolidated Statements of Changes in Equity	20
Selected Operating Results	21
Notes to Financial Statements	22
Part 1. Item 4. Controls and Procedures	70
Entergy Arkansas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	71
Consolidated Income Statements	78
Consolidated Statements of Cash Flows	79
Consolidated Balance Sheets	80
Consolidated Statements of Changes in Common Equity	82
Selected Operating Results	83
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis	84
Consolidated Income Statements	92
Consolidated Statements of Comprehensive Income	93
Consolidated Statements of Cash Flows	95
Consolidated Balance Sheets	96
Consolidated Statements of Changes in Equity	98
Selected Operating Results	99
Entergy Mississippi, Inc.
Management’s Financial Discussion and Analysis	100
Income Statements	105
Statements of Cash Flows	107
Balance Sheets	108
Statements of Changes in Common Equity	110
Selected Operating Results	111
Entergy New Orleans, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	112
Consolidated Income Statements	116
Consolidated Statements of Cash Flows	117
Consolidated Balance Sheets	118

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ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2016

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FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements. Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made. Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management’s Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):


•	resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs;

•

the termination of Entergy Arkansas’s participation in the System Agreement, which occurred in December 2013, the termination of Entergy Mississippi’s participation in the System Agreement, which occurred in November 2015, and the termination of Entergy Texas’s, Entergy New Orleans’s, and Entergy Louisiana’s participation in the System Agreement, which will occur on August 31, 2016, and will result in the termination of the System Agreement in its entirety pursuant to a settlement agreement approved by FERC in December 2015;

•

regulatory and operating challenges and uncertainties and economic risks associated with the Utility operating companies’ move to MISO, which occurred in December 2013, including the effect of current or projected MISO market rules and market and system conditions in the MISO markets, the allocation of MISO system transmission upgrade costs, and the effect of planning decisions that MISO makes with respect to future transmission investments by the Utility operating companies;


•	changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent transmission reliability requirements or market power criteria by the FERC;


•	changes in the regulation or regulatory oversight of Entergy’s nuclear generating facilities and nuclear materials and fuel, including with respect to the planned potential or actual shutdown of nuclear generating facilities owned or operated by Entergy Wholesale Commodities, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;


•	resolution of pending or future applications, and related regulatory proceedings and litigation, for license renewals or modifications or other authorizations required of nuclear generating facilities and the effect of public and political opposition on these applications, regulatory proceedings and litigation;


•	the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities;


•	Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;


•	prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants;


•	the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;

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FORWARD-LOOKING INFORMATION (Concluded)


•	volatility and changes in markets for electricity, natural gas, uranium, emissions allowances, and other energy-related commodities, and the effect of those changes on Entergy and its customers;


•	changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;


•	changes in environmental, tax, and other laws and regulations, including requirements for reduced emissions of sulfur dioxide, nitrogen oxide, greenhouse gases, mercury, thermal energy, and other regulated air and water emissions, and changes in costs of compliance with environmental and other laws and regulations;


•	uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal and the level of spent fuel and nuclear waste disposal fees charged by the U.S. government or other providers related to such sites;


•	variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms, or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance;


•	effects of climate change;


•	changes in the quality and availability of water supplies and the related regulation of water use and diversion;


•	Entergy’s ability to manage its capital projects and operation and maintenance costs;


•	Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;


•	the economic climate, and particularly economic conditions in Entergy’s Utility service area and the Northeast United States and events and circumstances that could influence economic conditions in those areas, including power prices, and the risk that anticipated load growth may not materialize;


•	the effects of Entergy’s strategies to reduce tax payments;


•	changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions;


•	actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;


•	changes in inflation and interest rates;


•	the effect of litigation and government investigations or proceedings;


•	changes in technology, including with respect to new, developing, or alternative sources of generation;


•	the effects of threatened or actual terrorism, cyber-attacks or data security breaches, including increased security costs, accidents, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;


•	Entergy’s ability to attract and retain talented management and directors;


•	changes in accounting standards and corporate governance;


•	declines in the market prices of marketable securities and resulting funding requirements and the effects on benefits costs for Entergy’s defined benefit pension and other postretirement benefit plans;


•	future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;


•	changes in decommissioning trust fund values or earnings or in the timing of, requirements for, or cost to decommission nuclear plant sites;


•	the implementation of the shutdown of Pilgrim and FitzPatrick and the related decommissioning of those plants and Vermont Yankee;


•	the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;


•	factors that could lead to impairment of long-lived assets; and


•	the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture.

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DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:



Abbreviation or Acronym	Term
AFUDC	Allowance for Funds Used During Construction
ALJ	Administrative Law Judge
ANO 1 and 2	Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC	Arkansas Public Service Commission
ASLB	Atomic Safety and Licensing Board, the board within the NRC that conducts hearings and performs other regulatory functions that the NRC authorizes
ASU	Accounting Standards Update issued by the FASB
Board	Board of Directors of Entergy Corporation
Cajun	Cajun Electric Power Cooperative, Inc.
capacity factor	Actual plant output divided by maximum potential plant output for the period
City Council or Council	Council of the City of New Orleans, Louisiana
D.C. Circuit	U.S. Court of Appeals for the District of Columbia Circuit
DOE	United States Department of Energy
Entergy	Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation	Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.	Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana	Entergy Gulf States Louisiana, L.L.C., a Louisiana limited liability company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires. Effective October 1, 2015, the business of Entergy Gulf States Louisiana was combined with Entergy Louisiana.
Entergy Louisiana	Entergy Louisiana, LLC, a Texas limited liability company formally created as part of the combination of Entergy Gulf States Louisiana and the company formerly known as Entergy Louisiana, LLC (Old Entergy Louisiana) into a single public utility company and the successor to Old Entergy Louisiana for financial reporting purposes.
Entergy Texas	Entergy Texas, Inc., a Texas corporation formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale Commodities (EWC)	Entergy’s non-utility business segment primarily comprised of the ownership, operation, and decommissioning of nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by its operating power plants to wholesale customers
EPA	United States Environmental Protection Agency
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FitzPatrick	James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K	Annual Report on Form 10-K for the calendar year ended December 31, 2015 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
FTR	Financial transmission right
Grand Gulf	Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy

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DEFINITIONS (continued)



