Edgar Filing: ENTERGY CORP /DE/

a10q.htm

__________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended June 30, 2013
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ____________ to ____________

Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.	Commission File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number, and IRS Employer Identification No.
1-11299	ENTERGY CORPORATION (a Delaware corporation) 639 Loyola Avenue New Orleans, Louisiana 70113 Telephone (504) 576-4000 72-1229752	1-31508	ENTERGY MISSISSIPPI, INC. (a Mississippi corporation) 308 East Pearl Street Jackson, Mississippi 39201 Telephone (601) 368-5000 64-0205830


1-10764	ENTERGY ARKANSAS, INC. (an Arkansas corporation) 425 West Capitol Avenue Little Rock, Arkansas 72201 Telephone (501) 377-4000 71-0005900	0-05807	ENTERGY NEW ORLEANS, INC. (a Louisiana corporation) 1600 Perdido Street New Orleans, Louisiana 70112 Telephone (504) 670-3700 72-0273040


0-20371	ENTERGY GULF STATES LOUISIANA, L.L.C. (a Louisiana limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 74-0662730	1-34360	ENTERGY TEXAS, INC. (a Texas corporation) 350 Pine Street Beaumont, Texas 77701 Telephone (409) 981-2000 61-1435798


1-32718	ENTERGY LOUISIANA, LLC (a Texas limited liability company) 446 North Boulevard Baton Rouge, Louisiana 70802 Telephone (800) 368-3749 75-3206126	1-09067	SYSTEM ENERGY RESOURCES, INC. (an Arkansas corporation) Echelon One 1340 Echelon Parkway Jackson, Mississippi 39213 Telephone (601) 368-5000 72-0752777

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Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrants have submitted electronically and posted on Entergy’s corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

	Large accelerated filer	Accelerated filer	Non- accelerated filer	Smaller reporting company
Entergy Corporation	Ö
Entergy Arkansas, Inc.			Ö
Entergy Gulf States Louisiana, L.L.C.			Ö
Entergy Louisiana, LLC			Ö
Entergy Mississippi, Inc.			Ö
Entergy New Orleans, Inc.			Ö
Entergy Texas, Inc.			Ö
System Energy Resources, Inc.			Ö

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Common Stock Outstanding		Outstanding at July 31, 2013
Entergy Corporation	($0.01 par value)	178,282,400

Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc. separately file this combined Quarterly Report on Form 10-Q. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company reports herein only as to itself and makes no other representations whatsoever as to any other company. This combined Quarterly Report on Form 10-Q supplements and updates the Annual Report on Form 10-K for the calendar year ended December 31, 2012 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed by the individual registrants with the SEC, and should be read in conjunction therewith.

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ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2013

	Page Number

Forward-looking information	iii
Definitions	v
Entergy Corporation and Subsidiaries
Management’s Financial Discussion and Analysis	1
Consolidated Statements of Income	24
Consolidated Statements of Comprehensive Income	25
Consolidated Statements of Cash Flows	26
Consolidated Balance Sheets	28
Consolidated Statements of Changes in Equity	30
Selected Operating Results	31
Notes to Financial Statements	32
Part 1. Item 4. Controls and Procedures	84
Entergy Arkansas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	85
Consolidated Income Statements	95
Consolidated Statements of Cash Flows	97
Consolidated Balance Sheets	98
Consolidated Statements of Changes in Common Equity	100
Selected Operating Results	101
Entergy Gulf States Louisiana, L.L.C.
Management’s Financial Discussion and Analysis	102
Income Statements	111
Statements of Comprehensive Income	112
Statements of Cash Flows	113
Balance Sheets	114
Statements of Changes in Equity	116
Selected Operating Results	117
Entergy Louisiana, LLC and Subsidiaries
Management’s Financial Discussion and Analysis	118
Consolidated Income Statements	127
Consolidated Statements of Comprehensive Income	128
Consolidated Statements of Cash Flows	129
Consolidated Balance Sheets	130
Consolidated Statements of Changes in Equity	132
Selected Operating Results	133
Entergy Mississippi, Inc.
Management’s Financial Discussion and Analysis	134
Income Statements	140
Statements of Cash Flows	141
Balance Sheets	142
Statements of Changes in Common Equity	144
Selected Operating Results	145

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ENTERGY CORPORATION AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

June 30, 2013

	Page Number

Entergy New Orleans, Inc.
Management’s Financial Discussion and Analysis	146
Income Statements	151
Statements of Cash Flows	153
Balance Sheets	154
Statements of Changes in Common Equity	156
Selected Operating Results	157
Entergy Texas, Inc. and Subsidiaries
Management’s Financial Discussion and Analysis	158
Consolidated Income Statements	164
Consolidated Statements of Cash Flows	165
Consolidated Balance Sheets	166
Consolidated Statements of Changes in Common Equity	168
Selected Operating Results	169
System Energy Resources, Inc.
Management’s Financial Discussion and Analysis	170
Income Statements	173
Statements of Cash Flows	175
Balance Sheets	176
Statements of Changes in Common Equity	178
Part II. Other Information
Item 1. Legal Proceedings	179
Item 1A. Risk Factors	179
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	179
Item 5. Other Information	180
Item 6. Exhibits	182
Signature	186

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FORWARD-LOOKING INFORMATION

In this combined report and from time to time, Entergy Corporation and the Registrant Subsidiaries each makes statements as a registrant concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “intend,” “expect,” “estimate,” “continue,” “potential,” “plan,” “predict,” “forecast,” and other similar words or expressions are intended to identify forward-looking statements but are not the only means to identify these statements. Although each of these registrants believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Any forward-looking statement is based on information current as of the date of this combined report and speaks only as of the date on which such statement is made. Except to the extent required by the federal securities laws, these registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including those factors discussed or incorporated by reference in (a) Item 1A. Risk Factors in the Form 10-K, (b) Management’s Financial Discussion and Analysis in the Form 10-K and in this report, and (c) the following factors (in addition to others described elsewhere in this combined report and in subsequent securities filings):

·	resolution of pending and future rate cases and negotiations, including various performance-based rate discussions, Entergy’s utility supply plan, and recovery of fuel and purchased power costs;

the termination of Entergy Arkansas’s and Entergy Mississippi’s participation in the System Agreement in December 2013 and November 2015, respectively, and the potential for other Entergy operating companies to terminate participation in the System Agreement by providing notice pursuant to the current 96-month notice period and/or by seeking an amendment to the System Agreement that would allow for an Entergy operating company to terminate its participation in less than 96 months;

·	regulatory and operating challenges and uncertainties associated with the Utility operating companies’ proposal to move to the MISO RTO;

risks associated with the proposed spin-off and subsequent merger of Entergy’s electric transmission business into a subsidiary of ITC Holdings Corp., including the risk that Entergy and the Utility operating companies may not be able to timely satisfy the conditions or obtain the approvals required to complete such transaction or such approvals may contain material restrictions or conditions, and the risk that if completed, the transaction may not achieve its anticipated results;

·	changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the application of more stringent transmission reliability requirements or market power criteria by the FERC;

changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of nuclear generating facilities, particularly those owned or operated by the Entergy Wholesale Commodities business, and the effects of new or existing safety or environmental concerns regarding nuclear power plants and nuclear fuel;

·	resolution of pending or future applications, and related regulatory proceedings and litigation, for license renewals or modifications of nuclear generating facilities;

·	the performance of and deliverability of power from Entergy’s generation resources, including the capacity factors at its nuclear generating facilities;

·	Entergy’s ability to develop and execute on a point of view regarding future prices of electricity, natural gas, and other energy-related commodities;

·	prices for power generated by Entergy’s merchant generating facilities and the ability to hedge, meet credit support requirements for hedges, sell power forward, or otherwise reduce the market price risk associated with those facilities, including the Entergy Wholesale Commodities nuclear plants;

iii

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FORWARD-LOOKING INFORMATION (Concluded)

·	the prices and availability of fuel and power Entergy must purchase for its Utility customers, and Entergy’s ability to meet credit support requirements for fuel and power supply contracts;

·	volatility and changes in markets for electricity, natural gas, uranium, and other energy-related commodities;

·	changes in law resulting from federal or state energy legislation or legislation subjecting energy derivatives used in hedging and risk management transactions to governmental regulation;

·	changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, greenhouse gases, mercury, and other regulated air emissions, and changes in costs of compliance with environmental and other laws and regulations;

·	uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel and nuclear waste storage and disposal;

variations in weather and the occurrence of hurricanes and other storms and disasters, including uncertainties associated with efforts to remediate the effects of hurricanes, ice storms, or other weather events and the recovery of costs associated with restoration, including accessing funded storm reserves, federal and local cost recovery mechanisms, securitization, and insurance;

·	effects of climate change;

·	changes in the quality and availability of water supplies and the related regulation of water use and diversion;

·	Entergy’s ability to manage its capital projects and operation and maintenance costs;

·	Entergy’s ability to purchase and sell assets at attractive prices and on other attractive terms;

·	the economic climate, and particularly economic conditions in Entergy’s Utility service area and the Northeast United States and events that could influence economic conditions in those areas;

·	the effects of Entergy’s strategies to reduce tax payments;

·	changes in the financial markets, particularly those affecting the availability of capital and Entergy’s ability to refinance existing debt, execute share repurchase programs, and fund investments and acquisitions;

·	actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in general corporate ratings, and changes in the rating agencies’ ratings criteria;

·	changes in inflation and interest rates;

·	the effect of litigation and government investigations or proceedings;

·	advances in technology;

·	the potential effects of threatened or actual terrorism, cyber attacks or data security breaches, including increased security costs, and war or a catastrophic event such as a nuclear accident or a natural gas pipeline explosion;

·	Entergy’s ability to attract and retain talented management and directors;

·	changes in accounting standards and corporate governance;

·	declines in the market prices of marketable securities and resulting funding requirements for Entergy’s defined benefit pension and other postretirement benefit plans;

·	future wage and employee benefit costs, including changes in discount rates and returns on benefit plan assets;

·	changes in decommissioning trust fund values or earnings or in the timing of or cost to decommission nuclear plant sites;

·	the effectiveness of Entergy’s risk management policies and procedures and the ability and willingness of its counterparties to satisfy their financial and performance commitments;

·	factors that could lead to impairment of long-lived assets; and

·	the ability to successfully complete merger, acquisition, or divestiture plans, regulatory or other limitations imposed as a result of merger, acquisition, or divestiture, and the success of the business following a merger, acquisition, or divestiture.

