Earnings Call Transcript
Entergy Louisiana, LLC (ELC)
Earnings Call Transcript - ELC Q4 2021
Operator, Operator
Good day and thank you for standing by. Welcome to the Entergy Fourth Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Bill Abler, Vice President of Investor Relations. Mr. Abler, the floor is yours.
William Abler, Vice President of Investor Relations
Good morning, and thank you for joining us. We will begin today with comments from Entergy's Chairman and CEO, Leo Denault; and then Drew Marsh, our CFO, will review results. In an effort to accommodate everyone who asks questions, we request that each person has no more than two questions. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation, and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website. And now I will turn the call over to Leo.
Leo Denault, Chairman and CEO
Thank you, Bill, and good morning, everyone. Today, we are reporting strong results for another successful year. Our adjusted earnings per share is $6.02, which is in the top half of our guidance range. This is the sixth year in a row that our results have come in above our guidance midpoint. Underlying our steady predictable results is Entergy's dedicated, robust, and resilient organization working day in and day out to create sustainable value for all our stakeholders. Because of the solid foundation that we have built and our proven track record, we are confident that we will continue to achieve success into the future by delivering meaningful outcomes. As such, we are initiating 2022 guidance and affirming our longer-term outlooks in line with our discussions at EEI. This continued success is important to all our stakeholders, including our customers. Being able to navigate through headwinds is possible only through financial discipline that allows us to continue to raise the capital needed to serve our customers. Without financial health, we could not have raised the over $4 billion needed to fund the restoration from recent storms, including Ida and Laura, two of the worst storms ever to hit Louisiana. Moreover, we have managed through the revenues lost as a result of these storms and COVID-19. Without financial health, we could not consider accelerating resilience investment to better withstand future storms, nor could we make the investments in clean energy that our customers, large and small, are seeking. In 2021, like 2020, we faced headwinds caused by the pandemic and weather events. However, as in 2020, we proved we could navigate those headwinds and continue to deliver strategically, operationally, and financially. Strategically, we stood up our customer organization and appointed our first-ever Chief Customer Officer, David Ellis. David is building a team to work with our customers to find ways to meet their reliability, affordability, and decarbonization goals. They are actively working on unique and significant opportunities to help our customers reduce their carbon emissions. We created a new sustainable planning, development, and operations group, led by Pete Norgeot, in order to drive greater strategic direction and collaboration in addressing stakeholders’ sustainability expectations. We aligned key internal teams to implement strategies that will decarbonize our portfolio and respond to our customers' sustainability needs, all while maintaining affordability and reliability for customers. Guided by this holistic planning framework, we updated our long-term supply plan to significantly increase renewable capacity. We now expect 11 gigawatts of renewable capacity by the end of 2030, more than double the estimate in our previous plan. As part of this plan, we issued renewable RFPs over the last year totaling nearly 2,000 megawatts. We completed the tax equity partnership for Searcy Solar in Arkansas. We designed this unique structure to help facilitate the economics of utility ownership while better aligning the interests of the project owner and tax equity partner. This is an important step to make utility renewable ownership an economic option for our customers. We proposed the Orange County Advanced Power Station in Texas. If approved, this will be our first hydrogen-capable plant and will provide efficient power with the flexibility to utilize clean hydrogen. We sold Indian Point and received approval from the NRC to sell Palisades, which is our last remaining EWC nuclear plant. We expect the sale to be completed around midyear. We made great progress in our diversity, inclusion, and belonging initiatives, including creating the Diversity and Workforce Strategies organization. This team, led by Taiwan Brown, is expanding our workforce development efforts and developing new standards for hiring. We concluded 2021 with gains in female and diverse representation toward our goal of reflecting the rich diversity of the communities we serve. Consistent with our progress, we received many awards and recognition for multiple aspects of our business, including environmental leadership and responsibility, storm response, social responsibility, corporate citizenship, economic development, and workplace excellence. Operationally, we improved distribution reliability in 2021. For transmission, years of hard work and strategic capital investment led to system improvements as that team achieved its best reliability performance in more than 20 years. We wrapped up our AMI initiative with more than 3 million meters online. These advanced meters allow our customers to better understand and control energy usage to achieve their affordability goals. Advanced meters also represent a foundational component of other customer and grid technology investments that will further improve service and reliability. Through a continued focus on improved operations, Grand Gulf achieved its highest-ever generation output in 2021. In response to the historic damage caused by Hurricane IDA, we deployed the largest restoration workforce in our history. The storm presented unique challenges, and we developed innovative solutions to restore power and help our customers and communities recover in a timely fashion. We deployed portable generators for key businesses and community services. We also procured materials and supplies from non-traditional sources, such as used pipe from the halted Keystone pipeline to strengthen the foundation of new distribution structures in areas with soft soil conditions. Financially, our adjusted earnings results were in the top half of our guidance range. We maintained solid liquidity throughout the year. Between driving business risk improvements and progress on our ATM program, we reduced our remaining equity needs through 2024 to $700 million, roughly one-quarter of what we communicated at our Analyst Day in 2020. We made significant progress on storm cost and balance sheet recovery. We expect to receive more than $3 billion of