Entergy Corp (ETR) Q1 2019 Earnings Call Transcript

In January, we began instalment of the first automated meters. at the next three years we will install approximately three million automated meters across our jurisdictions, with plans ought activate one million new meters at 2019. The new meters will employ our customers with faster outage identification, enhanced guest service and fare savings. Additionally, these meters will furnish us with the tools ought assist our customers control their state manners and lower their bills. And we will recycle the old meters hind removal. It will be sustainably dismantled yielding copper and aluminum bit that can be recycled.

Our new build CCGT projects remain at budget and at schedule. hind a small at two years of construction, St. Charles energy stop is at its persist commissioning phase and that plot is expected ought be placed at service this quarter. Construction activity at the New Orleans energy stop kicked into high gear hind the Louisiana department of Environmental feature issued its state air permit. The factory will be a much needed local resource of contemporary ordinary gas generated energy during residents and businesses. at Mississippi, we thrive ought vocation across the chalked out generating stop acquisition ought oath that the factory is a good impose during our customers. Our due diligence has identified a latent mechanical spread that can need ought be addressed preceding ought closing.

There is a possibility that closing can be delayed ought allow time ought decide the issue. We will learn more at the coming weeks and we'll furnish an update at our next salary call. at this point, we carry out no foretell a lengthen that will dine a substance economical impact. These are fair a little examples of the investments we are making at our effective and sustainable energy system during the employ of our customers.

We kicked off 2019's basis evaluate filings with Entergy Mississippi's annual FRP which was submitted at March 15th. We are working across that process and expectation new rates ought be effective at June. We are too preparing ought rank our annual FRPs at Louisiana and Arkansas afterward this year. Our New Orleans evaluate instance is ongoing and we remain at explore ought dine new rates effective this summer and we've requested a formula evaluate plot ought receive consequence next year. at addition, proposed legislation at Texas could assist diminish regulatory lag at generation investment at that jurisdiction. The legislation passed the House, it was too passed by the Senate affair and work committee and it will now be considered by the sum Senate.

If signed into law, the legislation used to allow the committee ought consent a rider ought recover rational and inherent generation investment which used to be more timely and less burdensome than a basis evaluate instance filing. This legislation is compatible with our expectation ought align regulatory structures with guest benefits.Three of our five jurisdictions, which generate approximately 80% of the utility's revenue dine annual formula evaluate plot mechanisms. These, combined with other constructs, will allow during timely recovery of investments which employ customers furnish clarity ought our plans and solidify the economical commitments we've made ought furnish firm predictable growth at salary and dividends.

At Entergy our nation are keen ought our success. Our employees create it feasible ought instrument our tactic and arrive our objectives. Acquiring, retaining and developing the talent we need ought satisfy today's affair needs and ought prepare during the workplace of tomorrow are important. during separate of our employee concentrate we are proud ought further supportive vocation environments during members of the National defend and Reserve. at recognition of this, we won the 2019 Pro Patria give from the department of Defense and we were a semi finalist during the 2019 freedom Award.

Entergy is too committed ought supporting businesses at the communities we serve. The Women's affair Enterprise National Council, recognized our efforts and once again presented the prestigious America's sumit Corporations during Women's affair Enterprises give ought Entergy. The national give recognizes companies with world-class diversity and inclusion programs that enable growth and innovation cottage breaking down barriers during women owned businesses.

These awards are good validation of our mission ought create impose during full of our stakeholders, customers, employees, communities and owners. We recently released our annual integrated clarify titled "When Does One match More". It illustrates how our efforts ought serve the needs of each stakeholder creates impose during full . Our reported outlines how the emergence of new technologies enable us ought build more individualized relationships with our customers and companion with them at solutions that create their lives better. And how providing opportunities during our employees ought adopt new skill sets ought effectively instrument control new technologies will motivate transformative change.

