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Risk Management And Fair Values | 6 Months Ended
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Jun. 30, 2023
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
Entergy Arkansas [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
Entergy Louisiana [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
Entergy Mississippi [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
Entergy New Orleans [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
Entergy Texas [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
System Energy [Member] |
Risk Management And Fair Values | RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy) Market Risk In the normal course of business, Entergy is exposed to a number of market risks. Market risk is the potential loss that Entergy may incur as a result of changes in the market or fair value of a particular commodity or instrument. All financial and commodity-related instruments, including derivatives, are subject to market risk including commodity price risk, equity price, and interest rate risk. Entergy uses derivatives primarily to mitigate commodity price risk, particularly power price and fuel price risk. The Utility has limited exposure to the effects of market risk because it operates primarily under cost-based rate regulation. To the extent approved by their retail regulators, the Utility operating companies use derivative instruments to hedge the exposure to price volatility inherent in their purchased power, fuel, and gas purchased for resale costs, that are recovered from customers. Entergy’s exposure to market risk is determined by a number of factors, including the size, term, composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as options, the time period during which the option may be exercised and the relationship between the current market price of the underlying instrument and the option’s contractual strike or exercise price also affects the level of market risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging techniques to mitigate such risk. Hedging instruments and volumes are chosen based on ability to mitigate risk associated with future energy and capacity prices; however, other considerations are factored into hedge product and volume decisions including corporate liquidity, corporate credit ratings, counterparty credit risk, hedging costs, firm settlement risk, and product availability in the marketplace. Entergy manages market risk by actively monitoring compliance with stated risk management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy’s risk management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy’s objectives. Derivatives Some derivative instruments are classified as cash flow hedges due to their financial settlement provisions while others are classified as normal purchase/normal sale transactions due to their physical settlement provisions. Normal purchase/normal sale risk management tools include power purchase and sales agreements, fuel purchase agreements, capacity contracts, and tolling agreements. Financially-settled cash flow hedges can include natural gas and electricity swaps and options. Entergy may enter into financially-settled swap and option contracts to manage market risk that may or may not be designated as hedging instruments. Entergy manages fuel price volatility for its Louisiana jurisdictions (Entergy Louisiana and Entergy New Orleans) and Entergy Mississippi through the purchase of natural gas swaps and options that financially settle against either the average Henry Hub Gas Daily prices or the NYMEX Henry Hub. These swaps and options are marked-to-market through fuel expense with offsetting regulatory assets or liabilities. All benefits or costs of the program are recorded in fuel costs. The notional volumes of these swaps are based on a portion of projected annual exposure to gas price volatility for electric generation at Entergy Louisiana and Entergy Mississippi and projected winter purchases for gas distribution at Entergy New Orleans. The maximum length of time over which Entergy has executed natural gas swaps and options as of June 30, 2023 is 9 months, for each of Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. The total volume of natural gas swaps and options outstanding as of June 30, 2023 is 21,084,400 MMBtu for Entergy, including 5,500,000 MMBtu for Entergy Louisiana, 15,305,100 MMBtu for Entergy Mississippi, and 279,300 MMBtu for Entergy New Orleans. Credit support for these natural gas swaps and options is covered by master agreements that do not require Entergy to provide collateral based on mark-to-market value, but do carry adequate assurance language that may lead to requests for collateral. During the second quarter 2023, Entergy participated in the annual financial transmission rights auction process for the MISO planning year of June 1, 2023 through May 31, 2024. Financial transmission rights are derivative instruments that represent economic hedges of future congestion charges that will be incurred in serving Entergy’s customer load. They are not designated as hedging instruments. Entergy initially records financial transmission rights at their estimated fair value and subsequently adjusts the carrying value to their estimated fair value at the end of each accounting period prior to settlement. Unrealized gains or losses on financial transmission rights held by Entergy’s non-utility operations are included in operating revenues. The Utility operating companies recognize regulatory liabilities or assets for unrealized gains or losses on financial transmission rights. The total volume of financial transmission rights outstanding as of June 30, 2023 is 140,203 GWh for Entergy, including 34,517 GWh for Entergy Arkansas, 60,886 GWh for Entergy Louisiana, 17,426 GWh for Entergy Mississippi, 5,439 GWh for Entergy New Orleans, and 21,597 GWh for Entergy Texas. Credit support for financial transmission rights held by the Utility operating companies is covered by cash and/or letters of credit issued by each Utility operating company as required by MISO. Credit support for financial transmission rights held by Entergy’s non-utility operations is covered by cash. No cash or letters of credit were required to be posted for financial transmission rights exposure for Entergy’s non-utility operations as of June 30, 2023 and December 31, 2022. Letters of credit posted with MISO covered the financial transmission rights exposure for Entergy Arkansas as of June 30, 2023 and for Entergy Mississippi, Entergy New Orleans, and Entergy Texas as of December 31, 2022. The fair values of Entergy’s derivative instruments not designated as hedging instruments on the consolidated balance sheet as of June 30, 2023 and December 31, 2022 are shown in the tables below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d)