Abbreviation or Acronym	Term
GWh	Gigawatt-hour(s), which equals one million kilowatt-hours
Independence	Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power, LLC
Indian Point 2	Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Indian Point 3	Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS	Internal Revenue Service
ISO	Independent System Operator
kW	Kilowatt, which equals one thousand watts
kWh	Kilowatt-hour(s)
LPSC	Louisiana Public Service Commission
MISO	Midcontinent Independent System Operator, Inc., a regional transmission organization
MMBtu	One million British Thermal Units
MPSC	Mississippi Public Service Commission
MW	Megawatt(s), which equals one thousand kilowatts
MWh	Megawatt-hour(s)
Net debt to net capital ratio	Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents
Net MW in operation	Installed capacity owned and operated
NRC	Nuclear Regulatory Commission
NYPA	New York Power Authority
Palisades	Palisades Nuclear Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Parent & Other	The portions of Entergy not included in the Utility or Entergy Wholesale Commodities segments, primarily consisting of the activities of the parent company, Entergy Corporation
Pilgrim	Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
PPA	Purchased power agreement or power purchase agreement
PUCT	Public Utility Commission of Texas
Registrant Subsidiaries	Entergy Arkansas, Inc., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend	River Bend Station (nuclear), owned by Entergy Louisiana
RTO	Regional transmission organization
SEC	Securities and Exchange Commission
System Agreement	Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources. Entergy Arkansas terminated its participation in the System Agreement effective December 18, 2013. Entergy Mississippi terminated its participation in the System Agreement effective November 7, 2015.
System Energy	System Energy Resources, Inc.
TWh	Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement	Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf

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DEFINITIONS (concluded)



Abbreviation or Acronym	Term
Utility	Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies	Entergy Arkansas, Entergy Gulf States Louisiana (prior to the completion of the business combination with Entergy Louisiana), Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee	Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment, which ceased power production in December 2014
Waterford 3	Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage	Electric usage excluding the effects of deviations from normal weather
White Bluff	White Bluff Steam Electric Generating Station, 57% owned by Entergy Arkansas

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ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Entergy operates primarily through two business segments: Utility and Entergy Wholesale Commodities.


•	The Utility business segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business.

•

The Entergy Wholesale Commodities business segment includes the ownership, operation, and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. Entergy Wholesale Commodities also provides services to other nuclear power plant owners and owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.

Results of Operations

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the first quarter 2016 to the first quarter 2015 showing how much the line item increased or (decreased) in comparison to the prior period:



	Utility			Entergy Wholesale Commodities			Parent & Other (a)			Entergy
	(In Thousands)
2015 Consolidated Net Income (Loss)		$227,750			$123,432			($48,253	)		$302,929

Net revenue (operating revenue less fuel expense, purchased power, and other regulatory charges/credits)	(35,427		)	(60,318		)	(9		)	(95,754		)
Other operation and maintenance	(41,278		)	1,335			1,748			(38,195		)
Asset write-offs, impairments, and related charges	—			7,361			—			7,361
Taxes other than income taxes	(6,461		)	(973		)	(311		)	(7,745		)
Depreciation and amortization	8,619			(6,156		)	(176		)	2,287
Other income	(8,300		)	(20,530		)	(923		)	(29,753		)
Interest expense	966			188			2,755			3,909
Other expenses	5,941			(20,852		)	—			(14,911		)
Income taxes	16,585			(17,876		)	(9,235		)	(10,526		)

2016 Consolidated Net Income (Loss)		$199,651			$79,557			($43,966	)		$235,242


(a)	Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to “ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS” for further information with respect to operating statistics.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the first quarter 2016 to the first quarter 2015:



	Amount
	(In Millions)
2015 net revenue		$1,410
Volume/weather	(46		)
Retail electric price	23
Other	(12		)
2016 net revenue		$1,375

The volume/weather variance is primarily due to a decrease of 849 GWh, or 3%, in billed electricity usage primarily due to the effect of less favorable weather on residential and commercial sales. The decrease is partially offset by an increase in industrial usage, primarily due to increased growth for new and expansion customers as well as existing customers, primarily in the petroleum refining industry.

The retail electric price variance is primarily due to an increase in base rates at Entergy Arkansas, as approved by the APSC. The new rates were effective February 24, 2016 and began billing with the first billing cycle of April 2016. The increase includes an interim base rate adjustment surcharge, effective with the first billing cycle of April 2016, to recover the incremental revenue requirement for the period February 24, 2016 through March 31, 2016. See Note 2 to the financial statements herein for further discussion of the rate case.

Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the first quarter 2016 to the first quarter 2015:



	Amount
	(In Millions)
2015 net revenue		$527
Nuclear realized price changes	(78		)
Rhode Island State Energy Center	(15		)
Nuclear volume	12
Nuclear fuel expenses	21
Other	(1		)
2016 net revenue		$466

As shown in the table above, net revenue for Entergy Wholesale Commodities decreased by $61 million in the first quarter 2016 as compared to the first quarter 2015 primarily due to lower realized wholesale energy prices and lower capacity prices and as a result of the sale of the Rhode Island State Energy Center in December 2015. The decrease was partially offset by higher volume in the Entergy Wholesale Commodities nuclear fleet resulting from fewer unplanned outage days in the first quarter 2016 as compared to the first quarter 2015, and a decrease in nuclear fuel expenses related to the impairments of the FitzPatrick, Pilgrim, and Palisades plants and related assets in the third and fourth quarters of 2015. See Note 1 to the financial statements in the Form 10-K for discussion of the impairments.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Following are key performance measures for Entergy Wholesale Commodities for the first quarter 2016 and 2015:



	2016	2015
Owned capacity (MW) (a)	4,880	5,463
GWh billed	9,246	9,592
Average revenue per MWh	$56.47	$67.00

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	90%	90%
GWh billed	8,688	8,618
Average revenue per MWh	$57.43	$65.78
Refueling Outage Days:
Indian Point 2	25	—
Indian Point 3	—	23


(a)	The reduction in owned capacity is due to the sale of the 583 MW Rhode Island State Energy Center in December 2015.

Realized Revenue per MWh for Entergy Wholesale Commodities Nuclear Plants

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Results of Operations - Realized Revenue per MWh for Entergy Wholesale Commodities Nuclear Plants” in the Form 10-K for a discussion of the effects of sustained low natural gas prices and power market structure challenges on market prices for electricity over the past few years in the power regions where the Entergy Wholesale Commodities power plants are located. As shown in the contracted sale of energy table in “Market and Credit Risk Sensitive Instruments,” Entergy Wholesale Commodities has sold forward 88% of its planned nuclear energy output for 2016 for an expected average contracted energy price of $40 per MWh based on market prices at March 31, 2016. In addition, Entergy Wholesale Commodities has sold forward 63% of its planned nuclear energy output for 2017 for an expected average contracted energy price of $46 per MWh based on market prices at March 31, 2016.

The market price trend presents a challenging economic situation for the Entergy Wholesale Commodities plants. The severity of the challenge varies for each of the plants based on a variety of factors such as their market for both energy and capacity, their size, their contracted positions, and the amount of investment required to continue to operate and maintain the safety and integrity of the plants, including the estimated asset retirement costs. In addition, currently the market design under which the plants operate does not adequately compensate merchant nuclear plants for their environmental and fuel diversity benefits in the region.