securitization proceeds in the coming months, which includes a $1 billion down payment toward IDF costs. We filed an uncontested settlement in Louisiana, and that case is on the agenda for today's LPSC meeting. The entire Entergy team proved once again to be highly resilient under challenging circumstances, and I cannot thank them enough. We also know that the key to continuing to achieve outcomes into the future is to ensure we are working for all of our stakeholders: customers, employees, communities, and owners. We are committed to achieving meaningful outcomes for each. This holistic approach will drive a vibrant, sustainable business for years to come. Our 3-year, $12 billion capital plan will continue to benefit customers with improved reliability, resilience, customer experience, and economic development. Our plan will also support our commitment to reduce carbon emissions. These customer-centric investments, combined with our growth forecast and regulatory mechanisms, support 5% to 7% growth in adjusted EPS and a strong credit profile. Roughly one-third of the capital will go toward generation. In addition to maintaining our highly efficient gas fleet, this capital will continue to modernize and ensure the longevity of our emission-free nuclear fleet. In the planning period, we will increase our renewable portfolio to more than 2 gigawatts. That's a 300% growth in renewables, and that trend will not only continue but accelerate beyond 2024 with plans for 11 gigawatts in service by the end of 2030. With this plan, we expect to achieve our 50% carbon intensity reduction goal several years earlier than our 2030 target. Additionally, our generation capital plan includes the initial portions of the investment in the Orange County Advanced Power Station with planned hydrogen capability, which is expected to come online in 2026. As we've discussed, our region has tremendous advantages in both hydrogen and carbon capture. Our distribution and utility support capital plan totals $5.8 billion. The plan is designed to deliver improved reliability, resilience, and customer experience through projects focused on asset renewals and enhancements in grid development. We will also ensure the grid is ready for new customer connections. Our transmission plan is $2.3 billion and will drive reliability and resilience while also supporting the expansion of renewables. Projects will focus on asset renewal and enhancements, congestion relief, and new customer interconnections. We have a clear line of sight to the base plan, but our intention is to do even better. Our future investment profile will increasingly be driven by meeting evolving customer needs. The two most significant areas of focus for our customers in the coming years are resilience and decarbonization. We have invested significantly in resilience for years, but with the potential for increasing frequency and intensity of weather events, it's time to review the speed with which we will make those investments. We've preliminarily identified between $5 billion and $15 billion of resilience investments that could be accelerated, which will help mitigate future storm damage and costs. Over the coming months, we'll map out what makes sense for our customers with a goal to share this information with our regulators, initially through technical conferences this spring, and subsequently through filings targeted for late summer so that we can, with their support, proceed to accelerate our resilience investment. Our customers have aggressive decarbonization objectives, and we are doing our part today with one of the cleanest large-scale generating fleets in the country. As I have previously mentioned, the continued operation of our large nuclear fleet and the addition of significant renewable capacity will allow us to further support their decarbonization goals to reduce Scope 2 emissions. We are working to provide our customers with the products they need, such as green tariffs, so that they can meet their environmental objectives. By meeting their clean energy needs, we can further accelerate our renewable deployment. However, a reduction in Scope 2 emissions will not be enough for many of our customers. Some are also looking for ways to reduce their Scope 1 emissions. Electrification is an efficient way to lower those emissions. Given the size of our industrial base as well as their emissions levels, helping our customers reduce their carbon footprint presents an exceptional opportunity for Entergy. This is true for new and expansion customers like U.S. Steel and Sempra, who recently announced facility additions with electrified processes that will drive significant new sales. These two customers alone could add 850 megawatts of new load, which represents nearly 2,000 megawatts of renewable capacity if the new sales are supplied with 100% green energy. It is also true for existing customers who need to decarbonize their processes to meet their objectives. As we discussed at EEI, we believe the addressable market could be as much as 30 terawatt hours of additional clean energy by 2030. Understanding the importance of renewables in attracting new jobs, Entergy Mississippi developed a strategy called Edge, economic development with green energy, to give Mississippi an edge in recruiting industry to the state. Entergy Mississippi is making its largest-ever commitment to renewable resources with plans to replace aging natural gas plants with 1,000 megawatts of renewable energy over the next five years. The plan has drawn praise and support from the governor and the state's public service commissioners. We continue to work with our customers to determine the size and pace of their needs. We will ensure that our resource plans and financial forecasts reflect the latest customer insights, and we'll keep you updated along the way. This is an exciting opportunity for us and one that is unique to Entergy. 2021 was another successful year for Entergy that benefited from the resilience we’ve built into our business. We delivered on our commitments, including steady predictable growth. We have a solid plan with significant certainty over the next three years. Beyond our base plan, other significant opportunities in renewable generation, clean electrification, and resilience acceleration will serve, at a minimum, to extend our runway of growth. This growth will deliver many benefits for all of Entergy's stakeholders, which will ensure the sustainability of our business for decades to come. Before I turn it over to Drew, I'm excited to announce that we will host our Analyst Day on June 16 in New York City. We will continue the conversation on the significant opportunities that we see ahead and provide a view of our five-year outlook. So stay tuned for more details. I'll now turn the call over to Drew, who will review our financial results and our outlooks.
