Ladies and gentlemen, thank you for standing by. And welcome to the Entergy Corporation Second Quarter 2020 Earnings Release and Teleconference. At this time, all participant lines are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, David Borde, Vice President, Investor Relations. Thank you. Please go ahead, sir.

Thank you. 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 has questions, we request that each person ask no more than one question and one follow-up. 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.

Thank you, David, and good morning, everyone. Thank you for joining us. Today, we are reporting strong second quarter results of $1.37 adjusted earnings per share. Sales in the quarter were better than we expected. We are on track to achieve our $100 million O&M cost savings target for the year. And our capital plan is unchanged. With these results, we are affirming our full year guidance, our longer term outlooks and our dividend growth aspirations. As you all know, the COVID-19 pandemic has placed a burden on our customers, employees and communities. We believe, it is part of our mission, empowering life, to do all that we can to support our stakeholders as we all work to recover from its effects. Despite these extraordinary times, 2020 is on pace to be another year of significant accomplishments for Entergy. This quarter, we’ve made progress on multiple fronts, all of which will benefit our stakeholders. We completed Phase 2 of the Western Region economic transmission project. The New Orleans Power Station came on line. The Public Utility Commission of Texas finalized its rulemaking for generation rider. The Mississippi Public Service Commission approved Entergy Mississippi’s formula rate plan filing. Entergy Arkansas and Entergy Louisiana each filed their annual formula rate plans and requested extensions of these mechanisms. And Entergy Louisiana issued a request for proposal for up to 300 megawatts of new renewable resources. And more importantly, we continue to successfully manage the effects of our investment on customer rates. According to an S&P Global Market Intelligence study published earlier this month, in 2019, Entergy provided power to retail customers at the second lowest average price of the major investor owned utilities in the United States, something we are very proud of. The COVID-19 pandemic continues to affect all of us across…

Thank you, Leo. Good morning, everyone. As Leo noted, our second quarter results were strong. Sales were better than we expected on our last call. We are well on track to achieve our cost savings for the year, and our capital plan remains unchanged. We’re affirming our guidance on longer term outlooks as we stay focused on becoming the premier utility. Entergy adjusted earnings for the quarter were $1.37 and drivers were straightforward. Starting with utility on slide 6, we saw positive effects of regulatory actions associated with our customer-centric investments in Arkansas, Louisiana, Mississippi and Texas, including the Lake Charles Power Station, which came on line a few months early. We experienced lower sales volume due to impact from COVID-19 and unfavorable weather. Lower O&M reflected our cost reduction initiatives, as well as the timing and scope of non-nuclear generation outages and lower nuclear generation expenses. Depreciation and interest were higher as a result of our continued growth, and earnings on a per share basis also reflected a higher share count. At EWC, on slide 7, as-reported earnings were $0.55 higher than a year ago. The key driver was strong market performance for EWC’s nuclear decommissioning trust funds. The quarter’s results also reflected lower revenue and lower O&M, primarily due to the shutdown of Pilgrim and Indian Point 2. Slide 8 shows operating cash flow increased approximately $240 million. The main drivers were higher collections for fuel and purchase power costs and a $45 million reduction in the unprotected excess to ADIT returned to customers. The second quarter also benefited from lower nuclear refueling outage spending and lower severance and retention payments at EWC. Lower collections from utility customers partially offset the increase. Now, turning to slide 9, we are affirming our 2020 adjusted EPS guidance range of $5.45…

[Operator Instructions] Our first question comes from the line of James Thalacker from BMO Capital Markets. Your line is now open.

Just two real quick questions. I think, your previous guidance had assumed a 2% decline for 2020 -- sorry, 2.5% decline for the full year; now, you’re at 2%. Can you kind of give us a breakdown of how you are thinking about that for the balance of the year? And do you think there’s some -- maybe some conservatism baked in there on the industrial side, as you’re kind of looking at the recovery through the end of 2020.