In October 2015, Entergy determined that it will close the Pilgrim and FitzPatrick plants. The decisions to shut down the plants were primarily due to the poor market conditions that have led to reduced revenues, the poor market design that fails to properly compensate nuclear generators for the benefits they provide, and increased operational costs. The Pilgrim plant is expected to cease operations on May 31, 2019. The FitzPatrick plant is expected to shut down at the end of its current fuel cycle, which is planned for January 27, 2017.

Entergy previously shut down Vermont Yankee in 2014, and, after the closures of Pilgrim and FitzPatrick, will have two remaining nuclear power generating facilities in operation in the Entergy Wholesale Commodities business, Indian Point and Palisades. Unlike the three facilities that Entergy has decided to shut down, Indian Point is a multi-unit site with both Indian Point 2 and 3 in operation that sells power at NYISO Zone G, which is a key supply region for New York City. In addition, Indian Point 2 (1,028 MW) and 3 (1,041 MW) are significantly larger plants than Vermont Yankee (605 MW), Pilgrim (688 MW), or FitzPatrick (838 MW). The Indian Point plants, however, are currently involved and face opposition in extensive licensing proceedings, which are described in “Entergy Wholesale

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Commodities Authorizations to Operate Its Nuclear Power Plants” in the Form 10-K and herein. Palisades (811 MW) is similar in size to FitzPatrick, is also a single-unit site, and the MISO market in which it operates has also experienced market price declines over the past few years. At this time, most of the Palisades output is sold under a 15-year power purchase agreement, entered at the plant’s acquisition in 2007, that expires in 2022. The power purchase agreement prices currently exceed market prices and escalate each year, up to $61.50/MWh in 2022.

In 2015, Entergy recorded impairment and other related charges to write down the carrying values of the FitzPatrick, Pilgrim, and Palisades plants and related assets to their fair values. Impairment of long-lived assets and nuclear decommissioning costs, and the factors that influence these items, are both discussed in the Form 10-K in “MANAGMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates.” If economic conditions or regulatory activity no longer support the continued operation of Indian Point or Palisades for their expected lives or no longer support the recovery of the costs of the plants, it could adversely affect Entergy’s results of operations through loss of revenue, impairment charges, increased depreciation rates, transitional costs, or accelerated decommissioning costs.

Other Income Statement Items

Utility

Other operation and maintenance expenses decreased from $555 million for the first quarter 2015 to $514 million for the first quarter 2016 primarily due to:


•	a decrease of $22 million in fossil-fueled generation expenses primarily due to an overall lower scope of work done during plant outages in 2016 as compared to the same period in 2015;


•	the deferral of $8 million of previously-incurred costs related to ANO post-Fukushima compliance and $10 million of previously-incurred costs related to ANO flood barrier compliance, as approved by the APSC as part of the Entergy Arkansas 2015 rate case settlement. See Note 2 to the financial statements for further discussion of the rate case settlement;

•

a decrease of $15 million in compensation and benefits costs primarily due to a decrease in net periodic pension and other postretirement benefits costs as a result of an increase in the discount rate used to value the benefit liabilities and a refinement in the approach used to estimate the service cost and interest cost components of pension and other postretirement costs. See “MANAGEMENT’S DISCUSSION AND ANALYSIS - Critical Accounting Estimates - Qualified Pension and Other Postretirement Benefits” in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs; and


•	a decrease of $6 million in energy efficiency costs, including the effects of true-ups.

The decrease was partially offset by an increase of $27 million in nuclear generation expenses primarily due to an increase in regulatory compliance costs and higher nuclear labor costs, including contract labor. The increase in regulatory compliance costs is primarily related to additional NRC inspection activities in the first quarter 2016 as a result of the NRC’s March 2015 decision to move ANO into the “multiple/repetitive degraded cornerstone column” of the NRC’s Reactor Oversight Process Action Matrix. See “ANO Damage, Outage, and NRC Reviews” below.

Depreciation and amortization expenses increased primarily due to additions to plant in service.

Other income decreased primarily due to lower realized gains on decommissioning trust fund investments in 2016 as compared to the same period in 2015.

Entergy Wholesale Commodities

Other income decreased primarily due to lower realized gains on decommissioning trust fund investments in 2016 as compared to the same period in 2015, which included realized decommissioning trust gains that resulted from portfolio reallocations for the Vermont Yankee nuclear decommissioning trust funds.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Other expenses decreased due to the reduction in deferred refueling outage amortization costs related to the impairments of the FitzPatrick, Pilgrim, and Palisades plants and related assets in the third and fourth quarters of 2015. See Note 1 to the financial statements in the Form 10-K for discussion of the impairments.

Income Taxes

The effective income tax rate was 37.3% for the first quarter 2016. The difference in the effective income tax rate for the first quarter 2016 versus the federal statutory rate of 35% was primarily due to state income taxes, certain book and tax differences related to utility plant items, and the provision for uncertain tax positions, partially offset by book and tax differences related to the allowance for equity funds used during construction.

The effective income tax rate was 33.2% for the first quarter 2015. The difference in the effective income tax rate for the first quarter 2015 versus the federal statutory rate of 35% was primarily due to the reversal of a portion of the provision for uncertain tax positions resulting from the receipt of finalized tax and interest computations for the 2006-2007 audit from the IRS, partially offset by certain book and tax differences related to utility plant items. See Note 3 to the financial statements in the Form 10-K for a discussion of the 2006-2007 audit.

Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” in the Form 10-K for a discussion of the NRC operating licenses for Indian Point 2 and Indian Point 3 and the NRC license renewal joint application in process for these plants. Following are updates to that discussion.

Indian Point NRC/ASLB Proceedings

In May 2016 the NRC issued a decision sustaining New York State’s appeal of the ASLB’s November 2013 Track 1 decision upholding the adequacy of Severe Accident Mitigation Alternatives (SAMA) decommissioning cost estimates. The NRC directed its staff to supplement its SAMA analysis to include sensitivity runs for two inputs to SAMA decommissioning costs. Since SAMA analysis is part of the NRC’s environmental impact analysis, and not part of its safety analysis, further supplementation of the NRC’s Final Supplemental Environmental Impact Statement will be required, with attendant impact on the schedule for completion of proceedings before the NRC. One SAMA appeal from Track 1 remains to be decided.

Indian Point Coastal Zone Management Act Proceedings

As discussed in the Form 10-K, in January 2016, Entergy filed suit in the U.S. District Court for the Northern District of New York challenging the New York State Department of Environmental Conservation’s objection to Entergy’s withdrawn Coastal Zone Management Act consistency certification on federal preemption grounds. Entergy’s complaint requests a determination that the objection, which cites nuclear safety concerns, is preempted and thus invalid. The New York State Department of State filed a motion to dismiss Entergy’s lawsuit in March 2016, and Entergy filed its response in May 2016.

ANO Damage, Outage, and NRC Reviews

See Note 8 to the financial statements in the Form 10-K for a discussion of the ANO stator incident and subsequent NRC reviews.