|  |  |  | (In Millions)
2023 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2 |  | $— |  | $2
Financial transmission rights |  | Prepayments and other |  | $44 |  | ($4) |  | $40
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $12 |  | $— |  | $12
2022 |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13 |  | $— |  | $13
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3 |  | $— |  | $3
Financial transmission rights |  | Prepayments and other |  | $21 |  | ($2) |  | $19
Liabilities: |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Other current liabilities |  | $25 |  | $— |  | $25
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Entergy Corporation and Subsidiaries’ Consolidated Balance Sheets (d)Excludes cash collateral in the amount of $8 million posted as of December 31, 2022. Also excludes letters of credit in the amount of $6 million posted as of June 30, 2023 and $3 million posted as of December 31, 2022. The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($1)
Financial transmission rights |  | Purchased power expense | (b) | $32
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $23
Financial transmission rights |  | Purchased power expense | (b) | $37
The effects of Entergy’s derivative instruments not designated as hedging instruments on the consolidated income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement location |  | Amount of gain (loss) recorded in the income statement
|  |  |  | (In Millions)
2023 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | ($38)
Financial transmission rights |  | Purchased power expense | (b) | $48
2022 |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale | (a) | $78
Financial transmission rights |  | Purchased power expense | (b) | $60
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of June 30, 2023 are shown in the table below. Certain investments, including those not designated as hedging instruments, are subject to master netting agreements and are presented in the balance sheet on a net basis in accordance with accounting guidance for derivatives and hedging.
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $2.1 |  | $— |  | $2.1 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $19.8 |  | ($0.2) |  | $19.6 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $16.9 |  | ($0.2) |  | $16.7 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $2.0 |  | ($0.8) |  | $1.2 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $1.6 |  | ($0.1) |  | $1.5 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $3.5 |  | ($2.3) |  | $1.2 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $12.6 |  | $— |  | $12.6 |  | Entergy Mississippi
The fair values of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their balance sheets as of December 31, 2022 were as follows:
Instrument |  | Balance Sheet Location |  | Gross Fair Value (a) |  | Offsetting Position (b) |  | Net Fair Value (c) (d) |  | Registrant
|  |  |  | (In Millions) |  |
Assets: |  |  |  |  |  |  |  |  |  |
Natural gas swaps and options |  | Prepayments and other |  | $13.1 |  | $— |  | $13.1 |  | Entergy Louisiana
Natural gas swaps and options |  | Other deferred debits and other assets |  | $3.4 |  | $— |  | $3.4 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $10.3 |  | $— |  | $10.3 |  | Entergy Arkansas
Financial transmission rights |  | Prepayments and other |  | $7.7 |  | ($0.4) |  | $7.3 |  | Entergy Louisiana
Financial transmission rights |  | Prepayments and other |  | $0.6 |  | $— |  | $0.6 |  | Entergy Mississippi
Financial transmission rights |  | Prepayments and other |  | $0.8 |  | $— |  | $0.8 |  | Entergy New Orleans
Financial transmission rights |  | Prepayments and other |  | $1.2 |  | ($1.1) |  | $0.1 |  | Entergy Texas
Liabilities: |  |  |  |  |  |  |  |  |  |
Natural gas swaps |  | Other current liabilities |  | $24.0 |  | $— |  | $24.0 |  | Entergy Mississippi
Natural gas swaps |  | Other current liabilities |  | $1.5 |  | $— |  | $1.5 |  | Entergy New Orleans
(a)Represents the gross amounts of recognized assets/liabilities (b)Represents the netting of fair value balances with the same counterparty (c)Represents the net amounts of assets/liabilities presented on the Registrant Subsidiaries’ balance sheets (d)As of June 30, 2023, letters of credit posted with MISO covered financial transmission rights exposure of $5.9 million for Entergy Arkansas. As of December 31, 2022, letters of credit posted with MISO covered financial transmission rights exposure of $0.2 million for Entergy Mississippi, $0.2 million for Entergy New Orleans, and $2.4 million for Entergy Texas. The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the three months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($1.2) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.1 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.1 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $19.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.0 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.5 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $3.5 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $8.7 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $14.6 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($0.2) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $16.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $16.1 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $2.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $1.6 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $1.0 | (b) | Entergy Texas