Andrew Marsh, CFO
Thank you, Leo. Good morning, everyone. As Leo said, today, we are reporting strong 2021 results in the top half of our guidance range. We executed key deliverables throughout the year, and our results are a validation of the resilience we've built into our business. We are confident that we will continue to deliver on our commitments, and we are initiating our 2022 guidance and confirming our longer-term 2023 and 2024 outlooks. I'll begin by discussing results for 2021 and then provide an overview of the key business drivers for 2022. Starting with Slide 6. Entergy adjusted EPS for 2021 was $6.02 and $0.36 higher than 2020. Turning to Slide 7. Our earnings growth was driven by investments across our operating companies that benefit customers through improved resilience, reliability, and operational efficiency. Weather-adjusted billed retail sales growth was 2% for the year as sales rebounded from COVID-19 impacts. Industrial sales were strong, around 6% higher than 2020. We saw continued growth from new and expansion customers, which helps keep rates low, as well as higher-than-expected demand from cogeneration customers. The weather's effect on billed sales reduced our earnings by $0.03 per share for the year. Our December temperatures were at record highs, and much of those sales were not yet billed before the year's end. When you take into account the negative weather impact for the year, it was significantly more at $0.11. Starting with first-quarter 2022 results, we will use our AMI infrastructure to update our weather estimates to be based on the calendar view versus the billing cycle. To help you, the appendix of our webcast presentation has updated 2021 estimated weather effects by quarter, which reflects the new methodology. Coming back to drivers for 2021, our utility O&M returned to more normal levels following last year's significant reductions from our flex spending program used to mitigate the impact of lower revenues from COVID-19. We also saw higher depreciation and interest, which were largely the result of customer-centric investments. Results for EWC are summarized on Slide 8 and reflect the continued wind down of that business. We expect to close the Palisades sale by the middle of 2022, which will complete our exit from the merchant business. On Slide 9, operating cash flow for the year was $2.3 billion, slightly lower than last year. Non-capital storm costs were a large driver of $220 million, increased fuel and purchased power payments, income tax payments, and lower EWC revenues also contributed to the decrease, while higher utility revenue provided a partial offset. Moving to Slide 10. We continue to expect to achieve credit metrics that meet or exceed rating agency expectations by the end of 2022. Solid results from business de-risking efforts are reflected in Moody's upgrade of Entergy Texas's long-term issuer and bond ratings on January 28. This upgrade recognizes the constructive regulation over the past several years, including riders and responsive storm cost recovery that has allowed Entergy Texas to earn a reasonable return on equity. The improved credit rating allows the company to attract capital at a lower cost, which benefits customers. At the same time, Moody's moved Entergy Arkansas and Entergy Mississippi to a positive outlook while also citing constructive regulatory factors. Take a minute to provide an update on the excellent progress we've made with storm cost recovery. Entergy Texas has received approval from both the storm cost determination and financing order. We expect to receive securitization proceeds in March or April. In Louisiana, we have submitted a unanimous settlement to the 2020 storm proceeding, which includes support for an additional $1 billion as an early prepayment against hurricane Ida cost recovery. The matter is on the agenda for today's Louisiana Commission meeting. Assuming the LPSC decides the issue today, we expect to issue the securitization bonds before the storm season. We have also refined our estimates for Hurricane Ida and now expect the cost to be $2.7 billion, slightly above our original expectations due to additional resilience and hardening investments as well as higher resource costs. We're completing storm invoice processing, and Entergy Louisiana is on track to submit its cost recovery filing in April, followed by Entergy New Orleans around midyear. Our goal remains to receive the balance of Entergy Louisiana's Hurricane Ida securitization proceeds by the end of this year, pending the Louisiana commission's procedural schedule for the case. Another area we have successfully reduced business risk is our pension obligation. In 2021, our funded status improved by approximately $900 million or 38% as a result of our increased contributions and actions to accelerate the reduction of the liability over the past several years. In addition, slightly higher interest rates and strong pension asset returns