As discussed in the Form 10-K, in March 2015 the NRC issued a letter notifying Entergy of its decision to move ANO into the “multiple/repetitive degraded cornerstone column” (Column 4) of the NRC’s Reactor Oversight Process Action Matrix. Placement into Column 4 requires significant additional NRC inspection activities at the ANO site, including a review of the site’s root cause evaluation associated with the flood barrier and stator issues, an

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Management's Financial Discussion and Analysis

assessment of the effectiveness of the site’s corrective action program, an additional design basis inspection, a safety culture assessment, and possibly other inspection activities consistent with the NRC’s Inspection Procedure. Entergy Arkansas incurred incremental expenses of approximately $53 million in 2015 to prepare for the NRC inspection that began in early 2016. Excluding remediation and response costs that may result from the additional NRC inspection activities, Entergy Arkansas expects to incur incremental expenses of approximately $50 million in 2016, of which $19.6 million was incurred in the first quarter 2016, in support of NRC inspection activities and to implement Entergy Arkansas’s performance improvement initiatives developed in 2015. A lesser amount of incremental expenses is expected to be ongoing annually after 2016.

Liquidity and Capital Resources

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources” in the Form 10-K for a discussion of Entergy’s capital structure, capital expenditure plans and other uses of capital, and sources of capital. Following are updates to that discussion.

Capital Structure

Entergy’s capitalization is balanced between equity and debt, as shown in the following table. The increase in the debt to capital ratio is primarily due to the net issuance of long-term debt in 2016.



	March 31, 2016		December 31, 2015
Debt to capital	60.9	%	59.1	%
Effect of excluding securitization bonds	(1.2	%)	(1.4	%)
Debt to capital, excluding securitization bonds (a)	59.7	%	57.7	%
Effect of subtracting cash	(1.9	%)	(2.7	%)
Net debt to net capital, excluding securitization bonds (a)	57.8	%	55.0	%


(a)	Calculation excludes the Arkansas, Louisiana, New Orleans, and Texas securitization bonds, which are non-recourse to Entergy Arkansas, Entergy Louisiana, Entergy New Orleans, and Entergy Texas, respectively.

Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable and commercial paper, capital lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, common shareholders’ equity, and subsidiaries’ preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. Entergy uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in August 2020. Entergy Corporation also has the ability to issue letters of credit against 50% of the total borrowing capacity of the credit facility. The commitment fee is currently 0.275% of the undrawn commitment amount. Commitment fees and interest rates on loans under the credit facility can fluctuate depending on the senior unsecured debt ratings of Entergy Corporation. The weighted average interest rate for the three months ended March 31, 2016 was 2.35% on the drawn portion of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of March 31, 2016:

A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio, as defined, of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. Entergy is currently in compliance with the covenant and expects to remain in compliance with this covenant. If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility’s maturity date may occur. See Note 4 to the financial statements herein for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.

Entergy Nuclear Vermont Yankee entered into a credit facility guaranteed by Entergy Corporation which expires in January 2018. In the first quarter 2016, Entergy Nuclear Vermont Yankee increased the borrowing capacity of its credit facility to $100 million. As of March 31, 2016, $61 million in cash borrowings were outstanding under the credit facility. Entergy Nuclear Vermont Yankee also entered into an uncommitted credit facility guaranteed by Entergy Corporation with a borrowing capacity of $85 million which expires in January 2018. As of March 31, 2016, there were no cash borrowings outstanding under the uncommitted credit facility. See Note 4 to the financial statements herein for additional discussion of the Vermont Yankee facilities.

Entergy Corporation has a commercial paper program with a Board-approved program limit of up to $1.5 billion. As of March 31, 2016, Entergy Corporation had $578 million of commercial paper outstanding. The weighted-average interest rate for the three months ended March 31, 2016 was 1.14%.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital,” that sets forth the amounts of planned construction and other capital investments by operating segment for 2016 through 2018. Following are updates to the discussion.

St. Charles Power Station

In August 2015, Entergy Louisiana filed with the LPSC an application seeking certification that the public necessity and convenience would be served by the construction of the St. Charles Power Station, a nominal 980 megawatt combined-cycle generating unit, on land adjacent to the existing Little Gypsy plant in St. Charles Parish, Louisiana. Testimony has been filed by LPSC staff and intervenors, with LPSC staff concluding that the construction of the project serves the public convenience and necessity. Three intervenors contend that Entergy Louisiana has not established that construction of the project is in the public interest, claiming that the RFP excluded consideration of certain resources that could be more cost effective, that the RFP provided undue preference to the self-build option, and that a 30-year capacity commitment is not warranted by current supply conditions. The RFP independent monitor also filed testimony and a report affirming that the St. Charles Power Station was selected through an objective and

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Management's Financial Discussion and Analysis

fair RFP that showed no undue preference to any proposal. An evidentiary hearing was held in April 2016 and, subject to regulatory approval by the LPSC and receipt of other permits and approvals, full notice to proceed is expected to be issued in Summer 2016. Commercial operation is estimated to occur by Summer 2019.

Dividends

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon Entergy’s earnings per share from the Utility operating segment and the Parent and Other portion of the business, financial strength, and future investment opportunities. At its April 2016 meeting, the Board declared a dividend of $0.85 per share.

Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the three months ended March 31, 2016 and 2015 were as follows:



	2016			2015
	(In Millions)
Cash and cash equivalents at beginning of period		$1,351			$1,422

Cash flow provided by (used in):
Operating activities	533			611
Investing activities	(1,878		)	(700		)
Financing activities	1,086			(152		)
Net decrease in cash and cash equivalents	(259		)	(241		)

Cash and cash equivalents at end of period		$1,092			$1,181

Operating Activities

Net cash flow provided by operating activities decreased $78 million for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 primarily due to:


•	lower Entergy Wholesale Commodities net revenues in 2016 as compared to the same period in 2015, as discussed previously;


•	an increase of $41 million in spending in 2016 on activities related to the decommissioning of Vermont Yankee, which ceased power production in December 2014; and

•

an increase of $48 million in interest paid in 2016 as compared to the same period in 2015 primarily due to an an interest payment of $60 million made in March 2016 related to the purchase of a beneficial interest in the Waterford 3 leased assets, partially offset by a decrease in interest paid in 2016 on the Grand Gulf sale-leaseback obligation. See Note 11 to the financial statements herein for a discussion of Entergy Louisiana’s purchase of a beneficial interest in the Waterford 3 leased assets, and see Note 10 to the financial statements in the Form 10-K for details of the Grand Gulf sale-leaseback obligation.

The decrease was partially offset by spending of $52 million in 2015 related to Vermont Yankee, including the severance and retention payments accrued in 2014 and defueling activities that took place after the plant ceased power production in December 2014, and a decrease in income tax payments of $40 million in 2016 primarily related to the final settlement of amounts outstanding associated with the 2006-2007 IRS audit paid in 2015. See Note 3 to the financial statements in the Form 10-K for a discussion of the income tax audit.

