ENTERGY ARKANSAS, LLC

Previous wording

The terms and conditions of service, including electric and gas rates, of the Utility operating companies and System Energy are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in delays in effecting rate changes, lengthy litigation, the risk of disallowance of recovery of certain costs, and uncertainty as to ultimate results.

Current wording

The terms and conditions of service, including electric rates, of the Utility operating companies and System Energy are determined through regulatory approval proceedings that can be lengthy and subject to appeal, potentially resulting in delays in effecting rate changes, lengthy litigation, the risk of disallowance of recovery of certain costs, and uncertainty as to ultimate results.

Previous wording

The Utility operating companies have large customer and stakeholder bases and, as a result, could be the subject of public criticism or adverse publicity focused on issues including, but not limited to, efforts to obtain land and secure permits for infrastructure, efforts to execute on and/or obtain regulatory approvals for generation, transmission, carbon capture and storage, or other facilities, the operation and maintenance of their assets and infrastructure, including with respect to climate or environmental matters, their preparedness for major storms or other extreme weather events (including accelerated resilience plans and projects, as well as executing same and/or seeking and obtaining regulatory approvals for such plans and projects) and/or the time it takes to restore service after such events, the quality of their customer service, including timely and accurate billing practices and ability to resolve customer complaints, and the reasonableness of the cost of their service. Criticism or adverse publicity of this nature could, among other things, result in project delays or cancellations or render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view the applicable operating company in a favorable light and potentially negatively affect legislative or regulatory processes or outcomes, including but not limited to failure to obtain requested approvals on infrastructure investments, as well as lead to increased regulatory oversight or more stringent legislative or regulatory requirements or other legislation or regulatory actions that adversely affect the Utility operating companies.

Current wording

The Utility operating companies have large customer and stakeholder bases and, as a result, could be the subject of public criticism or adverse publicity focused on issues including, but not limited to, efforts to obtain land and secure permits for infrastructure, efforts to execute on and/or obtain regulatory approvals for generation, transmission, carbon capture and storage, or other facilities, including, but not limited to, any such facilities that are intended to support load growth to the system associated with large-scale data centers, the operation and maintenance of their assets and infrastructure, including with respect to climate or environmental matters, their preparedness for major storms or other extreme weather events (including accelerated resilience plans and projects, as well as executing same and/or seeking and obtaining regulatory approvals for such plans and projects) and/or the time it takes to restore service after such events, the quality of their customer service, including timely and accurate billing practices and ability to resolve customer complaints, and the reasonableness of the cost of their service. Criticism or adverse publicity of this nature could, among other things, result in project delays or cancellations or render legislatures and other governing bodies, public service commissions and other regulatory authorities, and government officials less likely to view the applicable operating company in a favorable light and potentially negatively affect legislative or regulatory processes or outcomes, including but not limited to failure to obtain requested approvals on infrastructure investments, as well as lead to increased regulatory oversight or more stringent legislative or regulatory requirements or other legislation or regulatory actions that adversely affect the Utility operating companies.

Previous wording

The Utility operating companies and System Energy, and the energy industry as a whole, have experienced a period of rising costs and investments. An upward trend in spending, especially with respect to infrastructure investments (including those that have already been approved by a regulator), is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could result in adverse cost recovery determinations and/or face resistance from customers and other stakeholders especially in a rising cost environment, whether due to inflation, increased tariffs or changes to governmental policies and programs, including tax incentives or tax credits, grants, guarantees, and other subsidies, or high fuel prices or otherwise, and/or in periods of economic decline or hardship. Significant increases in costs could increase financing needs and otherwise adversely affect Entergy, the Utility operating companies, and System Energy’s business, financial position, results of operation, or cash flows. For information regarding rate case proceedings and formula rate plans applicable to the Utility operating companies, see Note 2 to the financial statements.

Current wording

The Utility operating companies and System Energy, and the energy industry as a whole, have experienced a period of rising costs and investments. An upward trend in spending, especially with respect to infrastructure investments (including those that have already been approved by a regulator), is likely to continue in the foreseeable future and could result in more frequent rate cases and requests for, and the continuation of, cost recovery mechanisms, all of which could result in adverse cost recovery determinations and/or face resistance from customers and other stakeholders especially in a rising cost environment, whether due to inflation, increased tariffs or changes to governmental policies and programs, including tax incentives or tax credits, grants, guarantees, and other subsidies, or high fuel prices or otherwise, and/or in periods of economic decline or hardship. Significant increases in costs associated with capital investments have occurred and could in the future increase financing needs and otherwise adversely affect Entergy, the Utility operating companies, and System Energy’s business, financial position, results of operation, or cash flows. For information regarding rate case proceedings and formula rate plans applicable to the Utility operating companies, see Note 2 to the financial statements.

Previous wording

Changes to state or federal legislation or regulation affecting electric generation, electric and natural gas transmission, distribution, and related activities could adversely affect Entergy and the Utility operating companies’ financial position, results of operations, or cash flows and their utility businesses.

Current wording

Changes to state or federal legislation or regulation affecting electric generation, electric transmission, distribution, and related activities could adversely affect Entergy and the Utility operating companies’ financial position, results of operations, or cash flows and their utility businesses.

Previous wording

If legislative and regulatory structures evolve in a manner that erodes the Utility operating companies’ exclusive rights to serve their regulated customers, such as through “retail open access” or otherwise, they could lose customers and sales and their results of operations, financial position, or cash flows could be materially affected. Additionally, technological advances in energy efficiency and distributed energy resources are reducing the costs of these technologies and, together with current state and federal subsidies, the increasing penetration of these technologies could result in reduced sales by the Utility operating companies. Such loss of sales, due to the methodology used to determine cost of service rates or otherwise, could put upward pressure on rates, possibly resulting in adverse regulatory actions to mitigate such effects on rates. Further, the failure of regulatory structures to evolve to accommodate the changing needs and desires of customers with respect to the sourcing and use of electricity also could diminish sales by the operating companies. Entergy and the Utility operating companies cannot predict if or when they may be subject to changes in legislation, regulation, or governmental policy, or the extent and timing of reductions of the cost of distributed energy resources, nor can they predict the impact of these changes on their results of operations, financial position, or cash flows.

Current wording

If legislative and regulatory structures evolve in a manner that erodes the Utility operating companies’ exclusive rights to serve their regulated customers, such as through “retail open access” or otherwise, they could lose customers and sales and their results of operations, financial position, or cash flows could be materially affected. Additionally, technological advances in energy efficiency and distributed energy resources are reducing the costs of these technologies and, together with current state and federal subsidies, the increasing penetration of these technologies could result in reduced sales by the Utility operating companies. Such loss of sales, due to the methodology used to determine cost of service rates or otherwise, could put upward pressure on rates, possibly resulting in adverse regulatory actions to mitigate such effects on rates. Further, the failure of regulatory structures to evolve to accommodate the changing needs and desires of customers with respect to the sourcing and use of electricity also could diminish sales by the operating companies. Additionally, any future laws and regulations regarding large-scale data centers, including those relating to energy use, efficiency standards and source of power, could adversely affect Entergy and the Utility operating companies serving these customers, and the effects of such laws and regulations could be heightened by these companies’ increasing exposure to the data center industry. Entergy and the Utility operating companies cannot predict if or when they may be subject to changes in law, regulation, or governmental policy, or the extent and timing of reductions of the cost of distributed energy resources, nor can they predict the impact of these changes on their results of operations, financial position, or cash flows.

Previous wording

The Utility operating companies recover their fuel, purchased power, and associated costs from their customers through rate mechanisms subject to periodic regulatory review and adjustment. Because regulatory review can result in the disallowance of incurred costs found not to have been prudently incurred or not reflected in rates as permitted by approved rate schedules and accounting rules, including the cost of replacement power purchased when generators experience outages or when planned outages are extended, with the possibility of refunds to ratepayers, there exists some risk to the ultimate recovery of those costs, particularly when there are substantial or sudden increases in such costs, including due to inflation or increased tariffs or as a result of changes to governmental policies and programs, including tax incentives or tax credits, loans, grants, guarantees, and other subsidies. Regulators also may initiate proceedings to investigate the continued usage or the adequacy and operation of the fuel and purchased power recovery clauses of the Utility operating companies and, therefore, there can be no assurance that existing recovery mechanisms will remain unchanged or in effect at all.