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DEFINITIONS

Certain abbreviations or acronyms used in the text and notes are defined below:

Abbreviation or Acronym	Term
AFUDC	Allowance for Funds Used During Construction
ALJ	Administrative Law Judge
ANO 1 and 2	Units 1 and 2 of Arkansas Nuclear One (nuclear), owned by Entergy Arkansas
APSC	Arkansas Public Service Commission
ASLB	Atomic Safety and Licensing Board, the board within the NRC that conducts hearings and performs other regulatory functions that the NRC authorizes
ASU	Accounting Standards Update issued by the FASB
Board	Board of Directors of Entergy Corporation
capacity factor	Actual plant output divided by maximum potential plant output for the period
City Council or Council	Council of the City of New Orleans, Louisiana
D.C. Circuit	U.S. Court of Appeals for the District of Columbia Circuit
DOE	United States Department of Energy
Entergy	Entergy Corporation and its direct and indirect subsidiaries
Entergy Corporation	Entergy Corporation, a Delaware corporation
Entergy Gulf States, Inc.	Predecessor company for financial reporting purposes to Entergy Gulf States Louisiana that included the assets and business operations of both Entergy Gulf States Louisiana and Entergy Texas
Entergy Gulf States Louisiana	Entergy Gulf States Louisiana, L.L.C., a company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. and the successor company to Entergy Gulf States, Inc. for financial reporting purposes. The term is also used to refer to the Louisiana jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Texas	Entergy Texas, Inc., a company formally created as part of the jurisdictional separation of Entergy Gulf States, Inc. The term is also used to refer to the Texas jurisdictional business of Entergy Gulf States, Inc., as the context requires.
Entergy Wholesale Commodities (EWC)	Entergy’s non-utility business segment primarily comprised of the ownership and operation of six nuclear power plants, the ownership of interests in non-nuclear power plants, and the sale of the electric power produced by those plants to wholesale customers
EPA	United States Environmental Protection Agency
ERCOT	Electric Reliability Council of Texas
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FitzPatrick	James A. FitzPatrick Nuclear Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Form 10-K	Annual Report on Form 10-K for the calendar year ended December 31, 2012 filed with the SEC by Entergy Corporation and its Registrant Subsidiaries
Grand Gulf	Unit No. 1 of Grand Gulf Nuclear Station (nuclear), 90% owned or leased by System Energy
GWh	Gigawatt-hour(s), which equals one million kilowatt-hours
Independence	Independence Steam Electric Station (coal), owned 16% by Entergy Arkansas, 25% by Entergy Mississippi, and 7% by Entergy Power
Indian Point 2	Unit 2 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Indian Point 3	Unit 3 of Indian Point Energy Center (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
IRS	Internal Revenue Service
ISO	Independent System Operator

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DEFINITIONS (Concluded)

Abbreviation or Acronym	Term
kW	Kilowatt, which equals one thousand watts
kWh	Kilowatt-hour(s)
LPSC	Louisiana Public Service Commission
MISO	Midcontinent Independent System Operator, Inc., a regional transmission organization
MMBtu	One million British Thermal Units
MPSC	Mississippi Public Service Commission
MW	Megawatt(s), which equals one thousand kilowatts
MWh	Megawatt-hour(s)
Net debt to net capital ratio	Gross debt less cash and cash equivalents divided by total capitalization less cash and cash equivalents
Net MW in operation	Installed capacity owned and operated
NRC	Nuclear Regulatory Commission
NYPA	New York Power Authority
Palisades	Palisades Power Plant (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Pilgrim	Pilgrim Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
PPA	Purchased power agreement or power purchase agreement
PUCT	Public Utility Commission of Texas
Registrant Subsidiaries	Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc., Entergy Texas, Inc., and System Energy Resources, Inc.
River Bend	River Bend Station (nuclear), owned by Entergy Gulf States Louisiana
RTO	Regional transmission organization
SEC	Securities and Exchange Commission
SMEPA	South Mississippi Electric Power Association, which owns a 10% interest in Grand Gulf
System Agreement	Agreement, effective January 1, 1983, as modified, among the Utility operating companies relating to the sharing of generating capacity and other power resources
System Energy	System Energy Resources, Inc.
TWh	Terawatt-hour(s), which equals one billion kilowatt-hours
Unit Power Sales Agreement	Agreement, dated as of June 10, 1982, as amended and approved by FERC, among Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, relating to the sale of capacity and energy from System Energy’s share of Grand Gulf
Utility	Entergy’s business segment that generates, transmits, distributes, and sells electric power, with a small amount of natural gas distribution
Utility operating companies	Entergy Arkansas, Entergy Gulf States Louisiana, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas
Vermont Yankee	Vermont Yankee Nuclear Power Station (nuclear), owned by an Entergy subsidiary in the Entergy Wholesale Commodities business segment
Waterford 3	Unit No. 3 (nuclear) of the Waterford Steam Electric Station, 100% owned or leased by Entergy Louisiana
weather-adjusted usage	Electric usage excluding the effects of deviations from normal weather

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ENTERGY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS

Entergy operates primarily through two business segments: Utility and Entergy Wholesale Commodities.

The Utility business segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operates a small natural gas distribution business. As discussed in more detail in “Plan to Spin Off the Utility’s Transmission Business,” herein and in the Form 10-K, in December 2011, Entergy entered into an agreement to spin off its transmission business and merge it with a newly-formed subsidiary of ITC Holdings Corp.

The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern United States and the sale of the electric power produced by those plants to wholesale customers. This business also provides services to other nuclear power plant owners. Entergy Wholesale Commodities also owns interests in non-nuclear power plants that sell the electric power produced by those plants to wholesale customers.

Results of Operations

Second Quarter 2013 Compared to Second Quarter 2012

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the second quarter 2013 to the second quarter 2012 showing how much the line item increased or (decreased) in comparison to the prior period:

	Utility	Entergy Wholesale Commodities	Parent & Other (a)	Entergy
	(In Thousands)

2nd Quarter 2012 Consolidated Net Income (Loss)	$308,525	$70,759	($8,701)	$370,583

Net revenue (operating revenue less fuel expense, purchased power, and other regulatory charges/credits)	219,043	(61,192)	2,618	160,469
Other operation and maintenance expenses	65,119	3,890	2,305	71,314
Taxes other than income taxes	7,095	(307)	(11)	6,777
Depreciation and amortization	20,634	2,233	(106)	22,761
Other income	4,133	(4,212)	(819)	(898)
Interest expense	9,989	(1,700)	1,555	9,844
Other expenses	4,922	51,167	-	56,089
Income taxes	223,387	(61,459)	33,386	195,314

2nd Quarter 2013 Consolidated Net Income (Loss)	$200,555	$11,531	($44,031)	$168,055

(a)	Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

In the fourth quarter 2012, Entergy moved two subsidiaries from Parent & Other to the Entergy Wholesale Commodities segment to improve the alignment of certain intercompany items and income tax activity. The prior period financial information in this Form 10-Q has been restated to reflect this change.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Net income for Utility in the second quarter 2012 was significantly affected by a settlement with the IRS related to the income tax treatment of the Louisiana Act 55 financing of the Hurricane Katrina and Hurricane Rita storm costs, which resulted in a reduction in income tax expense. The net income effect was partially offset by a regulatory charge, which reduced net revenue in 2012, associated with the storm costs settlement to reflect the obligation to customers with respect to the settlement. See Note 3 to the financial statements in the Form 10-K for additional discussion of the tax settlement and savings obligation.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the second quarter 2013 to the second quarter 2012:

		Amount
		(In Millions)

2012 net revenue		$1,152
Louisiana Act 55 financing savings obligation		167
Retail electric price		58
Grand Gulf recovery		33
Volume/weather		(38)
Other		(1)
2013 net revenue		$1,371

The Louisiana Act 55 financing savings obligation variance results from a regulatory charge recorded in 2012 because Entergy Gulf States Louisiana and Entergy Louisiana are sharing the savings from an IRS settlement related to the uncertain tax position regarding the Hurricane Katrina and Hurricane Rita Louisiana Act 55 financing with customers. See Note 3 to the financial statements in the Form 10-K for additional discussion of the tax settlement and savings obligation.

The retail electric price variance is primarily due to:

the recovery of Hinds plant costs through the power management rider at Entergy Mississippi, as approved by the MPSC, effective with the first billing cycle of 2013. The net income effect of the Hinds plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hinds plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;

a formula rate plan increase at Entergy Louisiana, effective January 2013, which includes an increase relating to the Waterford 3 steam generator replacement project, which was placed in service in December 2012. The net income effect of the formula rate plan increase is limited to a portion representing an allowed return on equity with the remainder offset by costs included in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;

an increase in the capacity acquisition rider at Entergy Arkansas, as approved by the APSC, effective with the first billing cycle of December 2012, relating to the Hot Spring plant acquisition. The net income effect of the Hot Spring plant cost recovery is limited to a portion representing an allowed return on equity on the net plant investment with the remainder offset by the Hot Spring plant costs in other operation and maintenance expenses, depreciation expenses, and taxes other than income taxes;

·	an annual base rate increase at Entergy Texas, effective July 2012, as a result of the PUCT’s order in the December 2011 rate case that was issued in September 2012; and

·	an increase in the energy efficiency rider, as approved by the APSC, effective July 2012. Energy efficiency revenues are offset by costs included in other operation and maintenance expenses and have no effect on net income.

See Note 2 to the financial statements herein and in the Form 10-K for a discussion of rate proceedings.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

The Grand Gulf recovery variance is primarily due to increased recovery of higher costs resulting from the Grand Gulf uprate.

The volume/weather variance is primarily due to decreased electricity usage in the second quarter 2013 compared to the same period in the prior year, including the effect of less favorable weather on residential and commercial sales. Billed electricity usage decreased a total of 1,100 GWh, or 4%, across all customer classes.

Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the second quarter 2013 to the second quarter 2012:

		Amount
		(In Millions)

2012 net revenue		$444
Nuclear volume		(31)
Nuclear realized price changes		(7)
Other		(23)
2013 net revenue		$383

As shown in the table above, net revenue for Entergy Wholesale Commodities decreased by $61 million in the second quarter 2013 compared to the second quarter 2012 primarily due to:

lower volume in its nuclear fleet resulting from more unplanned and refueling outage days in 2013 compared to the same period in 2012 and the exercise of resupply options provided for in purchase power agreements whereby Entergy Wholesale Commodities may elect to supply power from another source when the plant is not running;

·	the effect of lower power prices on electricity derivative instruments that are not designated as hedges, included in Other in the table above. See Note 8 to the financial statements herein for discussion of derivative instruments; and

·	lower energy prices, partially offset by higher capacity prices.