in 2021 contributed to the improvement. We've also made progress against our near-term growth equity needs, as you can see on Slide 11. In 2021, we utilized our at-the-market equity program and sold close to $500 million of common equity. The decrease in our pension deficit further improves our Moody's cash flow metric, and we reduced our remaining equity needs by an additional $300 million. As of today, our remaining growth equity requirement through 2024 stands at $700 million, roughly one-quarter of the original expectation. Looking ahead, Slide 12 shows that the fundamentals of our industrial customers remain robust. The forward commodity spreads remain supportive of continued growth and expansion. The four sectors shown on the slide represent nearly half of our industrial sales. Our economic indicators remain at or near multi-year highs, and our industrial base continues to be resilient and competitively advantaged. Our adjusted EPS guidance and outlooks shown on Slide 13 remain unchanged. Our 2022 adjusted EPS guidance range of $6.15 to $6.45, with a midpoint of $6.30. Our plan supports steady, predictable 5% to 7% annual growth. We also expect to continue our dividend growth commensurate with our adjusted EPS growth. The key drivers for 2022 guidance highlighted on Slide 14 are straightforward and in line with what you would expect. Starting with the top line, we will see revenue growth resulting from the customer-centric investments we've made, as well as increases in depreciation and interest expense associated with the new assets. We also expect an increase in retail sales volume of 1.8% on a weather-adjusted basis. This reflects increases in commercial and industrial sales and a slight decline in residential sales. Consistent with our EEI disclosures, we anticipate an increase in other O&M due to typical drivers, including inflation. We also have continuous improvement efforts to achieve efficiencies and flex tools that help mitigate changes during the year. The appendix of the webcast presentation contains additional details on the specific drivers, including quarterly considerations and earnings sensitivities. As Leo mentioned, 2021 was another successful year for our company. We delivered results in the top half of the guidance range despite significant storm disruption. We have strong fundamentals that underline our plan, which supports steady, predictable growth, and we are working to do even better. As Leo mentioned, Entergy has a unique and significant opportunity ahead. We are focused on translating that opportunity into a reality for our customers, our employees, our communities, and our owners. We look forward to talking more about these opportunities for you now over the coming months and at our Analyst Day in June. And now the Entergy team is available to answer questions.
Constantine Lednev, Analyst
Hi, good morning, Leo and team. It's actually Constantine here for Shar. Congrats on a great quarter and the closeout to the year. I appreciate the comments on potential upsides from resiliency spending in the prepared remarks. And I believe Mississippi has received an independent consultant recommendation on resiliency. Do you have any early indications on what the governing factors are, including some of the spending? Is it bills, regulatory constructs, financing needs? Any color on the early discussions that you may have?
Rod West, Executive
Yes. This is Rod. Good morning. I think the early discussions are going to be focused on the state-by-state cost-benefit analysis. If you think about our desire to accelerate resiliency, Leo alluded to it. We have four dimensions that we discussed, one of them being storm intensity, the frequency, the duration, and the location. We're in the early stages right now of doing the statistical analysis around various scenarios. Each of those scenarios will play out differently in each of our jurisdictions. We think the lion's share of the work, as you might expect, is going to show up in Louisiana. That's the subject of the technical conference, when we zero in on the scenarios and the planning assumptions where the regulator, along with the customers would be in a better position to make a decision on what direction they want to go in. But as Leo alluded to, the technical conference is the prelude to the filings later in the year when we start to actually show the public what we have to believe in order to put a specific acceleration plan in place. The nuances will be a state-by-state play, if that’s helpful, but it’s early in the process, which is why you might hear us framing it up in general terms.
Constantine Lednev, Analyst
Okay. That's helpful color. And just with the FEMA applications for resiliency funding of the $450 million, does that kind of play a factor? And how do those plans get developed? Are those projects included in the CapEx plan? Or would you fund those projects yourself if the FEMA applications don't go through?