Current wording

The Utility operating companies recover their fuel, purchased power, and associated costs from their customers through rate mechanisms subject to periodic regulatory review and adjustment. Because regulatory review can result in the disallowance of incurred costs found not to have been prudently incurred or not reflected in rates as permitted by approved rate schedules and accounting rules, including the cost of replacement power purchased when generators experience outages or when planned outages are extended, with the possibility of refunds to ratepayers, there exists some risk to the ultimate recovery of those costs, particularly when there are substantial or sudden increases in such costs, including due to inflation or as a result of changes to governmental policies and programs, including tariffs, tax incentives or tax credits, loans, grants, guarantees, and other subsidies. Regulators also may initiate proceedings to investigate the continued usage or the adequacy and operation of the fuel and purchased power recovery clauses of the Utility operating companies and, therefore, there can be no assurance that existing recovery mechanisms will remain unchanged or in effect at all.

Previous wording

The Utility operating companies are subject to economic risks associated with participation in the MISO markets and resource adequacy construct. MISO tariff rules and system conditions, including transmission congestion, could affect the Utility operating companies’ ability to sell capacity, energy, and/or ancillary services in certain regions and/or the economic value of such sales, or increase the cost of serving the Utility operating companies’ respective loads. MISO market rules may change or be interpreted in ways that cause additional cost and risk, including compliance risk. Additionally, each Utility operating company’s continued participation in MISO may be affected by the outcomes of proceedings at their respective retail regulators regarding the realized and expected costs and benefits associated with such Utility operating company’s ongoing participation in MISO.

Current wording

The Utility operating companies are subject to economic risks associated with participation in the MISO markets and resource adequacy construct. MISO tariff rules and system conditions, including transmission congestion, could affect the Utility operating companies’ ability to sell capacity, energy, and/or ancillary services in certain regions and/or the economic value of such sales, or increase the cost of serving the Utility operating companies’ respective loads. MISO market rules may change or be interpreted in ways that cause additional cost and risk, including compliance risk. Additionally, each Utility operating company’s continued participation in MISO may be affected by the outcomes of proceedings at its respective retail regulator regarding the realized and expected costs and benefits associated with such Utility operating company’s ongoing participation in MISO.

Previous wording

The Utility operating companies participate in the MISO regional transmission planning process and are subject to risks associated with planning decisions that MISO makes in the exercise of control over the planning of the Utility operating companies’ transmission assets that are under MISO’s functional control. The Utility operating companies pay transmission rates that reflect the cost of transmission projects that the Utility operating companies do not own and are subject to the same increased costs due to factors described herein as potentially impacting other capital projects, which could increase cash or financing needs. Further, FERC policies and regulation addressing cost responsibility for transmission projects, including transmission projects to interconnect new generation facilities, may give rise to cash and financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, in turn, may result in adverse actions by the Utility operating companies’ retail regulators. In addition to the cash and financing-related risks arising from the potential additional cost allocation to the Utility operating companies from transmission projects of others or changes in FERC policies or regulation related to cost responsibility for transmission projects, there is a risk that the Utility operating companies’ business and financial position could be harmed as a result of lost investment opportunities and other effects that flow from an increased number of competitive projects being approved and constructed that are interconnected with their transmission systems.

Current wording

The Utility operating companies participate in the MISO regional transmission planning process and are subject to risks associated with planning decisions that MISO makes in the exercise of control over the planning of the Utility operating companies’ transmission assets that are under MISO’s functional control. The Utility operating companies pay transmission rates that reflect the cost of transmission projects that the Utility operating companies do not own and are subject to the same increased costs due to factors described herein as potentially impacting other capital projects, which could increase cash or financing needs. Further, FERC policies and regulation addressing cost responsibility for transmission projects, including transmission projects to interconnect new generation facilities, such as new facilities to power large loads, may give rise to cash and financing-related risks as well as result in upward pressure on the retail rates of the Utility operating companies, which, in turn, may result in adverse actions by the Utility operating companies’ retail regulators. In addition to the cash and financing-related risks arising from the potential additional cost allocation to the Utility operating companies from transmission projects of others or changes in FERC policies or regulation related to cost responsibility for transmission projects (including, but not limited to, transmission projects that are intended to serve new large-scale data centers), there is a risk that the Utility operating companies’ business and financial position could be harmed as a result of lost investment opportunities and other effects that flow from an increased number of competitive and large-scale projects being approved and constructed that are interconnected with their transmission systems, as well as the risk associated with the large investment in serving an increasing number of customers concentrated in the data center industry.

Previous wording

Further, the terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets, the allocation of transmission upgrade costs, the MISO-wide allowed base rate of return on equity, and any required MISO-related charges and credits are subject to regulation by the FERC. The operation of the Utility operating companies’ transmission system pursuant to the MISO tariff and their participation in the MISO wholesale markets, and the resulting costs, may be adversely affected by regulatory or market design changes, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.

Current wording

Further, the terms and conditions of the MISO tariff, including provisions related to the design and implementation of wholesale markets, the allocation of transmission upgrade costs, the MISO-wide allowed base rate of return on equity, and any required MISO-related charges and credits are subject to regulation by the FERC. The operation of the Utility operating companies’ transmission system pursuant to the MISO tariff and their participation in the MISO wholesale markets, and the resulting costs, may be adversely affected by regulatory or market design changes relating to, among other issues, significant current and expected load growth to serve new large-scale data centers, as well as liability under, or any future inability to comply with, existing or future regulations or requirements.

Previous wording

The MISO tariff provisions governing the rights and obligations associated with the resource adequacy construct provided under the MISO tariff are subject to change and have recently undergone significant changes, some of which are the subject of pending litigation and/or appeals. Due to their magnitude and, with respect to the changes already made, the speed with which they have been implemented, these changes carry risk, including compliance risk, and may result in material additional costs being passed through to the Utility operating companies’ customers in retail rates, including but not limited to additional capacity costs incurred in the annual MISO Planning Resource Auction, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities. Also, by virtue of the Utility operating companies’ participation in MISO and the design and terms of the MISO resource adequacy construct, other load-serving entities served by the Utility operating companies’ transmission assets, which are under MISO’s functional control, may be able to circumvent reasonable resource planning obligations and avoid, in whole or in part, the full cost of procuring the resources reasonably needed to reliably supply their respective loads. As a result, there are a variety of risks to the Utility operating companies and their customers, including the risk of bearing additional costs for resources needed to ensure reliable service, the risk of reduced reliability and the enhanced risk of outages and lost sales which, because of the methodology for establishing cost of service rates, presents the risk of upward pressure on the Utility operating companies’ rates, and these risks may be exacerbated by significant new load additions whether by the Utility operating companies or by other MISO load-serving entities.

Current wording

The MISO tariff provisions governing the rights and obligations associated with the resource adequacy construct provided under the MISO tariff are subject to change and have recently undergone significant changes, some of which are the subject of pending litigation and/or appeals. Due to their magnitude and, with respect to the changes already made, the speed with which they have been implemented, these changes carry risk, including compliance risk, and may result in material additional costs being passed through to the Utility operating companies’ customers in retail rates, including but not limited to additional capacity costs incurred in the annual MISO Planning Resource Auction, and these risks may be exacerbated by significant new load additions, including large-scale projects to serve data centers, whether by the Utility operating companies or by other MISO load-serving entities. Also, by virtue of the Utility operating companies’ participation in MISO and the design and terms of the MISO resource adequacy construct, other load-serving entities served by the Utility operating companies’ transmission assets, which are under MISO’s functional control, may be able to circumvent reasonable resource planning obligations and avoid, in whole or in part, the full cost of procuring the resources reasonably needed to reliably supply their respective loads. As a result, there are a variety of risks to the Utility operating companies and their customers, including the risk of bearing additional costs for resources needed to ensure reliable service, the risk of reduced reliability and the enhanced risk of outages or curtailments and lost sales which, because of the methodology for establishing cost of service rates, presents the risk of upward pressure on the Utility operating companies’ rates, and these risks may be exacerbated by significant new load additions, including large-scale projects to serve data centers and the increasing concentration of exposure to the data center industry, whether by the Utility operating companies or by other MISO load-serving entities.

Previous wording

In addition, a large volume of parties and individual generation resources are presently seeking to interconnect to the transmission system MISO administers and over which MISO exercises functional control. Due to the resources and time required to study and evaluate these numerous interconnection requests, including the effects of speculative requests and requests that are withdrawn at late stages of the process, the current MISO interconnection queue to review new requests is subject to significant delays or periods in which MISO does not accept new interconnection requests. These delays present risks to the Utility operating companies and their ability to develop and procure new generation resources to serve their respective loads, and these risks may be exacerbated by significant new load additions.

