Good afternoon and welcome everyone. Thank you for joining us today at Entergy's 2020 Analyst Day. We are holding today's event virtually for reasons and circumstances we all understand, and we've taken precautions to maintain a safe work environment inside our broadcast studio. A detailed exposure control plan was developed with our certified industrial hygienist and that includes observing proper distancing protocols, temperature checks, the installation of plexiglass barriers between participants, and of course, proper hand hygiene practices. Before we begin with the business session, there are a few points I'd like to bring to your attention.
First, we will be making forward looking statements today. Actual results may differ due to risks we discuss in our SEC filings, which you should refer to for additional information. We don't assume any obligation to update those statements. We will also discuss non GAAP financial information. Reconciliations to the applicable GAAP measures are included in the slide presentations, which can be found on the Investor Relations section of our website.
Management presentations today will be followed by a Q and A session. Members of the investor community wishing to ask a question. At the break, before the Q and A session, I will prompt you to dial into the participant phone line using the dial in number that you've been provided. But please be aware that once you've dialed into that phone line, you will need to mute your computer to avoid any unpleasant echo or feedback. And finally, I'd like to remind everyone that after our business session, we will have the privilege to hear from our guest speaker, Doctor.
Henry Louis Gates, what I'm sure will be an insightful and relevant discussion. Thank you very much.
Good afternoon and welcome to the 2020 Entergy Analyst Day. Obviously, we wish we could be with you in person as we have been in past years. But this is 2020 and we have to adapt. So just like we've had to adapt to keeping our employees safe, whether they work in the field or whether they're office workers in new pandemic protocols, just like we've had to successfully adapt in our investment plan by keeping cost and schedule certainty, while we work under new safety protocols. Just like we've had to manage the regulatory process and keep the train running, get all of our work done from a strategic standpoint in collaboration with our regulators during a virtual world of the pandemic, just like we've had to adapt to holding to our near and long term financial outlooks, while we deal with lost revenues from both mild weather and obviously the impact that the pandemic has had on our customers.
And just like we recently had to adapt to using COVID safety protocols with one of the most significant storms ever to hit South Louisiana, we'll have to adapt today as well. But by the end of today's program, I think you'll agree that just like all of those other adaptations that we've had to make, that we've done a pretty good job of putting together what will be a meaningful discussion around the future of the company. So thank you very much for your time. As you know, our vision is we power life. Now that vision statement was developed by our employees some years ago to capture how they feel about the company they work for.
It's the fact that we do more than just provide natural gas and electric service to our customers, but that every day we take a holistic approach to try to benefit our 4 stakeholders, our customers, our employees, the communities we have the privilege to serve and you, our investors. Now that is the driving force behind our mission. Our mission is to grow a world class energy business that creates sustainable value for all four of those stakeholders. Every day, the decisions we make are intended to benefit all 4, not 1, not leaving any behind, but benefiting all 4. In fact, that's so much a part of our DNA that oftentimes when I'm talking to groups of employees, I will challenge them.
I'll say, if you hear us make a decision and you don't understand how that benefits all 4 of our stakeholders, you should challenge your leadership. I even go so far as to tell them, you're riding up the elevator with me the next day in the corporate office building, you should ask me to explain it to you and I should be able to make that explanation by the time we reach your floor. That's how much of our DNA that our employees believe that vision and that mission are. There's another interesting thing about the vision and the mission. It's not something that we just developed this year.
Like the Business Roundtable this year just decided that climate issues were important, like that same group last year decided that 4 stakeholders were important, not just 1. Or even in 2018, when Larry Fink first sent the letter to a bunch of us in the CEO world, telling us that we should have a greater purpose than just shareholder value that if we are to be successful companies for the long term in an enduring fashion, sustainability needs to be part of the mix and that sustainability needs to cover all 4 of the exact same stakeholders in our vision and mission. I point that out because what you're going to hear today is a lot about the legacy of Entergy in sustainability. And I want you to recognize that while we believe it's been in our DNA for over 20 years, you can see it codified in that vision and that mission as early as 2013. So it's extremely important in everything that we're going to go through today to keep that in mind that the creation of sustainable value for society as a whole has been an important part of our journey for quite some time.