Following are key performance measures for Entergy Wholesale Commodities for the second quarter 2013 and 2012:

	2013	2012

Owned capacity	6,612	6,612
GWh billed	11,172	11,674
Average realized revenue per MWh	$47.36	$48.27

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	82%	85%
GWh billed	9,789	10,426
Average realized revenue per MWh	$46.40	$48.67
Refueling Outage Days:
Indian Point 2	-	1
Palisades	-	34
Pilgrim	45	-
Vermont Yankee	5	-

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Realized Revenue per MWh Trend for Entergy Wholesale Commodities Nuclear Plants

The economic downturn and negative trends in the energy commodity markets have resulted over the past few years in lower natural gas prices and lower market prices for electricity in the New York and New England power regions, which is where five of the six Entergy Wholesale Commodities nuclear power plants are located. Entergy Wholesale Commodities’s nuclear business experienced a decrease in realized price per MWh to $50.29 in 2012 from $54.73 in 2011 and $59.16 in 2010. As shown in the contracted sale of energy table in “Market and Credit Risk Sensitive Instruments,” Entergy Wholesale Commodities has sold forward 83% of its planned nuclear energy output for the remainder of 2013 for an expected average contracted energy price of $46 per MWh based on market prices at June 30, 2013. In addition, Entergy Wholesale Commodities has sold forward 77% of its planned nuclear energy output for 2014 for an expected average contracted energy price of $46 per MWh based on market prices at June 30, 2013. These near-term price trends present a challenging economic situation for the Entergy Wholesale Commodities plants. The challenge is greater for some of these plants based on a variety of factors such as their market for both energy and capacity, their size, their contracted positions, and the investment required to maintain the safety and integrity of the plants. If, in the future, economic conditions or regulatory activity no longer support the continued operation of a plant by Entergy it could adversely affect Entergy’s results of operations through impairment charges, increased depreciation rates, transitional costs, or accelerated decommissioning costs. Impairment of long-lived assets and nuclear decommissioning costs, and the factors that influence these items, are both discussed in detail in the Form 10-K in “Critical Accounting Estimates.” See also the discussion below in “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” regarding Entergy Wholesale Commodities nuclear plant operating license and related activity.

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $522 million for the second quarter 2012 to $587 million for the second quarter 2013 primarily due to:

an increase of $22 million in fossil-fueled generation expenses primarily due to an overall higher scope of work done during plant outages as compared to the prior year. Also contributing to the increase are the acquisitions of the Hot Spring plant by Entergy Arkansas and the Hinds plant by Entergy Mississippi in November 2012. Costs related to the Hot Spring and Hinds plants are recovered through the capacity acquisition rider and power management rider, respectively, as previously discussed;

·	an increase of $14 million resulting from costs related to the generator stator incident at ANO, including an offset for expected insurance proceeds. See “ANO Damage and Outage” below for further discussion of the incident;

·	the prior year deferral, as approved by the LPSC and the FERC, of costs related to the transition and implementation of joining the MISO RTO, which reduced 2012 expenses by $12 million; and

an increase of $9 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs. See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs.

Depreciation and amortization expenses increased primarily due to additions to plant in service, including the Hot Spring and Hinds plant acquisitions in 2012 and the completion of the Waterford 3 steam generator replacement project and the Grand Gulf uprate project in 2012. Also contributing to the increase is an increase in depreciation rates as a result of the rate order approved by the PUCT in September 2012.

Interest expense increased primarily due to net debt issuances by certain of the Utility operating companies.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Entergy Wholesale Commodities

Other expenses increased primarily due to a credit to decommissioning expense of $49 million in the second quarter 2012 resulting from a reduction in the decommissioning cost liability for a plant as a result of a revised decommissioning cost study. See “Critical Accounting Estimates – Nuclear Decommissioning Costs” in the Form 10-K for further discussion.

Income Taxes

The effective income tax rate was 30.3% for the second quarter 2013. The difference in the effective income tax rate for the second quarter 2013 versus the statutory rate of 35% was primarily due to lower state income taxes resulting from a state deferred tax adjustment. Also contributing to the lower rate were book and tax differences related to the allowance for equity funds used during construction, partially offset by certain book and tax differences related to utility plant items.

The effective income tax rate was (49.2%) for the second quarter 2012. The difference in the effective income tax rate versus the statutory rate of 35% for the second quarter 2012 was related to (1) an IRS settlement on how to treat the Louisiana Act 55 Financing of the Hurricane Katrina and Hurricane Rita storm costs, as discussed further in Note 3 to the financial statements in the Form 10-K; and (2) a unanimous court decision from the U.S. Court of Appeals for the Fifth Circuit affirming an earlier decision of the U.S. Tax Court holding that Entergy was entitled to claim a credit against its U.S. tax liability for the U.K. windfall tax that it paid, both of which enabled Entergy to reverse provisions for uncertain tax positions.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Following are income statement variances for Utility, Entergy Wholesale Commodities, Parent & Other, and Entergy comparing the six months ended June 30, 2013 to the six months ended June 30, 2012 showing how much the line item increased or (decreased) in comparison to the prior period:

	Utility	Entergy Wholesale Commodities	Parent & Other (a)	Entergy
	(In Thousands)

2012 Consolidated Net Income (Loss)	$375,738	($105,192)	($46,702)	$223,844

Net revenue (operating revenue less fuel expense, purchased power, and other regulatory charges/credits)	336,688	(19,765)	4,169	321,092
Other operation and maintenance expenses	94,651	2,494	6,791	103,936
Asset impairment	-	(355,524)	-	(355,524)
Taxes other than income taxes	18,059	2,672	(28)	20,703
Depreciation and amortization	43,078	403	(60)	43,421
Other income	(8,121)	(3,040)	388	(10,773)
Interest expense	16,779	(4,839)	8,512	20,452
Other expenses	8,592	45,534	-	54,126
Income taxes	194,755	87,617	29,639	312,011

2013 Consolidated Net Income (Loss)	$328,391	$93,646	($86,999)	$335,038

(a)	Parent & Other includes eliminations, which are primarily intersegment activity.

Refer to "ENTERGY CORPORATION AND SUBSIDIARIES - SELECTED OPERATING RESULTS" for further information with respect to operating statistics.

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As discussed in more detail in Note 1 to the financial statements in the Form 10-K, results of operations for the six months ended June 30, 2012 include a $355.5 million ($223.5 million after-tax) impairment charge to write down the carrying values of Vermont Yankee and related assets to their fair values. Also, net income for Utility for the six months ended June 30, 2012 was significantly affected by a settlement with the IRS related to the income tax treatment of the Louisiana Act 55 financing of the Hurricane Katrina and Hurricane Rita storm costs, which resulted in a reduction in income tax expense. The net income effect was partially offset by a regulatory charge, which reduced net revenue in 2012, associated with the storm costs settlement to reflect the obligation to customers with respect to the settlement. See Note 3 to the financial statements in the Form 10-K for additional discussion of the tax settlement and savings obligation.

Net Revenue

Utility

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2013 to the six months ended June 30, 2012:

		Amount
		(In Millions)

2012 net revenue		$2,257
Louisiana Act 55 financing savings obligation		169
Retail electric price		118
Grand Gulf recovery		66
Volume/weather		(17)
Other		1
2013 net revenue		$2,594

The retail electric price variance is primarily due to:

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·	an annual base rate increase at Entergy Texas, effective July 2012, as a result of the PUCT’s order in the December 2011 rate case that was issued in September 2012; and

·	an increase in the energy efficiency rider, as approved by the APSC, effective July 2012. Energy efficiency revenues are offset by costs included in other operation and maintenance expenses and have no effect on net income.

See Note 2 to the financial statements herein and in the Form 10-K for a discussion of rate proceedings.

The Grand Gulf recovery variance is primarily due to increased recovery of higher costs resulting from the Grand Gulf uprate.

The volume/weather variance is primarily due to a decrease of 496 GWh, or 1%, in weather-adjusted usage across all customer classes. The decrease in weather-adjusted usage in the residential class was almost entirely offset by the effect of more favorable weather on residential sales in the first half of 2013 compared to the same period in the prior year.

Entergy Wholesale Commodities

Following is an analysis of the change in net revenue comparing the six months ended June 30, 2013 to the six months ended June 30, 2012:

		Amount
		(In Millions)

2012 net revenue		$895
Nuclear volume		(56)
Nuclear realized price changes		58
Other		(21)
2013 net revenue		$876

As shown in the table above, net revenue for Entergy Wholesale Commodities decreased by $19 million in the six months ended June 30, 2013 compared to the six months ended June 30, 2012 primarily due to:

·	the effect of lower power prices on electricity derivative instruments that are not designated as hedges, included in Other in the table above. See Note 8 to the financial statements herein for discussion of derivative instruments.

These decreases were partially offset by higher energy and capacity prices.

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Following are key performance measures for Entergy Wholesale Commodities for the six months ended June 30, 2013 and 2012:

	2013	2012

Owned capacity	6,612	6,612
GWh billed	21,559	22,955
Average realized revenue per MWh	$52.80	$48.77

Entergy Wholesale Commodities Nuclear Fleet
Capacity factor	82%	87%
GWh billed	19,035	20,264
Average realized revenue per MWh	$51.95	$49.47
Refueling Outage Days:
Indian Point 2	-	28
Indian Point 3	28	-
Palisades	-	34
Pilgrim	45	-
Vermont Yankee	27	-

Other Income Statement Items

Utility

Other operation and maintenance expenses increased from $1,012 million for the six months ended June 30, 2012 to $1,107 million for the six months ended June 30, 2013 primarily due to:

an increase of $29 million in fossil-fueled generation expenses primarily due to an overall higher scope of work done during plant outages as compared to the prior year. Also contributing to the increase are the acquisitions of the Hot Spring plant by Entergy Arkansas and the Hinds plant by Entergy Mississippi in November 2012. Costs related to the Hot Spring and Hinds plants are recovered through the capacity acquisition rider and power management rider, respectively, as previously discussed;

an increase of $24 million in compensation and benefits costs primarily due to a decrease in the discount rates used to determine net periodic pension and other postretirement benefit costs. See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for further discussion of benefits costs;

·	an increase of $13 million in nuclear expenses, primarily due to higher labor costs, including higher contract labor;

·	an increase of $14 million resulting from costs related to the generator stator incident at ANO, including an offset for expected insurance proceeds. See “ANO Damage and Outage” below for further discussion of the ANO incident; and

·	the prior year deferral, as approved by the LPSC and the FERC, of costs related to the transition and implementation of joining the MISO RTO, which reduced 2012 expenses by $10 million.

Taxes other than income taxes increased primarily due to an increase in ad valorem taxes resulting from a higher 2013 assessment as compared to 2012 as well as an increase in local franchise taxes resulting from higher residential and commercial revenues as compared with prior year.

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Interest expense increased primarily due to net debt issuances by certain of the Utility operating companies.

Entergy Wholesale Commodities

The asset impairment variance is due to a $355.5 million ($223.5 million after-tax) impairment charge recorded in first quarter 2012 to write down the carrying values of Vermont Yankee and related assets to their fair values. See Note 1 to the financial statements in the Form 10-K for further discussion of this charge.

Income Taxes

The effective income tax rate was 36.2% for the six months ended June 30, 2013. The difference in the effective income tax rate for the six months ended June 30, 2013 versus the statutory rate of 35% was primarily due to certain book and tax differences related to utility plant items, partially offset by book and tax differences related to the allowance for equity funds used during construction and lower state income taxes resulting from a state deferred tax adjustment.

The effective income tax rate was (120.6%) for the six months ended June 30, 2012. The difference in the effective income tax rate versus the statutory rate of 35% for the six months ended June 30, 2012 was related to (1) an IRS settlement on how to treat the Louisiana Act 55 Financing of the Hurricane Katrina and Hurricane Rita storm costs, as discussed further in Note 3 to the financial statements in the Form 10-K; and (2) a unanimous court decision from the U.S. Court of Appeals for the Fifth Circuit affirming an earlier decision of the U.S. Tax Court holding that Entergy was entitled to claim a credit against its U.S. tax liability for the U.K. windfall tax that it paid, both of which enabled Entergy to reverse provisions for uncertain tax positions.