Current wording

In addition, a large volume of parties and individual generation resources, including large-scale projects to serve data centers, are presently seeking to interconnect to the transmission system MISO administers and over which MISO exercises functional control. Due to the resources and time required to study and evaluate these numerous interconnection requests, including the effects of speculative requests and requests that are withdrawn at late stages of the process, the current MISO interconnection queue to review new requests is subject to significant delays or periods in which MISO does not accept new interconnection requests. These delays present risks to the Utility operating companies and their ability to develop and procure new generation resources to serve their respective loads, and these risks may be exacerbated by significant new load additions. Moreover, MISO’s recently revised collateral and financial requirements for generation interconnections are stricter with larger initial financial obligations. In addition, they carry greater financial penalties and requirements tied directly to project readiness and speed.

Previous wording

Weather, economic conditions, technological developments, and other factors may have a material impact on electricity and gas sales and otherwise materially affect the Utility operating companies’results of operations and system reliability.

Current wording

Weather, economic conditions, technological developments, and other factors may have a material impact on electricity sales and otherwise materially affect the Utility operating companies’results of operations and system reliability.

Previous wording

Temperatures above normal levels in the summer tend to increase electric cooling demand and revenues, and temperatures below normal levels in the winter tend to increase electric and gas heating demand and revenues. As a corollary, mild temperatures in either season tend to decrease energy usage and resulting revenues. Higher consumption levels coupled with seasonal pricing differentials typically cause the Utility operating companies to report higher revenues in the third quarter of the fiscal year than in the other quarters. Changing weather patterns and extreme weather conditions, including hurricanes or tropical storms, droughts, wildfires, flooding events, or ice storms, the frequency or intensity of which may be exacerbated by climate change, may stress the Utility operating companies’ generation facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on their ability to meet peak customer demand, increased regulatory oversight, criticism or adverse publicity, and reduced customer satisfaction. These extreme conditions could have a material effect on the Utility operating companies’ financial condition, results of operations, and liquidity.

Current wording

Temperatures above normal levels in the summer tend to increase electric cooling demand and revenues, and temperatures below normal levels in the winter tend to increase electric heating demand and revenues. As a corollary, mild temperatures in either season tend to decrease energy usage and resulting revenues. Higher consumption levels coupled with seasonal pricing differentials typically cause the Utility operating companies to report higher revenues in the third quarter of the fiscal year than in the other quarters. Changing weather patterns and extreme weather conditions, including hurricanes or tropical storms, droughts, wildfires, flooding events, or ice storms, the frequency or intensity of which may be exacerbated by climate change, may stress the Utility operating companies’ generation facilities and transmission and distribution systems, resulting in increased maintenance and capital costs (and potential increased financing needs), limits on their ability to meet peak customer demand, increased regulatory oversight, criticism or adverse publicity, and reduced customer satisfaction. These extreme conditions could have a material effect on the Utility operating companies’ financial condition, results of operations, and liquidity.

Previous wording

Entergy’s electricity sales volumes are affected by a number of factors including weather and economic conditions, trends in energy efficiency, new technologies, and self-generation alternatives, including the willingness and ability of large industrial customers to develop co-generation facilities that greatly reduce their grid demand. In addition, changes to regulatory policies, such as those that allow customers to directly access the market to procure wholesale energy or those that incentivize development and utilization of new, developing, or alternative sources of generation, could, and in some instances, have already reduced sales, and other non-traditional procurements, such as virtual purchase power agreements or “behind the meter” generation solutions, could, and in some instances have already limited growth opportunities or reduced sales at the Utility operating companies. Some of these factors are inherently cyclical or temporary in nature, such as the weather or economic conditions, and typically do not have a long-lasting effect on Entergy’s operating results. Others, such as the organic turnover of appliances and lighting and their replacement with more efficient ones and adoption of newer technologies, including smart thermostats, new building codes, distributed energy resources, energy storage, demand side management, and rooftop solar, are having a more permanent effect by reducing sales growth rates from historical norms. As a result of these emerging efficiencies and technologies, the Utility operating companies may lose customers or experience lower average use per customer in the residential and commercial classes, and continuing advances have the potential to further limit sales or sales growth in the future.

Current wording

Entergy’s electricity sales volumes are affected by a number of factors including weather and economic conditions, trends in energy efficiency, new technologies, and self-generation alternatives, including the willingness and ability of large industrial customers to develop co-generation facilities that greatly reduce their grid demand. In addition, changes to regulatory policies, such as those that allow customers to directly access the market to procure wholesale energy or those that incentivize development and utilization of new, developing, or alternative sources of generation, could, and in some instances, have already reduced sales, and other non-traditional procurements, such as virtual purchase power agreements or “behind the meter” generation solutions, could, and in some instances have already limited growth opportunities or reduced sales at the Utility operating companies. Some of these factors are inherently cyclical or temporary in nature, such as the weather or economic conditions, and typically do not have a long-lasting effect on Entergy’s operating results. Others, such as the organic turnover of appliances and lighting and their replacement with more efficient ones and adoption of newer technologies, including smart thermostats, new building codes, distributed energy resources, energy storage, demand side management, and rooftop solar, are adversely affecting sales growth rates on a more permanent basis. As a result of emerging efficiencies and technologies, the Utility operating companies may lose customers or experience lower average use per customer in the residential and commercial classes, and continuing advances have the potential to further limit sales or sales growth in the future.

Previous wording

Electricity sales to industrial customers, in particular, benefit from steady economic growth and favorable commodity markets; however, industrial sales are or may be sensitive to changes in laws, regulations, trade-related governmental actions, including tariffs and other measures, or conditions in the markets in which its customers operate. Negative changes in any of these or other factors, particularly sustained economic downturns or sluggishness, have the potential to result in slower sales growth or sales declines and increased bad debt expense, which could materially affect Entergy’s and the Utility operating companies’ results of operations, financial condition, and liquidity.

Current wording

Electricity sales to industrial customers, in particular, benefit from steady economic growth and favorable commodity markets; however, industrial sales are or may be sensitive to changes in laws, regulations, trade-related governmental actions, including tariffs and other measures, such as new laws or regulations relating to data centers or other large loads, or conditions in the markets in which its customers operate. Negative changes in any of these or other factors, particularly sustained economic downturns or sluggishness, have the potential to result in slower sales growth or sales declines and increased bad debt expense, which could materially affect Entergy’s and the Utility operating companies’ results of operations, financial condition, and liquidity.

Previous wording

The Utility operating companies also may not realize anticipated or expected growth in industrial sales, such as from large data center customers or electrification opportunities to help such customers achieve their environmental sustainability goals. This could occur because of changes in customers’ goals or business priorities, changes in environmental policies and priorities of federal, state, and local officials and other stakeholders, competition from other companies, or decisions by such customers to seek to achieve such objectives or goals through methods not offered by Entergy.

Current wording

The Utility operating companies also may not realize anticipated or expected growth in industrial or large-scale data center sales or electrification opportunities to help such customers achieve their environmental sustainability goals. This could occur because of changes in customers’ goals or business priorities, changes in environmental policies and priorities of federal, state, and local officials and other stakeholders, competition from other companies, or decisions by such customers to seek to achieve such objectives or goals through methods not offered by Entergy.