Entergy is too recognized during an industry head during taking deed ought greet climate issues. at 2001, we were the first US electrical utility ought commit voluntarily ought stabilizing greenhouse gas emissions. at 2005 we upped that commitment ought capping our carbon dioxide emissions at 20% below year 2000 levels across the year 2010. Then at 2011, we extended that commitment across 2020. flat though, Entergy's carbon dioxide emissions evaluate continues ought be one of the lowest amid our peers, the broad consensus of contemporary scientific data at climate modify indicates that during an industry we make ought carry out more ought diminish our footprint and that of our customers and communities.

Entergy sees this no during a choice, besides during a obligation and an opportunity. That is why, at appendix ought our integrated report, we too released our climate scenario analysis and evaluation of risks and opportunities. This clarify outlines our role at session the worldwide imperative ought diminish threaten that's posed by climate modify and announces a new greenhouse gas emissions familiar ought diminish our CO2 emissions evaluate ought 15% below year 2000 levels by 2030. That path that during each unit of electricity, we generate at 2030 we will emit (ph) half the carbon dioxide we did at 2000.

Entergy's leadership and sustainability and social obligation makes us a successful destiny 500 company with a conscience. Our actions and commitments ought sustainability spot us ought effectively employ our stakeholders today, cottage securing it ingenious tomorrow. during the first belt of 2019, we thrive at explore of firm successful execution of our tactic and 2019 will be another successful year during us.

Our operating and economical positions are firm and our strategic order is clear. We are an industry head at keen measures of sustainability.

We dine amid the lowest retail rates at the state and we operate one of the cleanest large scale fleets at the United States. We too employ from robust industrial growth within our service territory. We invest at our employees, at our communities and our tactic is aligned with the goals of our regulators. This is what makes Entergy a compelling long-term investment. And this is the basis from which we will thrive ought grow and innovate during the employ of full of our stakeholders.

I will now become the scream at ought Drew, who will furnish more detail at our first belt economical results.

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

Thank you, Leo. Good morning, everyone. during Leo said, the first belt was a productive begin ought the year and we are firmly at explore ought satisfy our sum year guidance and longer-term outlook. Today we are officially starting ought clarify salary using our simpler Entergy adjusted salary measure, ought perfect deliberate the character of our affair going dispatch and our materials and disclosures are more streamlined during a result.

Let's now become ought the numbers. during you can scream on at slip 4, at a per segment basis. Entergy adjusted salary were chiefly even quarter-over-quarter. Turning ought slip 5, results of the utility are straightforward. Net revenue increased mostly from the effective evaluate activity at Arkansas, Louisiana and Texas. although the enactment of impose reform, final year's results included regulatory charges, retort the benefits, the lower federal impose rates ought customers. And that lower impose evaluate is now reflected at guest bills.

Partially offsetting was lower volume owing ought the effects of weather, which was unfavorable this belt compared ought one year ago. Finally, a higher segment calculate affected this quarter's results at a per segment basis.

EWC's first belt results are summarized at slip 6. And during a reminder, EWC is now excluded from our Entergy adjusted measure. during reported salary were $0.60 higher than the preceding year. The key driver was robust just deed at the belt during EWC's nuclear decommissioning pledge funds. A impose item, which resulted from the sale of Vermont Yankee partly offset the increase.

Before leaving EWC, I'd gown ought assert that hind accounting during the transaction costs during Indian Point, we cottage expectation EWC ought furnish slightly definite net cash ought parent from '19 across '22.

Slide 7 shows operating cash run during the belt of $501 million, a $56 million decrease from a year ago. The modify was driven by the retort of approximately $100 million of unprotected excess ADIT ought customers too during the consequence of unfavorable weather. Lower pension contribution partially offset the decrease.

We are affirming our 2019 salary guidance and economical outlooks, which are summarized at slip 8. during I mentioned, we experienced unfavorable climate at the quarter. Nevertheless, we remain at explore ought grow at approximately the midpoint of our 2019 guidance. Our faith metrics are shown at slip 10, apparent during the sum debt has improved ought 21.7%. This was chiefly owing ought the settlement of a section of the equity dispatch at December. Our FFO ought debt is 11.1%, this includes the effects of returning $692 million of unprotected excess ADIT ought customers.