Rod West, Executive
As we stated before, anything that comes from the federal government helps to offset what would otherwise be borne by customers. We're going to remain actively involved in ensuring we can maximize whatever input the federal government might provide. That said, we still have to go forward with our regulators assuming that the federal funds don't come through, whether it's offsetting existing storm costs or putting forth federal funds toward future resiliency spending. But our plans are assuming both dynamics from a scenario planning perspective, but it's not dependent upon federal funds.
Constantine Lednev, Analyst
Okay. That's great color. And just a quick follow-up on the equity needs, and kudos to the whole team for materially mitigating the needs from the Analyst Day. Curious about your thoughts on the timing for the remaining $700 million in plan. Is there a threshold or event that could accelerate? Or do you have some cushion to defer given the progress made in '21, maybe a continuation of the ATM at a modest level?
Andrew Marsh, CFO
Yes. This is Drew. We are still mindful that we'd like to get this done. We are continuing to work through with the ATM that we put in place before. I think you'll continue to see us use that, and we could knock this out fairly quickly with that framework. We'll be mindful of any other opportunities that, if the right market conditions come along, would allow us to finish it off through a block. So we're paying close attention to that. But as you can tell, the number’s gotten much smaller. The end is sort of in sight for us overall.
Constantine Lednev, Analyst
Thanks. That’s very helpful, and thank you for taking the questions and congrats on FY21.
Andrew Marsh, CFO
Thanks, Constantine.
Operator, Operator
Thank you. Next up, we have on the line, Jeremy Tonet of JPMorgan. Your line is open.
Jeremy Tonet, Analyst
Hi, good morning.
Leo Denault, Chairman and CEO
Good morning, Jeremy.
Jeremy Tonet, Analyst
Good morning. Just wanted to start on load growth, if I could. Could you provide a little bit more detail on the significant growth on the industrial side? You provided some commentary there in the slides, but just wondering how you see that trending, relative to pre-pandemic levels and expectations to exceed that? And then you talked a bit about green demand. Just wondering if you could update us a little bit more on where does the green tariff demand stand now across this customer base versus where it was 12 months ago? And how you see that evolving over time?
Andrew Marsh, CFO
So this is Drew. I'll take the first piece on the load growth, and I'll let Rod talk about the green tariff. Overall, our load growth for the industrial side continues to be robust. I went through some of the drivers for our main industries in my prepared remarks, those are in really good places. We do see continued demand with the recent announcements from U.S. Steel and Sempra, and we are continuing to see demand. However, the nature of it is evolving, and you see that in what's happening there. Those customers are looking for clean, green options at a low cost, and we are well situated for that. As a result, that is our opportunity from a generation perspective. A lot of the other fundamentals that we've had all along are still there: proximity to the Gulf Coast, proximity to the Mississippi River, an available workforce, and supportive communities. All of that continues to attract investment from our customers and for others from outside the area today. So relative to the pre-pandemic, I would say that's pretty good, but post-pandemic, we're seeing that shift to wanting that clean electrification opportunity. That is what we are seeing this year; as you go into '22, it's a little bit lower. However, as you look out to '24 and beyond, we certainly expect it to continue to ramp up on that clean electrification opportunity.
Rod West, Executive
And I'll simply add that Leo alluded to the 30 terawatt hours of an addressable market through 2030. The efforts we've taken internally to engage differently with those customers to identify how this demand might play out. What we saw with U.S. Steel and Sempra underscores the thesis that the opportunity for growth is there. We'll share far more details about how we see the next five years playing out at Analyst Day. But the early indicators are that we're confident in our industrial customers, and we're seeing it flow down into the smaller commercial sector. They've already made public their plans to reduce their carbon emissions. We think we have a unique opportunity to play a role in helping them get there. This foreshadows a great demand for our green products, also underscoring, as Leo alluded to in his comments, the significance of our low emitting and efficient gas generation, as well as our nuclear fleet, not to mention the up to 11 gigawatts of solar by 2030. More to come at Analyst Day, but so far, early indications are looking very good for our ability to help our customers meet their sustainability objectives.
Andrew Marsh, CFO
That’s helpful. Thanks for that. And kind of picking up on the point there, without front-running the Analyst Day, are there any broad strokes that you could provide for us as far as themes or other topics that we might expect at the Analyst Day update wise?
Leo Denault, Chairman and CEO
Well, I think, as I mentioned, we're going to go a couple of extra years as we always do at Analyst Day, and those opportunities that Rod talked about, even if you think about U.S. Steel and Sempra, for example, the 2024 and 2027 in-service dates. This acceleration really picks up as you get out kind of the '24 and beyond timeframe. That will be the major theme; we'll talk a little bit about what we may be seeing in that regard.