Previous wording

Certain of the Utility operating companies and System Energy incur costs for the on-site storage of spent nuclear fuel. The approval of a license for a national repository for the disposal of spent nuclear fuel, such as the one proposed for Yucca Mountain, Nevada, or any interim storage facility, and the timing of such facility opening, will significantly affect the costs associated with on-site storage of spent nuclear fuel. For example, while the DOE is required by law to proceed with the licensing of the Yucca Mountain repository and, after the license is granted by the NRC, to construct the repository and commence the receipt of spent fuel, the NRC licensing of the Yucca Mountain repository is effectively at a standstill. These actions are prolonging the time before spent fuel is removed from Entergy’s plant sites. Because the DOE has not accomplished its objectives, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts, and Entergy has sued the DOE for such breaches, and has won and collected on judgments against the government totaling approximately $1.2 billion through 2024, and continues to be involved in litigation to recover damages. Furthermore, Entergy is uncertain as to when the DOE will commence acceptance of spent fuel from its facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at the companies’ nuclear sites and maintenance costs on existing storage facilities, including aging management of fuel storage casks, may increase. The costs of on-site storage are also affected by regulatory requirements for such storage. In addition, the availability of a repository or other off-site storage facility for spent nuclear fuel may affect the ability to fully decommission the nuclear units and the costs relating to decommissioning. For further information regarding spent fuel storage, see the “Critical Accounting Estimates –Nuclear Decommissioning Costs –Spent

Current wording

Certain of the Utility operating companies and System Energy incur costs for the on-site storage of spent nuclear fuel. The approval of a license for a national repository for the disposal of spent nuclear fuel, such as the one proposed for Yucca Mountain, Nevada, or any interim storage facility, and the timing of such facility opening, will significantly affect the costs associated with on-site storage of spent nuclear fuel. For example, while the DOE is required by law to proceed with the licensing of the Yucca Mountain repository and, after the license is granted by the NRC, to construct the repository and commence the receipt of spent fuel, the NRC licensing of the Yucca Mountain repository is effectively at a standstill. These actions are prolonging the time before spent fuel is removed from Entergy’s plant sites. Because the DOE has not accomplished its objectives, it is in non-compliance with the Nuclear Waste Policy Act of 1982 and is in partial breach of its spent fuel disposal contracts, and Entergy has sued the DOE for such breaches, and has won and collected on judgments against the government totaling approximately $1.2 billion through 2025, and continues to be involved in litigation to recover damages. Furthermore, Entergy is uncertain as to when the DOE will commence acceptance of spent fuel from its facilities for storage or disposal. As a result, continuing future expenditures will be required to increase spent fuel storage capacity at the companies’ nuclear sites and maintenance costs on existing storage facilities, including aging management of fuel storage casks, may increase. The costs of on-site storage are also affected by regulatory requirements for such storage. In addition, the availability of a repository or other off-site storage facility for spent nuclear fuel may affect the ability to fully decommission the nuclear units and the costs relating to decommissioning. For further information regarding spent fuel storage, see the “Critical Accounting Estimates –Nuclear Decommissioning Costs –Spent Fuel Disposal” section of Management’s Financial Discussion and Analysis for Entergy, Entergy Arkansas, Entergy Louisiana, and System Energy and Note 8 to the financial statements.

Previous wording

NEIL is a utility industry mutual insurance company, owned by its members, including the Utility operating companies and System Energy. NEIL provides onsite property and decontamination coverage. All member plants could be subject to an annual assessment (retrospective premium of up to 10 times current annual premium for all policies) should the NEIL surplus (reserve) be significantly depleted due to insured losses. The current maximum annual assessment amounts total approximately $72.2 million per occurrence for the Utility nuclear plants. The retrospective premium assessments are subject to change based on results of NEIL underwriting.

Current wording

NEIL is a utility industry mutual insurance company, owned by its members, including the Utility operating companies and System Energy. NEIL provides onsite property and decontamination coverage. All member plants could be subject to an annual assessment (retrospective premium of up to 10 times current annual premium for all policies) should the NEIL surplus (reserve) be significantly depleted due to insured losses. The current maximum annual assessment amounts total approximately $76.1 million per occurrence for the Utility nuclear plants. The retrospective premium assessments are subject to change based on results of NEIL underwriting.

Previous wording

Entergy’s business is capital intensive and dependent upon its ability to access capital at reasonable rates and other terms. At times there are also spikes in the price for natural gas and other commodities that increase the liquidity requirements of the Utility operating companies. In addition, Entergy’s and the Registrant Subsidiaries’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster similar to that experienced in Entergy’s service area with Hurricane Katrina and Hurricane Rita in 2005, Hurricane Gustav and Hurricane Ike in 2008, Hurricane Isaac in 2012, Hurricane Laura, Hurricane Delta, and Hurricane Zeta in 2020, and Winter Storm Uri and Hurricane Ida in 2021. The occurrence of one or more contingencies, including an adverse decision or a delay in regulatory recovery of fuel or purchased power costs or storm restoration costs, an acceleration of payments or decreased credit lines, less cash flow from operations than expected, changes in regulation, governmental policy (including tax and trade policy, such as increased tariffs) or governmental programs (including tax incentives or tax credits, loans, grants, guarantees, and other subsidies), or other unknown or unforeseen events, could cause the financing needs of Entergy and its subsidiaries to increase. In addition, accessing the debt capital markets more frequently in these situations may result in an increase in leverage. Material leverage increases could negatively affect the credit ratings of Entergy, the Utility operating companies, and System Energy, which in turn could negatively affect access to the capital markets.

Current wording

Entergy’s business is capital intensive and dependent upon its ability to access capital at reasonable rates and other terms. At times there are also spikes in the price for natural gas and other commodities that increase the liquidity requirements of the Utility operating companies. In addition, Entergy’s and the Registrant Subsidiaries’ liquidity needs could significantly increase in the event of a hurricane or other weather-related or unforeseen disaster similar to that experienced in Entergy’s service area with Hurricane Katrina and Hurricane Rita in 2005, Hurricane Gustav and Hurricane Ike in 2008, Hurricane Isaac in 2012, Hurricane Laura, Hurricane Delta, and Hurricane Zeta in 2020, and Winter Storm Uri and Hurricane Ida in 2021. In recent years, the capital intensive nature of Entergy’s business has increased even further as a result of the capital expenditures required to build the infrastructure to serve multiple large-scale data centers in its utility service area. The occurrence of one or more adverse events or contingencies, including an adverse decision or a delay in regulatory recovery of fuel or purchased power costs or storm restoration costs, an acceleration of payments or decreased credit lines, less cash flow from operations than expected, changes in regulation, governmental policy (including tax and trade policy, such as increased tariffs, and new laws or regulations relating to data centers or other large loads) or governmental programs (including tax incentives or tax credits, loans, grants, guarantees, and other subsidies), or other unknown or unforeseen events, could cause the financing needs of Entergy and its subsidiaries to increase. In addition, accessing the debt capital markets more frequently in these situations may result in an increase in leverage. Material leverage increases could negatively affect the credit ratings of Entergy, the Utility operating companies, and System Energy, which in turn could negatively affect access to the capital markets.

Previous wording

The inability to raise capital on favorable terms, particularly during times of high interest rates and inflation, and uncertainty or reduced liquidity in the capital markets, could negatively affect Entergy and its subsidiaries’ ability to maintain and to expand their businesses. Access to capital markets could be restricted and/or borrowing costs could be increased due to certain sources of debt and equity capital being unwilling to invest in offerings to fund fossil fuel projects or companies that are impacted by extreme weather events or other catastrophes, that rely on fossil fuels, or that are impacted by risks related to climate change, or such sources of capital de-emphasizing their interest in investing in clean or renewable energy projects. Additionally, shifts in governmental policy surrounding tax incentives or tax credits, loans, grants, guarantees, and other subsidies may increase borrowing costs. Factors beyond Entergy’s control may create uncertainty that could increase its cost of capital or impair its ability to access the capital markets, including the ability to draw on its bank credit facilities. These factors include depressed economic conditions, a recession, increasing interest rates, inflation, sanctions, trade restrictions, political instability, war, terrorism, and extreme volatility in the debt, equity, or credit markets. Entergy and its subsidiaries are unable to predict the degree of success they will have in renewing or replacing their credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If Entergy and its subsidiaries are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities, and/or bear an unfavorable cost of capital, which, in turn, could impact their ability to grow their businesses, decrease earnings, significantly reduce financial flexibility, and/or limit Entergy Corporation’s ability to sustain its current common stock dividend level.

Current wording

The inability to raise capital on favorable terms, particularly during times of high interest rates and inflation, and uncertainty or reduced liquidity in the capital markets, could negatively affect Entergy and its subsidiaries’ ability to maintain and to expand their businesses. Access to capital markets could be restricted and/or borrowing costs could be increased due to certain sources of debt and equity capital avoiding participating in offerings to fund fossil fuel projects or companies that are impacted by extreme weather events or other catastrophes, that rely on fossil fuels, or that are impacted by risks related to climate change, or such sources of capital de-emphasizing their interest in investing in clean or renewable energy projects. Additionally, shifts in governmental policy surrounding tax incentives or tax credits, loans, grants, guarantees, and other subsidies (including as a result of the One Big Beautiful Bill Act of 2025) may increase borrowing costs. Factors beyond Entergy’s control may create uncertainty that could increase its cost of capital or impair its ability to access the capital markets, including the ability to draw on its bank credit facilities. These factors include depressed economic conditions, a recession, the economic impacts of another full or partial government shutdown, increasing interest rates, inflation, sanctions, trade restrictions, political instability, war, terrorism, and extreme volatility in the debt, equity, or credit markets. Entergy and its subsidiaries are unable to predict the degree of success they will have in renewing or replacing their credit facilities as they come up for renewal. Moreover, the size, terms, and covenants of any new credit facilities may not be comparable to, and may be more restrictive than, existing facilities. If Entergy and its subsidiaries are unable to access the credit and capital markets on terms that are reasonable, they may have to delay raising capital, issue shorter-term securities, and/or bear an unfavorable cost of capital, which, in turn, could impact their ability to grow their businesses, decrease earnings, significantly reduce financial flexibility, and/or limit Entergy Corporation’s ability to sustain its current common stock dividend level.