Yes. James, this is Drew. Yes. So, we haven’t changed our outlook for sales actually for the third and fourth quarter from what we described in May, even though we did see a little bit better outcome in the second quarter than what we were anticipating. It is possible that we could do better. But, given the spike in cases, around the country and our service territory, we thought we should just keep it about where it is for right now. We do continue to see the phased reopening, even though it’s paused in certain municipalities right now. So, there is opportunity perhaps over the balance of the year. But, for the time, we’ve elected to keep our outlook for sales, where we had it for the second half.

So, basically, the improved sort of outlook really comes from just the second quarter and whether you’ve kind of -- and the sales you’ve seen sort of quarter-to-date…?

That’s correct.

Okay. And then, the other question, I guess just comes back to sort of credit is, are you still comfortable with the equity guidance that you’ve given before where you’re looking, I think for the high end of the 5% to 10% of the planned CapEx? Is that still sort of how you’re looking at things, and do you still feel like you’re on target for the end of the year to get to 15% FFO to debt, which I think is where you guys were sort of targeting last time we spoke?

That’s right. We are still targeting that, we still expect to make that by fourth quarter next year. And our equity outlook is in that same range that we’ve talked about previously. We have continued to think about timing. And we think it’s probably the latter half of next year when the need will actually arise. And we continue to think about the method in which we would deliver that. And in the past we’ve talked about block rate. That’s what we did a few years ago. So that’s still on the table. But, we’ve also added other options to the table, including an ATM possibility and even perhaps preferred equity. Right now, we don’t have authorization for preferred equity within our charts. So, we would need a proxy vote to ensure that that would be shareholder friendly, but we’re considering that as well.

And just a follow-up on the preferred equity, I’m assuming that’d be like a mandatory convert.

Yes.

Is that from a rating agency standpoint? I know that you’ll get anywhere from 25% to 50% credit for something like that. Does that kind of limit I guess how much of the funding you can do through the convert, just considering it’s a little bit farther out and you don’t get as much equity credit as you would versus say a block sale or through an ATM?

So, that’s why the preferred equity gets you actually I think up to 100%. There are options around preferred debt, other versions of convertibles that will give you various credit, depending on the rating agency. And we have authorization for all of those. What we don’t have authorization for is the preferred equity that would allow you to get 100% credit.

Our next question comes from the line of Shahriar Pourreza from Guggenheim Partners.

So, good to see that the $100 million cost savings program is on target. Is there any plans to hold recurring savings into ‘21? Any sort of rough numbers to think about, I mean, what could be recurring with the 2020 savings, anything perpetual? And I have follow-up.

So, obviously, at this point in the year, we are also thinking about 2021 and what that might mean. And we have started to think about opportunities for savings in 2021. So, that is actually well under way. Currently, we are monitoring everything that’s going on in the world and making sure that there isn’t any other risks that may be out there that we will need to apply those two. But that network that you’re referring to is well underway. But, we’re not prepared to talk about specific numbers at this point.

And obviously, you highlighted it’s been relatively a strong start to the year. Can you just maybe point us to kind of where you’re tracking within your 2020 earnings band? It seems to be just as rough modeling, you’re getting a little bit closer to the top end, especially if the 3Q weather transpires? Just maybe a little bit of -- from a trend perspective, where are you in that band?

We’re still tracking towards the middle of the band. There are opportunities potentially out there for us. But, we continue to track towards the middle at this point.

Our next question comes from the line of Jonathan Arnold from Vertical Research.

I was just -- could I just come back to sales and just ask you where they most sort of deviated, to the positive or otherwise from -- in the second quarter? Because the way you show that slide and on the Q1 deck, I believe that was sort of versus guidance, rather than a year-over-year camp. So, just curious whether that was sort of down. I think it was down 1% in industrial, for example in Q2. Was that where the favorability was, or was it more on the residential side?