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Investing Activities

Net cash flow used in investing activities increased $1,178 million for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 primarily due to:


•	the purchase of Union Power Station for approximately $948 million. See Note 13 to the financial statements for discussion of the Union purchase;

•

the deposit of $197 million held in trust as a result of the issuance by Louisiana Public Facilities Authority of $83.680 million of 3.375% pollution control refunding revenue bonds and $115 million of 3.50% pollution control refunding revenue bonds in March 2016. In April 2016, these funds were used to redeem $83.680 million of 5.0% pollution control refunding revenue bonds due September 2028 and $115 million of 5.0% pollution control refunding revenue bonds due June 2030; and


•	an increase in construction expenditures primarily due to an overall higher scope of work on various projects in 2016 as compared to the same period in 2015, partially offset by a decrease in spending related to compliance with NRC post-Fukushima requirements.

The increase was partially offset by a $71 million NYPA value sharing payment in 2015. See Note 15 to the financial statements in the Form 10-K for further discussion of Entergy’s NYPA value sharing agreements.

Financing Activities

Entergy’s financing activities provided $1,086 million of cash for the three months ended March 31, 2016 compared to using $152 million of cash for the three months ended March 31, 2015 primarily due to:


•	long-term debt activity providing approximately $966 million of cash in 2016 compared to using approximately $197 million of cash in 2015. Included in the long-term debt activity is $219 million in 2016 and $187 million in 2015 for the repayment of borrowings on the Entergy Corporation long-term credit facility;


•	an increase of $116 million in 2016 compared to a decrease of $68 million in 2015 in short-term borrowings by the nuclear fuel company variable interest entities;


•	net issuances of $156 million of commercial paper in 2016 compared to net issuances of $278 million of commercial paper in 2015; and


•	$25 million of common stock repurchased in 2015.

For the details of Entergy’s commercial paper program and the nuclear fuel company variable interest entities’ short-term borrowings, see Note 4 to the financial statements herein. See Note 4 to the financial statements herein and Note 5 to the financial statements in the Form 10-K for details of long-term debt.

Rate, Cost-recovery, and Other Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation” in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

Federal Regulation

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation - Federal Regulation” in the Form 10-K for a discussion of federal regulatory proceedings. The following is an update to that discussion.

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Management's Financial Discussion and Analysis

Entergy’s Integration Into the MISO Regional Transmission Organization

As discussed in the Form 10-K, in January 2013, Occidental Chemical Corporation filed with the FERC a petition for declaratory judgment and complaint against MISO alleging that MISO’s proposed treatment of Qualifying Facilities (QFs) in the Entergy region is unduly discriminatory in violation of sections 205 and 206 of the Federal Power Act and violates the Public Utility Regulatory Policies Act (PURPA) and the FERC’s implementing regulations. In April 2016 the FERC denied Occidental’s complaint against MISO and found that MISO’s treatment of QFs in Entergy’s service territories is consistent with the requirements of PURPA and does not violate sections 205 and 206 of the Federal Power Act. In February 2014, Occidental also filed a petition for enforcement with the FERC against the LPSC. Occidental’s petition for enforcement alleges that the LPSC’s January 2014 order, which approved Entergy Louisiana’s application for modification of Entergy’s methodology for calculating avoided cost rates paid to QFs, is inconsistent with the requirements of PURPA and the FERC’s regulations implementing PURPA. In April 2014 the FERC issued a “Notice Of Intent Not To Act At This Time” with respect to Occidental’s petition for enforcement against the LPSC. The FERC concluded that Occidental’s petition for enforcement largely raises the same issues as those raised in the January 2013 complaint and petition for declaratory order that Occidental filed against MISO, and that the two proceedings should be addressed at the same time. The FERC reserved its ability to issue a further order or to take further action at a future date should it find that doing so is appropriate. In April 2016 the FERC reviewed its earlier “Notice of Intent Not to Act as This Time” and issued another notice declining to initiate an enforcement action against the LPSC. In January 2016, in a separate proceeding, the FERC issued an order granting the Utility operating companies’ petition to terminate the requirement that they enter into new obligations or contracts with QFs with net capacity in excess of 20 MW, including Occidental’s Taft QF, effective October 2015. The FERC denied without prejudice the petition as it relates to Dow Chemical Company’s Plaquemine QF. In April 2016 the FERC denied Occidental’s request for rehearing of the order granting the Utility operating companies’ petition to terminate the QF purchase requirement for QFs with net capacity in excess of 20 MW and affirmed that Occidental failed to rebut the presumption that its Taft QF has non-discriminatory access to the MISO markets.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As a wholesale generator, Entergy Wholesale Commodities’ core business is selling energy, measured in MWh, to its customers. Entergy Wholesale Commodities enters into forward contracts with its customers and also sells energy in the day ahead or spot markets. In addition to selling the energy produced by its plants, Entergy Wholesale Commodities sells unforced capacity, which allows load-serving entities to meet specified reserve and related requirements placed on them by the ISOs in their respective areas. Entergy Wholesale Commodities’ forward physical power contracts consist of contracts to sell energy only, contracts to sell capacity only, and bundled contracts in which it sells both capacity and energy. While the terminology and payment mechanics vary in these contracts, each of these types of contracts requires Entergy Wholesale Commodities to deliver MWh of energy, make capacity available, or both. In addition to its forward physical power contracts, Entergy Wholesale Commodities also uses a combination of financial contracts, including swaps, collars, and options, to manage forward commodity price risk. Certain hedge volumes have price downside and upside relative to market price movement. The contracted minimum, expected value, and sensitivities are provided in the table below to show potential variations. The sensitivities may not reflect the total maximum upside potential from higher market prices. The information contained in the following table represents projections at a point in time and will vary over time based on numerous factors, such as future market prices, contracting activities, and generation. Following is a summary of Entergy Wholesale Commodities’ current forward capacity and generation contracts as well as total revenue projections based on market prices as of March 31, 2016 (2016 represents the remainder of the year):

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Entergy Corporation and Subsidiaries

Management's Financial Discussion and Analysis

Entergy Wholesale Commodities Nuclear Portfolio



	2016	2017	2018	2019
Energy
Percent of planned generation under contract (a):
Unit-contingent (b)	67%	53%	21%	26%
Firm LD (c)	42%	10%	—%	—%
Offsetting positions (d)	(21%)	—%	—%	—%
Total	88%	63%	21%	26%
Planned generation (TWh) (e) (f)	25	28	29	26
Average revenue per MWh on contracted volumes:
Minimum	$40	$46	$56	$57
Expected based on market prices as of March 31, 2016	$40	$46	$56	$57
Sensitivity: -/+ $10 per MWh market price change	$40-$42	$46-$47	$56	$57

Capacity
Percent of capacity sold forward (g):
Bundled capacity and energy contracts (h)	17%	22%	22%	25%
Capacity contracts (i)	25%	20%	20%	9%
Total	42%	42%	42%	34%
Planned net MW in operation (f)	4,406	3,568	3,568	3,167
Average revenue under contract per kW per month (applies to capacity contracts only)	$3.4	$5.6	$9.4	$11.1

Total Nuclear Energy and Capacity Revenues (j)
Expected sold and market total revenue per MWh	$44	$50	$48	$49
Sensitivity: -/+ $10 per MWh market price change	$41-$47	$46-$54	$40-$56	$42-$56


(a)	Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty that may require regulatory approval or approval of transmission rights. Positions that are not classified as hedges are netted in the planned generation under contract.