The effects of the Registrant Subsidiaries’ derivative instruments not designated as hedging instruments on their income statements for the six months ended June 30, 2023 and 2022 were as follows:
Instrument |  | Income Statement Location |  | Amount of gain (loss) recorded in the income statement |  | Registrant
|  |  |  | (In Millions) |  |
2023 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($5.7) | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($29.8) | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | ($2.1) | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $8.0 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $28.3 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $4.5 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.2 | (b) | Entergy Texas
2022 |  |  |  |  |  |
Natural gas swaps and options |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $19.8 | (a) | Entergy Louisiana
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $57.4 | (a) | Entergy Mississippi
Natural gas swaps |  | Fuel, fuel-related expenses, and gas purchased for resale |  | $0.9 | (a) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $23.5 | (b) | Entergy Arkansas
Financial transmission rights |  | Purchased power expense |  | $25.5 | (b) | Entergy Louisiana
Financial transmission rights |  | Purchased power expense |  | $3.2 | (b) | Entergy Mississippi
Financial transmission rights |  | Purchased power expense |  | $2.4 | (b) | Entergy New Orleans
Financial transmission rights |  | Purchased power expense |  | $4.9 | (b) | Entergy Texas
(a)Due to regulatory treatment, the natural gas swaps and options are marked-to-market through fuel, fuel-related expenses, and gas purchased for resale and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as fuel expenses when the swaps and options are settled are recovered or refunded through fuel cost recovery mechanisms. (b)Due to regulatory treatment, the changes in the estimated fair value of financial transmission rights for the Utility operating companies are recorded through purchased power expense and then such amounts are simultaneously reversed and recorded as an offsetting regulatory asset or liability. The gains or losses recorded as purchased power expense when the financial transmission rights for the Utility operating companies are settled are recovered or refunded through fuel cost recovery mechanisms. Fair Values The estimated fair values of Entergy’s financial instruments and derivatives are determined using historical prices, bid prices, market quotes, and financial modeling. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. Gains or losses realized on financial instruments are reflected in future rates and therefore do not affect net income. Entergy considers the carrying amounts of most financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. Accounting standards define fair value as an exit price, or the price that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between knowledgeable market participants at the date of measurement. Entergy and the Registrant Subsidiaries use assumptions or market input data that market participants would use in pricing assets or liabilities at fair value. The inputs can be readily observable, corroborated by market data, or generally unobservable. Entergy and the Registrant Subsidiaries endeavor to use the best available information to determine fair value. Accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy establishes the highest priority for unadjusted market quotes in an active market for the identical asset or liability and the lowest priority for unobservable inputs. The three levels of the fair value hierarchy are: •Level 1 - Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of individually owned common stocks, cash equivalents (temporary cash investments, securitization recovery trust account, and escrow accounts), debt instruments, and gas swaps traded on exchanges with active markets. Cash equivalents includes all unrestricted highly liquid debt instruments with an original or remaining maturity of three months or less at the date of purchase. •Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date. Assets are valued based on prices derived by independent third parties that use inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Prices are reviewed and can be challenged with the independent parties and/or overridden by Entergy if it is believed such would be more reflective of fair value. Level 2 inputs include the following: –quoted prices for similar assets or liabilities in active markets; –quoted prices for identical assets or liabilities in inactive markets; –inputs other than quoted prices that are observable for the asset or liability; or –inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 consists primarily of individually-owned debt instruments and gas swaps and options valued using observable inputs. •Level 3 - Level 3 inputs are pricing inputs that are generally less observable or unobservable from objective sources. These inputs are used with internally developed methodologies to produce management’s best estimate of fair value for the asset or liability. Level 3 consists primarily of financial transmission rights. The values of financial transmission rights are based on unobservable inputs, including estimates of congestion costs in MISO between applicable generation and load pricing nodes based on the 50th percentile of historical prices. They are classified as Level 3 assets and liabilities. The valuations of these assets and liabilities are performed by the Office of Corporate Risk Oversight. The values are calculated internally and verified against the data published by MISO. Entergy’s Accounting group reviews these valuations for reasonableness, with the assistance of others within the organization with knowledge of the various inputs and assumptions used in the valuation. The Office of Corporate Risk Oversight reports to the Vice President and Treasurer. The Accounting group reports to the Chief Accounting Officer. The following tables set forth, by level within the fair value hierarchy, Entergy’s assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels.