This is Rod. Good morning. I think, the storyline remains consistent with what we expected back in May, where the growth was driven by residential, because so much of the shelter-in-place was showing up -- was showing up in our residential sector. And you had some volatility in the commercial sector, because you had so many different levels of uncertainty with schools and churches and restaurants and the like. And I think, the clarity we had in the industrial sector sort of played out, although it was a little bit better than expected. So, the fundamentals have not changed dramatically, when you think about sort of this cross sector contribution to growth. So, residential is really showing up for us and offsetting a large part, a lot of the volatility we’re seeing elsewhere.

And I’ll just add to that it pretty much was across all three quadrants, where we were a little bit ahead of expectations. It wasn’t one or the other that completely dominated.

And just my follow-up on the balance sheet, it looks like your uncollectibles went up from 7 odd million to 43 or so. Can you talk a little bit about what you’re seeing there, whether it’s sort of on -- has it kind of spiked and is it plateauing now, or is it sort of on accelerating trend, and then, just how to think about some of those variables going forward?

Jonathan, that’s a good question. So, we are seeing more uncollectibles right now. We actually -- as you noted, we booked about $30 million of bad debt expense this quarter. That was offset by regulatory assets, given regulatory orders that we have in our retail jurisdictions. So, there’s not really any bottom line impact associated with that, because we would expect to be able to recover those costs. Historically, we’ve experienced about -- bad debt expenses, about a third of our typical arrears. So, typically, we have arrears in any given point of about $75 million, and we experienced about $25 million of bad debt expense. We are about $100 million higher on our arrears right now. And that’s why we booked the $30 million. So, it’s consistent with that ratio. We expect that there are some people that are able to pay that are just taking advantage of the current situation. But -- and we do expect that to grow a little bit more. We haven’t turned on our dunning programs. And we would expect that that balance would continue to grow through the summer, although we expect it to continue to be manageable. And it is -- that growth is reflected in our liquidity expectations, which continue to be strong. So, that is something that we’re closely monitoring. And it’s important for us to continue to work with our customers in order to help them through this.

Our next question comes from the line of Julien Dumoulin-Smith from Bank of America.

If I can, and I first off want to say that I appreciate [Technical Difficulty]

Julien, we’re having trouble hearing you.

I apologize. Hey, guys, apologies. On the merits of your argument with SERI and just understanding just the financial implication, Drew, you specifically said that there were some mitigating factors, but didn’t quantify or specify what they were. Can you help walk through what they might be, be it from a reduction in financing needs or otherwise? Just help us understand what reserves you might have already taken and/or other mitigating circumstances?

Julien, I’ll start with the quote unquote mitigating circumstances. And then, I’ll let Drew kind of finish up. But, first and foremost, my expectation would be that we would -- that whatever impact ultimately happened that we would overcome that and still meet our expectations. So, that’s our going-in position from just an organizationally that whatever the impact is that we would continue to meet the objectives that we’ve laid out for you. There are also some -- within the SERI case, I think, there are some things that we talked about in the past that could be used to mitigate, such as the interest costs that we have in the IRS and some other things like that. And obviously there’d be some financing or whatever that would fit into, whatever financing plan Drew has. But, I guess, the overall -- the overarching mitigation is that whatever it is, that will be our expectation to overcome it.

Right. And I would say that the opportunity within our business is embedded within our continuous improvement program. And so, as you know, we’ve been working hard to continue to develop that. And we feel like it’s continued to grow and mature. And that is where that opportunity would come from. So, not all of it clearly has been identified at this point. But, as we clearly just articulated, there is an expectation about how we would be expected to operate within the Company. And just like we have in the past, I have 100% confidence that the Company is going to figure out how to make that work.

And of course, Julien, our perspective is that there won’t be an impact, because of our position in the case. So, I just want to make that clear too?