(b)

Transaction under which power is supplied from a specific generation asset; if the asset is not operating, the seller is generally not liable to buyer for any damages. Certain unit-contingent sales include a guarantee of availability. Availability guarantees provide for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.

(c)

Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract, a portion of which may be capped through the use of risk management products. This also includes option transactions that may expire without being exercised.


(d)	Transactions for the purchase of energy, generally to offset a Firm LD transaction.


(e)	Amount of output expected to be generated by Entergy Wholesale Commodities resources considering plant operating characteristics, outage schedules, and expected market conditions that affect dispatch.


(f)	Assumes NRC license renewals for plants with NRC license renewal applications in process. Assumes shutdown of FitzPatrick on January 27, 2017, shutdown of Pilgrim on May 31, 2019, and uninterrupted normal operation

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Management's Financial Discussion and Analysis

at remaining plants. NRC license renewal applications are in process for two units, as follows (with current license expirations in parentheses): Indian Point 2 (September 2013 and now operating under its period of extended operations while its application is pending) and Indian Point 3 (December 2015 and now operating under its period of extended operations while its application is pending). For a discussion regarding the shutdown of the FitzPatrick and Pilgrim plants, see Note 1 to the financial statements in the Form 10-K. For a discussion regarding the license renewals for Indian Point 2 and Indian Point 3, see “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” above and in the Form 10-K.


(g)	Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.


(h)	A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.


(i)	A contract for the sale of an installed capacity product in a regional market.


(j)	Includes assumptions on converting a portion of the portfolio to contracted with fixed price cost or discount and excludes non-cash revenue from the amortization of the Palisades below-market PPA, mark-to-market activity, and service revenues.

Entergy estimates that a positive $10 per MWh change in the annual average energy price in the markets in which the Entergy Wholesale Commodities nuclear business sells power, based on March 31, 2016 market conditions, planned generation volumes, and hedged positions, would have a corresponding effect on pre-tax net income of $79 million for the remainder of 2016. As of March 31, 2015, a positive $10 per MWh change would have had a corresponding effect on pre-tax income of $82 million for the remainder of 2015. A negative $10 per MWh change in the annual average energy price in the markets based on March 31, 2016 market conditions, planned generation volumes, and hedged positions, would have a corresponding effect on pre-tax net income of ($69) million for the remainder of 2016. As of March 31, 2015, a negative $10 per MWh change would have had a corresponding effect on pre-tax income of ($44) million for the remainder of 2015.

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’ power plants contain provisions that require an Entergy subsidiary to provide credit support to secure its obligations under the agreements. The Entergy subsidiary is required to provide credit support based upon the difference between the current market prices and contracted power prices in the regions where Entergy Wholesale Commodities sells power. The primary form of credit support to satisfy these requirements is an Entergy Corporation guaranty. Cash and letters of credit are also acceptable forms of credit support. At March 31, 2016, based on power prices at that time, Entergy had liquidity exposure of $136 million under the guarantees in place supporting Entergy Wholesale Commodities transactions and $5 million of posted cash collateral. In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of March 31, 2016, Entergy would have been required to provide approximately $50 million of additional cash or letters of credit under some of the agreements. As of March 31, 2016, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by $81 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets.

As of March 31, 2016, substantially all of the credit exposure associated with the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2019 is with counterparties or their guarantors that have public investment grade credit ratings.

Nuclear Matters

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Nuclear Matters” in the Form 10-K for a discussion of nuclear matters. The following are updates to that discussion.

See “ANO Damage, Outage, and NRC Reviews” above for discussion of the NRC’s decision to move ANO into the “multiple/repetitive degraded cornerstone column” (Column 4) of the NRC’s Reactor Oversight Process Action Matrix, and the resulting significant additional NRC inspection activities at the ANO site.

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Management's Financial Discussion and Analysis

See Note 1 to the financial statements herein for discussion of the NRC’s decision in September 2015 to place Pilgrim in Column 4 of its Reactor Oversight Process Action Matrix due to its finding of continuing weaknesses in Pilgrim’s corrective action program that contributed to repeated unscheduled shutdowns and equipment failures.

Based upon the recent performance history of several units within the Entergy nuclear fleet, Entergy has determined to undertake a nuclear performance improvement plan. That plan has not been fully developed, but it may result in increased operating and capital costs associated with operating Entergy’s nuclear plants. Entergy is continuing to determine what specific actions will be part of the nuclear performance improvement plan, and an estimate of the costs associated with this plan cannot be made at this time.

Indian Point 2 outage

During the scheduled refueling and maintenance outage at Indian Point Unit 2 in the first quarter 2016, comprehensive inspections were done as part of the aging management program which calls for an in-depth inspection of the reactor vessel. Inspections of more than 2,000 bolts in the reactor's removable insert liner identified issues with roughly 11% of the bolts that required further analysis. Entergy is replacing the bolts as necessary and expects that the replacement effort will extend the outage into June 2016 and increase costs associated with the outage. The additional costs will be accounted for as deferred refueling outage costs and amortized over the plant’s subsequent fuel cycle. The increase in the deferred refueling outage balance is expected to increase outage amortization expense in 2016, 2017, and 2018. In addition to the higher costs, Entergy will lose net revenue due to the plant being offline. Entergy estimates the negative effect on earnings to be approximately $60 million pre-tax during 2016. This estimate is subject to change depending upon final costs incurred, the restart date of the plant, and prices that would have been received for the sale of Indian Point 2’s power.

Critical Accounting Estimates

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates” in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy’s accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies.

New Accounting Pronouncements

See “MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - New Accounting Pronouncements” in the Form 10-K for a discussion of new accounting pronouncements. Following are updates to that discussion.

In February 2016 the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The ASU’s core principle is that “a lessee should recognize the assets and liabilities that arise from leases.” The ASU considers that “all leases create an asset and a liability,” and accordingly requires that the assets and liabilities related to all leases with a term greater than 12 months must be recorded on the balance sheet. ASU 2016-02 is effective for Entergy for the first quarter 2019. Entergy expects that ASU 2016-02 will affect its financial position by increasing the assets and liabilities recorded relating to its operating leases. Entergy is evaluating the ASU for other effects on the results of operations, financial position, and cash flows.