Plan to Spin Off the Utility’s Transmission Business

See the Form 10-K for a discussion of Entergy’s plan to spin off its transmission business and merge it with a newly formed subsidiary of ITC Holdings Corp. On April 16, 2013, the ITC shareholders approved the ITC merger proposals. On June 28, 2013, Entergy and ITC mutually agreed to extend the term of the Merger Agreement to December 31, 2013. Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, Entergy will distribute the TransCo common units to its shareholders, excluding any TransCo common units contributed to an exchange trust if Entergy makes the exchange trust election. At Entergy’s election, it may distribute the TransCo common units by means of a pro rata dividend in a spin-off or pursuant to an exchange offer in a split-off, or a combination of a split-off and a spin-off (the Distribution). On July 24, 2013, Mid South TransCo LLC (TransCo) filed a registration statement with the SEC on Forms S-1/S-4 under which the Distribution would occur by means of a combination of a split-off and a spin-off.

Filings with Retail Regulators

See the Form 10-K for a discussion of the applications that each of the Utility operating companies has filed with their respective retail regulators seeking approval for the proposal to spin off and merge the transmission business with ITC.

In each retail jurisdiction, the Utility operating companies and ITC have offered certain commitments for consideration should the retail regulators deem it appropriate to impose conditions on the approval of the transaction, including a commitment to mitigate certain effects on customer rates for a period of at least five years. In the offered commitments, the Utility operating companies and ITC proposed an initial five-year period of wholesale rate discounts and retail bill credits totaling $127.5 million for Entergy Arkansas customers, $45.6 million for Entergy Gulf States Louisiana customers, $56.2 million for Entergy Louisiana customers, $70.8 million for Entergy Mississippi customers, $20.0 million for Entergy New Orleans customers, and $67.0 million for Entergy Texas

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customers. The share of the rate mitigation to be borne will vary by Utility operating company, but the Utility is expected to bear, on an aggregate basis, over the initial five-year period, approximately 65 to 70% of the wholesale rate discounts and retail bill credits, with ITC expected to bear the remainder. Following the first five years after closing of the transaction, the economic and performance benefits of ITC’s ownership will be measured and verified by an independent auditor to determine if they offset the ownership cost increase resulting from ITC’s weighted average cost of capital. If the benefits exceed such costs, rate mitigation will cease. If they do not, wholesale rate discounts and retail bill credits will continue until they do.

In addition, the Utility operating companies have offered the following additional retail bill credits to address the effects of moving to a forward test year: $6.9 million for Entergy Arkansas customers, $5.4 million for Entergy Gulf States Louisiana customers, $7.2 million for Entergy Louisiana customers, $6.7 million for Entergy Mississippi customers, $0.4 million for Entergy New Orleans customers, and $13.1 million for Entergy Texas customers. Lastly, Entergy Texas customers will also experience net avoided costs of $10.0 million due to the effects of eliminating transmission cost allocation under the Entergy System Agreement. Entergy Gulf States Louisiana and Entergy Louisiana customers will also experience net avoided costs of $4.1 million and $12.2 million, respectively, due to the effects of both eliminating transmission cost allocation under the Entergy System Agreement and moving to MISO’s transmission pricing zone structure.

These offered commitments may change as the regulatory proceedings evolve.

In April 2013, the LPSC staff, APSC staff, and other parties filed testimony in the proceedings pending at the LPSC and APSC, respectively, identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval. The LPSC staff testimony also included a comprehensive set of conditions should the LPSC determine that the transaction is in the public interest. Conditions were also recommended by the Arkansas Attorney General should the APSC consider approving the transaction. In April and May 2013, various parties and the PUCT staff respectively filed testimony in the PUCT proceeding identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval. Certain parties also included a comprehensive set of conditions should the PUCT determine that the transaction is in the public interest. In May 2013 the City Council advisors filed testimony identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval. In June 2013 the MPSC staff and other parties filed testimony in the MPSC proceeding identifying concerns with the proposed transaction and concluding that the transaction in its current form does not satisfy the applicable criteria for approval. The MPSC staff also included a comprehensive set of conditions should the MPSC determine that the transaction is in the public interest.

The PUCT hearing on the joint application was held before the ALJs in May 2013. On July 8, 2013, the ALJs issued a proposal for decision that recommended the denial of the joint application. The ALJs further recommended that if the PUCT approved the joint application, that the PUCT impose certain conditions on Entergy Texas and ITC. Exceptions to the proposal for decision were filed in July 2013, and the PUCT is expected to rule on the joint application in August 2013.

The APSC postponed a previously-scheduled July 9, 2013 hearing, which has been rescheduled for September 2013, to allow the parties to pursue more details regarding the rate mitigation commitments described above. LPSC hearings were held in July 2013 and post-hearing briefs will be submitted in August 2013. At its July 31, 2013 meeting the LPSC also voted to allow a 45-day discovery period regarding the mitigation commitments offered by the Utility operating companies and ITC. The MPSC postponed a previously-scheduled August 2013 hearing, and will instead consider the matter based on the submission of pre-filed evidence after briefing concludes in August 2013. The City Council modified its procedural schedule, with an evidentiary hearing scheduled to commence on August 27, 2013 and certification of the record to the City Council no later than September 6, 2013.

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Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC. The hearing before the Missouri Public Service Commission took place in June 2013, and post-hearing briefs were filed in July and early August 2013. It is anticipated that the matter will be submitted to the Missouri Public Service Commission in August 2013.

Filings with the FERC

See the Form 10-K for a discussion of the series of filings with the FERC made by Entergy, ITC, and certain of their subsidiaries to obtain regulatory approvals related to the proposed transfer to ITC subsidiaries of the transmission assets owned by the Utility operating companies.

On September 24, 2012, ITC and Entergy filed a joint application with the FERC seeking all necessary approvals under sections 203 and 205 of the Federal Power Act and the necessary declaration under section 305(a) of the Federal Power Act. On June 20, 2013, the FERC issued an order authorizing the transactions under section 203 of the Federal Power Act, and also issued a declaration that section 305(a) of the Federal Power Act is not implicated by the transactions because the concerns underlying section 305(a) of the Federal Power Act are not present in the transactions. The FERC order also stated that the exchange trust election will not undermine or interfere with the independence of ITC. The FERC order rejected, without prejudice, the request to extend by six months the deadline for new employees of ITC to dispose of their Entergy common stock.

The FERC issued a separate order on June 20, 2013, addressing the rate formula proposed by ITC in the September 24, 2012 application, as well as certain ancillary agreements also submitted for FERC’s approval with the application. In that order, the FERC summarily approved certain aspects of ITC’s rate proposal, such as the 12.38% return on equity, a capital structure of 60% equity/40% debt, and use of a forward-looking formula rate. However, the FERC found that other aspects of the rate proposal raised issues of material fact that cannot be resolved based on the record before the FERC, and thus ordered hearing and settlement judge procedures. The FERC also accepted certain transaction-related agreements for filing, but included the transition services agreements and certain other ancillary agreements in the ordered hearing and settlement judge procedures. The FERC consolidated the issues set for hearing and settlement judge procedures with two other Section 205 proceedings related to the transactions: (1) a proposed ratemaking treatment for certain pension and post-retirement welfare plan costs that relate to the Entergy employees that will become employees of ITC; and (2) the Attachment O formula rate templates filed by Entergy Services, on behalf of the Utility operating companies, on February 15, 2013, which includes the basis for the initial charges to be collected by the new operating subsidiaries of ITC post-closing, as well as the rates proposed to apply under the MISO Tariff in the event the transactions fail to close and Entergy retains its transmission assets.

On June 20, 2013, the FERC also issued an order accepting MISO’s proposed amendment to the MISO Tariff to enable the integration of the new ITC Operating Companies’ transmission facilities into MISO prior to the Utility operating companies becoming market participants in MISO. In addition, on June 20, 2013, the FERC issued an order accepting Entergy Services’s application under the Federal Power Act section 205 to cancel System Agreement Service Schedule MSS-2 (Transmission Equalization) effective upon closing of the ITC transaction.

In October 2012, Entergy, ITC, and certain subsidiaries submitted filings with the FERC to obtain regulatory approvals under Federal Power Act section 204 for the various financings being undertaken as part of the transaction. On May 16, 2013, the FERC issued an order authorizing the proposed financings for the ITC Transaction under Federal Power Act section 204 subject to the closing of the transaction.

Other Filings

In July 2012, Entergy Corporation submitted a request to the Internal Revenue Service seeking a private letter ruling substantially to the effect that certain requirements for the tax-free treatment of the distribution of the transmission business are met. In May 2013, Entergy obtained IRS rulings regarding the tax-free treatment of certain aspects of the transactions. While the May 2013 IRS rulings provide sufficient guidance for Entergy to execute the spin-merge in a tax-free manner, Entergy expects to request additional IRS rulings regarding certain other aspects of the transactions during the third quarter of 2013. In September 2012, Entergy submitted an application to the NRC for approval of certain nuclear plant license transfers and amendments as part of the steps to complete the spin-off and merger. In May 2013, the NRC issued orders approving the license transfers and amendments.

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Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants

See the Form 10-K for a discussion of the NRC operating licenses for Indian Point 2 and Indian Point 3 and the NRC license renewal applications in process for these plants. Following are two updates to the discussion regarding the NRC proceedings. First, in July 2013 Entergy filed a motion to dismiss Riverkeeper’s Endangered Species Act contention on the ground that the NRC Staff’s issuance of the supplemental FSEIS in June 2013 rendered that contention moot. Second, the original expiration date of the NRC license for Indian Point Unit 2 is September 28, 2013. That license will be extended by law under “timely renewal,” which is a federal statutory rule of general applicability providing for extension of a license for which a renewal application has been timely filed with the licensing agency. The Indian Point license renewal application qualifies for timely renewal protection because it met NRC regulatory standards for timely filing.