Previous wording

•adverse impacts on liquidity and cash flows, including through declining sales, reduced revenues, delays in receipts of customer payments, or increased bad debt expense;

Current wording

•adverse impacts on liquidity and cash flows, including through declining sales, reduced revenues, delays in receipts of customer payments, increased bad debt expense, or customers or other counterparties failing to satisfy their obligations;

Previous wording

As with any company, Entergy’s and its Registrant Subsidiaries’ reputations are an important element of their ability to effectively conduct their businesses. Entergy’s and its Registrant Subsidiaries’ reputations could be harmed by a variety of factors, including: failure of a generating asset or supporting infrastructure; failure to restore power after a hurricane or other severe weather event or catastrophe in a manner perceived as timely by regulators or customers; the incurrence of storm restoration costs perceived as excessive by regulators or customers; failure to effectively manage land and other natural resources; failure to obtain land and secure permits for infrastructure investments; failure to execute on and/or obtain regulatory approvals for generation, transmission, or other facilities; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues surrounding the safety or environmental concerns regarding carbon capture and storage; real or perceived issues with Entergy’s safety culture; challenges or negative reaction to Entergy’s diversity, inclusion, and belonging efforts, or work culture and environment; challenges or negative reaction to Entergy’s climate goals; inability to meet their climate goals, including as a result of increased sales growth, or to achieve their human capital strategies, or failure to demonstrate meaningful progress toward such goals or strategies; deterioration in relations with bargaining employees and labor unions representing them; inability to effectively prepare for major storms and other weather events, including accelerated resilience planning and projects and challenges in execution thereof, including obtaining necessary regulatory approvals for scope and timing of such plans and projects; inability to keep their electricity rates stable; inability to provide quality customer service, including timely and accurate billing; involvement in a class-action or other high-profile lawsuit; significant delays in, or termination of, construction projects, including as a result of or in connection with changes in regulation or governmental policy (such as tax and trade policy, including increased tariffs and supply chain challenges) or governmental programs (such as tax incentives or tax credits, loans, grants, guarantees, and other subsidies); occurrence of or responses to cyber attacks, data breaches or physical- or cyber- security vulnerabilities; acts or omissions of Entergy management or acts or omissions of a contractor or other third party working with or for Entergy or its Registrant Subsidiaries, which actually or perceivably reflect negatively on Entergy or its Registrant Subsidiaries; measures taken to offset reductions in demand or to supply rising demand; a significant dispute with one of Entergy’s or its Registrant Subsidiaries’ customers or other stakeholders; or negative political and public sentiment resulting in a significa…

Excerpt shortened here; the source contains the full paragraph.

Current wording

As with any company, Entergy’s and its Registrant Subsidiaries’ reputations are an important element of their ability to effectively conduct their businesses. Entergy’s and its Registrant Subsidiaries’ reputations could be harmed by a variety of factors, including: failure of a generating asset or supporting infrastructure; failure to restore power after a hurricane or other severe weather event or catastrophe in a manner perceived as timely by regulators or customers; the incurrence of storm restoration costs perceived as excessive by regulators or customers; failure to effectively manage land and other natural resources; failure to obtain land and secure permits for infrastructure investments; failure to execute on and/or obtain regulatory approvals for generation, transmission, or other facilities; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues surrounding the safety or environmental concerns regarding carbon capture and storage; real or perceived issues concerning the environmental impact of new generation, new large load customers, and potential rate increases resulting from investments relating to serving these customers; real or perceived issues with Entergy’s safety culture; challenges or negative reaction to Entergy’s employee inclusion and belonging efforts, work culture and workplace environment; challenges or negative reaction to Entergy’s climate goals or aspirations; inability to meet their climate goals or aspirations, including as a result of increased sales growth, or to achieve their human capital strategies, or failure to demonstrate meaningful progress toward such goals or strategies; deterioration in relations with bargaining employees and labor unions representing them; inability to effectively prepare for major storms and other weather events, including accelerated resilience planning and projects and challenges in execution thereof, including obtaining necessary regulatory approvals for scope and timing of such plans and projects; inability to keep their electricity rates stable; inability to provide quality customer service, including timely and accurate billing; involvement in a class-action or other high-profile lawsuit; significant delays in, or termination of, construction projects, including as a result of or in connection with changes in regulation or governmental policy (such as tax and trade policy, including increased tariffs and supply chain challenges) or governmental programs (such as tax incentives or tax credits, loans, grants, guarantees, and other subsidies); occurrence of or responses to cyber attacks, data breaches or physical- or cyber- security vulnerabilities; acts or omissions of Entergy management or acts or omissions of a contractor or other third party working with or for Entergy or its Registrant Subsidiaries, which actually or perceivably reflect negatively on Entergy or its Registrant Subsidiaries; measures taken to…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Deterioration in Entergy’s or its Registrant Subsidiaries’ reputations may harm Entergy’s or its Registrant Subsidiaries’ relationships with their customers, regulators, and other stakeholders, may increase their cost of doing business, may interfere with their ability to attract and retain a qualified, inclusive, and diverse workforce with a wide variety of backgrounds, experiences, and perspectives, may impact Entergy’s or its Registrant Subsidiaries’ ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way Entergy or its Registrant Subsidiaries conduct their business, or may have a material adverse effect on their financial condition and results of operations.

Current wording

Deterioration in Entergy’s or its Registrant Subsidiaries’ reputations may harm Entergy’s or its Registrant Subsidiaries’ relationships with their customers, regulators, and other stakeholders, may increase their cost of doing business, may interfere with their ability to attract and retain a qualified workforce from a wide variety of backgrounds, experiences, and perspectives, may impact Entergy’s or its Registrant Subsidiaries’ ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way Entergy or its Registrant Subsidiaries conduct their business, or may have a material adverse effect on their financial condition and results of operations.

Previous wording

Recent U.S. tax legislation may materially adversely affect Entergy’s financial condition, results of operations, and cash flows.

Current wording

U.S. tax legislation may materially adversely affect Entergy’s financial condition, results of operations, and cash flows.

Previous wording

The Tax Cuts and Jobs Act of 2017 significantly changed the U.S. Internal Revenue Code, including taxation of U.S. corporations, by, among other things, reducing the federal corporate income tax rate, limiting interest deductions, and altering the expensing of capital expenditures. The Inflation Reduction Act of 2022 further significantly changed the U.S. Internal Revenue Code by, among other things, enacting a new corporate alternative minimum tax and expanding federal tax credits for clean energy production. The interpretive guidance issued by the IRS and state tax authorities may be inconsistent with Entergy’s own interpretation and the legislation could be subject to amendments, which could lessen or increase certain impacts of the legislation. Further, changes in tax legislation or guidance, or uncertainties regarding the repeal, continuation, or interpretation of such tax legislation or guidance, could impact interpretation of and negotiations around certain contractual arrangements with counterparties, which could result in unfavorable changes to such arrangements or delays. In addition, the retail regulatory treatment of the expanded tax credits and corporate alternative minimum tax included in the Inflation Reduction Act of 2022, or any other changes to or repeal of such tax credits, could materially impact Entergy’s future cash flows, and this legislation and pending interpretive guidance could result in unintended consequences not yet identified that could have a material adverse impact on Entergy’s financial results and future cash flows.