Now at no point in time is that more important than in times of crisis and 2020 has certainly turned out to be a time of crisis. In the pandemic, we've not only had the impact on our business, but we've had the impact on our communities and Entergy has stepped forward. We stepped forward in a number of ways. One of the things that we determined at the very outset was that in addition to continuing our investment plan to continue to grow the business, we needed to continue our investment plan and step forward, not back, so that we could keep economic prosperity going or at least lead recovery in the region that we serve. In addition to making sure we continued to keep our employees and our contractors employed by continuing our investment plan, we've directed our supply chain to focus more on local suppliers and diverse suppliers, those that are most impacted by the pandemic.
We stepped forward with our charitable foundation, our employee giving and our shareholder match to make sure that we supported local agencies for frontline workers and for the many people in our community that were impacted, particularly if you think about South Louisiana in the entertainment industry, the hospitality industry, a lot of economic impact we needed to step forward, not back. And obviously, this year has been a very active storm season. As you all know, Hurricane Laura made landfall in August. It was the most significant storm to hit Louisiana since 1856. The damage to our infrastructure was pretty significant.
Our response also had to be significant. It was the largest restoration response in the history of the company, surpassing what we had to do for Katrina, surpassing what we had to do for Rita, Gustaf, Ike, all of those storms, significant storm, significant response. We had to do it during a pandemic. We and our mutual assistance partners and our contract partners did an excellent job of stepping up during Hurricane Laura. Just to give you a feel for the type of damage that was done, there was significant infrastructure that was just destroyed.
So we had 9 transmission lines that go into the Lake Charles, Louisiana, for example. All 9 of them were damaged. When I say damaged, I don't just mean that we had to repair them by stringing up wires. When I say damaged, majority of those structures were absolutely destroyed. So the process that we've had to go through is not so much a repair of the system, but a rebuild of the system, very significant effort.
There is some good news associated with what we saw in South Louisiana. You may remember that last year we put in service a multi year construction project called the Lake Charles Transmission Project. It was the largest transmission infrastructure investment in the history of the company, around $180,000,000 Every last structure from the Lake Charles Transmission Project remained standing the day after Hurricane Laura. After facing the brunt of those sustained 150 mile an hour winds with gusts between 180 and 190 miles an hour. All of the older structures that have been put in place with older technologies were destroyed and toppled.
That's the part of this the infrastructure that we have to rebuild, not the Lake Charles Transmission Project. The other good news is that the infrastructure we will replace those 9 transmission lines with will be infrastructure to the new technological standards of the Lake Charles Transmission Project. So there's good news on two fronts about that. 1, obviously, is the fact that the system will be more sustainable when we're done with the rebuild, which is by and large complete. In addition to that, I want you to think about that technological improvement from old to new.
When you listen to what Ron has to say about our customer centric investment plan. The new technology provides a higher level of service to our customers while we maintain some of the lowest rates in the United States. This is evidence of how that new technology can benefit our customers. Now today, as we speak, 99% of the customers who can take power have it and the remainder of those customers will have power by the end of the month. The stability and the system redundancy with all those transmission lines complete will be in place by the middle of October.
And just like the pandemic, it was a more holistic point of view on the part of Entergy than nearly getting the power back on for our customers. Again, our charitable foundation, our employees are giving, our shareholders stepped up in the communities providing meals, providing support, the American Red Cross, providing support to our own employees whose homes were damaged. We have to take care of them while they're out making sure that the community gets back on track. Significant storm, significant response, a response that takes into consideration the safety of our employees, the service level of our customers and the health of our communities. It didn't go unnoticed.
If you've been reading the press, if you've been seeing what's been out there, significant response from local, state and federal officials all in support of not only the significance of the storm, a consistent story there, but a consistent story on the amount of the response that Entergy had. As one local official put it, as soon as the storm passed, Entergy was everywhere. But it's not just during incident response that we have to take that holistic point of view. We have to take that view of creating sustainable value for all 4 of those stakeholders. It's been, as I said, part of Entergy's DNA for 20 years.