The New York State Department of Environmental Conservation (NYSDEC) has taken the position that Indian Point must obtain a new state-issued Clean Water Act Section 401 water quality certification as part of the license renewal process. Entergy submitted its application for a water quality certification to the NYSDEC in April 2009, with a reservation of rights regarding the applicability of Section 401 in this case. After Entergy submitted certain additional information in response to NYSDEC requests for additional information, in February 2010 the NYSDEC staff determined that Entergy’s water quality certification application was complete. In April 2010 the NYSDEC staff issued a proposed notice of denial of Entergy’s water quality certification application (the Notice). NYSDEC staff’s Notice triggered an administrative adjudicatory hearing before NYSDEC ALJs on the proposed Notice. The NYSDEC staff decision does not restrict Indian Point operations, but the issuance of a certification is potentially required prior to NRC issuance of renewed unit licenses. In June 2011, Entergy filed notice with the NRC that the NYSDEC, the agency that would issue or deny a water quality certification for the Indian Point license renewal process, has taken longer than one year to take final action on Entergy’s application for a water quality certification and, therefore, has waived its opportunity to require a certification under the provisions of Section 401 of the Clean Water Act. The NYSDEC has notified the NRC that it disagrees with Entergy’s position and does not believe that it has waived the right to require a certification. The NYSDEC ALJs overseeing the agency’s certification adjudicatory process stated in a ruling issued in July 2011 that while the waiver issue is pending before the NRC, the NYSDEC hearing process will continue on selected issues. The judges held a Legislative Hearing (agency public comment session) and an Issues Conference (pre-trial conference) in July 2010. Issue-by-issue hearings before the NYSDEC ALJs began in October 2011 and are expected to continue, on an episodic basis, into 2014 and perhaps longer. After hearings and briefing on all issues, the ALJs will issue a recommended decision to the Commissioner or his delegate, who will then issue the final agency decision. A party to the proceeding can appeal the decision of the Commissioner to state court.

In addition, the consistency of Indian Point’s operations with New York State’s coastal management policies must be resolved to the extent required by the Coastal Zone Management Act (CZMA). Entergy has undertaken three independent initiatives to resolve CZMA issues. First, on July 24, 2012, Entergy filed a supplement to the Indian Point license renewal application currently pending before the NRC. The supplement states that, based on applicable federal law and in light of prior reviews by the State of New York, the NRC may issue the requested renewed operating licenses for Indian Point without the need for an additional consistency review by the State of New York under the CZMA. On July 30, 2012, Entergy filed a motion for declaratory order with the ASLB seeking confirmation of its position that no further CZMA consistency determination is required before the NRC may issue renewed licenses. On April 5, 2013, the State of New York and Riverkeeper filed answers opposing Entergy’s motion. The State of New York also filed a cross-motion for declaratory order seeking confirmation that Indian Point had not been previously reviewed, and that only the New York State Department of State (NYSDOS) could conduct a CZMA review for NRC license renewal purposes. On April 15, 2013, the NRC Staff filed answers recommending the ASLB deny both Entergy’s and the State of New York’s motions for declaratory order. On June 12, 2013, the ASLB denied Entergy’s and the State of New York’s motions, without prejudice, on the ground that consultation on the matter of previous review among the NRC, Entergy (as applicant), and the State of New York had not taken place, as the ASLB determined to be required. There is no prescribed schedule or deadline for the consultation process.

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Second, Entergy filed with the NYSDOS on November 7, 2012 a petition for declaratory order that Indian Point is grandfathered under either of two criteria prescribed by the New York Coastal Management Program (NYCMP), which sets forth the state coastal policies applied in a CZMA consistency review. NYSDOS denied the motion by order dated January 9, 2013. Entergy filed a petition for judicial review of NYSDOS’s decision with the New York State Supreme Court for Albany County on March 13, 2013. NYSDOS’s opposition was filed on May 10, 2013. Entergy’s reply was filed June 7, 2013. Oral argument has been scheduled before the New York State Supreme Court for Albany County for September 18, 2013. It is uncertain when the court will act on the petition for review. The losing party may file an appeal as of right with the next level state appellate court.

Third, on December 17, 2012, Entergy filed with NYSDOS a consistency determination explaining why Indian Point satisfies all applicable NYCMP policies. Entergy included in the consistency determination a “reservation of rights” clarifying that Entergy does not concede NYSDOS’s right to conduct a new CZMA review for Indian Point. The six-month federal deadline for state decision on a consistency determination runs from the date the submission is complete. On January 16, 2013, NYSDOS notified Entergy that it deemed the consistency determination incomplete because it did not include the final version of a further supplement to the Final Supplemental Environmental Impact Statement that was targeted for subsequent issuance by NRC staff. On June 28, 2013, NYSDOS notified Entergy that NYSDOS had received a copy of the final version of the Final Supplement Environmental Impact Statement on June 20, 2013, and that NYSDOS’s review of the Indian Point consistency determination had begun on June 20, 2013.

ANO Damage and Outage

On March 31, 2013, during a scheduled refueling outage at ANO 1, a contractor-owned and operated heavy-lifting apparatus collapsed while moving the generator stator out of the turbine building. The collapse resulted in the death of an ironworker and injuries to several other contract workers, caused ANO 2 to shut down, and damaged the ANO turbine building. The turbine building serves both ANO 1 and 2 and is a non-radiological area of the plant. Entergy Arkansas is in the process of repairing this damage and readying ANO 1 to return to operation. ANO 2 reconnected to the grid on April 28, 2013. Restoration and restart efforts with respect to ANO 1 are ongoing and are expected to be complete before September 30, 2013. The total cost of assessment, restoration of off-site power, site restoration, debris removal, and replacement of damaged property and equipment is currently estimated to be in the range of $95 million to $120 million. This estimate may change through the conclusion of restoration activities. In addition, Entergy Arkansas incurred replacement power costs for ANO 2 power during its outage and is incurring incremental replacement power costs for ANO 1 power because the outage extended beyond the originally-planned duration of the refueling outage. Each of the Utility operating companies has recovery mechanisms in place designed to recover its prudently-incurred fuel and purchased power costs.

Entergy Arkansas is assessing its options for recovering damages that resulted from the stator drop, including its insurance coverage and legal action. Entergy is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurance company that provides property damage coverage to the members’ nuclear generating plants, including ANO. NEIL has notified Entergy that it believes that a $50 million course of construction sublimit applies to any loss associated with the lifting apparatus failure and stator drop at ANO. Entergy has responded that it disagrees with NEIL's position and is evaluating its options for enforcing its rights under the policy. On July 12, 2013, Entergy Arkansas filed a complaint in the Circuit Court in Pope County, Arkansas against the owner of the heavy-lifting apparatus that collapsed, an engineering firm, a general contractor, and certain individuals asserting claims of breach of contract, negligence, and gross negligence in connection with their responsibility for the stator drop.

In the second quarter 2013, Entergy Arkansas recorded an insurance receivable of $50 million based on the minimum amount that it expects to receive from NEIL. This $50 million receivable completely offset the approximately $41 million of capital spending and also offset approximately $9 million of the operation and maintenance expense incurred for the recovery through June 30, 2013. Entergy Arkansas has incurred approximately $14 million in operation and maintenance expense in excess of its insurance receivable as of June 30, 2013.

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Human Capital Management Strategic Imperative

Entergy is engaged in a strategic imperative that is intended to optimize the organization through a process known as human capital management. In July 2013, management completed a comprehensive review of Entergy’s organization design and processes. This effort resulted in a new internal organization structure, which management expects to result in the elimination of approximately 800 employee positions. One-time costs associated with this phase of human capital management, primarily implementation costs, severance expenses, and the one-time effect on benefit plan expense, are expected to be in the range of $145 to $185 million. The majority of these costs are expected to be incurred by the end of 2013.

Entergy Solutions District Energy Sales Agreement

Entergy Solutions District Energy, a business wholly-owned by Entergy in the Entergy Wholesale Commodities segment, owns and operates district energy assets serving the business districts in Houston and New Orleans. In August 2013, Entergy signed agreements to sell Entergy Solutions District Energy for approximately $130 million, subject to adjustments. Entergy Solutions District Energy’s book value as of June 30, 2013 was approximately $90 million. The sale is expected to close in 2013.

Liquidity and Capital Resources

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources" in the Form 10-K for a discussion of Entergy’s capital structure, capital expenditure plans and other uses of capital, and sources of capital. Following are updates to that discussion.

Capital Structure

Entergy’s capitalization is balanced between equity and debt, as shown in the following table.

	June 30, 2013	December 31, 2012

Debt to capital	59.0%	58.7%
Effect of excluding the securitization bonds	(1.7%)	(1.8%)
Debt to capital, excluding securitization bonds (a)	57.3%	56.9%
Effect of subtracting cash	(0.6%)	(1.1%)
Net debt to net capital, excluding securitization bonds (a)	56.7%	55.8%

(a)	Calculation excludes the Arkansas, Louisiana, and Texas securitization bonds, which are non-recourse to Entergy Arkansas, Entergy Louisiana, and Entergy Texas, respectively.

Net debt consists of debt less cash and cash equivalents. Debt consists of notes payable and commercial paper, capital lease obligations, and long-term debt, including the currently maturing portion. Capital consists of debt, common shareholders’ equity, and subsidiaries’ preferred stock without sinking fund. Net capital consists of capital less cash and cash equivalents. Entergy uses the debt to capital ratios excluding securitization bonds in analyzing its financial condition and believes they provide useful information to its investors and creditors in evaluating Entergy’s financial condition because the securitization bonds are non-recourse to Entergy, as more fully described in Note 5 to the financial statements in the Form 10-K. Entergy also uses the net debt to net capital ratio excluding securitization bonds in analyzing its financial condition and believes it provides useful information to its investors and creditors in evaluating Entergy’s financial condition because net debt indicates Entergy’s outstanding debt position that could not be readily satisfied by cash and cash equivalents on hand.

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Entergy Corporation has in place a credit facility that has a borrowing capacity of $3.5 billion and expires in March 2018. Entergy Corporation has the ability to issue letters of credit against 50% of the total borrowing capacity of the facility. Following is a summary of the borrowings outstanding and capacity available under the facility as of June 30, 2013:

Capacity (a)	Borrowings	Letters of Credit	Capacity Available
(In Millions)

$3,500	$190	$8	$3,302

(a)	The capacity decreases to $3,490 million in March 2017.

A covenant in Entergy Corporation’s credit facility requires Entergy to maintain a consolidated debt ratio of 65% or less of its total capitalization. The calculation of this debt ratio under Entergy Corporation’s credit facility is different than the calculation of the debt to capital ratio above. Entergy is currently in compliance with the covenant. If Entergy fails to meet this ratio, or if Entergy or one of the Utility operating companies (except Entergy New Orleans) defaults on other indebtedness or is in bankruptcy or insolvency proceedings, an acceleration of the facility’s maturity date may occur. See Note 4 to the financial statements for additional discussion of the Entergy Corporation credit facility and discussion of the Registrant Subsidiaries’ credit facilities.

See Note 4 to the financial statements for additional discussion of the Entergy Corporation commercial paper program. As of June 30, 2013, Entergy Corporation had $948 million of commercial paper outstanding. In July 2013 the Board increased the commercial paper program limit to $1.5 billion.

Capital Expenditure Plans and Other Uses of Capital

See the table and discussion in the Form 10-K under "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Liquidity and Capital Resources - Capital Expenditure Plans and Other Uses of Capital," that sets forth the amounts of planned construction and other capital investments by operating segment for 2013 through 2015. As discussed in the Form 10-K, the planned amounts disclosed in the Form 10-K do not include costs for the capital projects that might result from the NRC’s post-Fukushima requirements. The current preliminary cost estimate for post-Fukushima requirements is approximately $265 million for Utility, including approximately $230 million in capital and approximately $35 million in one-time operation and maintenance expenses, and approximately $345 million for Entergy Wholesale Commodities, including approximately $290 million in capital and approximately $55 million in one-time operation and maintenance expenses. These costs are expected to be incurred over the 2012 through 2018 time period, and do not include any amounts for filtered vents, for which the NRC initiated a rulemaking in first quarter 2013, or any future NRC requirements (e.g., Tier 2 and 3 activities). Also, Entergy now expects a delay in the spending associated with potential wedgewire screens at the Indian Point site from the timing reflected in the amounts in the table in the Form 10-K.

