Entergy Louisiana, LLC COLLATERAL TR MT Q3 FY2025 earnings call

• Quarterly financial results were strong, with adjusted EPS at $1.53. Guidance was narrowed and the bottom was raised by $0.10. - Maintained first quartile Net Promoter Score for utility residential service. Focused on keeping rates low, managing fuel volatility, and implementing customer assistance programs. - Business developments included Entergy Mississippi's $300 million Superpower Mississippi initiative, Sempra's Port Arthur LNG project Phase 2, and AVAIO's investment in Entergy Mississippi. - Grid improvement projects, new peak loads hit by systems, and progress on generation/transmission projects like Entergy Texas' Orange County Advanced Power Station, Entergy Mississippi's Vicksburg Advanced Power Station, and Louisiana's Bogalusa West Solar project. - Regulatory approvals in various states supported customer growth and economic development.

Adjusted earnings per share for the quarter was $1.53. Weather-adjusted sales increased approximately 4.5% during the quarter, with industrial sales contributing the largest growth at over 7%. Credit ratings were affirmed, and credit metric outlooks remained better than rating agency thresholds. Nuclear tax credits were monetized, netting over $535 million after transaction costs.

• Narrowed 2025 guidance range, raising the bottom by $0.10 due to higher-than-planned revenue and other planning updates. - Long-term adjusted EPS growth outlook remained strong at over 8% through 2029, with visibility through that period and potential for additional growth with more customers. - Capital plan for 2026-2029 was $41 billion, with $4.4 billion in equity, aligning cash outflow with asset service times.

• Challenges with labor availability for generation projects leading to increasing costs. - Uncertainties in regulatory proceedings and timing of project approvals and customer benefits from nuclear tax credits.

Q: Congrats on a great quarter. Maybe starting off on the updated CapEx plan and kind of the 4.5 gigawatts of the power island equipment. Is that directly associated with some of the more visible load in the current pipeline, you anticipate any incremental CapEx needs that would require regulatory approval before making into the '29 plan? Just how should we be thinking about the upside here?

A: Kimberly Fontan stated the $41 billion includes capital for forecasted load, and the 4.5 incremental gigawatts would support additional customers. If those customers reach agreement, supplemental capital may be needed, which is planned ahead.

Q: Shifting to the longer-term outlook, kind of with the large load growth solidifying and under contract, you're locking in kind of the CapEx plans and the associated equipment. Do you see any opportunity to potentially guide on the longer-term EPS growth outlook beyond 2030 just as you kind of gain that visibility?

A: Kimberly Fontan mentioned they added 2029 with good visibility through that period, and if additional customers are landed, visibility will be provided, but beyond that, there's long-term opportunity.

Q: Just a quick follow-up on kind of the generation needs, kind of more broadly. Do you see customers agnostic to the resource mix? Or is there still a push for some renewable components as we've kind of seen with hyperscalers demanding for nuclear SMRs and other technologies?

A: Kimberly Fontan said they talk to customers about all kinds of supply, have a pipeline of renewable opportunities, and Drew Marsh referenced both gas and renewable resources.

Q: What's the time frame for the 4.5 gigawatts of the power equipment that you secured? And I guess I was wondering, is this a stepping stone? Are you still actively working to secure additional power equipment in a similar way?

A: Andrew Marsh said the 6 units would support commercial operations in 2031 and 2032. If there continues to be growth, they may seek additional turbine access, and are also looking at other options like new nuclear, solar, and system upgrades.

Q: So I was just wondering, we've all read about the Manhattan sized data center in your Louisiana service territory from Meta. So how much of that is currently covered by ESAs and reflected in your pipeline?

A: Andrew Marsh said right now, only the previously announced signed ESA is in the outlook, and anything beyond that is not currently reflected, as they need a signed ESA for large data centers in the capital plan.

Q: On the regulatory front, given all of the demand from large, large customers and all the trends that we know about, do you envision that you will need something more beyond your regular formula rate plan proceedings to accommodate that growth and recovery, of course.