Current wording

The interpretive guidance issued by the IRS and state tax authorities may be inconsistent with Entergy’s own expectation or interpretation and the legislation could be subject to amendments, which could lessen or increase certain impacts of the legislation. Further, changes in tax legislation or guidance, or uncertainties regarding the repeal, continuation, or interpretation of such tax legislation or guidance, could impact interpretation of and negotiations around certain contractual arrangements with counterparties, which could result in unfavorable changes to such arrangements or delays. In addition, the retail regulatory treatment of the expanded tax credits and corporate alternative minimum tax included in the Inflation Reduction Act of 2022, the limitation of the use of certain tax credits in the One Big Beautiful Bill Act of 2025, or any other changes to or additional scaling back of such tax credits, could materially impact Entergy’s future cash flows, and this legislation and pending interpretive guidance could result in unintended consequences not yet identified that could have a material adverse impact on Entergy’s financial results and future cash flows.

Previous wording

Based on current IRS guidance and current internal forecasts, Entergy and the Registrant Subsidiaries may become subject to the corporate alternative minimum tax included in the Inflation Reduction Act of 2022 beginning in the next two to four years.

Current wording

Based on current IRS guidance and current internal forecasts, Entergy and the Registrant Subsidiaries may become subject to the corporate alternative minimum tax included in the Inflation Reduction Act of 2022 beginning in the next one to three years.

Previous wording

See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act on 2024, 2023, and 2022 results of operations and financial condition, the provisions of the Tax Cuts and Jobs Act, and Note 2 to the financial statements for discussion of the regulatory proceedings that have considered the effects of the Tax Cuts and Jobs Act. For further discussion of the effects of the Inflation Reduction Act of 2022, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.

Current wording

See Note 3 to the financial statements for discussion of the effects of the Tax Cuts and Jobs Act on 2025, 2024, and 2023 results of operations and financial condition, the provisions of the Tax Cuts and Jobs Act, and Note 2 to the financial statements for discussion of the regulatory proceedings that have considered the effects of the Tax Cuts and Jobs Act. For further discussion of the effects of the Inflation Reduction Act of 2022, and the One Big Beautiful Bill Act of 2025, see the “Income Tax Legislation and Regulation” section of Entergy Corporation and Subsidiaries Management’s Financial Discussion and Analysis and Note 3 to the financial statements.

Previous wording

Entergy and its subsidiaries’ future prospects and results of operations significantly depend on their ability to successfully implement their business strategies, including executing on their growth strategy and achieving Entergy’s climate goals and commitments, which are subject to business, regulatory, economic, shareholder activism and other risks and uncertainties, many of which are beyond their control. As a result, Entergy and its subsidiaries may be unable to fully achieve the anticipated results of such strategies.

Current wording

Entergy and its subsidiaries’ future prospects and results of operations significantly depend on their ability to successfully implement their business strategies, including executing on their growth strategy and achieving Entergy’s climate goals and aspirations, which are subject to business, regulatory, economic, shareholder activism and other risks and uncertainties, many of which are beyond their control. As a result, Entergy and its subsidiaries may be unable to fully achieve the anticipated results of such strategies.

Previous wording

Entergy and its subsidiaries anticipate a high level of load growth in their industrial and large commercial customer segments, including from large data centers owned by a small number of large customers. Entergy and its subsidiaries may be unsuccessful in capturing such opportunities or the opportunities to serve these new large customers may not materialize to the degree currently expected. Entergy and its subsidiaries also may not have access to the capital needed to finance the incremental growth on terms and conditions satisfactory to Entergy or its subsidiaries and consistent with the maintenance of satisfactory credit ratings. Entergy and its subsidiaries may fail to execute within currently expected time frames or within currently expected costs, due to a number of factors, including failure to obtain, or any delay in obtaining, regulatory approval, shortages of qualified labor, supply chain constraints, other cost pressures, or inadequate project management and execution. Entergy and its subsidiaries may not be able to adequately protect contractually against the risks inherent in relying on such rapid growth within a small number of large customers concentrated in a single industry. These customers may represent a high percentage of total sales, revenues, and cash flow with respect to the applicable Utility operating company and thereby create business and credit concentration risks which Entergy and its subsidiaries may not be able to fully mitigate.

Current wording

Entergy and its subsidiaries anticipate a high level of load growth in their industrial and large commercial customer segments, including from large-scale data centers owned by a small number of large customers. Entergy and its subsidiaries may be unsuccessful in capturing such opportunities or the opportunities to serve these new large customers may not materialize to the degree, extent, or duration currently expected. Entergy and its subsidiaries also may not have access to the capital needed to finance the incremental growth on terms and conditions satisfactory to Entergy or its subsidiaries and consistent with the maintenance of satisfactory credit ratings. Entergy and its subsidiaries may fail to execute within currently expected time frames or within currently expected costs, due to a number of factors, including failure to obtain, or any delay in obtaining, regulatory approval, shortages of qualified labor, supply chain constraints, other cost pressures, or inadequate project management and execution. Entergy and its subsidiaries may not be able to adequately protect contractually against the risks inherent in relying on such rapid growth within a small number of large customers concentrated in a single industry and/or recover any amounts outside those included in the contractual arrangements. Entergy expects that these customers will represent a high percentage of total sales, revenues, and cash flow with respect to the applicable Utility operating company for the foreseeable future. This creates business industry and credit concentration risks which Entergy and its subsidiaries may not be able to fully mitigate.

Previous wording

Additionally, Entergy and its subsidiaries have pursued and may continue to pursue strategic transactions including merger, acquisition, divestiture, joint venture, restructuring, or other strategic transactions. For example, each of Entergy Louisiana and Entergy New Orleans have entered into purchase and sale agreements to sell their respective regulated natural gas local distribution company businesses to a third-party. Also, a significant portion of Entergy’s utility business plan over the next several years includes the construction and/or purchase of several natural gas plants and solar facilities. These or other transactions and plans are or may become subject to regulatory approval and other material conditions or contingencies, including increased costs or delays resulting from supply chain disruptions, import tariffs, and other issues. The failure to complete these transactions or plans or any future strategic transaction successfully or on a timely basis could have an adverse effect on Entergy’s or its subsidiaries’ financial condition or results of operations and the market’s perception of Entergy’s ability to execute its strategy. Further, these transactions, and any completed or future strategic transactions, involve substantial risks, including the following:

Current wording

Additionally, Entergy and its subsidiaries have pursued and may continue to pursue strategic transactions including merger, acquisition, divestiture, joint venture, restructuring, or other strategic transactions. Entergy’s utility business plan over the next several years includes the construction and/or purchase of several natural gas plants and solar facilities. These or other transactions and plans are or may become subject to regulatory approval and other material conditions or contingencies, including increased costs or delays resulting from supply chain disruptions, import tariffs, and other issues. The failure to complete these transactions or plans or any future strategic transaction successfully or on a timely basis could have an adverse effect on Entergy’s or its subsidiaries’ financial condition or results of operations and the market’s perception of Entergy’s ability to execute its strategy. Further, these transactions, and any completed or future strategic transactions, involve substantial risks, including the following:

Previous wording

The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of customers, the continued demand for electricity to power data centers, and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results, and financial condition of Entergy and these Utility operating companies.

Current wording

The success of certain Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on a limited number of such customers, the continued demand for electricity to power data centers, and the successful completion of the associated generation and transmission projects. Any reduction in the demand for electricity to power data centers or delays or unexpected costs associated with such projects may harm the growth prospects, future operating results, and financial condition of Entergy and these Utility operating companies.

Previous wording

Subject to pending regulatory approvals, certain Utility operating companies are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of customer representing significant new load to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities. The Utility operating companies continue to explore similar opportunities and may engage in additional similar transactions in the future.

Current wording

Subject to any pending regulatory approvals, certain Utility operating companies are making or are planning to make significant infrastructure investments in new solar projects, natural gas power plants, and other transmission and generation assets to power new large-scale data centers. These infrastructure investments are being made primarily in connection with electric service agreements with a small number of customers representing significant new load to provide power for new data centers being constructed to support artificial intelligence and other technology capabilities. The Utility operating companies continue to explore similar opportunities and have engaged, and may continue to engage, in additional similar transactions in the future.

Previous wording

This concentration of business with a small number of customers in an industry based on emerging technologies, including artificial intelligence and machine learning, presents several risks for these Utility operating companies. These technologies and their related business applications have developed rapidly in recent years and continue to develop. Entergy cannot predict the rate at which or the extent to which these emerging technologies will be broadly adopted and successful as business models. Changes in industry practice or advances in these technologies could reduce the demand for electricity to power data centers. Additionally, these customers may experience business downturn, which may cause the loss of these customers or may weaken their financial condition. Similarly, customers may reduce their investment in these new technologies or abandon them entirely.