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $1,127 |  |  | $— |  |  | $— |  |  | $1,127 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 19 |  |  | — |  |  | — |  |  | 19 |
Debt securities |  | 586 |  |  | 1,121 |  |  | — |  |  | 1,707 |
Common trusts (b) |  |  |  |  |  |  |  | 2,834 |
Securitization recovery trust account |  | 5 |  |  | — |  |  | — |  |  | 5 |
Storm reserve escrow accounts |  | 411 |  |  | — |  |  | — |  |  | 411 |
Gas hedge contracts |  | 2 |  |  | — |  |  | — |  |  | 2 |
Financial transmission rights |  | — |  |  | — |  |  | 40 |  |  | 40 |
|  | $2,150 |  |  | $1,121 |  |  | $40 |  |  | $6,145 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12 |  |  | $— |  |  | $— |  |  | $12 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $109 |  |  | $— |  |  | $— |  |  | $109 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 24 |  |  | — |  |  | — |  |  | 24 |
Debt securities |  | 534 |  |  | 1,122 |  |  | — |  |  | 1,656 |
Common trusts (b) |  |  |  |  |  |  |  | 2,442 |
Securitization recovery trust account |  | 13 |  |  | — |  |  | — |  |  | 13 |
Storm reserve escrow accounts |  | 402 |  |  | — |  |  | — |  |  | 402 |
Gas hedge contracts |  | 13 |  |  | 3 |  |  | — |  |  | 16 |
Financial transmission rights |  | — |  |  | — |  |  | 19 |  |  | 19 |
|  | $1,095 |  |  | $1,125 |  |  | $19 |  |  | $4,681 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $25 |  |  | $— |  |  | $— |  |  | $25 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023 and 2022:
| 2023 |  | 2022
| (In Millions)
Balance as of April 1, | $7 |  |  | $1 |
Total gains (losses) for the period |  |  |
Included as a regulatory liability/asset | 23 |  |  | 32 |
Issuances of financial transmission rights | 42 |  |  | 16 |
Settlements | (32) |  |  | (37) |
Balance as of June 30, | $40 |  |  | $12 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of financial transmission rights classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023 and 2022:
|  |  | 2023 |  | 2022
|  |  | (In Millions)
Balance as of January 1, |  |  | $19 |  |  | $4 |
Total gains (losses) for the period |  |  |  |  |
Included as a regulatory liability/asset |  |  | 27 |  |  | 52 |
Issuances of financial transmission rights |  |  | 42 |  |  | 16 |
Settlements |  |  | (48) |  |  | (60) |
Balance as of June 30, |  |  | $40 |  |  | $12 |
The fair values of the Level 3 financial transmission rights are based on unobservable inputs calculated internally and verified against historical pricing data published by MISO. The following tables set forth, by level within the fair value hierarchy, the Registrant Subsidiaries’ assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022. The assessment of the significance of a particular input to a fair value measurement requires judgment and may affect its placement within the fair value hierarchy levels. Entergy Arkansas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.9 |  |  | $— |  |  | $— |  |  | $3.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 1.6 |  |  | — |  |  | — |  |  | 1.6 |
Debt securities |  | 135.7 |  |  | 349.1 |  |  | — |  |  | 484.8 |
Common trusts (b) |  |  |  |  |  |  |  | 840.2 |
Financial transmission rights |  | — |  |  | — |  |  | 19.6 |  |  | 19.6 |
|  | $141.2 |  |  | $349.1 |  |  | $19.6 |  |  | $1,350.1 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.4 |  |  | $— |  |  | $— |  |  | $3.4 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 4.5 |  |  | — |  |  | — |  |  | 4.5 |
Debt securities |  | 126.8 |  |  | 343.9 |  |  | — |  |  | 470.7 |