Absolutely, I appreciate the merits of the arguments there as well. They sound, sound. But, if I can ask you to down on this, as you obviously have a $100 million in cost that you are well on track, at least for this year. When you say you’ll find ways to offset that, does that include leveraging or offsetting it with continuation of this $100 million in cost cuts? And maybe even more broadly, actually, I know the last quarter and at the outset of COVID, we’ve been talking about the sustainability of these cost reductions. How do you think about that now, given the plans for the back half of the year and how that might impact ‘21, and also considering potential timing in ‘21 of resolution to the sales basis when you say...

So, I’ll unpack a little bit of that, Julien, and I’ll ask my colleagues to tell me if I forget some of the points that you can get that in there. I appreciate the question because really there is a couple of things at play here. The $100 million is by and large our flex program with what we’re doing within the year to manage the impacts of COVID and weather. Obviously, we’ve had that negative weather so far this year, plus the impacts of COVID. Last year, we had negative weather and those intra-year dollars are primarily what we talked about at the beginning of the year when we started to flex associated with weather and then continued to ramp up the flex because of the impact on sales of COVID. In parallel to that, we do have a continuous improvement program, which is more akin to what we did last year on this call, where we found permanent cost reductions that as you recall, allowed us to invest more capital into the system, to improve the reliability of the system and the impact on the experience in our customer base, plus grow the business, allowed us to actually add money to our charitable foundation and to our employee benefits through those -- the headroom that was provided through those and continuous improvement. So, when we start to talk about next year, there’ll be a combination of the two as well. I will say that -- I’m sure this is not unique to us that we are finding there are some areas of impact on our cost, associated with our reaction to COVID that will likely fall into that bucket of continuous improvement and could be permanent. We have -- we’re in the process of trying to merry what goes from an annual thing to a permanent thing. But, I’m sure even within all of your firms you’ve found things that you used to do one way that you do in a different way today, that’s much more efficient that you’ll probably continue to do so. So, I hope that helps. There is really two parallel things that they will work -- that we work on. One is just a normal flex within the annual budget that every department has, the other is the permanent continuous improvement that everybody is also focused on. And you saw that second quarter last year when we changed our outlooks, because of the continuous improvement. This year, we’re holding onto our outlooks because of flex. Does that make sense?

Right. And that’s the offset, potentially the impact next year too?

Yes, yes. But, I would say, impact next year, depending on what it is, whether it is weather, whatever, it would be a flex sort of thing, we were just talking about SERI. That’d be more of a continuous improvement sort of thing.

Got it. All right. Excellent. Thanks for the clarity.

Thank you.

Thank you. Our next question comes from the line of Jeremy Tonet from JP Morgan. Your line is now open.

I was just wondering if you could speak a little bit more on the 90% of CapEx not dependent on customer growth. And is this kind of like a shift in planning and strategy or is it kind of just more reflective of current system investment levels that are needed?

That’s a great question, Jeremy. It’s consistent with the capital plan that we’ve had for the last 10 years. And I felt like it was necessary to add a metric that keeps that top of mind with everybody, because I believe that’s important about our plan. If you think about what we’re doing in the generation space and what we’ve been doing for over a decade, we are replacing 50-year old generation with brand new generation. The heat rate is lower that it creates a significant production cost improvement at pace for the plant, emissions are 40% lower than the -- they use less water. All those things are good about new plants. And so, what we’ve been doing over the years is adding new generation and then subsequently retiring old generation. So, it’s meeting the needs of the system with new stuff rather than old stuff. Same things goes with the investments that we’ve had in the distribution system. So, if you think about AMI, we’re replacing old meters with new meters. It’s not new customers. Although there are new customers that get a new meter, the majority of that program is driven by the technological improvement. Our distribution, automation strategy, our asset management strategy, all of those are really based on improving the level of service that our customers achieve by deploying capital that lowers costs or provides a service that was not available in the past. So, 90% of it has been and continues to be based on the fact that we need to modernize the system. Where the fact that we have customer growth has assisted us is that it has provided a lower rate path for everybody, as we expand the sales that we have on those assets that we’re using to modernize the system, which contributes to the fact that we have historically had either the lowest or second lowest rates in United States. So, I just felt like it was necessary, given the impact that COVID has had on the economy and sales that we point out that the capital plan is still there to modernize the system, and COVID hasn’t changed the need for us to modernize the system. If anything, it’s actually enhanced the need for us to modernize the system, particularly at the distribution level. And so, while 90% of what’s in there today is based on technological improvement, if there is a lot in the wings for more technological improvement that we can do to the extent we find the headroom to do it. I hope that helps answer your question.