In 2,001, we were the 1st utility in the United States to voluntarily cap our greenhouse gas emissions. In 2,002, our Board of Directors adopted what could only be described as a visionary environmental and sustainability statement when they declared that Entergy would conduct its business in a responsible manner that is environmentally, socially and economically sustainable. 2,012,002, not 2019, not 2018, not even 2013. Now in 2019, Entergy was again named to the Dow Jones Sustainability Index. We are the only utility in the United States to be named to the DGSI for 18 years in a row.
It's because of those commitments that we made in 2,000 and 1, 2002 and the follow on of actions and execution that has created that opportunity. Now I could go on all day about our efforts for the environment, our efforts for our employees, our diversity, inclusion and belonging efforts, all of those things. I could tell you how I believe Entergy was ESG before ESG was cool, but that would take the entire program. And maybe sometime next year, we'll have such a program. But for today, you should look at the materials that we released in conjunction with this Analyst Day that describe our efforts and our progress and our legacy in areas of sustainability.
So today, you're going to hear about that legacy and you're going to hear what it means for us going forward. Rod is going to talk to you about that customer centric investment plan, significant amount of investment, all geared towards technological improvement in the system to provide our customers with a higher level of service at some of the lowest prices in the United States. Julie Harbert, our Senior Vice President of Corporate Business Services, who's a new face to many of you, is going to talk to you about our continuous improvement efforts and how continuous improvement benefits all 4 of those stakeholders. She's going to talk to you about the organization that we've put in place and also the culture that we've had to adopt to be able to continuously improve with a laser focus on benefiting all 4 of those stakeholders. And she's going to use 2019 as an example where continuous improvement gave us the opportunity to do just that.
Paul Henningkamp, who many of you remember from our last Analyst Day, our Chief Operating Officer, he's going to talk to you about our sustainability efforts in the environment. He's going to talk to you about our legacy, where we've come from, where we are and where we're going, including not only describing our 2,050 objective that we're releasing today for net 0 CO2 emissions, but also the options that we've put in place as a mechanism to get us there by 2,050. Drew is going to wrap all that up for you to talk to you about how that investment plan and the recovery mechanisms that we have and continuous improvement in our flex spending will all allow us in spite of what's going on in 2020 with storms, in spite of what's going on in 2020 as it relates to the pandemic, to be able to hold true to our near and long term financial outlooks as it relates to earnings, dividends and credit. Then I get the opportunity to come back and tell you that there's more. To talk to you about the things that we're doing in the investment space, continuous improvement space and financially that would allow us to make sure that that 5% to 7% growth in earnings and dividends that we talk about 2020 to 2024 remains beyond 2024.
And also to talk to you a little bit about how we're identifying the right kinds of opportunities that could be pulled forward such that if continuous improvement turns out the way we hope it should, that we can do even better than that 5% to 7% growth rate. So we're very excited about where we are and we're very excited to have you with us here today. I mentioned at the outset that we had to adapt to a new way of doing things to hold this Analyst Day this year. But I imagine if we had just postponed or canceled this Analyst Day because of the pandemic, because of storms, you'd have been fine with that. That you'd have given us a pass, that you would have said, of course, they can't have an Analyst Day, there's too much going on.
But the fact of the matter is that never even crossed our minds. And the reason it didn't cross our minds is because every opportunity that we saw we had in front of us as we entered 2020 still exists as we sit here today. All of those opportunities are still in front of us in spite of the pandemic, in spite of the storms. We still have some of the lowest rates in the United States. We're still a leader in critical measures of sustainability and we still have one of the cleanest large scale generating fleets in the United States and it's getting cleaner.
We still have a tremendous opportunity in the investment space to provide our customers with a higher level of service while we maintain some of the lowest rates in the United States. We still see a clear line of sight to 5% to 7% earnings growth and we still have a clear line of sight to beginning to grow our dividend commensurate with those earnings beginning at the end of next year. And we wake up every morning and we come into the office, where we work from our homes and we go in the field with the intention of doing better. So no, we are going to adapt by holding an Analyst Day and providing you with the type of experience that you expect from us because we want to share with you the enthusiasm that we have for the future of the company. So thank you very much for your time today.
