Drew Marsh
Chairman of the Board and Chief Executive Officer at Entergy
Thank you, Bill, and good morning, everyone. Today we are reporting very strong financial results for the quarter, as well as important progress with a few recent announcements including a settlement in principle with the Arkansas Public Service Commission on zero litigation and an agreement to sell our gas distribution business.
Starting with our quarterly financial results. Our adjusted earnings per share was $3.27. We experienced record temperatures with an estimated impact of $0.64, which has given us the opportunity to flex our spending plans to invest in key areas that benefit our customers, derisk 2024, and support our goal to deliver steady predictable results. With our results to date and our biggest quarter behind us, we are raising the bottom of the guidance range by $0.10 per share. We remain well-positioned to achieve our long-term 6% to 8% growth outlooks. Our goal to deliver steady predictable growth includes our dividend. Consistent with expectations, our Board of Directors once again raised our quarterly dividend by 6% to $1.13 per share or $4.52 annually.
Turning to the business update. Our system faced extreme heat and we saw record demand through July and August. In fact, they were 13 days that surpassed previous peak demand records. Despite the challenging weather, our system met our customers' high expectations. Our power delivery team withstood June storms as the summer turned hot and dry for most of our service territory. Our generation portfolio covered our customer demand and we operated well within our reserve margins and our nuclear fleet was online throughout the quarter with a fleet capability factor of 99%. We continue to invest in our nuclear assets with the goal to operate safely and reliably well into the future. Two of our plants are currently planned outages to complete work along these lines.
Waterford 3 is an extended planned refueling outage that includes significant investments to drive plant longevity. In addition, we advanced in a planned outage to complete minor repairs to improve reliability going forward. We are also investing in power delivery to improve reliability and resiliency. These investments not only benefit existing customers but also attract new economic development through our region. Through the first three quarters of this year, we replaced approximately 21,000 distribution poles placed nearly 1,500 new transmission structures in service, and completed 15 new substations.
Our past investments in modern efficient generation units, our nuclear fleet, and our power delivery system helped us meet this summer's number of demands. We continue to see signs of strong customer growth that helps affordability by spreading fixed costs over a larger customer base. For example, First Solar announced plans to invest up to $1.1 billion to build the solar manufacturing facility. CF Industries is proposing a $2 billion low-carbon clean ammonia production facility and Cora is proposing an $800 million investment in two electric vehicle battery supply-chain projects. These are just a few of the projects to support our expectation for strong growth in the coming years.
We've made meaningful progress on important regulatory matters which support the credit required to meet customers' growing needs and to drive improved customer outcomes. First, System Energy reached a $142 million global settlement in principle with the Arkansas Public Service Commission to resolve all current SERI claims. Entergy Arkansas has already received some funds and the remaining amount will be refunded by SERI once FERC approves the settlement. This agreement is consistent with SERI's settlement with Mississippi which was approved by FERC. It is also consistent with the reserve recorded last year. With this latest settlement, SERI has now resolved nearly two-thirds of its litigation risk. The SERI settlement follows FERC's August order on rehearing for the sale-leaseback renewal and uncertain tax position case and in that order, FERC agreed with System Energy's arguments on the sale-leaseback and depreciation refund calculations and denied rehearing requests on the uncertain tax positions.
Accordingly, we submitted our compliance report on the sale-leaseback and SERI has recouped $40 million of the amount previously paid to Entergy New Orleans and Entergy Louisiana. Shortly after 1st August order, the LPSC filed for rehearing and clarification. FERC denied the rehearing by operation of law and indicated intends to issue an additional order on this matter. We believe that the August order and settlement with Arkansas provides important clarity that will help guide constructive discussions to resolve the remaining SERI litigation matters. A fair and reasonable settlement can provide meaningful refunds to customers in the near-term and eliminate uncertainty which itself brings further benefits to customers.
Turning to retail matters. Entergy New Orleans' new formula rates were approved by the City Council and went into effect in September. This is the last rate change under those current FRP. In addition, the council also approved Entergy New Orleans's request to extend its FRP for another three years. The outcome provides regulatory clarity for Entergy New Orleans and includes enhancements that will support the company's credit and by extension, it's ability to make important investments for its customers. Entergy Louisiana, likewise, has new formula rates effective in September, it's last rate change under its current FRP.
In the third quarter, Entergy Louisiana also filed its rate case and alternatively proposed to extend its FRP with some revisions to provide an opportunity to earn a fair improved return on investment that is critical to support the Louisiana growth. The proposal also includes new customer and community programs to support those in need. We prefer the proposed FRP renewal to the rate case as it better supports the strong growth that is important to Louisiana. Regardless of the past, our goal is to maintain the current cadence with new rates effective next September.
In late-breaking news at the LPSC yesterday afternoon, we filed an unopposed stipulated settlement to resolve outstanding 2017 to 2019 formula rate plan filings and certain issues in the 2020 and 2021 filings. This settlement, which requires LPSC review is consistent with our outlooks and it represents continued work with our stakeholders to provide clarity on our path forward. Separately, Louisiana's docket to implement a streamlined process for certification of up to 3,000 megawatts of new solar is also progressing. Staff testimony is supportive of enhancing the process and we will work with them to incorporate the perspective. It is still relatively early in the process and we are hopeful that we will ultimately reach a constructive settlement as part of our ongoing efforts to work collaboratively with our regulators to bring clean-energy solutions for our customers.