Operator, Operator
Hello. One moment, please. We ask that you may remain on the line; the conference will resume shortly.
Rod West, Executive
All right. So I don't know, Leo, if you want to respond to the last answer. I know Jeremy, you had asked about the Analyst Day. I was mentioning that we'll go a couple of years out farther than the 2024 current outlook. That will be interesting because of the growth opportunities presented by electrification.
Jeremy Tonet, Analyst
Got it. That's helpful. And just one more, if I could. With regards to Grand Gulf, given stronger operations in 2021. Just wondering if you could update us, I guess, how things are looking right now operations-wise in '22 expectations. Has this improved performance come through when needed, improved stakeholder conversations? Just wondering if you could provide any update there.
Leo Denault, Chairman and CEO
Well, Grand Gulf has improved operations. As I mentioned in my prepared remarks, it had its highest generation output ever in 2021. Our expectation is to continue that performance going into the future and improve as we continue through outages and upgrade the equipment associated with the facility. Our nuclear plants are important to the economic development of our jurisdictions. As we talk about electrification, I think one thing that goes unnoticed is the already clean nature of our fleet. As one of the cleanest generating fleets in the country, some of the low rates will allow decarbonization objectives to be met by electrifying processes just using the grid power we have today, even before we build out the renewables. The majority of our customers have decarbonization objectives, so we engage in dialogue with them about the nuclear fleet being an important part of decarbonization. The discussion around nuclear has changed significantly regarding its importance for the future of the economy of the states where we operate. It's a holistic approach crucial for both the reliability and sustainability of the system. As more customers demand carbon-free energy that follows their load, we'll have an advantage in jurisdictions that have nuclear power.
Jeremy Tonet, Analyst
Got it. Actually, one last one, if I could. Any updated thoughts on advanced nuclear small modular reactors and if you think that this could start to enter the Entergy plans towards the end of the decade?
Leo Denault, Chairman and CEO
Certainly, we have folks following the development of various technologies in the nuclear space. Should we reach a point where some form of SMR is economically viable, we'd certainly incorporate it into the mix. As I mentioned, decarbonization is the goal for everyone, and today, the most reliable way to generate significant energy without carbon emissions is through nuclear power. We're watching those developments closely across the board. If they become economically viable, we'd certainly pursue them. Our jurisdictions are typically open to the development of new assets that create jobs and high energy intensity for economic development. It’s too early to say how quickly those will become part of the resource mix, but there is a substantial focus on carbon reduction.
Jeremy Tonet, Analyst
Got it. That’s very helpful. I’ll leave it there. Thank you.
Leo Denault, Chairman and CEO
Thank you, Jeremy.
Operator, Operator
Thank you. And next, we have on the line, Michael of Goldman Sachs. Your line is open.
Michael Lapides, Analyst
Hey, guys, thank you for taking my question. I actually have a couple, and they're kind of unrelated to each other. First of all, on the Orange County project, seems like it's a long construction timeframe, four years, if you get approval in May, June timeframe, but in service not until May of '26? Is that due to the hydrogen capability being added, or is there some other driver? Normally, combined cycle is quicker than that?
Leo Denault, Chairman and CEO
No, there's nothing really. By the time we get the regulatory approval and get into the process, there's a bit more work done at this stage on the hydrogen side, but it's not a significant cost driver at these early stages to get to the 30% blended capability. So, there's nothing out of the ordinary—it's a big plant.
Andrew Marsh, CFO
And I would say that, Michael, given our history of construction around CCGTs, we would typically come in under the expected timeline in nearly every instance. So, I wouldn't expect that we would end up in June of ‘26 unless there were some weather-related issues or something else.
Michael Lapides, Analyst
Got it. Okay. And then an unrelated topic, the FERC put out its policy statement about gas infrastructure projects and GHG emissions. It obviously matters to you, and you're not building pipelines of material size at all or anything, but lots of companies in your service territory who are major customers are either trying to build new pipelines or new LNG facilities or other petchem-related energy infrastructure. Just curious how you see this process changing the permitting for new gas infrastructure? And what that means for your Louisiana and Texas service territories longer-term?
Rod West, Executive
Yes, Michael, it's Rod. As you might imagine, we're closely aligned with our industrial customer base, as you have alluded to, in terms of what it might portend for the future. It fits into our point of view that perhaps this could be a catalyst for accelerating decarbonization efforts. This also fuels our view on our ability to support their objectives, whether through the Scope 2 resources from our electric supply or any opportunity we have to electrify their processes. We're viewing it through the lens of what's the implication for the customers, who might move faster as a condition of permitting to take advantage of the other market advantages of locating and expanding in our service territory. It is unclear how it will ultimately play out. But as you might imagine, we are considering how that applies to other potential customers like Sempra, most recently, as they're working through their permitting process. We are stakeholders in those proceedings for that very reason.