Building the premier utility begins with the customer, providing a higher level of service while managing their bills. Then we add positive customer interactions, strong Net Promoter Scores, superior innovative products and services, all focusing on the outcomes customers desire in their homes and their businesses, creating an optimal customer experience. That's how we begin, but this journey never
ends.
Good afternoon, everyone. My name is Rod West. I'm the Group President of Utility Operations. Thanks for joining us and certainly for giving me an opportunity to share a few thoughts about why I'm so excited to talk to you about how our plan to power life and build a premier utility starts with creating optimal customer experience. Our ambition to be great, that is our plan to be the premier utility begins with both an understanding of and an obsession with our customers' needs and desires.
I'll speak to what informs our customer point of view, but more importantly, how our point of view about drives customer outcomes, what's important to them, how that influences our capital plan, our regulatory strategy, but perhaps more importantly, our outlooks, our financial commitments to you. Customer centricity and the way that we're thinking about it today, along with continuous improvement and in an environment that supports diversity, inclusion and belonging is how we expect to fulfill our vision and mission to create sustainable value for our 4 key stakeholders and specifically to execute on our financial plan, our customer centric capital plan. So customer centricity, it's not something new to us. We've always been customer centric. Many of you by show of virtual hands have heard of or read about Abraham Maslow's hierarchy of needs.
This is not a psychology exam, but it does give some framework for how we at Entergy think about what it means to be customer centric. For the last 100 years, customer centricity has really been focused around our responsibility as the utility to optimize the traditional generation transmission and distribution value chain to benefit customers. You've heard us say it before, safe, reliable power at the lowest reasonable cost. Well, as you'll hear me talk about and certainly as we talk the rest of the day, that part hasn't changed. What's different is that technology has influenced customers' expectations of doing business with us.
But that same technology has afforded us the opportunity to interact with and serve customers differently than we have before. So when we think about Maslow's hierarchy, it starts with the basics, safety and security. And once the bottom level of safety and security, that physical survival is met, then our customers pursue higher ordered, thus the hierarchy, aspirations. So when we say customer centricity, what we're really describing is that intersection between Maslow's hierarchy and Thomas Edison's electron or for our DAS colleagues, the molecule. That's what customer centricity is if you want to think about it from a framework standpoint.
But as it relates to our business, our capital plan, the resources we're putting to work to create specific outcomes and how those outcomes drive value, Our insights suggest to us engaging with our customers directly. It's not a theory. It's the insights we glean from the data, from the interviews, from the interactions with customers. There are 4 components that drive their satisfaction, their loyalty to us based on our ability to meet their existing and emerging needs and desires. Interactions and offerings is essentially whether it's products and services or delivery mechanisms solving their problems, it's the ease of doing business or the way that our business helps them pursue their aspirations with relative age, whatever those aspirations are.
Power quality, reliability, again, that's not new. You'd find it interesting that power quality and reliability is actually weighted lower than interactions and offerings. It's certainly dynamic, but using the reference of Maslow's hierarchy, reliability is on the low end of the hierarchy. It's assumed. Reliability in service becomes really important if it's not there.
But when it's there, they really are pursuing higher ideals. And so our focus on interactions and offerings will make sense to you when we talk about how the traditional value chain is different. Value and affordability is going to always be important, whether it's through an individual customer, regardless of where they are above or below the poverty line or complex commercial or industrial customer for whom value and affordability is all about commercial survivability. Our corporate reputation is nothing more than a proxy for trust, whether it's trust with you as our investors and owners or our relationship with regulators. When we seek to be transparent, we seek to be consistent and when we make promises, we have a record of keeping those promises no different than it is with customers.
We trade on our corporate reputation across our entire stakeholder segment. So for us, that intersection between Maslow's hierarchy and Thomas Alba Edison's Electron is the lifeblood of what we mean when we say customer outcomes. And so the traditional components of our value chain is still very much intact. Generation, transmission and distribution will continue to be an important driver of our 5 year capital plan and beyond. What's traditional value chain of central station power, high voltage transmission, lower down the distribution levels to power homes and cities, That's going to be continue to be present for the foreseeable future.
