Entergy Utility Group, Inc. 1ST MTG 5% 52

What they do

Entergy New Orleans, LLC operates as a regulated utility, providing electric and natural gas service to customers in New Orleans, Louisiana. As part of Entergy Corporation, it participates in the MISO wholesale electricity market and is subject to rates and regulation by local and federal authorities. Its operations are included in Entergy's Utility segment, which encompasses the company's regulated electric and gas utilities.

Revenue drivers

• Electric retail sales — Revenue is primarily derived from regulated electric rates charged to residential, commercial, and industrial customers in New Orleans. Rate filings and formula rate plans adjust these rates, impacting revenue.
• Natural gas distribution — Entergy New Orleans also operates a natural gas distribution business, subject to regulation, contributing to revenues alongside electricity. The 10-K notes Entergy New Orleans and Entergy Louisiana's natural gas distribution businesses were held for sale at end of 2024.
• Regulatory mechanisms and riders — Revenue recovery is supported by regulatory mechanisms such as formula rate plans, fuel and purchased power cost recovery riders, and riders for construction work in progress, which adjust cash flows and earnings.

Recent performance

Entergy Corporation reported consolidated earnings of $483 million, or $1.03 per share, for Q2 2026, and $868 million, or $1.87 per share, year-to-date, on an as-reported basis. Adjusted earnings (non-GAAP) were $881 million, or $1.90 per share, year-to-date, up from $829 million, or $1.87, in the prior year. Utility business earnings for Q2 2026 were $626 million, or $1.34 per share, flat versus prior year, with higher retail sales and regulatory actions offset by higher interest, O&M, and depreciation. Entergy New Orleans, as a subsidiary, is included in these consolidated results; separate figures were not provided in the excerpts.

Strategy

Entergy's strategy focuses on meeting customer-driven load growth, including increasing demand from large data centers, while continuing investment in grid reliability and generation. The company is pursuing regulatory approvals for rate plans and generation projects, as evidenced by filings for formula rate plans and riders across operating companies. Entergy highlights participation in MISO, which involves allocating transmission upgrade costs and managing interconnection queue delays, as a strategic and regulatory challenge. The company also emphasizes weather and operational performance, with a focus on nuclear plant longevity and operational excellence.

Risks

• Regulatory and rate case risk — Pending rate cases and formula rate plan proceedings could affect cost recovery and returns, with delays potentially impacting cash flows.
• MISO market and cost allocation — Changes in MISO market rules or allocation of transmission upgrade costs could adversely affect Entergy New Orleans's operations and financial results.
• Load growth and data center dependencies — Capital investments tied to expected customer growth, including data centers, may become stranded if growth does not materialize as projected.
• Nuclear operating and regulatory risks — Changes in nuclear regulation, safety concerns, or operational challenges at Entergy's nuclear plants could impose costs and affect reliability.

Outlook

Management affirmed full-year 2026 guidance and outlooks, expecting to stay on track for its 2026 objectives. Regulatory filings and rate updates are expected to continue, including formula rate plan extensions and rider adjustments across operating companies. Entergy also plans to continue investments in grid reliability and to monetize opportunities such as the Texas Energy Fund grant, which may indirectly benefit the system.