A: Andrew Marsh said it depends on the jurisdiction. In Mississippi, there's a law for large economic development projects, and in Louisiana and Arkansas, they're using expedited processes for growth accommodation.

Q: The 12 gigawatt pipeline, could you help us and break it down by, I guess, the stage it's in, like how much of that is in the ESA stage versus the slightly earlier maybe in the process?

A: Kimberly Fontan said that's opportunity in the pipeline, not all the way to signed ESA, and they don't include in forecast until signed ESA.

Q: I had a clarifying question following up on David's a little bit. Could you explain the comment on the 8 gigawatts for additional growth from the power commitments above the plan? Because I recall it was 7 gigawatts from the second quarter call, and I know you said you added 4.5 gigawatts. But does that mean you execute against some of that incremental opportunity? I was just a little confused on that piece, if you could clarify.

A: Kimberly Fontan said they had 15 gigawatts before, now 19.5 gigawatts, with 8 gigawatts for growth, and the delta is due to capital closing outside the period.

Q: On the 4.5 gigawatts, I guess, of the additional power equipment, is that incremental to what's on Slide 14 of, I guess, you have 7 CCGTs listed that is incremental to that?

A: Andrew Marsh said yes, it's incremental to the ones on Slide 14.

Q: Just on -- and I think you touched on in your prepared remarks on EPC availability. It doesn't seem like there's any issue getting craft labor contracts to build all the generation. Just if you could provide any color whereas we've seen other large projects that maybe have struggled in the size of all of these projects. It's kind of tremendous, but yet no issues on labor. I just wonder if you give any color on that.

A: Andrew Marsh said there are real challenges with labor, increasing costs for combined cycle projects, and they're working through it with EPCs.

Q: If I can first piggyback on Angie's question about the massive data center build-outs. I don't need or expect you to comment specifically on Meta's Hyperion project, but how are you thinking about the potential for some of these data centers to build on-site power generation themselves? Have you been talking to them about their interest in self-generating versus buying power from your utilities? I know your CapEx and earnings outlooks are based on real signed contracts, but how are you thinking about that going forward?

A: Andrew Marsh said they're building generation close to customers, customers prefer not to put capital into generation, and they're well positioned to support growth by putting their own plants nearby.

Q: In Arkansas, I believe you're planning to file a rate case early next year. You talked about the hyperscalers helping with customer affordability and paying their fair share. Can you maybe preview the filing a little bit in terms of customer bill impacts and what role Google might play in that case?

A: Andrew Marsh said the team is still working on the case, and they expect to lay out benefits of large new customers helping existing customers in the rate case.

Q: Just maybe trying to tie around this 4.5 gigawatts of incremental. I was just wondering if you could maybe tie that with the comments made a little bit earlier on the ERAS queue as well. Is that 4.5 gigawatts, does that tie to those extra incremental, I feel like 4 projects in the queue? And then maybe more broadly, if the ERAS process right now is working as intended and seemingly should be able to kind of help for the forward needs?

A: Andrew Marsh said the 4.5 gigawatts are not yet in the ERAS queue, which are near term, and the ERAS process works to support speed to market.

Q: Drew and Kimberly, just kind of again on some of this discussion around the dispatchable generation. Can you talk a little bit more about the alternative financing agreements that you guys are using? And just can I extrapolate what that is, the sizing of that, if you've gone from 8 gigawatts that I think was committed in 2Q to now the implied 11 gigawatts in Q3. Does that 3 gigawatt increase, is that basically what's being alternatively financed and falls outside of the plan? Just can you give a flavor of the timing around that and the magnitude? Because it seems like that would be a $6 billion to $7.5 billion of spend that could come in 30 or 31, which would look like it would drive an outsized amount of growth.

A: Kimberly Fontan said it's not a direct correlation, and Andrew Marsh said projects are expected to achieve commercial operations by 2032, with capital over the horizon from 2029 to support build-out.