Michael Lapides, Analyst
Got it. Thank you, Rod. Much appreciated, guys.
Andrew Marsh, CFO
Thanks, Michael.
Operator, Operator
Thank you. And next on the line, we have Jonathan Arnold of Vertical Research. Your line is open.
Jonathan Arnold, Analyst
Hi, good morning, guys. Just a quick one on longer-term financing. Drew, I think you sort of talked about being done once you've completed the '22 to '24 reduced equity raise. Is how do you think about that sort of post-'24 period? Is something similar to the run rate you've effectively been doing here a sensible assumption? Or could you be out of the capital raise business for a few years like you've been in the past?
Andrew Marsh, CFO
That's a good question, Jonathan. We've talked a lot about the types of financing available to us and what would be beneficial in certain situations. Financing with the equity capital markets is useful because it gives you a firm idea of what you're going to get, and it's a liquid market, so you can close quickly. That's what we've been doing here recently because we have a near-term need. Looking beyond 2024, there are different options that become available because it's such a long-term perspective. It's not just capital markets; other types of financing we've discussed before might be strategically available rather than from a capital markets perspective. But that's longer term; we won't be focusing on that right this minute. However, looking out beyond our horizon period, there are other options available.
Jonathan Arnold, Analyst
Okay. And just to make sure I've got this straight, the $300 million or so that you did under the ATM, that's not yet settled. Those shares are not yet in the share count, correct?
Andrew Marsh, CFO
That's correct.
Jonathan Arnold, Analyst
Okay. Thank you. And then just on one other thing. Can you remind us or maybe tell us what went on with the Liberty County solar project, and were there any lessons learned around that for a better outcome next time around?
Rod West, Executive
Yes. This is Rod. The Liberty County project was pulled not because the commission didn't recognize the benefits of the actual project. That particular one had more to do with where the Texas Commission was in terms of how they viewed the Liberty County project and its implications inside ERCOT. I don't want to send a signal that there was anything untoward with the project. We pulled it because we wanted to return to the commission when they actually had a full commission. The lack of a full commission was also influential in their reticence to approve the deal. It was a timing play for us. We had greater capital needs and recognized a robust response to additional RFPs, so we decided to pull it. But it does not thwart our belief in the viability of those projects. We expect to come back with more, but I don't want you to overread anything into it.
Jonathan Arnold, Analyst
No. Do you expect to come back with that particular project, or it was just with other things?
Rod West, Executive
The timing of that particular one may return, but we have a robust opportunity to fill our needs with other projects. I won't signal anything for that specific one, but the pipeline is quite robust.
Operator, Operator
Thank you. And next on the line, we have Paul Zimbardo of Bank of America. Your line is open.
Paul Zimbardo, Analyst
I want to follow up on some of the potential storm hardening acceleration where you talked about some of those data points leading up to the Analyst Day. Should we think of that as purely incremental capital? Or could that kind of mitigate some of the capital already in the plan as you don't need to do some other work around storm hardening?
Leo Denault, Chairman and CEO
It's really an acceleration of things that we've identified could be done. For example, in our current three-year outlook, there's around $2.7 billion of T&D investments that could be considered resilience investments: about $1.7 billion in the T space, about $1 billion in the D space. We've been doing resilience spending in a combination of new projects and post-storm repairs to build to new standards. What we'd be looking at with the resilience spending is identifying things that we could do faster than they would otherwise be on the schedule. It would be incremental in the timelines proposed if that makes sense.
Paul Zimbardo, Analyst
Yes, that makes it clear. The other question I had was just given some of the broad inflationary pressures, how are you thinking and your comfort level about the ability to execute in Arkansas relative to the 4% rate cap?
Andrew Marsh, CFO
Yes, this is Drew. I'll start, and maybe Rod can add to it. We're not immune from whatever inflation issues are present, so we're monitoring it closely. There's different pieces to it—fuel, which gets collected through a separate fuel rider in Arkansas. That might move the 4% cap up a bit, but it won't hinder our investments there. On the O&M side, we haven't seen the pressures that other sectors have experienced. That doesn't mean we haven't faced ongoing issues on a more spot basis. We're ramping up continuous improvement efforts to help manage against potential inflation acceleration broadly in our business. We're seeing some pressure on the capital side, especially regarding some solar projects. That said, the RFPs we've conducted recently and those we expect to conduct indicate that we're still at a very early stage of renewal investments. While some projects have encountered pressure, the bulk of them has built-in expectations around the inflation environment and the supply chain. These projects are still highly valuable for customers and should receive support from retail regulators. Thus, right now, we don’t see any significant challenges.