Common trusts (b) |  |  |  |  |  |  |  | 724.7 |
Financial transmission rights |  | — |  |  | — |  |  | 10.3 |  |  | 10.3 |
|  | $134.7 |  |  | $343.9 |  |  | $10.3 |  |  | $1,213.6 |
Entergy Louisiana
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $856.8 |  |  | $— |  |  | $— |  |  | $856.8 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 14.4 |  |  | — |  |  | — |  |  | 14.4 |
Debt securities |  | 249.5 |  |  | 503.9 |  |  | — |  |  | 753.4 |
Common trusts (b) |  |  |  |  |  |  |  | 1,205.3 |
Storm reserve escrow account |  | 300.0 |  |  | — |  |  | — |  |  | 300.0 |
Gas hedge contracts |  | 2.1 |  |  | — |  |  | — |  |  | 2.1 |
Financial transmission rights |  | — |  |  | — |  |  | 16.7 |  |  | 16.7 |
|  | $1,422.8 |  |  | $503.9 |  |  | $16.7 |  |  | $3,148.7 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $6.3 |  |  | $— |  |  | $— |  |  | $6.3 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 16.8 |  |  | — |  |  | — |  |  | 16.8 |
Debt securities |  | 209.4 |  |  | 515.7 |  |  | — |  |  | 725.1 |
Common trusts (b) |  |  |  |  |  |  |  | 1,037.2 |
Storm reserve escrow account |  | 293.4 |  |  | — |  |  | — |  |  | 293.4 |
Gas hedge contracts |  | 13.1 |  |  | 3.4 |  |  | — |  |  | 16.5 |
Financial transmission rights |  | — |  |  | — |  |  | 7.3 |  |  | 7.3 |
|  | $539.0 |  |  | $519.1 |  |  | $7.3 |  |  | $2,102.6 |
Entergy Mississippi
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $8.4 |  |  | $— |  |  | $— |  |  | $8.4 |
Storm reserve escrow account |  | 34.3 |  |  | — |  |  | — |  |  | 34.3 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $42.7 |  |  | $— |  |  | $1.2 |  |  | $43.9 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $12.6 |  |  | $— |  |  | $— |  |  | $12.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $17.0 |  |  | $— |  |  | $— |  |  | $17.0 |
Storm reserve escrow account |  | 33.5 |  |  | — |  |  | — |  |  | 33.5 |
Financial transmission rights |  | — |  |  | — |  |  | 0.6 |  |  | 0.6 |
|  | $50.5 |  |  | $— |  |  | $0.6 |  |  | $51.1 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $24.0 |  |  | $— |  |  | $— |  |  | $24.0 |
Entergy New Orleans
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $141.3 |  |  | $— |  |  | $— |  |  | $141.3 |
Securitization recovery trust account |  | 1.7 |  |  | — |  |  | — |  |  | 1.7 |
Storm reserve escrow account |  | 76.7 |  |  | — |  |  | — |  |  | 76.7 |
Financial transmission rights |  | — |  |  | — |  |  | 1.5 |  |  | 1.5 |
|  | $219.7 |  |  | $— |  |  | $1.5 |  |  | $221.2 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $4.4 |  |  | $— |  |  | $— |  |  | $4.4 |
Securitization recovery trust account |  | 2.2 |  |  | — |  |  | — |  |  | 2.2 |
Storm reserve escrow account |  | 75.0 |  |  | — |  |  | — |  |  | 75.0 |
Financial transmission rights |  | — |  |  | — |  |  | 0.8 |  |  | 0.8 |
|  | $81.6 |  |  | $— |  |  | $0.8 |  |  | $82.4 |
Liabilities: |  |  |  |  |  |  |  |
Gas hedge contracts |  | $1.5 |  |  | $— |  |  | $— |  |  | $1.5 |
Entergy Texas
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.8 |  |  | $— |  |  | $— |  |  | $2.8 |
Securitization recovery trust account |  | 3.6 |  |  | — |  |  | — |  |  | 3.6 |
Financial transmission rights |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |
|  | $6.4 |  |  | $— |  |  | $1.2 |  |  | $7.6 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $3.0 |  |  | $— |  |  | $— |  |  | $3.0 |
Securitization recovery trust account |  | 10.9 |  |  | — |  |  | — |  |  | 10.9 |
Financial transmission rights |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
