ENTERGY MISSISSIPPI, LLC Annual Report - Your Investor's Guide

Unlock the insights from Entergy Mississippi, LLC's latest 10-K filing. This guide provides a clear, investor-focused overview of the company's performance for the fiscal year ended December 31, 2025, compared to 2024. We'll break down the critical financial, operational, and strategic highlights, helping you understand what these mean for your investment.

Business Overview

Entergy Mississippi, LLC (EML) is a regulated electric utility that transmits and distributes electricity to approximately 460,000 customers across 45 counties in western and central Mississippi. As a fully owned subsidiary of Entergy Corporation, EML operates within an exclusive service territory granted by the Mississippi Public Service Commission (MPSC). While EML primarily focuses on transmission and distribution, it sources most of its power through agreements with affiliates, such as System Energy Resources, Inc., which owns major generation assets. The MPSC extensively regulates EML's operations, overseeing its rates, service quality, and infrastructure investments to ensure reliable and affordable electricity for customers.

Financial Performance: A Solid Year of Growth and Stability

Entergy Mississippi achieved stable financial performance in 2025, driven by consistent demand and effective cost management.

• Revenue Growth: Total operating revenues grew by approximately 3.5% to $1.55 billion in 2025, up from $1.50 billion in 2024. This growth stemmed primarily from a stable customer base (over 460,000 customers), modest rate adjustments approved by the MPSC, and increased energy consumption in key industrial sectors.
• Net Income: The company reported net income of $185 million for 2025, a 5.7% increase from $175 million in 2024. This improvement reflects efficient operations and the company's ability to recover approved costs through regulatory mechanisms.
• Operating Expenses: While fuel and purchased power costs remained significant, management effectively controlled overall operating expenses. Operations and maintenance (O&M) expenses rose slightly by 2% to $250 million, primarily due to enhanced grid modernization efforts and storm restoration activities.
• Cash Flow: Operating cash flow reached a robust $280 million in 2025, providing ample funds for capital expenditures and debt obligations. This strong cash generation is crucial for a capital-intensive utility business.

Financial Health: Investing in the Future

Entergy Mississippi's balance sheet demonstrates a commitment to infrastructure investment and prudent financial management.

• Assets: Total assets grew, reaching $4.2 billion as of December 31, 2025, up from $4.0 billion in 2024. This growth primarily stems from ongoing capital expenditures in utility plant and equipment. Notably, major generation assets (like nuclear or large fossil fuel plants) are typically owned by affiliates such as System Energy Resources, Inc. Entergy Mississippi covers their costs through power purchase agreements, which helps ensure a diversified and reliable energy supply.
• Capital Expenditures: The company invested approximately $320 million in capital projects during 2025 to enhance grid reliability, resilience, and smart grid technologies. These projects included substation upgrades, transmission line enhancements, and the deployment of advanced metering infrastructure.
• Debt and Equity: Entergy Mississippi maintains a balanced capital structure. Long-term debt was approximately $1.8 billion at year-end 2025, with a debt-to-capitalization ratio of around 55%, consistent with industry norms for regulated utilities.
• Regulatory Balances: Specific regulatory assets and liabilities remained stable. These include balances for future plant removals ($10 million), pension and retirement costs ($10 million), and other deferrals (e.g., Qualified Pension Settlement Cost Deferral, Non-Service Pension and Other Postretirement Plan Costs, Asset Retirement Obligation Costs, Loss on Reacquired Debt – each at $1 million). These balances represent costs or revenues that regulators have approved for future recovery or refund, which helps ensure stable rates and fairness across generations of customers.

Management Discussion Highlights (Integrated)

Management's focus on cost management, strategic capital investments in grid modernization, and effective navigation of the regulatory environment were key to the company's stable financial performance and robust cash flow generation in 2025. The balanced capital structure and prudent management of regulatory assets and liabilities highlight the company's commitment to long-term financial stability.

Operational Highlights & Strategic Focus

Entergy Mississippi is committed to providing reliable service while navigating the evolving energy landscape.

• Reliability: The company improved service reliability, with its System Average Interruption Duration Index (SAIDI) improving by 7% in 2025 compared to 2024. This improvement is a result of ongoing grid modernization and vegetation management programs.
• Customer Service: Customer satisfaction scores remained high, thanks to initiatives like digital engagement and efficient outage response.
• Environmental & Sustainability: Entergy Mississippi contributes to Entergy Corporation's broader sustainability goals by exploring renewable energy options and reducing carbon emissions. Although affiliates hold direct generation assets, the company supports integrating cleaner energy sources into its supply portfolio.
• Regulatory Environment: The company successfully completed its annual regulatory reviews, securing approval for cost recovery mechanisms to support its infrastructure investments and operational expenses. Future rate cases will be critical for continued investment and financial health.

Competitive Position

As a regulated electric utility, Entergy Mississippi operates within an exclusive service territory granted by the Mississippi Public Service Commission (MPSC). This regulatory framework effectively gives the company a monopoly for electricity distribution and transmission in its service area. Therefore, traditional market competition, as seen in unregulated industries, does not apply.

Instead, Entergy Mississippi's 'competitive position' is defined by:

• Exclusive Service Territory: The MPSC grants EML the exclusive right to provide electric service to its customers in its defined geographic area, eliminating direct competition for customer acquisition.
• Regulatory Framework: The MPSC oversees EML's rates, service quality, and capital expenditures. The company's ability to maintain a strong financial position and invest in its infrastructure heavily depends on a supportive regulatory environment that allows for timely recovery of approved costs.
• Reliability and Service Quality: While not competing on price in a direct market sense, EML measures its performance by its ability to provide reliable, safe, and affordable electricity. Maintaining high service quality and customer satisfaction is crucial for maintaining good regulatory relations and public perception.
• Affiliate Relationships: As part of the Entergy Corporation system, EML benefits from shared resources, expertise, and diversified generation assets owned by affiliates, enhancing its operational efficiency and power supply reliability.
• Economic Development: EML's role in supporting economic development within its service territory, by providing reliable power and collaborating with local governments, is also key to its standing.

Key Risks to Consider

Investors should consider the following principal risks:

• Regulatory Risk: Changes in regulatory policies, rate case outcomes, or environmental regulations from the MPSC or federal agencies could impact profitability and investment recovery.
• Operational Risk: Extreme weather events (hurricanes, ice storms), equipment failures, or cybersecurity breaches could disrupt service, lead to significant restoration costs, and impact financial performance.
• Economic Conditions: Fluctuations in the Mississippi economy could affect customer demand for electricity, particularly from industrial and commercial sectors.
• Interest Rate Risk: As a capital-intensive business, rising interest rates could increase borrowing costs, impacting profitability.
• Climate Change Risk: Long-term physical risks from climate change (e.g., increased storm intensity) may require higher capital expenditures for grid hardening and resilience.

Future Outlook: Focused on Reliability and Modernization

Looking ahead to 2026, Entergy Mississippi will continue strategic investments in grid modernization and reliability. The company anticipates stable financial performance, supported by a supportive regulatory environment and a focus on operational efficiency. Key initiatives include enhancing grid resilience, exploring opportunities for renewable energy integration, and maintaining strong customer relationships. The company's ability to recover approved costs through regulation will be crucial for its continued financial health and its ability to invest in the future of Mississippi's energy infrastructure.