That was very helpful. Thank you for that. One more if I could. Just wondering if you could talk a bit on how your position in MISO impacts Entergy’s renewable planning. And do you see opportunities here changing over the next five years from MISO level planning and changes?

Well, we do our resource planning obviously in conjunction with the resource adequacy that we need for MISO but our resource planning is done at state level. So, the resource plans that we have in the type generation we need incorporates our participation in MISO. But, it’s not -- MISO is not driving what resources we pick.

Thank you. Our next question comes from the line of Steve Fleishman from Wolfe Research. Your line is now open.

One very brief clarification on the SERI, because of this change you’re going to make to the uncertain tax position. Does that cause the earnings impact to occur kind of temporarily until you get the final decision?

No, there shouldn’t be any real earnings impact associated with that, other than the fact that we did have an expectation that we would be successful, which would have reduced future rate base and subsequent earnings. But, I don’t -- that’s not what we’re referring to when we’re talking about maintaining our expectations. It would have to come through other means.

Okay. Just the FRPs, the extensions, I think Louisiana, you filed and then, are you doing Arkansas?

Yes, both jurisdiction...

Yes. Just how much do we need to kind of worry about these as more like normal rate cases as opposed to these like annual reviews, like can you just explain the issues in the multi-year extensions versus the annual?

I think, the primary question on the renewals is, has the FRP accomplished the objectives that we set out five years ago in Arkansas and three years ago in Louisiana. And, when you think about how we’ve shaped the capital plan and we’ve disclosed to our regulators what our plans were, then the question becomes, can we achieve the objectives, and you’ve heard it before, Steve, around reliability, sustainability, affordable, low-cost competitive rates, can we achieve that given the capital plan for customers? And, if the answer to that question is yes and as we laid out in our and our a renewal filings, the answer is yes, in our view. Then they’ll -- we expect that they as well as the other stakeholders will agree that it makes sense to keep it going. It’s not a -- it hasn’t been viewed, as we’ve discussed with the stakeholders as a full blown rate case where we are reviewing what we spend a year going through the traditional backwards looking base rate case. So, that’s not the expectation. But, of course the regulator has the ability to weigh in on whatever component that they wish. But, we believe the interests are aligned. We think the way that the FRPs have worked historically have been consistent with what we represented five years ago in Arkansas. And, as you know, this is a series of three-year renewals in Louisiana. And again, given the shape of the capital plan, we’re going beyond just a renewal of FRP in Louisiana. For instance, recognizing as Leo laid out, we have -- we’re shaping the capital plan with more distribution investment. For instance, as part of that asset renewal, that’s going to show up in what we are asking the jurisdiction in Louisiana to consider with a distribution rider. And so, it’s those type of policy considerations that we’re going through with our stakeholders and not as much a rate case review, if that’s helpful.

Yes. Steve, Rod mentioned that we -- to look at how it works in Louisiana, you just look back to the last renewal and the renewal before that and renewal before that and the renewal before that. This is obviously the first time that we’ve done it in Arkansas, but it’s been pretty clear that Arkansas formula rate plan has worked exactly the way it was intended to work with the combination -- all you have to do is look at something like a year like 2018, where we ended up with a year that worked out differently because of tax reform than we thought it was going to, and then we ended up earning our allowed rate of return and we refunded dollars to customers in the next formula rate plan filing that went through. So, that’s worked really, really well for customers as well. So, Louisiana, obviously, we have a long history of renewals. This will be the first one in Arkansas. But, it appears to be working exactly the way it was intended by all the parties.