But the technology that I made reference to in those four drivers is inverting the value chain for us to the extent that our insights make it clear that the future capital plan for Entergy, our capital plan is going to be populated more and more by distribution and or customer solutions investments that are sited closer to where the customer is. And so when we talk about customer solutions driving the investment plans, it's that those outcomes are going to be more individually tailored and customized. That's what we mean by adding this 4th dimension around DGT and customer solutions. Customer solutions are going to involve various components of distribution, generation and transmission, except that instead of it being sited miles away at the source of generation in the case of central station power, both the generation, the transmission and the distribution components could very well be all in one place at a customer site or closer and closer to the where the customer is. Thus the figuratively speaking and literally speaking, the last mile.
What are the things that we can do to create positive customer outcomes that might be unique to them that represent the last mile of that traditional utility value chain. That's what we mean when we talk about creating solutions that are little different from the traditional value chain. And our 5 year capital plan reflects our point of view around what that's going to look like for the next 5 years. Dollars 21,000,000,000 of new customer centric investments that we can tie to specific outcomes that matter to customers. It provides the safe reliable power at affordable costs, but it also supports the transformation of our system toward those objectives of creating outcomes that matter to customers.
That's what this $21,000,000,000 in capital represents for us. The benefits, you see the check marks on the left hand side. The green check marks on the right speak to those four drivers of customer loyalty and satisfaction. When we make a regulatory filing or make a case to customers for an investment, All of these aspects are not just check marks. They're criteria that we use in making every decision around resources that we put to work on behalf of customers.
So when we check these lists off on the left hand side, I want you to think reliability, affordability, flexibility, sustainability. If we can't answer yes to either 1 or all 4 of these components, that particular idea is not going to last. It's not going to rise to the forefront, because it's not creating outcomes that matter to us and to customers in a way that supports investment. Those investments that are on the highest end of our prioritization list are the ones that meet all 4. And we believe our capital plan does just that.
On the distribution end, the objective of our 5 year plan is to meet customer expectations the way we describe, dollars 1,000,000,000 of that spend, grid modernization, advanced metering infrastructure, big data, both our customers to us, us to our customers, but also data from us to the systems that we manipulate to create outcomes for customers. Enterprise Asset Management System, working smarter in the field, lowering the cost of service, distribution automation, the ability to assess and remediate issues that happen in the field remotely, lowering the cost of service to customers while improving reliability and creating a platform for those new customer solutions and technologies. It's all there. That plan is really broken down into 3 major areas. The targeted spending reliability improvement, what's that all about?
That's nothing more than finding out where the highest and quickest moves that we can make today to have the greatest impact on the largest number of customers, positive impact. Whether it's a problem circuit or an area that we know has been impacted by storm, it's still held up, but because of the storm, even though it provided benefits, it degraded a little bit. We need to pay attention to it because we have so many customers that are on that particular circuit. We're working it now, so that it makes it less likely that those customers would be interrupted. The asset renewal and infrastructure and modernization component is no different than what we do in the generation space.
We're managing aging assets. As the assets get older, as they become less efficient, we have an opportunity to upgrade them to make them more resilient, to make them more efficient, to create benefits for customers. The part that the folks in the field get really excited about is the new technology. It is not technology for technology's sake, but what excites our employees about the new technology is that it puts tools at their fingertips that makes it easier for them to meet the needs of customers. There's no more exciting day for an Entergy employee than when they are empowered with tools that give them a chance to make customers happy, not just on getting the lights back on, but doing something that the customer didn't expect.
Creating those positive outcomes is all about, yes, taking care of the table stakes, keeping the lights on, reducing the frequency and duration of outages, but producing positive experiences with customers and doing business with us. And that's what the distribution capital is all about. And yes, we're talking about capital. We also know that we are going to be asked to invest additional O and M towards producing positive customer outcomes in developing solutions to customer problems that may not be in existence today. But we are accounting for the O and M component of our investments in our outlook.