In March 2016 the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The ASU seeks to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The statement is effective beginning in 2017 and Entergy expects that ASU 2016-09 will prospectively increase the volatility of income tax expense related to share-based payments. Entergy is evaluating the ASU for other effects on the results of operations, financial position, and cash flows.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)

	2016			2015
	(In Thousands, Except Share Data)
OPERATING REVENUES
Electric		$2,042,160			$2,217,989
Natural gas	45,613			59,511
Competitive businesses	522,079			642,590
TOTAL	2,609,852			2,920,090

OPERATING EXPENSES
Operation and Maintenance:
Fuel, fuel-related expenses, and gas purchased for resale	504,967			630,453
Purchased power	262,323			342,023
Nuclear refueling outage expenses	51,230			64,870
Other operation and maintenance	731,915			770,110
Asset write-offs, impairments, and related charges	7,361			—
Decommissioning	68,628			69,899
Taxes other than income taxes	149,778			157,523
Depreciation and amortization	334,273			331,986
Other regulatory charges	1,159			10,457
TOTAL	2,111,634			2,377,321

OPERATING INCOME	498,218			542,769

OTHER INCOME
Allowance for equity funds used during construction	18,932			11,738
Interest and investment income	32,753			68,133
Miscellaneous - net	(10,587		)	(9,020		)
TOTAL	41,098			70,851

INTEREST EXPENSE
Interest expense	173,811			166,337
Allowance for borrowed funds used during construction	(9,682		)	(6,117		)
TOTAL	164,129			160,220

INCOME BEFORE INCOME TAXES	375,187			453,400

Income taxes	139,945			150,471

CONSOLIDATED NET INCOME	235,242			302,929

Preferred dividend requirements of subsidiaries	5,276			4,879

NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION		$229,966			$298,050

Earnings per average common share:
Basic		$1.29			$1.66
Diluted		$1.28			$1.65
Dividends declared per common share		$0.85			$0.83

Basic average number of common shares outstanding	178,578,536			179,658,981
Diluted average number of common shares outstanding	178,976,380			180,480,523

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)

	2016			2015
	(In Thousands)

Net Income		$235,242			$302,929

Other comprehensive income (loss)
Cash flow hedges net unrealized loss
(net of tax benefit of $5,201 and $15,898)	(9,506		)	(29,330		)
Pension and other postretirement liabilities
(net of tax expense of $258 and $3,715)	7,562			8,448
Net unrealized investment gains
(net of tax expense of $18,358 and $3,666)	23,069			4,003
Foreign currency translation
(net of tax benefit of $153 and $296)	(284		)	(551		)
Other comprehensive income (loss)	20,841			(17,430		)

Comprehensive Income	256,083			285,499
Preferred dividend requirements of subsidiaries	5,276			4,879
Comprehensive Income Attributable to Entergy Corporation		$250,807			$280,620

See Notes to Financial Statements.

Table of Contents



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
	2016			2015
	(In Thousands)
OPERATING ACTIVITIES
Consolidated net income		$235,242			$302,929
Adjustments to reconcile consolidated net income to net cash flow provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization	500,248			526,008
Deferred income taxes, investment tax credits, and non-current taxes accrued	75,415			95,732
Asset write-offs, impairments, and related charges	7,361			—
Changes in working capital:
Receivables	76,532			22,288
Fuel inventory	(9,089		)	(22,553		)
Accounts payable	(67,364		)	(153,700		)
Taxes accrued	(15,996		)	(67,941		)
Interest accrued	(27,535		)	(42,551		)
Deferred fuel costs	97,566			81,271
Other working capital accounts	(95,291		)	(90,619		)
Changes in provisions for estimated losses	(3,968		)	1,334
Changes in other regulatory assets	56,047			93,082
Changes in other regulatory liabilities	18,735			15,857
Changes in pensions and other postretirement liabilities	(89,046		)	(52,509		)
Other	(226,036		)	(97,670		)
Net cash flow provided by operating activities	532,821			610,958

INVESTING ACTIVITIES
Construction/capital expenditures	(636,011		)	(532,958		)
Allowance for equity funds used during construction	19,107			13,077
Nuclear fuel purchases	(85,819		)	(96,392		)
Payment for purchase of plant	(947,778		)	—
Insurance proceeds received for property damages	—			12,745
Changes in securitization account	(1,399		)	(251		)
NYPA value sharing payment	—			(70,790		)
Payments to storm reserve escrow account	(367		)	(1,865		)
Decrease (increase) in other investments	(196,509		)	278
Proceeds from nuclear decommissioning trust fund sales	729,414			492,841
Investment in nuclear decommissioning trust funds	(758,665		)	(516,564		)
Net cash flow used in investing activities	(1,878,027		)	(699,879		)

See Notes to Financial Statements.

Table of Contents



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
	2016			2015
	(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt	2,869,808			488,065
Treasury stock	5,787			23,156
Retirement of long-term debt	(1,903,670		)	(685,258		)
Repurchase of common stock	—			(25,078		)
Changes in credit borrowings and commercial paper - net	271,730			210,012
Other	(644		)	(9,320		)
Dividends paid:
Common stock	(151,839		)	(149,257		)
Preferred stock	(5,276		)	(4,879		)
Net cash flow provided by (used in) financing activities	1,085,896			(152,559		)

Net decrease in cash and cash equivalents	(259,310		)	(241,480		)

Cash and cash equivalents at beginning of period	1,350,961			1,422,026

Cash and cash equivalents at end of period		$1,091,651			$1,180,546

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized		$251,305			$203,786
Income taxes		$26,382			$65,919

See Notes to Financial Statements.

Table of Contents



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2016 and December 31, 2015
(Unaudited)
	2016			2015
	(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash		$81,624			$63,497
Temporary cash investments	1,010,027			1,287,464
Total cash and cash equivalents	1,091,651			1,350,961
Accounts receivable:
Customer	559,584			608,491
Allowance for doubtful accounts	(41,377		)	(39,895		)
Other	170,771			178,364
Accrued unbilled revenues	304,446			321,940
Total accounts receivable	993,424			1,068,900
Deferred fuel costs	28,296			—
Fuel inventory - at average cost	226,898			217,810
Materials and supplies - at average cost	873,679			873,357
Deferred nuclear refueling outage costs	245,623			211,512
Prepayments and other	541,624			344,872
TOTAL	4,001,195			4,067,412

OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity	4,653			4,341
Decommissioning trust funds	5,451,729			5,349,953
Non-utility property - at cost (less accumulated depreciation)	221,431			219,999
Other	490,232			468,704
TOTAL	6,168,045			6,042,997

PROPERTY, PLANT, AND EQUIPMENT
Electric	46,578,818			44,467,159
Property under capital lease	610,590			952,465
Natural gas	396,687			392,032
Construction work in progress	1,426,671			1,456,735
Nuclear fuel	1,302,903			1,345,422
TOTAL PROPERTY, PLANT, AND EQUIPMENT	50,315,669			48,613,813
Less - accumulated depreciation and amortization	21,333,661			20,789,452
PROPERTY, PLANT, AND EQUIPMENT - NET	28,982,008			27,824,361

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net	776,370			775,528
Other regulatory assets (includes securitization property of $689,885 as of March 31, 2016 and $714,044 as of December 31, 2015)	4,647,907			4,704,796
Deferred fuel costs	238,951			238,902
Goodwill	377,172			377,172
Accumulated deferred income taxes	121,700			54,903
Other	620,534			561,610
TOTAL	6,782,634			6,712,911

TOTAL ASSETS		$45,933,882			$44,647,681

See Notes to Financial Statements.