Thank you. Our next question comes from the line of Angie Storozynski from Seaport Global.

So, I wanted to go back to SERI. So, I appreciate your classification of the downside case here, respecting to $0.20 and your ability to offset that potential earnings drag. But, it seems like that’s just potentially half of the impact. Right? Because there is a separate proceeding regarding the ROE and probably equity ratio for the asset, and I see that the ALJ recommendation is expected only in February of next year. But, if you could just explain how -- I’m assuming that there is some negotiations on that front. We have the MISO ROE decision from FERC. We had some adjustments, at least proposed adjustment to the calculation mechanism for the ROE and how that could impact the earnings power of Grand Gulf?

So, this is Drew. And we’ve had, Angie, an expectation for ROE and capital structure baked in for three years or so, at this point. And our expectations -- and those are in our outlooks, based on the outcome of this proceeding. And at this point we don’t see any reason to change those, based on how the proceedings have moved to-date. And even if those outlooks weren’t met, from an ROE and capital structure perspective, we don’t think that the -- whatever that delta would be, is something that we couldn’t manage within our current expectations.

Okay. Even if there were those overlapping impacts, right, with the reduction of the rate base and reduction of the ROE and the reduction in the equity layer?

That’s correct. Yes.

He was saying that we already reserved on the...

We’ve already -- we have an expectation for that based in our outlooks. We don’t want -- we don’t usually talk about that, because we’re still in the preceding. But, we’re comfortable with where that is in our outlooks right now.

Great. And just one follow-up. So, what should we expect then going into your Analyst Day? I mean, do you plan on making any announcements, for instance regarding more renewable power spending or is this just an additional cost cutting initiative? Again, I mean, just big picture expectations going into the Analyst Day?

Yes. I think, big picture, Angie, what we’ll be talking about is being able to give a little bit more color on how we operate and what we’re doing and what’s in the capital plan, and how we’re thinking about it. The capital plan is pretty certain where it is. As you know, there is a large mix of renewables in our future as it is, as we’ve stated before, between ‘22 and ‘30. We anticipate a lot of renewables. We got the RFPs that we’ve been involved in, the construction -- the projects that are up and running, the ones that are under construction. So, I think the capital plan is in pretty good shape. We may get more details about that and talk about what’s in our future, particularly as we spend time on the customer solution side of things. But, really a little more depth on things like what’s in the capital plan? What’s in our path to lower emissions, what’s in our customer solution space, what’s in the distribution space, how are we operationalizing continuous improvement? Things like that.

Thank you. Our next question comes from the line of Sophie Karp from KeyBanc.

So, I wanted to go back to maybe a little bit to the volumes picture. And just looking at the breakdown by the class, it seems like the industrial is doing pretty well here. It’s barely down year-over-year in the weather-adjusted basis. And commercial understandably is suffering a little more and the residential is up, and I think we’ll get that. My question is, I guess, could you help us a little more in the sense what’s going on in the ground right now? Is this a trend we should just expect to continue the same way? And if the -- given this shift in the mix, if the sensitivities to this changes that we had pre-COVID to hold in this new environment?

Yes. So, Sophie, the industrial piece in particular that you noted, we were expecting pretty solid growth this year, at the outset, in the 5% to 6% range for industrial. So, the fact that it’s 1% down is a pretty big drop relative -- even though year-over-year it’s 1% down, we were expecting it to be 5%-6% up. And on the balance of the year, I would say that we expect the residential to trend -- start to trend down as people return to work in different places than their home. And we’d expect the commercial and governmental to slowly begin to trend up and industrial to hopefully begin to improve. And that’s all I think consistent with where we lined out our expectations in May. And so, I think that we are continuing to expect to the phase reopening to support slow but steady improvement in these numbers.