Current wording

This small number of data center customers representing a large portion of the anticipated business of certain of the Utility operating companies exposes these Utility operating companies to several risks, the impact of which is greater due to the common risks facing those customers in the businesses supported by the data centers. The recent dramatic expansion in anticipated demand from data center customers is largely based on emerging technologies, including artificial intelligence and machine learning. These technologies and their related business applications have developed rapidly in recent years and continue to evolve rapidly. Entergy cannot predict the rate at which or the extent to which these emerging technologies will be broadly adopted and successful as business models. Changes in industry practice or advances in these technologies could reduce the demand for electricity to power data centers, including from these customers. Some data center owners and operators are developing their own energy sources to power their data centers, and it is possible that the Utility operating companies’ customers could choose to develop their own energy sources in the future. Additionally, data centers could be subject to future laws and regulations relating to, among other things, energy efficiency standards and energy use and source of power restrictions. These customers may also experience business downturns, which may cause the loss of these customers or a portion of their load requirements or may weaken their financial condition or ability to satisfy contractual obligations. Similarly, these customers may reduce their investment in these new technologies or abandon them entirely. It is not possible for Entergy to predict the future level of demand for electricity from such customers.

Previous wording

Any of these situations may result in the early termination or non-renewal of these customers’ electric service agreements or renewal on terms less favorable to the Utility operating company. Our electric service agreements with these customers include provisions for early termination payments in certain circumstances, but they do not fully protect against these risks. In the event a customer does not renew its electric service agreement, the Utility operating companies are also subject to the risk that they may not be able to enter into services agreements with new customers or that the terms of any new agreements may be less favorable to the Utility operating companies. While the assets constructed to serve these customers may otherwise be useful in the Utility operating companies’ business, there is a risk that the Utility operating companies may not be able to fully recover their investment in or a return on those assets, either through retail or wholesale rates. The small number of such customers and scale of the investment required to support those customers exacerbates this risk.

Current wording

Any of these situations may result in lower than anticipated revenue or the early termination or non-renewal of these customers’ electric service agreements or renewal on terms less favorable to the associated Utility operating company. Our electric service agreements with these customers include provisions for early termination payments in certain circumstances, but they do not fully protect against these risks. The Utility operating companies expect to incur a significant level of debt to finance the infrastructure investments associated with these customers’ projects. Although a significant portion of the costs of the infrastructure investments are expected to be recovered through payments under contractual agreements with the applicable customer, there is a risk that the Utility operating companies may not fully recover the costs of the infrastructure constructed to serve these customers despite contractual protections. Once this infrastructure becomes operational, Entergy expects that these customers will represent a high percentage of total sales, revenues, and cash flow for the associated Utility operating company in accordance with the terms of their electric service agreements. In the event a customer terminates or does not renew its electric service agreement, the Utility operating companies may not be able to enter into new services agreements, timely or at all, with one or more comparable revenue-generating customers, and the terms of any new agreements may be less favorable to the Utility operating companies. While the assets constructed to serve these customers may otherwise be useful in the Utility operating companies’ business, there is a risk that the Utility operating companies may not be able to fully recover their investment in or a return on those assets, either through retail or wholesale rates or meet the debt obligations incurred in connection with these assets. The small number of such customers and scale of the investment required to support those customers heightens this risk.

Previous wording

The success of these Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on the successful completion of large capital projects to provide electricity to these data centers. As discussed elsewhere in this report, the ability to complete large capital projects is dependent upon several factors, including, among others, the ability to obtain financing of such projects on satisfactory terms and conditions, secure regulatory permits, secure sufficient land for the siting of solar panels and power generation facilities, obtain and maintain MISO interconnection queue positions and otherwise obtain necessary interconnection or transmission service in MISO, and hire qualified labor, as well as levels of public support or opposition to these projects, and suppliers’ and contractors’ performance and ability to fulfill their obligations under contracts. Successful completion of these projects may be further influenced by changes in law or regulation, such as environmental compliance requirements or MISO tariff rules and processes, direct and indirect trade and tariff issues, including those associated with imported solar panels, as well as supply chain delays or disruptions, workforce challenges, and other events beyond the control of these Utility operating companies. The occurrence of any of these events may materially affect the schedule, cost, and performance of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-offs of their investments in these projects or incur other costs or risks, including MISO market risks or charges. For additional information concerning these Utility operating companies’ investments in new generation to support large-scale data centers, see “Utility -Property and Other Generation Resources -Provision of Service to Large-Scale Data Center Customers” in Part I, Item 1.

Current wording

The success of these Utility operating companies’ investments in new generation and transmission assets to support large-scale data centers depends on the successful completion of large capital projects to provide electricity to these data centers. As discussed elsewhere in this report, the ability to complete large capital projects is dependent upon several factors, including, among others, the ability to obtain financing of such large-scale projects on satisfactory terms and conditions, secure regulatory permits, secure sufficient land for the siting of solar panels and power generation facilities, obtain and maintain MISO interconnection queue positions and otherwise obtain necessary interconnection or transmission service in MISO, and hire qualified labor, as well as levels of public support or opposition to these projects, including, but not limited to opposition arising out of concerns over environmental impacts or the potential for rate increases for all customers, and suppliers’ and contractors’ performance and ability to fulfill their obligations under contracts. Successful completion of these projects may be further influenced by changes in law or regulation, such as environmental compliance requirements or MISO tariff rules and processes; trade-related government actions, such as direct and indirect trade and tariff actions, including those associated with imported solar panels; as well as supply chain delays or disruptions, workforce challenges, and other events beyond the control of these Utility operating companies. The occurrence of any of these events may materially affect the schedule, cost, and performance of these projects. If these projects are significantly delayed or become subject to cost overruns or cancellation, Entergy and the Utility operating companies could incur additional costs and termination payments or face increased risk of potential write-offs of their investments in these projects or incur other costs or risks, including MISO market risks or charges. For additional information concerning these Utility operating companies’ investments in new generation to support large-scale data centers, see “Utility -Property and Other Generation Resources -Provision of Service to Large-Scale Data Center Customers” in Part I, Item 1.

Previous wording

The completion of capital projects, including the construction of power generation facilities, and other capital improvements, involve substantial risks. Should such efforts be unsuccessful, the financial condition, results of operations, or liquidity of Entergy and the Utility operating companies could be materially affected.

Current wording

The completion of capital projects, including the construction of power generation facilities, and other capital improvements, involves substantial risks. Should such efforts be unsuccessful, the financial condition, results of operations, or liquidity of Entergy and the Utility operating companies could be materially affected.

Previous wording

Entergy’s and the Utility operating companies’ ability to complete capital projects, including the construction of power generation facilities, or make other capital improvements, such as transmission and distribution infrastructure replacements or upgrades, in a timely and cost-effective manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, project management expertise, escalating costs for materials, labor, and environmental compliance, reliance on suppliers for timely and satisfactory performance, delays and cost increases, and supply chains and material constraints, including those that may result from major storm events, both within and outside of Entergy’s service area. Certain events may occur that may materially affect the schedule, cost, and performance of these projects. These events may relate to the actual siting and construction process, such as facing public opposition; delays in obtaining permits; challenges in securing sufficient land for the siting of solar panels, power generation facilities, and large transmission projects; shortages in materials and qualified labor; suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit their ability to fulfill their obligations under contracts; supply chain delays or disruptions; and changes in the scope and timing of projects. Various economic and financial factors may include poor quality initial cost estimates from contractors; the inability to raise capital on favorable terms; changes in commodity prices affecting revenue, fuel costs, or materials costs; and downward changes in the economy. Regulatory and legal issues include items such as changes in law or regulation, including environmental compliance requirements; and further direct and indirect trade and tariff issues, including those associated with imported solar panels or other goods or products required to complete major capital projects. Additionally, other events beyond the control of the Utility operating companies may occur that may materially affect the schedule, cost, and performance of these projects.