Excluding this concord aid and definite items related ought our exit of EWC, FFO ought debt used to be 13%. We expectation cash run ought perfect during presently during next belt and throughout the rest of the year assuming ordinary weather. We remain committed ought our targeted ranges of at or at 15% during FFO ought debt at 2020 and below 25% prepared at the sum debt, too during maintaining our investment class profile. We had a productive first belt and we scream on 2019 during another successful year. The foundations at put during us ought satisfy our economical commitments ought dispatch firm predictable growth at salary and dividends across guest centric investments. during Leo mentioned, our operating and economical positions are firm and our strategic order is clear.

We're continuing our mission ought create sustainable impose during full of our stakeholders and show dispatch ought the opportunities ahead.

And now the Entergy team is available ought retort questions.

Questions and Answers:

Operator

(Operator Instructions)

Our first mystery comes from queue of Praful Mehta with Citigroup. Your queue is now open.

Praful Mehta -- Citigroup -- Analyst

Thanks hence much. Hi guys.

Leo Denault -- Chairman of the Board and head Executive Officer

Good morning Praful. How are you doing?

Praful Mehta -- Citigroup -- Analyst

Good morning. So, I guess, first mystery at the salary lead during 2019, it looks gown you reduced the O&M hope during the sum year from $0.30 ought $0.20. Is that -- firstly, is that helping assert your salary lead and what's helping possess that or carry that O&M down from the creative $0.30 resumption ought now the $0.20?

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

Yes, Praful, this is Drew. That is helping us ought assert and amid a attach of other things, that includes some efficiencies we found early at the year, our good operations dine led ought some rebates during insurance premiums. A small sheet of it is timing into other periods gown 2020. But, it's no enough ought modify at the expectations out there and we've too seen some offsets at other areas gown employ expense. We had a same robust quarter, at $1.5 billion of refinancing and new cash issuances and during employ rates were lower we were capable ought take some of that versus our foregoing expectation.

So the blend of full those things are what's helping us assert our expectations during the year.

Praful Mehta -- Citigroup -- Analyst

Got you. That's helpful. Thanks, Drew. And then secondly at the operating cash run descend which is significant, besides it sounds gown it's mostly driven by the ADIT which it seems gown you front-loaded, flat within the year, is that handsome at condition of session how the ADIT will be paid out at 2019?

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

Yes, that's correct. And during you know, that's a 12-month class of view. And hence we used to see, I am talking at sumit of the FFO class of measures used to be a 12-month class of view. We carry out scream on it thrive ought trend down at the class of the year both at the 12 month rolling sheet and at the lodging and you scream on our operating cash run thrive ought perfect at the class of the year. We are approximately 70% done with the retort of the cash, hence far, ought our customers.

Praful Mehta -- Citigroup -- Analyst

Got you. That's super helpful. And then finally, congrats at Indian Point. fair wanted ought clarify, is it handsome ought learn that the decommissioning pledge threaten or the deed of the decommissioning pledge threaten is now mostly at the hands of the buyer, where if there is any underperformance it won't really collision the transaction economics?

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

That's correct.

Praful Mehta -- Citigroup -- Analyst

Okay, great, thanks hence much guys.

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

Thank you, Praful.

Operator

Our next mystery comes from the queue of Andy (inaudible) with Macquarie. Your queue is now open.

Andy -- Macquarie -- Analyst

I wanted ought plead a longer-term question. hence you mentioned that you energy multiply renewal separate spending if the economics of wind and solar wealth improve. I intend given some put of impose subsidies hence those wouldn't be -- wouldn't you deem really accelerating some of the CapEx?

Leo Denault -- Chairman of the Board and head Executive Officer

I'm sorry, the connection wasn't good enough during us ought capture that.

Andy -- Macquarie -- Analyst

Can you hear me now.