In Texas, the PUCT approved our rate case settlement. New rates as well as new depreciation and amortizations are effective retroactive to December 2022. And also just yesterday, Entergy Arkansas filed the unanimous settlement with its annual FRP. That allowance for a rate change with a 4% cap. We expect the Commission to take up the matter before year-end and new rates will be effective in January.
Last week, Entergy Arkansas agreed to forego cost recovery from the state or incidents in 2013. As a result, this quarter, Entergy Arkansas wrote off replacement power costs for an underappreciated plant through on its balance sheet. This has been a long-standing issue and this resolution provides clarity moving forward.
Finally, regarding resilience. We continue to move forward in the processes to review our accelerated resilience proposals. In New Orleans, we are holding town hall meetings to listen to our stakeholder's inputs and answer their questions. We are targeting a City Council decision by year-end. In Louisiana, we received input from a staff engineer as well as staff and interveners. All parties agree that accelerated resilience would benefit customers. There are however varying opinions on how much we should pursue right now and the timing as we work together to manage customer affordability. Our focus remains on bringing as much value to customers as we can while maintaining the credit of the business.
We have significant capital needs to meet our customers' growing demand for reliable, resilient, and clean energy. To that end, we are pursuing opportunities to source that capital at lower costs. On Monday, we announced an agreement to sell our gas distribution business for $484 million. We will use the proceeds to reduce debt and support our capital needs. The sale is expected to be essentially neutral to earnings. While the gas business is a relatively small piece of our overall utility business, the more than 200 employees in that business are an important part of Entergy's community and culture as they have been for over 100 years.
We have reached an agreement with Bernhard Capital Partners, a Louisiana-based group and part because they understand that these employees are critical stakeholders in the gas business. In addition, our customers will continue to receive the high level of service that they have come to expect. The transaction is contingent on regulatory approvals and we anticipate closing around the the third quarter of 2025.
Federal programs are another cost-effective way to source capital. We are pursuing both grants and loans through various programs. For example, under the Grid Resilience and Innovation Partnerships or GRIP program, each of our operating companies submitted applications. We are pleased to report that the proposal from Entergy New Orleans was selected in the federal share of the $110 million system hardening and battery microgrid project will be $55 million. While four of our projects were not selected, they did receive encouragement letters and we are able to reapply for future funding rounds.
We are also preparing to apply for federal loans through the DOE titled 17 Clean Energy Financing Program. Our application will include projects that we are already planning, including renewable generation, battery storage, and transmission projects. Beyond federal financing directly for our customers, we are working with our community partners to attract other federal support for investment in our region. A good example is Louisiana's Hero project that unites public-private and philanthropic sectors to accelerate more affordable, reliable, and clean energy to protect residents of Louisiana from climate change threats. Entergy Louisiana and Entergy New Orleans were both critical team members in helping Louisiana secure the $500 million award.
Another example is Entergy Texas's participation in the high-velocity hydrogen hub, which was selected by the deal with DOE for $1.2 billion award. This funding will help jumpstart additional clean-energy production transportation and end-use opportunities which in turn will create jobs and economic activity and our communities. Entergy Texas could see additional load from blue and green hydrogen customers as a result. Most of our community work is local boots on the ground, including economic developments. Our teams work alongside our state and local governments to attract new business, jobs, and tax base to our service area. We are honored that Site Selection magazine has once again recognized Entergy as a top utility for economic development. We also have programs to directly help our customers in need. With the extreme heat this past quarter, we stepped up our efforts to provide resources for bill assistance, provide education on energy efficiency, a range of payment plans, and encourage customers to transition to levelize billing.
We also hosted our first Power Your Future Summit with education and workforce partners across our service area to create pathways to employment for individuals from underrepresented communities. These are just a few examples of the tremendous work our utility companies and employees put toward our community stakeholders every day.
The EEI Financial Conference is just a couple of weeks away. The fundamentals under parent -- underpinning our growth and value-creation for each of our key stakeholders remains intact. Our long-term sales growth outlook is robust, bolstered by the IRA. Our investment plan includes incremental capital to support the growth and other customer objectives including reliability, resilience, and clean-energy investments. Customer affordability remains a priority and we are actively pursuing continuous improvement efforts to expand our employee skills and capabilities and using technologies like artificial intelligence and robotic process automation to help us maintain a generally flat O&M trajectory despite the inflationary environment and our incremental investments.
While our capital plan is increasing, we have a plan to manage within the current financing environment that meets our credit objectives with the same level of equity, we laid out at Analyst Day. With all of that, we are on track to deliver steady, predictable earnings and dividend growth and steadily working to build the premier utility. We look forward to continuing this conversation with you at the EEI Financial Conference in a couple of weeks.
Now I'll turn the call over to Kimberly, who will review our financial results for the quarter.
