Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Entergy Corp (ETR, Financial) reported strong EPS of $2.99 for the quarter, leading to an increase in the bottom of their guidance range by $0.10.
- The company has announced a significant new capital investment plan, increasing by $7 billion through 2028, driven by higher industrial sales and growing interest in clean energy products.
- Entergy Corp (ETR) is experiencing robust industrial sales growth, with a compound annual growth rate of 11% to 12% projected through 2028.
- The company is actively expanding its renewable energy portfolio, with close to 800 megawatts of solar resources in service and more than 2,600 megawatts of projects in process.
- Entergy Corp (ETR) has a proven track record of successfully executing large projects, with several major generation projects completed over the last decade and more in progress.
Negative Points
- The company's earnings for the quarter were lower than last year due to the impacts of extremely hot weather in the previous year.
- Entergy Corp (ETR) faces challenges in managing the scale of nuclear projects relative to the size of some of its operating companies, which could pose a risk.
- The company has not disclosed specific customer details for new agreements, limiting transparency for stakeholders.
- There are ongoing regulatory approvals needed for certain projects, such as the transfer of Louisiana's share of Grand Gulf Energy and Capacity to Mississippi.
- Entergy Corp (ETR) must navigate complex stakeholder engagement and regulatory processes to ensure successful project execution and customer satisfaction.
Q & A Highlights
Q: Can you provide color on what drove the major change in the 2026 EPS growth outlook to 8% to 9%? Is the investment fully covered under the rate agreement, or does it rely on the FRP as well?
A: The step-up in 2026 is supported by incremental capital for significant customer growth. We have a significant amount of growth already baked in our plan from a probability basis. Our investments are expected to be fully recoverable under our rate mechanisms, including the FRP, which has been extended for three years in Louisiana. (Kimberly Fontan, CFO)
Q: Is the deal to transfer SERI from Louisiana to Mississippi creating an additional capacity need for Louisiana? Can you satisfy that with the 3 gigs of solar, or does there need to be a resource adequacy backstop?
A: We can manage the capacity needs for Louisiana and Mississippi going forward. The transfer involves about 200 megawatts, which is manageable within Entergy Louisiana's portfolio. Opportunities from solar and potential nuclear upgrades will cover the balance. (Andrew Marsh, CEO)
Q: Can you talk about the sustainability of the 8% to 9% growth rate past 2028, and what are the long-term drivers?
A: The growth is driven by onshoring, clean energy, electrification, and technology trends. We expect these to pick up as we move into the next decade, particularly around clean energy and electrification. Conversations with large potential high-load factor customers in various industries continue, supporting long-term growth. (Andrew Marsh, CEO)
Q: Regarding advanced nuclear, can you expand on your comments? Would this be within the regulated cohort, and who is in the working group?
A: We believe nuclear is critical for meeting carbon objectives. Our stakeholders include vendors, communities, elected leaders, and commissioners. We are exploring how to manage risks to achieve policy objectives like clean energy and job creation. (Andrew Marsh, CEO)
Q: Is all of the CapEx from the new large customer reflected in this update? What is the customer bill impact relative to the outlook at Analyst Day?
A: Yes, all potential CapEx from the new customer is included. The bill trajectory is down to about 3.5% from 4% at Analyst Day, as increased sales growth spreads fixed costs over more sales, benefiting all customers. (Kimberly Fontan, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