Dividends

Declarations of dividends on Entergy’s common stock are made at the discretion of the Board. Among other things, the Board evaluates the level of Entergy’s common stock dividends based upon Entergy’s earnings, financial strength, and future investment opportunities. At its July 2013 meeting, the Board declared a dividend of $0.83 per share, which is the same quarterly dividend per share that Entergy has paid since second quarter 2010.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Cash Flow Activity

As shown in Entergy’s Consolidated Statements of Cash Flows, cash flows for the six months ended June 30, 2013 and 2012 were as follows:

	2013	2012
	(In Millions)

Cash and cash equivalents at beginning of period	$533	$694

Cash flow provided by (used in):
Operating activities	1,116	1,188
Investing activities	(1,305)	(1,500)
Financing activities	(33)	(99)
Net decrease in cash and cash equivalents	(222)	(411)

Cash and cash equivalents at end of period	$311	$283

Operating Activities

Net cash provided by operating activities decreased by $72 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012 primarily due to:

·	higher deferred fuel refunds in 2013 compared to the same period in prior year;

·	an increase of $54 million in spending on nuclear refueling outages in 2013 compared to the same period in prior year;

·	an increase of $46 million in income tax payments;

·	approximately $36 million in storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac; and

·	approximately $25 million in spending related to the generator stator incident at ANO, as discussed previously.

These decreases in cash flow were partially offset by:

·	higher Utility net revenues in 2013 resulting from additional generation investments made in 2012;

·	a decrease of $54 million in pension contributions. See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Critical Accounting Estimates" in the Form 10-K and Note 6 to the financial statements herein for a discussion of qualified pension and other postretirement benefits funding;

·	proceeds of $34 million received from the U.S. Department of Energy in April 2013 resulting from litigation regarding the storage of spent nuclear fuel. The litigation is discussed in more detail in Part II, Item 5, “Spent Nuclear Fuel”; and

·	a refund of $31 million, including interest, paid to AmerenUE in June 2012. The FERC ordered Entergy Arkansas to refund to AmerenUE the rough production cost equalization payments previously collected. See Note 2 to the financial statements in the Form 10-K for further discussion of the FERC order.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Investing Activities

Net cash used in investing activities decreased by $195 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012 primarily due to:

·	the withdrawal of a total of $260 million from storm reserve escrow accounts, primarily by Entergy Gulf States Louisiana and Entergy Louisiana, in 2013 after Hurricane Isaac. See Note 2 to the financial statements herein and in the Form 10-K for a discussion of Hurricane Isaac;

·	a decrease in nuclear fuel purchases because of variations from year to year in the timing and pricing of fuel reload requirements, material and services deliveries, and the timing of cash payments during the nuclear fuel cycle; and

a slight decrease in construction expenditures, primarily in the Utility business, resulting from spending in 2012 on the uprate project at Grand Gulf, substantially offset by storm restoration spending in 2013 resulting from the Arkansas December 2012 Winter storm and Hurricane Isaac, spending in 2013 on Ninemile 6 self-build project, and spending in 2013 related to the generator stator incident at ANO, as discussed previously.

The decrease was partially offset by a change in collateral deposit activity, reflected in the “Decrease (increase) in other investments” line on the Consolidated Statement of Cash Flows, as Entergy returned net deposits of $34 million in 2013 and received net deposits of $51 million in 2012. Entergy Wholesale Commodities’s forward sales contracts are discussed in the Market and Credit Risk Sensitive Instruments section below.

Financing Activities

Net cash used in financing activities decreased by $66 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012 primarily due to the following activity:

long-term debt activity using approximately $36 million of cash in 2013 compared to providing $125 million of cash in 2012. Included in the long-term debt activity in 2013 is $605 million repayment of borrowings on the Entergy Corporation long-term credit facility. Entergy Corporation issued $283 million of commercial paper in 2013, in part, to repay borrowings on its long-term credit facility; and

·	$51 million in proceeds from the sale to a third party in 2012 of a portion of Entergy Gulf States Louisiana’s investment in Entergy Holdings Company’s Class A preferred membership interests.

For details of long-term debt activity and Entergy's commercial paper program in 2013 see Note 4 to the financial statements herein.

Rate, Cost-recovery, and Other Regulation

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Rate, Cost-recovery, and Other Regulation" in the Form 10-K for discussions of rate regulation, federal regulation, and related regulatory proceedings.

State and Local Rate Regulation and Fuel-Cost Recovery

See Note 2 to the financial statements herein for updates to the discussion in the Form 10-K regarding these proceedings.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Federal Regulation

See the Form 10-K for a discussion of federal regulatory proceedings. Following are updates to that discussion.

System Agreement

Utility Operating Company Notices of Termination of System Agreement Participation

As discussed in the Form 10-K, in February 2009, Entergy Arkansas and Entergy Mississippi filed with the FERC their notices of cancellation to terminate their participation in the System Agreement, effective December 18, 2013 and November 7, 2015, respectively. In November 2009 the FERC accepted the notices of cancellation and determined that Entergy Arkansas and Entergy Mississippi are permitted to withdraw from the System Agreement following the 96-month notice period without payment of a fee or the requirement to otherwise compensate the remaining Utility operating companies as a result of withdrawal. In February 2011, the FERC denied the LPSC’s and the City Council’s rehearing requests. In September and October 2012, the U.S. Court of Appeals for the D.C. Circuit denied the LPSC’s and the City Council’s appeals of the FERC decisions. In January 2013, the LPSC and the City Council filed a petition for a writ of certiorari with the U.S. Supreme Court. On May 13, 2013, U.S. Supreme Court denied the petition for a writ of certiorari filed by the LPSC and the City Council seeking review of the D.C. Circuit’s decision to affirm the FERC’s orders accepting the notices of cancellation filed by Entergy Arkansas and Entergy Mississippi and determining that Entergy Arkansas and Entergy Mississippi are permitted to withdraw from the System Agreement following the 96-month notice period without payment of a fee or the requirement to otherwise compensate the remaining Utility operating companies as a result of withdrawal.

In November 2012 the Utility operating companies filed amendments to the System Agreement with the FERC pursuant to section 205 of the Federal Power Act. The LPSC, MPSC, PUCT, and City Council filed protests at the FERC regarding the amendments and other aspects of the Utility operating companies’ future operating arrangements, including requests that the continued viability of the System Agreement in MISO (among other issues) be set for hearing by the FERC. On March 12, 2013, the Utility operating companies filed an answer to the protests. The answer proposed, among other things, that: (1) the FERC allow the System Agreement revisions to go into effect as of December 19, 2013, without a hearing and for an initial two-year transition period; (2) no later than October 18, 2013, Entergy Services submit a filing pursuant to section 205 of the Federal Power Act that provides Entergy Texas’s notice of cancellation to terminate participation in the System Agreement and responds to the PUCT’s position that Entergy Texas be allowed to terminate its participation prior to the end of the mandatory 96-month notice period; and (3) at least six months prior to the end of the two-year transition period, Entergy Services submits an additional filing under section 205 of the Federal Power Act that addresses the allocation of MISO charges and credits among the Utility operating companies that remain in the System Agreement. Prior to the filing to be made no later than October 18, 2013, Entergy Services, Entergy Texas, and Entergy will exercise reasonable best efforts to engage the Utility operating companies and their retail regulators in searching for a consensual means of allowing Entergy Texas to exit the System Agreement prior to the end of the mandatory 96-month notice period. If a consensual resolution is reached on such early termination, the filing will reflect such a resolution. The matter remains pending at the FERC.

Entergy’s Proposal to Join MISO

See the Form 10-K for a discussion of the Utility operating companies’ proposal to join MISO. Following are updates to that discussion.

On April 8, 2013, the APSC issued an order resolving the outstanding issues in Entergy Arkansas’s change of control docket and granted Entergy Arkansas’s application subject to the conditions set forth in the APSC’s October 2012 order. On May 23, 2013, the FERC issued an order accepting the changes to Appendix K of the MISO Transmission Owners Agreement proposed by MISO and a majority of the MISO transmission owners to implement MISO governance enhancements consistent with the APSC’s October 2012 order.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Because Entergy Arkansas also owns limited transmission facilities in Missouri, on February 14, 2013, Entergy Arkansas, ITC, and certain other related parties filed, out of an abundance of caution, a joint application with the Missouri Public Service Commission related to the transaction, although the Missouri Public Service Commission is not a retail regulator of Entergy Arkansas. On April 18, 2013, the Missouri Public Service Commission consolidated for purposes of a hearing in June 2013 Entergy Arkansas’s separate MISO case that is related to Entergy Arkansas’s notice of its intent to integrate into MISO with the Entergy and ITC case that is related to the proposal to spin off and merge the transmission business with ITC. The hearing before the Missouri Public Service Commission took place in June 2013, and post-hearing briefs were filed in July and early August 2013. It is anticipated that the matter will be submitted to the Missouri Public Service Commission in August 2013.

On January 23, 2013, Entergy Arkansas filed a Motion to Discontinue Activities Necessary to Operate as a True Stand-Alone Electric Utility, with supporting testimony, in which Entergy Arkansas requested an order from the APSC authorizing it to drop the stand-alone option by March 1, 2013. On April 8, 2013, the APSC issued an order granting Entergy Arkansas’s motion.

On April 3, 2013, the PUCT staff filed a study performed by its independent consultant assessing Entergy Texas’s January 2013 updated analysis of the effect of termination of certain power purchase agreements on Entergy Texas’s costs upon Entergy Texas’s exit from the System Agreement. While the independent consultant study concluded that the adjustments made in Entergy Texas’s updated analysis were analytically correct, the consultant also recommended further study regarding the effect of the termination of the power purchase agreements on the benefits associated with Entergy Texas joining MISO. On April 5, 2013, Entergy Texas filed a response to the consultant study, noting a number of errors in the analysis and recommending against any further study of this matter. Entergy Texas has agreed to fund further analysis, which will be performed by a different independent consultant for the PUCT, regarding the effects of termination of these purchased power agreements.

In April 2012 the FERC conditionally accepted MISO’s proposal related to the allocation of transmission upgrade costs in connection with the transition and integration of the Utility operating companies into MISO. In November 2012 the FERC issued an order denying the requests for rehearing of the April 2012 order, and conditionally accepting MISO’s May 2012 compliance filing, subject to a further compliance filing due within 30 days of the date of the November 2012 Order. In December 2012, MISO and the MISO Transmission Owners submitted to FERC a request for rehearing and proposed revisions to the MISO Tariff in compliance with FERC’s November 2012 order. On July 11, 2013, the FERC issued an order conditionally accepting MISO’s compliance filing and granting in part and denying in part the request for rehearing.