Table of Contents



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
March 31, 2016 and December 31, 2015
(Unaudited)
	2016		2015
	(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt		$796,732		$214,374
Notes payable and commercial paper	766,079		494,348
Accounts payable	888,349		1,071,798
Customer deposits	423,564		419,407
Taxes accrued	194,081		210,077
Interest accrued	167,030		194,565
Deferred fuel costs	361,897		235,986
Obligations under capital leases	2,762		2,709
Pension and other postretirement liabilities	62,789		62,513
Other	176,065		184,181
TOTAL	3,839,348		3,089,958

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued	8,467,757		8,306,865
Accumulated deferred investment tax credits	231,610		234,300
Obligations under capital leases	26,290		27,001
Other regulatory liabilities	1,433,632		1,414,898
Decommissioning and asset retirement cost liabilities	4,808,315		4,790,187
Accumulated provisions	456,698		460,727
Pension and other postretirement liabilities	3,098,036		3,187,357
Long-term debt (includes securitization bonds of $751,595 as of March 31, 2016 and $774,696 as of December 31, 2015)	13,500,140		13,111,556
Other	392,924		449,856
TOTAL	32,415,402		31,982,747

Commitments and Contingencies

Subsidiaries' preferred stock without sinking fund	318,185		318,185

SHAREHOLDERS' EQUITY
Common stock, $.01 par value, authorized 500,000,000 shares; issued 254,752,788 shares in 2016 and in 2015	2,548		2,548
Paid-in capital	5,384,762		5,403,758
Retained earnings	9,472,040		9,393,913
Accumulated other comprehensive income	29,792		8,951
Less - treasury stock, at cost (76,031,187 shares in 2016 and 76,363,763 shares in 2015)	5,528,195		5,552,379
TOTAL	9,360,947		9,256,791

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$45,933,882		$44,647,681

See Notes to Financial Statements.

Table of Contents



ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)

				Common Shareholders’ Equity
	Subsidiaries’ Preferred Stock			Common Stock		Treasury Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	(In Thousands)

Balance at December 31, 2014		$94,000			$2,548		($5,497,526	)		$5,375,353			$10,169,657			($42,307	)		$10,101,725

Consolidated net income (a)	4,879			—		—			—			298,050			—			302,929
Other comprehensive loss	—			—		—			—			—			(17,430		)	(17,430		)
Common stock repurchases	—			—		(25,078		)	—			—			—			(25,078		)
Common stock issuances related to stock plans	—			—		43,632			(23,663		)	—			—			19,969
Common stock dividends declared	—			—		—			—			(149,257		)	—			(149,257		)
Preferred dividend requirements of subsidiaries (a)	(4,879		)	—		—			—			—			—			(4,879		)

Balance at March 31, 2015		$94,000			$2,548		($5,478,972	)		$5,351,690			$10,318,450			($59,737	)		$10,227,979


Balance at December 31, 2015		$—			$2,548		($5,552,379	)		$5,403,758			$9,393,913			$8,951			$9,256,791

Consolidated net income (a)	5,276			—		—			—			229,966			—			235,242
Other comprehensive income	—			—		—			—			—			20,841			20,841
Common stock issuances related to stock plans	—			—		24,184			(18,996		)	—			—			5,188
Common stock dividends declared	—			—		—			—

10-Q	2018-09-30	Filed 2018-11-06
10-Q	2018-06-30	Filed 2018-08-07
10-K	2017-12-31	Filed 2018-02-26
10-Q	2017-09-30	Filed 2017-11-03
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2016-09-30	Filed 2016-11-04
10-Q	2016-06-30	Filed 2016-08-04
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-02-26

8-K	2019-10-30
8-K	2019-08-14
8-K	2019-07-31
8-K	2019-06-28
8-K	2019-06-21
8-K	2019-05-01
8-K	2019-03-19
8-K	2019-02-20
8-K	2019-01-25
8-K	2018-11-20
8-K	2018-05-11

EX-4.(D)	exhibit4dq116.htm
EX-4.(G)	exhibit4gq116.htm
EX-4.(H)	exhibit4hq116.htm
EX-4.(K)	exhibit4kq116.htm
EX-4.(M)	exhibit4mq116.htm
EX-12.(A)	exhibit12aq116.htm
EX-12.(B)	exhibit12bq116.htm
EX-12.(C)	exhibit12cq116.htm
EX-12.(D)	exhibit12dq116.htm
EX-12.(E)	exhibit12eq116.htm
EX-12.(F)	exhibit12fq116.htm
EX-31.(A)	exhibit31aq116.htm
EX-31.(B)	exhibit31bq116.htm
EX-31.(C)	exhibit31cq116.htm
EX-31.(D)	exhibit31dq116.htm
EX-31.(E)	exhibit31eq116.htm
EX-31.(F)	exhibit31fq116.htm
EX-31.(G)	exhibit31gq116.htm
EX-31.(H)	exhibit31hq116.htm
EX-31.(I)	exhibit31iq116.htm
EX-31.(J)	exhibit31jq116.htm
EX-31.(K)	exhibit31kq116.htm
EX-31.(L)	exhibit31lq116.htm
EX-31.(M)	exhibit31mq116.htm
EX-31.(N)	exhibit31nq116.htm
EX-32.(A)	exhibit32aq116.htm
EX-32.(B)	exhibit32bq116.htm
EX-32.(C)	exhibit32cq116.htm
EX-32.(D)	exhibit32dq116.htm
EX-32.(E)	exhibit32eq116.htm
EX-32.(F)	exhibit32fq116.htm
EX-32.(G)	exhibit32gq116.htm
EX-32.(H)	exhibit32hq116.htm
EX-32.(I)	exhibit32iq116.htm
EX-32.(J)	exhibit32jq116.htm
EX-32.(K)	exhibit32kq116.htm
EX-32.(L)	exhibit32lq116.htm
EX-32.(M)	exhibit32mq116.htm
EX-32.(N)	exhibit32nq116.htm

Borrowings

Letters
of Credit

Capacity
Available

(In Millions)