Paul Zimbardo, Analyst
Okay. Thank you very much for that.
Operator, Operator
Thank you. And next on the line, we have Stephen Byrd of Morgan Stanley.
Stephen Byrd, Analyst
Hi, good morning.
Leo Denault, Chairman and CEO
Good morning.
Andrew Marsh, CFO
Good morning.
Stephen Byrd, Analyst
I wanted to follow up on Jeremy's questions just on nuclear operations, and it looks like there's been good improvement there. I wondered if you could speak to just the dialogue with the NRC. You're not on column four, and operations are improving. Is there any additional color you can give in terms of the dialogue with the NRC on nuclear operations?
Leo Denault, Chairman and CEO
We continue to engage in comprehensive dialogue at all levels, from the resident inspector to the regions, to the headquarters in Washington. Our relationship with the NRC is strong and open. I meet with resident inspectors when I'm on site and with the region on a regular basis. I've also met with all the commissioners whenever I can. We had to conduct many of those meetings virtually over the last couple of years, but we continue to have a constructive relationship.
Stephen Byrd, Analyst
Understood. Has there been recognition of the improvements in operational performance of your nuclear fleet?
Leo Denault, Chairman and CEO
Yes. Absolutely.
Stephen Byrd, Analyst
Okay, great. And then just one last question for me. Given the commodity cost outlook, could you speak to the outlook for customer billing, especially for residential customers, across your footprint? I know residential is a smaller percentage for you all than some utilities, but I'm just curious given the commodity outlook what the bill increase outlook is for you.
Andrew Marsh, CFO
Yes, Stephen, it's Drew. There are a couple of things going on in our bills, and it depends on the jurisdiction particularly. I already talked about inflation and what that means. Regarding Louisiana and Texas, Winter Storm Uri in 2021 raised the fuel costs quite a bit in those two jurisdictions for 2021. The fuel curve is still above the forward curve, that’s not impact?on customers in those jurisdictions because we've already had high fuel prices due to Winter Storm Uri. Looking forward, the fuel curve remains a bit backward dated. Our expectations are typically above the forward curve after a few years. Thus, we think we're fairly well situated from a customer perspective. The securitization thesis in the next 18 months brings stabilization and potentially ongoing costs across those jurisdiction. Once we get past that, we anticipate the growth rate in the bills should remain reasonable, historically stated at or below inflation. That certainly shifts with current conditions, though historically, we’ve aimed for bills to rise at or below inflation, which is less than 3%. So, that's what we’d expect to see once we get past the current higher costs due to fuel securitization.
Stephen Byrd, Analyst
Very good. Thank you very much.
Operator, Operator
Thank you. And our last question comes from the line of an unidentified analyst of UBS. Your line is open.
Unidentified Analyst, Analyst
Assuming all goes well at the Louisiana Public Service Commission, what are the steps for getting storm recovery that you'll have? There's the securitization that you touched on just a minute ago. Can you walk through the steps in the amounts that you expect to be coming in?
Leo Denault, Chairman and CEO
Sure. In Texas, we've already got the orders. We're in the process of setting up the actual sourcing of securitization funds, which should take place in March or April. That's expected to be in the neighborhood of $290 million. Assuming we receive approval from the LPSC today, we'll set up the transaction for that. It would be around $3.2 billion, including the $1 billion for Ida costs. This process will differ from the Texas transaction, where we've already received approval from the State Bond Commission. We hope to set up the transaction quickly, followed by the balance of the Ida costs, ideally, by late this year as per the Louisiana commission's procedural schedule.
Unidentified Analyst, Analyst
Okay, thanks.
Leo Denault, Chairman and CEO
Thank you.
William Abler, Vice President of Investor Relations
Thank you, Chris, and thanks to everyone for participating this morning. Our annual report on Form 10-K is due to the SEC on February 25 and provides more details and disclosures about our financial statements. Events that occurred prior to the date of the 10-K filing provide additional evidence of conditions that existed at the date of the balance sheet and would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a web page as part of Entergy's Investor Relations website on regulatory and other information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. This concludes our call. Thank you very much.
Operator, Operator
Then this concludes today's conference call. Thank you all for participating. You may now disconnect and have a good day.