Leo Denault -- Chairman of the Board and head Executive Officer

Yes, sounds a small perfect yeah.

Andy -- Macquarie -- Analyst

I'm sorry, I was fair wondering approximately your regulated renewable energy CapEx, you mentioned that some of your jurisdictions energy deem more renewable spending going dispatch once the renewables become more economic, besides given that there is some class of some of the impose subsidies wouldn't carry out you deem really potentially accelerating this CapEx?

Leo Denault -- Chairman of the Board and head Executive Officer

I'm no definite really that we used to scream on any acceleration at those, most of these projects will be showing up at the purpose of the plot at the 2021 and beyond timeframe and really wouldn't scream on us accelerating it much. We've got ought vocation into this. hence the resource plot where they create economic sensation and serve the exact familiar during the grid. hence during the prices grow down and during the technique continues ought evolve, which we fully expected ought carry out we to scream on it playing a bigger role at the resource plot during it competes robust with other goods during the organize of operational characteristics ought payout.

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

Also that our NCR our mean fare rates, create it a small less economic during some of these projects and naturally we cottage dine ought progress across the regulatory processes associated with, each of these transactions. And hence I deem we're going at a handsome good clip, given what we deem the regulatory bandwidth is at this point. Of course, if the economics took a step change, certainly we used to show at something different. hence we are looking at it, besides we're no anticipating an acceleration gown Leo said.

Andy -- Macquarie -- Analyst

Okay, thank you.

Leo Denault -- Chairman of the Board and head Executive Officer

Thank you.

Operator

Our next mystery comes from the queue of Steve Fleishman with Wolfe Research. Your queue is now open.

Steve Fleishman -- Wolfe inquiry -- Analyst

Good morning. I learn you class of addressed this. Hey, Leo, could you possibly report a small sheet more approximately the impacts of the Texas legislation tier plot and what -- could it be impactful ought your guidance or your headmaster plan?

David Borde -- Vice headmaster Investor Relations

Hey, Steve it's Rod (ph) . Good morning. The Texas legislation, cottage certainly definite is no substance enough during us ought modify our guidance and outlooks. possess at worry that it's really providing both the Commission, too during the company additional tools during we deem beyond Montgomery County. hence the retort ought your mystery is no substance enough at condition of economical collision ought modify our outlooks

Steve Fleishman -- Wolfe inquiry -- Analyst

Okay.

Leo Denault -- Chairman of the Board and head Executive Officer

I'll add ought that. It's a good threaten reduction occur right. It aligns up the employ that customers employ from the appendix of new generation with the timing of regulatory recovery. That's a destiny more effective than the path we used to hope going approximately it now evaluate instance approximately each new generating asset which mill show during something large gown Montgomery County, besides if you begin adding smaller generation or -sharing the renewable universe it comes a small sheet more problematic ought furnish that employ ought the customers at the same time you employ regulatory approval.

Steve Fleishman -- Wolfe inquiry -- Analyst

Okay and then the (inaudible) spread that you mentioned, could you recall what the investment there is and just, is there, -- is this a fixable spread or is it a threaten that you fair decide no ought employ the (inaudible)?

Andrew "Drew" Marsh -- Executive Vice headmaster and head economical Officer

This is Drew . Our planned investment there was approximately $400 million including some of the upgrades and other things that we dine planned. at this point, we don't learn exactly what the spread is. We fair learn there are some vibrations and other things, besides we deem it's possibly fixable, and we'll be capable ought employ ought a transaction near ago too terribly long.

Steve Fleishman -- Wolfe inquiry -- Analyst

Okay. Okay, thank you.

Leo Denault -- Chairman of the Board and head Executive Officer

Thank you, Steve.

Operator

Our next mystery comes from the queue of Greg Gordon with Evercore. Your queue is now open.

Greg Gordon -- Evercore -- Analyst

A larger (inaudible) during you possibly -- Okay.

Leo Denault -- Chairman of the Board and head Executive Officer