Current wording

Entergy’s and the Utility operating companies’ ability to complete capital projects, including the construction of power generation facilities, or make other capital improvements, such as transmission and distribution infrastructure replacements or upgrades, in a timely and cost-effective manner and within budget is contingent upon many variables and subject to substantial risks. These variables include, but are not limited to, availability of project management expertise, availability of qualified, skilled labor, escalating costs for materials, labor, and environmental compliance, reliance on suppliers for timely and satisfactory performance, delays and cost increases, and supply chains and material constraints, including those that may result from major storm events, both within and outside of Entergy’s service area. Certain events may occur that may materially affect the schedule, cost, and performance of these projects. These events may relate to the actual siting and construction process, such as facing public opposition; delays in obtaining permits; challenges in securing sufficient land for the siting of solar panels, power generation facilities, and large transmission projects; shortages in materials and qualified labor; suppliers and contractors not performing as expected or required under their contracts and/or experiencing financial problems that inhibit their ability to fulfill their obligations under contracts; supply chain delays or disruptions; and changes in the scope and timing of projects. Various economic and financial factors may include early stage cost estimates from contractors that are lower than final costs; the inability to raise capital on favorable terms; changes in commodity prices affecting revenue, fuel costs, or materials costs; and downward changes in the economy. Regulatory and legal issues include items such as changes in law or regulation, including environmental compliance requirements and restrictive laws, regulations or policies relating to data centers or facilities that power data centers; and further direct and indirect trade and tariff issues, including those associated with imported solar panels or other goods or products required to complete major capital projects. Additionally, other events beyond the control of the Utility operating companies may occur that may materially affect the schedule, cost, and performance of these projects.

Previous wording

Entergy relies on a large and changing workforce, including employees, contractors, and temporary staffing. Certain factors, such as an aging workforce, mismatching of skill sets for current and future needs, failing to appropriately anticipate future workforce needs, workforce impacts from public health concerns, challenges competing with other employers offering fully remote or more flexible work options, rising salary and other labor costs, unavailability of contract resources, and labor disputes and work disruptions may lead to operating challenges and increased costs. The challenges include inability to attract or retain talent, lack of resources, loss of knowledge base, and the time required for skill development. Costs, including costs for contractors to replace employees, productivity costs, and safety costs, may increase. Failure to hire and adequately train replacement employees, or the future availability and cost of contract labor, may adversely affect the ability to manage and operate the business, especially considering the specialized workforce needs associated with nuclear generation facilities and new skills required to develop and operate a modernized, technology-enabled, and lower carbon power grid. If Entergy and its subsidiaries are unable to successfully attract, retain, and manage an appropriately qualified workforce and/or retain sufficient skilled contract labor resources to supplement the workforce, their results of operations, financial position, and cash flows could be negatively affected.

Current wording

Entergy relies on a large and changing workforce, including employees, contractors, and temporary staffing, to provide the services necessary to operate its business and execute on its business plan and growth strategy. Certain factors, such as an aging workforce, mismatching of skill sets for current and future needs, failing to appropriately anticipate future workforce needs, workforce impacts from public health concerns, challenges competing with other employers offering fully remote or more flexible work options, increased demand for skilled labor and challenging labor markets, particularly in rural areas where certain large-scale data centers and other large customers plan to be located, rising salary and other labor costs, unavailability of contract resources, and labor disputes, work disruptions, and increased labor organizing activity may lead to operating challenges and increased costs. The challenges include inability to attract or retain talent, lack of resources, loss of knowledge base, and the time required for skill development. Costs to attract and retain employees and contract labor, including costs for contractors to replace employees, productivity costs, and safety costs, may increase. Failure to hire and adequately train replacement employees, or the future availability and cost of contract labor, may adversely affect the ability to manage and operate the business and to execute on Entergy’s business plan and growth strategy, especially considering the specialized workforce needs associated with nuclear generation facilities and new skills required to develop and operate a modernized, technology-enabled, and lower carbon power grid. If Entergy and its subsidiaries are unable to successfully attract, retain, and manage an appropriately qualified workforce and/or retain sufficient skilled contract labor resources to supplement the workforce, their results of operations, financial position, and cash flows could be negatively affected.

Previous wording

The businesses in which Entergy’s subsidiaries, including the Utility operating companies and System Energy, operate are subject to extensive existing environmental regulation by local, state, and federal authorities. These laws and regulations affect the manner in which the Utility operating companies and System Energy conduct their operations and make capital expenditures. These laws and regulations also affect how Entergy’s subsidiaries, including the Utility operating companies and System Energy, manage air emissions, discharges to water, wetlands impacts, solid and hazardous waste storage and disposal, cooling and service water intake, the protection of threatened and endangered species, certain migratory birds and eagles, hazardous materials transportation, and similar matters. Federal, state, and local authorities continually revise these laws and regulations, and the laws and regulations are subject to judicial interpretation and to the implementing agencies’ permitting and enforcement decisions. Developing and implementing plans for facility compliance with these requirements can lead to capital, personnel, and operation and maintenance expenditures. Violations of these requirements can subject the Utility operating companies and System Energy to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, remediation and clean-up costs, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. In addition, Entergy and its subsidiaries, including the Utility operating companies and System Energy, are subject to potential liability under these laws for the costs of remediation of environmental contamination of property now or formerly owned or operated by the Utility operating companies and System Energy and of property potentially contaminated by hazardous substances they generate. The Utility operating companies currently are involved in proceedings relating to sites where hazardous substances have been released and may be subject to additional proceedings in the future. Entergy’s subsidiaries, including the Utility operating companies and System Energy, have incurred and expect to incur significant costs related to environmental compliance.

Current wording

The businesses in which Entergy’s subsidiaries, including the Utility operating companies and System Energy, operate are subject to extensive existing environmental regulation by local, state, and federal authorities. These laws and regulations affect the manner in which the Utility operating companies and System Energy conduct their operations and make capital expenditures. These laws and regulations also affect how Entergy’s subsidiaries, including the Utility operating companies and System Energy, manage air emissions, discharges to water, wetlands impacts, solid and hazardous waste storage and disposal, cooling and service water intake, the protection of threatened and endangered species, certain migratory birds and eagles, hazardous materials transportation, and similar matters. Federal, state, and local authorities continually revise these laws and regulations, and the laws and regulations are subject to judicial interpretation and to the implementing agencies’ permitting and enforcement decisions. Furthermore, in response to increased economic and industrial growth, federal, state, and local governments may adopt or change laws, regulations, or ordinances addressing the real or perceived environmental or other impacts. Developing and implementing plans for facility compliance with these requirements can lead to capital, personnel, and operation and maintenance expenditures. Violations of these requirements can subject the Utility operating companies and System Energy to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs or operating restrictions to achieve compliance, remediation and clean-up costs, civil penalties, and exposure to third parties’ claims for alleged health or property damages or for violations of applicable permits or standards. In addition, Entergy and its subsidiaries, including the Utility operating companies and System Energy, are subject to potential liability under these laws for the costs of remediation of environmental contamination of property now or formerly owned or operated by the Utility operating companies and System Energy and of property potentially contaminated by hazardous substances they generate. The Utility operating companies currently are involved in proceedings relating to sites where hazardous substances have been released and may be subject to additional proceedings in the future. Entergy’s subsidiaries, including the Utility operating companies and System Energy, have incurred and expect to incur significant costs related to environmental compliance. To the extent that any such changes in law or regulation impact data centers or facilities that power data centers, these risks may be heightened by Entergy’s and the Utility operating companies’ increasing reliance on large-scale data center customers for revenue and load growth.

Previous wording

Emissions of nitrogen and sulfur oxides, mercury, particulates, greenhouse gases, and other regulated emissions from generating plants potentially are subject to increased regulation, controls, and mitigation expenses. In addition, existing environmental regulations and programs promulgated by the EPA often are challenged legally, or are revised or withdrawn by the EPA, sometimes resulting in large-scale changes to anticipated regulatory regimes and the resulting need to shift course, both operationally and economically, depending on the nature of the changes. Risks relating to global climate change, initiatives to regulate, or otherwise compel reductions of greenhouse gas emissions, and water availability issues are discussed below.

Current wording

Emissions of nitrogen and sulfur oxides, mercury, particulates, greenhouse gases, and other regulated emissions from generating plants potentially are subject to increased regulation, controls, and mitigation expenses. The capital plan of certain Utility operating companies includes significant investments in generation facilities to serve the rapid growth in load demand from large customers and large-scale data centers. These generating facilities will produce regulated emissions, which amplifies these risks for Entergy and those Utility operating companies. In addition, existing environmental regulations and programs promulgated by the EPA often are challenged legally, or are revised or withdrawn by the EPA, sometimes resulting in large-scale changes to anticipated regulatory regimes and the resulting need to shift course, both operationally and economically, depending on the nature of the changes. Risks relating to global climate change, initiatives to regulate, or otherwise compel reductions of greenhouse gas emissions, and water availability issues are discussed below.