And it's also part of the go get, as Leo likes to describe, as we think about our work in continuous improvement. And so it's all part of our objective to create these positive customer outcomes and it's embedded in our distribution capital plan. Our generation plan is not much different. How do we modernize our fleet to put us in a position to create a more clean footprint, while still meeting our needs for reliability for our customers? Whether it's the backbone load following capabilities of our gas and nuclear fleet or putting us in a position to deploy more utility scale and customer at renewable energy, it's still generation.
And it speaks to the point I was making a few minutes ago about it doesn't matter now where that generation exists, whether it's central station power or it's rooftop solar right at your residence. It's all part of our generation portfolio. And no surprise, dollars 1,400,000,000 in our 5 year plan towards renewables, which we believe would be primarily solar. The new generation to serve our sustainability goals. We announced today the 2,050 net zero goal, and we are well on our way to meeting the goal that we set for 2,030.
But the objective remains the same. We've been agnostic as to fuel source. So when people would ask us in times past, did we have a solar strategy? Not exactly. We have a customer strategy.
What is the optimum resource mix that provides the maximum benefits, the outcomes that matter to customers? And we've been saying year over year that as solar becomes more efficient, as the price points become more competitive with, say, gas or the non emitting attributes of that baseload nuclear, then we would expect to see more and more renewables play a role in our capital plan and we're seeing that come to fruition. And Paul will talk about the renewable portfolio, which is predominantly solar. I also know that on the customer solutions front, that Leo has been excited as we've grown and progressed in our customer side at Generation. But I'll leave for Leo and let him tell you why we're so excited about the ideas we're seeing like that regional microgrid solution.
And I'll let Leo talk about that, but it's those kinds of ideas that's transforming our relationship with our customers and technology is providing us an opportunity to do that. Transmission is not different. Again, you're going to hear me sound say the things over and over again, it's because our strategy hasn't changed. Technology may be changing the compilation of our capital plan, but our strategy remains the same. What do we invest in transmission Well, to help support reliability and growth for customers.
Aging asset management also responding to growth. That's what's happening here. One thing that I will note in the context of us being in the midst of storm season and certainly, we're still helping our customers in Southwest Louisiana, other parts of the state and certainly Texas recover from LoRa. There's a pretty bright line, a clear line of demarcation between the newer transmission structures, where we've invested in the past in modernizing, upgrading transmission infrastructure to a higher standard, how the legacy transmission structures fared in the storm compared to the new ones. The new ones fared pretty well, still standing literally.
And what it does, it reinforces for us that we've been moving in the right direction as we've upped our standards to make our transmission facilities more resilient, more storm proof. And so we'll continue in that vein, again, all part of a backbone system helping us meet our customers' objectives. The transmission projects, a little different than the generation projects, but you can pinpoint a specific named project like the big power plants that you all are accustomed to hearing from us, St. Charles, Lake Charles in Texas, Montgomery County. You can point to those specific projects.
In transmission, and it's not nearly as complex with the myriad, the thousands of projects in distribution, we still have a line of sight in transmission as to the discrete projects that make up the 400 or so transmission related projects of varying sizes and complexity. But they're all designed to achieve the outcomes that I have mentioned, and we know what they are, and it supports the clarity we have around how we're going to put your capital to work. Speaking of capital, okay, I've touched on the generation, transmission, distribution, how we think about the solutions and products and services and meeting customer ambitions around this notion of customer centricity. All right. How do we put the resources to work to create the benefits and how do we turn around and create clarity and outcomes that matter to you?
It's the ninety-ninety-ninety conversation we have when we're talking to you. 90% of the capital plan through 2022, driven by modernization, not low growth. 90% plus recovery through timely recovery mechanisms. We had the generator in Texas as the most recent. 90% ready for execution from a regulatory standpoint.
That level of clarity and certainty around 2022, Well, now that we're extending another 2 years, I wanted to give you a reason why we remain confident in our ability to execute because the numbers haven't changed. Extend the 2 years, we're still 90%, 90%, and almost 90%, in that we know that there are things we have in the plan that we ultimately have to bring to our regulators, again, with the expectation of creating clarity, not just for customers and regulators, but for you. But we have still, with that 5 year outlook, extending those 2 years, significant certainty, constructive regulatory mechanisms that will continue to provide timely recovery. 1 of the most significant guardrails that keeps us honest and it really is the voice in the back of our head as we think about all these wonderful things we get to do, we want to do, we envision doing for customers is we have to find a way to continue to make productive investments. That is putting capital to work in a way that utilizes or lowers the utilizes fewer resources or lowers the cost of service delivery for customers.