On February 15, 2013, Entergy Services, on behalf of the Utility operating companies, made a filing with the FERC requesting to adopt the standard Attachment O formula rate template used by transmission owners to establish transmission rates within MISO. The filing proposed four transmission pricing zones for the Utility operating companies, one for Entergy Arkansas, one for Entergy Mississippi, one for Entergy Texas, and one for Entergy Louisiana, Entergy Gulf States Louisiana, and Entergy New Orleans. On June 20, 2013, the FERC issued an order accepting the use of four transmission pricing zones, consolidated the proposed revisions to the Attachment O templates in this proceeding with certain other proceedings related to the ITC transaction, and set for hearing and settlement judge procedures those issues of material fact that FERC decided could not be resolved based on the existing record. Several parties, including the City Council, filed requests for rehearing of the June 2013 order.

Also on February 15, 2013, MISO and Entergy Arkansas and Entergy Mississippi filed with the FERC proposed revisions to Attachment P of the MISO Tariff, to list the existing transmission and related agreements between each of Entergy Arkansas and Entergy Mississippi and each of their counterparties as grandfathered agreements. On May 31, 2013, the FERC issued an order accepting the proposed revisions, effective December 19, 2013, as requested.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

On March 28, 2013, the FERC issued an order conditionally accepting MISO’s proposed tariff changes related to the allocation of long-term transmission rights and auction revenue rights, subject to a further compliance filing. The amendments are intended to address the anticipated integration of the Utility operating companies, as well as other load-serving entities and transmission-owning utilities, into the MISO RTO. On April 29, 2013, MISO made the required compliance filing.

FERC Reliability Standards Investigation

On March 19, 2013, the FERC issued an order approving a settlement between Entergy Services and the FERC Enforcement Staff (the Staff) arising from the Staff’s November 20, 2012 “Notice of Alleged Violations” which stated that the Staff had concluded that Entergy Services’s practices in certain areas violated various requirements of the North American Electric Reliability Corporation reliability standards. Under the terms of the settlement, Entergy Services neither admits nor denies the alleged violations, but agrees to pay a civil penalty of $975,000 and undertake certain mitigation activities agreed to during discussions with Staff.

Market and Credit Risk Sensitive Instruments

Commodity Price Risk

Power Generation

As a wholesale generator, Entergy Wholesale Commodities’s core business is selling energy, measured in MWh, to its customers. Entergy Wholesale Commodities enters into forward contracts with its customers and sells energy in the day ahead or spot markets. In addition to selling the energy produced by its plants, Entergy Wholesale Commodities sells unforced capacity, which allows load-serving entities to meet specified reserve and related requirements placed on them by the ISOs in their respective areas. Entergy Wholesale Commodities’s forward physical power contracts consist of contracts to sell energy only, contracts to sell capacity only, and bundled contracts in which it sells both capacity and energy. While the terminology and payment mechanics vary in these contracts, each of these types of contracts requires Entergy Wholesale Commodities to deliver MWh of energy, make capacity available, or both. In addition to its forward physical power contracts, Entergy Wholesale Commodities also uses a combination of financial contracts, including swaps, collars, put and/or call options, to manage forward commodity price risk. Certain hedge volumes have price downside and upside relative to market price movement. The contracted minimum, expected value, and sensitivity are provided to show potential variations. While the sensitivity reflects the minimum, it does not reflect the total maximum upside potential from higher market prices. The information contained in the table below represents projections at a point in time and will vary over time based on numerous factors, such as future market prices, contracting activities, and generation. Following is a summary of Entergy Wholesale Commodities’s current forward capacity and generation contracts as well as total revenue projections based on market prices as of June 30, 2013 (2013 represents the remaining two quarters of the year):

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Entergy Wholesale Commodities Nuclear Portfolio

	2013	2014	2015	2016	2017

Energy
Percent of planned generation under contract (a):
Unit-contingent (b)	40%	21%	12%	14%	12%
Unit-contingent with availability guarantees (c)	20%	16%	13%	13%	13%
Firm LD (d)	23%	60%	14%	-%	-%
Offsetting positions (e)	-%	(20)%	-%	-%	-%
Total	83%	77%	39%	27%	25%
Planned generation (TWh) (f) (g)	21	40	41	40	41
Average revenue per MWh on contracted volumes:
Minimum	$45	$44	$45	$50	$51
Expected based on market prices as of June 30, 2013	$46	$46	$48	$50	$52
Sensitivity: -/+ $10 per MWh market price change	$45-$48	$44-$49	$45-$53	$50-$53	$51-$55

Capacity
Percent of capacity sold forward (h):
Bundled capacity and energy contracts (i)	16%	16%	16%	16%	16%
Capacity contracts (j)	42%	19%	12%	18%	9%
Total	58%	35%	28%	34%	25%
Planned net MW in operation (g) (k)	5,011	5,011	5,011	5,011	5,011
Average revenue under contract per kW per month (applies to capacity contracts only)	$2.8	$2.4	$3.2	$3.2	$3.2

Total Nuclear Energy and Capacity Revenues
Expected sold and market total revenue per MWh	$49	$47	$47	$48	$49
Sensitivity: -/+ $10 per MWh market price change	$47-$53	$44-$52	$40-$54	$41-$56	$42-$57

Entergy Wholesale Commodities Non-Nuclear Portfolio

	2013	2014	2015	2016	2017

Energy
Percent of planned generation under contract (a):
Cost-based contracts (l)	31%	32%	36%	33%	33%
Firm LD (d)	6%	6%	7%	7%	6%
Total	37%	38%	43%	40%	39%
Planned generation (TWh) (f) (m)	3	6	6	6	6

Capacity
Percent of capacity sold forward (h):
Cost-based contracts (l)	24%	24%	24%	24%	26%
Bundled capacity and energy contracts (i)	8%	8%	8%	8%	8%
Capacity contracts (j)	52%	50%	52%	49%	21%
Total	84%	82%	84%	81%	55%
Planned net MW in operation (k) (m)	1,052	1,052	1,052	1,052	977

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

(a)	Percent of planned generation output sold or purchased forward under contracts, forward physical contracts, forward financial contracts, or options that mitigate price uncertainty that may require regulatory approval or approval of transmission rights.
(b)	Transaction under which power is supplied from a specific generation asset; if the asset is not operating, seller is generally not liable to buyer for any damages.
(c)	A sale of power on a unit-contingent basis coupled with a guarantee of availability provides for the payment to the power purchaser of contract damages, if incurred, in the event the seller fails to deliver power as a result of the failure of the specified generation unit to generate power at or above a specified availability threshold. All of Entergy’s outstanding guarantees of availability provide for dollar limits on Entergy’s maximum liability under such guarantees.
(d)	Transaction that requires receipt or delivery of energy at a specified delivery point (usually at a market hub not associated with a specific asset) or settles financially on notional quantities; if a party fails to deliver or receive energy, defaulting party must compensate the other party as specified in the contract, a portion of which may be capped through the use of risk management products.
(e)	Transactions for the purchase of energy, generally to offset a firm LD transaction.
(f)	Amount of output expected to be generated by Entergy Wholesale Commodities resources considering plant operating characteristics, outage schedules, and expected market conditions that effect dispatch.
(g)	Assumes NRC license renewal for plants whose current licenses expire within five years and uninterrupted normal operation at all plants. NRC license renewal applications are in process for two units, as follows (with current license expirations in parentheses): Indian Point 2 (September 2013) and Indian Point 3 (December 2015). For a discussion regarding the continued operation of the Vermont Yankee plant, see “Impairment of Long-Lived Assets” in Note 11 to the financial statements herein and Note 1 to the financial statements in the Form 10-K. For a discussion regarding the license renewals for Indian Point 2 and Indian Point 3, see “Entergy Wholesale Commodities Authorizations to Operate Its Nuclear Power Plants” above.
(h)	Percent of planned qualified capacity sold to mitigate price uncertainty under physical or financial transactions.
(i)	A contract for the sale of installed capacity and related energy, priced per megawatt-hour sold.
(j)	A contract for the sale of an installed capacity product in a regional market.
(k)	Amount of capacity to be available to generate power and/or sell capacity considering uprates planned to be completed during the year.
(l)	Contracts priced in accordance with cost-based rates, a ratemaking concept used for the design and development of rate schedules to ensure that the filed rate schedules recover only the cost of providing the service; these contracts are on owned non-utility resources located within Entergy’s Utility service area, which do not operate under market-based rate authority. The percentage sold assumes approval of long-term transmission rights. Includes sales to the Utility through 2013 of 121 MW of capacity and energy from Entergy Power sourced from Independence Steam Electric Station Unit 2.
(m)	Non-nuclear planned generation and net MW in operation include purchases from affiliated and non-affiliated counterparties under long-term contracts and exclude energy and capacity from Entergy Wholesale Commodities’s wind investment and from the 544 MW Ritchie plant that is not planned to operate.

Entergy estimates that a positive $10 per MWh change in the annual average energy price in the markets in which the Entergy Wholesale Commodities nuclear business sells power, based on June 30, 2013 market conditions, planned generation volumes, and hedged positions, would have a corresponding effect on pre-tax net income of $79 million for the remainder of 2013.

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Entergy Corporation and Subsidiaries

Management’s Financial Discussion and Analysis

Some of the agreements to sell the power produced by Entergy Wholesale Commodities’s power plants contain provisions that require an Entergy subsidiary to provide collateral to secure its obligations under the agreements. The Entergy subsidiary is required to provide collateral based upon the difference between the current market and contracted power prices in the regions where Entergy Wholesale Commodities sells power. The primary form of collateral to satisfy these requirements is an Entergy Corporation guaranty. Cash and letters of credit are also acceptable forms of collateral. At June 30, 2013, based on power prices at that time, Entergy had liquidity exposure of $184 million under the guarantees in place supporting Entergy Wholesale Commodities transactions, $20 million of guarantees that support letters of credit, and $27 million of posted cash collateral. As of June 30, 2013, the liquidity exposure associated with Entergy Wholesale Commodities assurance requirements, including return of previously posted collateral from counterparties, would increase by $120 million for a $1 per MMBtu increase in gas prices in both the short-and long-term markets. In the event of a decrease in Entergy Corporation’s credit rating to below investment grade, based on power prices as of June 30, 2013, Entergy would have been required to provide approximately $54 million of additional cash or letters of credit under some of the agreements.

As of June 30, 2013, substantially all of the counterparties or their guarantors for 100% of the planned energy output under contract for Entergy Wholesale Commodities nuclear plants through 2017 have public investment grade credit ratings.

Nuclear Matters

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS – Nuclear Matters" in the Form 10-K for a discussion of nuclear matters.

Critical Accounting Estimates

See "MANAGEMENT’S FINANCIAL DISCUSSION AND ANALYSIS - Critical Accounting Estimates" in the Form 10-K for a discussion of the estimates and judgments necessary in Entergy’s accounting for nuclear decommissioning costs, unbilled revenue, impairment of long-lived assets and trust fund investments, qualified pension and other postretirement benefits, and other contingencies. Following is an update to that discussion.