|  | $13.9 |  |  | $— |  |  | $0.1 |  |  | $14.0 |
System Energy
2023 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $46.2 |  |  | $— |  |  | $— |  |  | $46.2 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.5 |  |  | — |  |  | — |  |  | 2.5 |
Debt securities |  | 200.7 |  |  | 268.4 |  |  | — |  |  | 469.1 |
Common trusts (b) |  |  |  |  |  |  |  | 788.7 |
|  | $249.4 |  |  | $268.4 |  |  | $— |  |  | $1,306.5 |
2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Millions)
Assets: |  |  |  |  |  |  |  |
Temporary cash investments |  | $2.9 |  |  | $— |  |  | $— |  |  | $2.9 |
Decommissioning trust funds (a): |  |  |  |  |  |  |  |
Equity securities |  | 2.8 |  |  | — |  |  | — |  |  | 2.8 |
Debt securities |  | 197.5 |  |  | 262.2 |  |  | — |  |  | 459.7 |
Common trusts (b) |  |  |  |  |  |  |  | 680.4 |
|  | $203.2 |  |  | $262.2 |  |  | $— |  |  | $1,145.8 |
(a)The decommissioning trust funds hold equity and fixed income securities. Equity securities are invested to approximate the returns of major market indices. Fixed income securities are held in various governmental and corporate securities. See Note 9 to the financial statements herein for additional information on the investment portfolios. (b)Common trust funds are not publicly quoted and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table. The fund administrator of these investments allows daily trading at the net asset value and trades settle at a later date. The following table sets forth a reconciliation of changes in the net assets (liabilities) for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $4.0 |  |  | $2.5 |  |  | $0.2 |  |  | $0.3 |  |  | ($0.1) |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (0.9) |  |  | 15.6 |  |  | 2.6 |  |  | 1.3 |  |  | 4.6 |
Settlements | (4.1) |  |  | (19.5) |  |  | (3.0) |  |  | (1.5) |  |  | (3.5) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the three months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of April 1, | $0.4 |  |  | $0.3 |  |  | $0.2 |  |  | $0.1 |  |  | $0.5 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 14.6 |  |  | 15.2 |  |  | 1.7 |  |  | 1.3 |  |  | (1.9) |
Settlements | (16.0) |  |  | (16.1) |  |  | (2.2) |  |  | (1.6) |  |  | (1.0) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2023.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $10.3 |  |  | $7.3 |  |  | $0.6 |  |  | $0.8 |  |  | $0.1 |
Issuances of financial transmission rights | 20.6 |  |  | 18.1 |  |  | 1.4 |  |  | 1.4 |  |  | 0.2 |
Gains (losses) included as a regulatory liability/asset | (3.3) |  |  | 19.6 |  |  | 3.7 |  |  | 1.7 |  |  | 5.1 |
Settlements | (8.0) |  |  | (28.3) |  |  | (4.5) |  |  | (2.4) |  |  | (4.2) |
Balance as of June 30, | $19.6 |  |  | $16.7 |  |  | $1.2 |  |  | $1.5 |  |  | $1.2 |
The following table sets forth a reconciliation of changes in the net assets for the fair value of derivatives classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.
| Entergy Arkansas |  | Entergy Louisiana |  | Entergy Mississippi |  | Entergy New Orleans |  | Entergy Texas
| (In Millions)
Balance as of January 1, | $2.3 |  |  | $0.6 |  |  | $0.3 |  |  | $0.1 |  |  | $0.8 |
Issuances of financial transmission rights | 5.4 |  |  | 5.3 |  |  | 0.8 |  |  | 0.8 |  |  | 3.9 |
Gains (losses) included as a regulatory liability/asset | 20.2 |  |  | 24.3 |  |  | 2.6 |  |  | 2.1 |  |  | 1.7 |
Settlements | (23.5) |  |  | (25.5) |  |  | (3.2) |  |  | (2.4) |  |  | (4.9) |
Balance as of June 30, | $4.4 |  |  | $4.7 |  |  | $0.5 |  |  | $0.6 |  |  | $1.5 |

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