Why? Because we know whether it's the commercial industrial customers or those customers who were price sensitive on the lower end of the socioeconomic strata, those bills matter. And so we keep a line of sight on the levers we get to pull to keep our bills low. And even at the 2.5% CAGR we have here, that's not where we want to be. We know we can do better.
And so the mantra of weather is continuous improvement, and you'll hear from Julie right after me, continuous improvement is not a program. It's an ethos. It's an ethic. It's the way that we choose to work in a way we're trying to figure out how can we create better benefits by utilizing the least amount of resources. That puts us in a position to create value for everyone.
Yes, there's low bills. You've heard us talk about low rates. We're confident that we can do it. We've done it before. We believe, as Paul shared with you in our one of our earlier Analyst Days, we got this.
This is what we do. This lowest rates in the country is not just a bragging right. It's an economic reality for those customers for whom they're price sensitive, where they have literally limited fixed income or they're living on very limited discretionary income. It matters to them that we have low rates. Or those industrial customers who we're trying to convince the site in our service territory who want to be competitive, whether it be domestically or internationally, for whom electricity is a major part of their economic life cycle for the cost of electricity.
And so we're providing them a competitive advantage. It's in our objective. Leo has often told you, we know we do well when our communities do well. That's why having the lowest rates in the country matters. It makes it an easier sell when we're putting forth a capital plan like we are today that we can be responsible stewards of our owners and our customers' resources, and we can provide the type of value that matters to them.
We are aware that LoRa does have an impact on our rates. And we wanted to, in full transparency to you, give you an idea of exactly what we believe the impact will be if we're able to successfully and we still have to go through our regulators, if we're able to successfully, for instance, securitize our storm costs the way we did after Katrina, still amongst the lowest rates in the United States of America, still creating an environment for a competitive advantage for those industrial customers, still creating an opportunity for our customers who are on fixed income, who have less discretionary income to enjoy the benefits of the outcomes that we make universally available, while still being able to provide their basic needs and their climb of Maslow's hierarchy. Lowest rates in the country, it matters. How do we go about turning the capital plan into outcomes that matter to you? That's why you hear us talking about the ninety-ninety-ninety and why those constructive regulatory mechanisms matter so much.
It's fulfilling the promise of the regulatory compact that says that the ideal objective is to create a recovery mechanism or a system of recovery that matches the benefits, the deployment of capital that creates benefits for customers and have the timing of the benefits of nearing the customers match the recovery of and on the capital that we put to work. That's why the riders, the forward looking FRPs, the traditional FRPs and even the rate cases matter so much, matching up the benefits to recovery in a way that puts us in a position to fulfill our promise to you, to be responsible stewards, to return total shareholder return to you. That's our objective. When we say we will our objective is to create sustainable value for all 4 key stakeholders. So tying the journey of customer centricity to the outcomes that matter to you, If we're successful in meeting those four drivers of customer satisfaction and customer loyalty, that includes the bulk electric system, that includes the specialized and customized outcomes.
If we're successful in doing that, it puts us in a position to achieve these types of objectives. That's why we're here. That's what the conversation for us is all about. So when we talk about the intersection of Maslow's hierarchy and Thomas Alba Edison's Electron, we're talking about creating an optimal customer experience for the benefit of creating certainty for the capital plan and utilizing, maintaining, renewing those regulatory mechanisms that support efficient investment recovery to put us in a position to create outcomes that matter to you as well. That's why we focus on customer centricity.
That's why we're confident in our ability to meet your objectives. It's what We Power Life is all about. Thank you.
Delivering sustainable value to all our stakeholders means never stopping, never settling, never saying good enough. We're working smarter and streamlining end to end processes. We're creating financial flexibility to invest in the well-being of our employees, the strength of our communities, the resiliency of our system and the outcomes our customers desire while maintaining low rates. Listen to how continuous improvement creates value for our stakeholders.