Nuclear Decommissioning Costs

In the first quarter of 2013, Entergy Wholesale Commodities recorded a revision to its estimated decommissioning cost liability for a nuclear site as a result of a revised decommissioning cost study. The revised estimate resulted in a $46.6 million reduction in the decommissioning cost liability, along with a corresponding reduction in the related asset retirement cost asset.

New Accounting Pronouncements

The accounting standard-setting process, including projects between the FASB and the International Accounting Standards Board (IASB) to converge U.S. GAAP and International Financial Reporting Standards, is ongoing and the FASB and the IASB are each currently working on several projects that have not yet resulted in final pronouncements. Final pronouncements that result from these projects could have a material effect on Entergy’s future net income, financial position, or cash flows.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 2013 and 2012
(Unaudited)

	Three Months Ended						Six Months Ended
	2013			2012			2013			2012
	(In Thousands, Except Share Data)

OPERATING REVENUES
Electric	$	2,177,210		$	1,934,550		$	4,126,490		$	3,719,392
Natural gas		33,881			23,879			87,202			69,886
Competitive businesses		527,117			560,171			1,133,390			1,112,982
TOTAL		2,738,208			2,518,600			5,347,082			4,902,260

OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale		489,608			437,157			999,940			975,994
Purchased power		485,744			345,298			858,873			630,264
Nuclear refueling outage expenses		66,464			57,822			127,183			121,706
Asset impairment		-			-			-			355,524
Other operation and maintenance		844,195			772,881			1,598,453			1,494,517
Decommissioning		59,389			11,942			118,494			69,845
Taxes other than income taxes		144,888			138,111			295,983			275,280
Depreciation and amortization		297,516			274,755			598,392			554,971
Other regulatory charges		3,892			137,650			9,207			138,032
TOTAL		2,391,696			2,175,616			4,606,525			4,616,133

OPERATING INCOME		346,512			342,984			740,557			286,127

OTHER INCOME
Allowance for equity funds used during construction		16,249			28,282			29,000			52,590
Interest and investment income		40,541			29,285			78,847			70,276
Miscellaneous - net		(13,157	)		(13,036	)		(26,779	)		(31,025	)
TOTAL		43,633			44,531			81,068			91,841

INTEREST EXPENSE
Interest expense		155,768			149,616			308,918			296,361
Allowance for borrowed funds used during construction		(6,791	)		(10,483	)		(11,979	)		(19,874	)
TOTAL		148,977			139,133			296,939			276,487

INCOME BEFORE INCOME TAXES		241,168			248,382			524,686			101,481

Income taxes		73,113			(122,201	)		189,648			(122,363	)

CONSOLIDATED NET INCOME		168,055			370,583			335,038			223,844

Preferred dividend requirements of subsidiaries		4,332			5,582			9,915			10,526

NET INCOME ATTRIBUTABLE TO ENTERGY CORPORATION	$	163,723		$	365,001		$	325,123		$	213,318


Earnings per average common share:
Basic	$	0.92		$	2.06		$	1.83		$	1.21
Diluted	$	0.92		$	2.06		$	1.82		$	1.20
Dividends declared per common share	$	0.83		$	0.83		$	1.66		$	1.66

Basic average number of common shares outstanding		178,196,525			177,166,519			178,112,709			177,015,941
Diluted average number of common shares outstanding		178,614,383			177,565,351			178,534,201			177,470,486

See Notes to Financial Statements.

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ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Six Months Ended June 30, 2013 and 2012
(Unaudited)

	Three Months Ended						Six Months Ended
	2013			2012			2013			2012
	(In Thousands)

Net Income	$	168,055		$	370,583		$	335,038		$	223,844

Other comprehensive income (loss)
Cash flow hedges net unrealized gain (loss)
(net of tax expense (benefit) of $14,531, ($58,275), ($26,604), and $17,219)		27,590			(108,090	)		(48,385	)		37,345
Pension and other postretirement liabilities
(net of tax expense of $5,885, $10,479, $11,754, and $14,355)		9,779			17,060			19,574			23,327
Net unrealized investment gains (losses)
(net of tax expense (benefit) of ($9,325), ($11,749), $44,986, and $37,389)		(8,033	)		(18,025	)		48,344			32,082
Foreign currency translation
(net of tax expense (benefit) of $11, ($113), ($405), and $54)		19			(209	)		(753	)		101
Other comprehensive income (loss)		29,355			(109,264	)		18,780			92,855

Comprehensive Income		197,410			261,319			353,818			316,699

Preferred dividend requirements of subsidiaries		4,332			5,582			9,915			10,526

Comprehensive Income Attributable to Entergy Corporation	$	193,078		$	255,737		$	343,903		$	306,173


See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)

OPERATING ACTIVITIES
Consolidated net income	$	335,038		$	223,844
Adjustments to reconcile consolidated net income to net cash flow
provided by operating activities:
Depreciation, amortization, and decommissioning, including nuclear fuel amortization		948,950			832,662
Deferred income taxes, investment tax credits, and non-current taxes accrued		162,189			(122,657	)
Asset impairment		-			355,524
Changes in working capital:
Receivables		(218,279	)		(52,185	)
Fuel inventory		6,190			(19,222	)
Accounts payable		151,993			8,339
Prepaid taxes and taxes accrued		(58,176	)		(12,446	)
Interest accrued		(3,172	)		(6,978	)
Deferred fuel costs		(101,421	)		5,909
Other working capital accounts		(133,575	)		(108,441	)
Changes in provisions for estimated losses		(250,343	)		(19,267	)
Changes in other regulatory assets		216,659			113,645
Changes in pensions and other postretirement liabilities		24,955			(34,541	)
Other		34,897			23,733
Net cash flow provided by operating activities		1,115,905			1,187,919

INVESTING ACTIVITIES
Construction/capital expenditures		(1,244,859	)		(1,252,277	)
Allowance for equity funds used during construction		30,977			54,417
Nuclear fuel purchases		(209,509	)		(240,804	)
Payment for purchase of plant		-			(645	)
Changes in securitization account		9,118			12,876
NYPA value sharing payment		(71,736	)		(72,000	)
Payments to storm reserve escrow account		(3,855	)		(2,987	)
Receipts from storm reserve escrow account		260,230			17,884
Decrease (increase) in other investments		(28,895	)		37,076
Litigation proceeds for reimbursement of spent nuclear fuel storage costs		10,763			-
Proceeds from nuclear decommissioning trust fund sales		779,706			944,833
Investment in nuclear decommissioning trust funds		(837,114	)		(998,579	)
Net cash flow used in investing activities		(1,305,174	)		(1,500,206	)

See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2013 and 2012
(Unaudited)
	2013			2012
	(In Thousands)

FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt		1,973,866			1,325,162
Mandatorily redeemable preferred membership units of subsidiary		-			51,000
Treasury stock		16,634			34,628
Retirement of long-term debt		(2,010,111	)		(1,199,926	)
Changes in credit borrowings and commercial paper - net		294,123			(4,615	)
Dividends paid:
Common stock		(297,054	)		(293,741	)
Preferred stock		(10,137	)		(11,165	)
Net cash flow used in financing activities		(32,679	)		(98,657	)

Effect of exchange rates on cash and cash equivalents		751			(101	)

Net decrease in cash and cash equivalents		(221,197	)		(411,045	)

Cash and cash equivalents at beginning of period		532,569			694,438

Cash and cash equivalents at end of period	$	311,372		$	283,393



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized	$	261,277		$	253,617
Income taxes	$	88,665		$	42,450


See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, 2013 and December 31, 2012
(Unaudited)

	2013			2012
	(In Thousands)

CURRENT ASSETS
Cash and cash equivalents:
Cash	$	86,324		$	112,992
Temporary cash investments		225,048			419,577
Total cash and cash equivalents		311,372			532,569
Securitization recovery trust account		36,922			46,040
Accounts receivable:
Customer		651,863			568,871
Allowance for doubtful accounts		(32,130	)		(31,956	)
Other		224,057			161,408
Accrued unbilled revenues		378,643			303,392
Total accounts receivable		1,222,433			1,001,715
Deferred fuel costs		158,461			150,363
Accumulated deferred income taxes		112,613			306,902
Fuel inventory - at average cost		207,640			213,831
Materials and supplies - at average cost		935,229			928,530
Deferred nuclear refueling outage costs		329,165			243,374
System agreement cost equalization		14,600			16,880
Prepayments and other		263,287			242,922
TOTAL		3,591,722			3,683,126

OTHER PROPERTY AND INVESTMENTS
Investment in affiliates - at equity		41,491			46,738
Decommissioning trust funds		4,466,620			4,190,108
Non-utility property - at cost (less accumulated depreciation)		260,609			256,039
Other		183,609			436,234
TOTAL		4,952,329			4,929,119

PROPERTY, PLANT AND EQUIPMENT
Electric		42,415,345			41,944,567
Property under capital lease		933,786			935,199
Natural gas		359,725			353,492
Construction work in progress		1,573,328			1,365,699
Nuclear fuel		1,634,366			1,598,430
TOTAL PROPERTY, PLANT AND EQUIPMENT		46,916,550			46,197,387
Less - accumulated depreciation and amortization		19,344,473			18,898,842
PROPERTY, PLANT AND EQUIPMENT - NET		27,572,077			27,298,545

DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Regulatory asset for income taxes - net		754,870			742,030
Other regulatory assets (includes securitization property of
$874,976 as of June 30, 2013 and $914,751 as of
December 31, 2012)		4,810,706			5,025,912
Deferred fuel costs		172,202			172,202
Goodwill		377,172			377,172
Accumulated deferred income taxes		66,843			37,748
Other		964,364			936,648
TOTAL		7,146,157			7,291,712

TOTAL ASSETS	$	43,262,285		$	43,202,502

See Notes to Financial Statements.

Table of Contents

ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND EQUITY
June 30, 2013 and December 31, 2012
(Unaudited)

	2013		2012
	(In Thousands)

CURRENT LIABILITIES
Currently maturing long-term debt	$	525,622	$	718,516
Notes payable and commercial paper		1,090,124		796,002
Accounts payable		1,170,405		1,217,180
Customer deposits		365,223		359,078
Taxes accrued		275,543		333,719
Accumulated deferred income taxes		22,103		13,109
Interest accrued		181,492		184,664
Deferred fuel costs		3,116		96,439
Obligations under capital leases		3,111		3,880
Pension and other postretirement liabilities		93,044		95,900
System agreement cost equalization		14,600		25,848
Other		239,571		261,986
TOTAL		3,983,954		4,106,321

NON-CURRENT LIABILITIES
Accumulated deferred income taxes and taxes accrued		8,339,892		8,311,756
Accumulated deferred investment tax credits		268,128		273,696
Obligations under capital leases		33,402		34,541
Other regulatory liabilities		997,421		898,614
Decommissioning and asset retirement cost liabilities		3,584,788		3,513,634
Accumulated provisions