And then, lastly, maybe if you could give us a little bit of a sneak-peak into your Analyst Day. Things seem to go on track for the most part for your company. What topics or what areas do you plan to give us an update on?

As far as topics for the Analyst Day, probably just a little more depth and color around what’s in the capital plan, our trend to lower emissions and as well as continuous improvement, structure and things like that will be subjects that we’ll talk about. We don’t want to talk too much about it today. We want you to tune in.

Thank you. Our next question comes from the line of Ryan Levine from Citi. Your line is now open.

What projects are in your capital plan that are most sensitive to load outlook that was incorporated within that 10% that was that highlighted in the prepared remarks?

There are probably a smattering -- obviously there is new customer hookups are the big piece of it in the distribution of the transmission space. So, for example, if you had a major industrial customer that was located in your service territory, the substations for them can be pretty significant. So, you’d have to build them a substation. And then, we just have general line extension to our distribution business every day, when a new house is built or something like that. So, some of the transmission infrastructure could be put in that bucket as well, to the extent that we need to put -- build transmission infrastructure into an area because of either prior load growth or new load growth. But, it’s really more in the -- getting to that last mile.

Thanks. And then, in terms of the industrial load assumption in your guidance, what are your conversations with customers suggesting for that outlook and are there any big lumpy customers that you have color as to their plans or timing upon some of that industrial load can return throughout the remaining portion of the year?

Hey Ryan, it’s Rod. I know, we’ll talk more in detail about the nuances of our industrial engagement perhaps at the Analyst Day. But, part of our confidence comes from -- in our growth observations comes from the fact that we’re actually talking to real customers and we can quantify and identify the existing projects. And so, what we’re paying attention to at the moment are not just sort of the macroeconomic commodity spreads and other indicators, we’re talking to those companies who’ve made final investment decisions. And whether they have delayed projects or ramping back up, we can point to specific companies and tie them to specific projects that are in our outlook. And as we’ve shared before, we probability weight, not just the projects in the plan, but there are other projects that make up our economic development type of pipeline and that are -- that we’re also monitoring to determine whether or not we need to include those or exclude those as the case may be in the plan. We’ve not seen much movement in our existing plan with regard to projects that we’ve identified that for instance that were canceled. There might have been one or two here and there, but they were on the lower end of the spectrum in terms of impact. But, our confidence comes from the fact that we’re tying them to actual project that is still in play.

Thank you. Our last question comes from the line of Durgesh Chopra from Evercore ISI.

I just want to quickly clarify, Drew, the $0.15 to $0.20. I’m trying to reconcile that to the slide 26 where you show the rate base exposure. Am I right in thinking about the $0.15 to $0.20 is essentially you sort of in a worst case scenario, losing the return on that 400 -- north of $400 million rate base? It is that the right way to think about it or am I comparing apples and oranges?

Yes. So, the $400 million plus the $100 million of interest that is part of the refund, because they are saying that we owe the money. And it’s not actually really rate base. It’s refund. So, the rate base doesn’t really change in that regard. It would only change if we were successful in our outcome with the IRS, because that would be a deferred tax and the rate base would go down, the net rate base would go down. So, really what we’re talking about is the $510 million that you see there. That total amount is the requested refund. And so, we’ve had to finance that. And then, the lease payments that are about the $17 million a year on an ongoing basis.

Thank you. At this time, I’m showing no further questions. I would like to turn the call back over to David Borde for closing remarks.

Thank you, Gigi, and thank you to everyone for participating this morning. Our annual report on Form 10-Q is due to the SEC on August 10th and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-Q filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with Generally Accepted Accounting Principles. Also, as a reminder, we maintain a webpage as part of Entergy’s Investor Relations website called 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. And this concludes our call. Thank you very much.

This concludes today’s conference call. Thank you for participating. You may now disconnect.