Good afternoon, everyone. I'm excited to be here with you today. I'm Julie Harbert and for most of you I'm a new face here at Entergy. I'm the Head of our Corporate Business Services Group. That's a combination of our integrated supply chain, information technology and our cybersecurity teams as well as our shared services team.
Earlier you heard Rod talk about our investments that we're making on behalf of our customers. I'm here today to talk about the how, how we're going to deliver sustainable value for all of our stakeholders through the use of continuous improvement. I want to start with first about what I love about CI. It does not discriminate. Through disciplined use of frameworks and best in class processes, we can drive value for all of our stakeholders, value for our customers through higher service reliability, while maintaining their bill levels.
The value doesn't stop there though. Value goes to our employees in competitive benefits and upskilling them from a talent perspective. We continue to invest in the economic development within our territories and the communities that we serve. Last but not least, we can use that headroom that we create through continuous improvement to create leverage for strong financial forecasts. In other words, everyone benefits, everyone wins with continuous improvement.
I've been at Entergy a couple of years now joining the management team from the tech industry, but we've been in the process of laying this groundwork and foundation to be the premier utility for some time. Even still, we're early on in our journey of continuous improvement. Been working on things I like to think about like enablers, platforms for employee ideation and collaboration, investments in time and resource, spent on smart automation, specifically RPA or robotic process automation. In 2019, we banked out of all of this work significant savings and benefit for all of our stakeholders. On that benefit, we formed a CI team earlier this year to capitalize and progress the opportunity that lays out before us in a real and sustained way.
I'd like to talk a minute though about 2019, because I think if you understand what's at the heart of the performance and the management that we're using to drive value, you're going to see the opportunity as it lays ahead of us. I'll start with $750,000,000 $750,000,000 that's a big number. That's the amount of additional capital we were able to put in our forward looking plan through O and M budget management, a day in day out focus on quality, operational performance. A lot of that pointed towards service reliability, strengthening our distribution, so our customers enjoy clean uninterrupted power. But I mentioned everyone benefits.
We instituted a much more modern and competitive parental leave policy for our employees. We worked on future proofing ourselves. Future proofing is something I like to talk to my teams about, about things we know we're going to need to do in the future. So we work on them now. We get ready.
An example of that is advanced analytics and the use of Power BI. May have started in the IT function, but now today groups all throughout the company are leveraging advanced analytics and Power BI as a part of their everyday job. In December, we funded our charitable foundation. That proved to be fortuitous for 2020. When COVID-nineteen March of this year rolled around, we had an efficient mechanism for distributing help and resources to those who needed it most within our communities.
Last but not least, all of you know that are tuned in to the call today, we raised our financial outlook last year, leveraging that headroom to the benefit of our owners and our shareholders. Everyone wins. Everyone wins with operational excellence and continuous improvement. And we're positioned to capitalize further on that. All throughout the organization, we looked for our experts, people who already understood Lean, who understood how to drive quality through 6 Sigma, people who know how to do daily stand up.
They were in our nuclear fleet. They're in the utility, in our operations teams and in our corporate functions. It's about 100 people we pulled in combined with change managers, smart automation pods that we had all throughout the organization driving benefit, pulled them all into a single harmonized team focused on coaching, assisting and scaling ideas throughout the company. We went out and looked at those who are ahead, those who do CI best. And where we had gaps, we started bringing in that talent from places like Walmart, from Shell, from IBM and Coca Cola, bringing in experts to match up with our subject matter experts in the field.
And through that marriage of institutional knowledge as well as CI expertise, we create a powerful mechanism for value creation. We create a platform where everyone in the company is going to understand what great looks like and they know their role in it. We take accountability down to the ground level. This is not only a management discussion, a leadership discussion. We take accountability to the ground level.
We give that talent the tools and support they need to be change agents. We empower them with the ability to make that change. So what does CI concretely look like at Entergy? Well, like most Fortune 500 companies, one size doesn't fit all. We got department focus on quality, first time right.
We look to break down traditional silos in areas like fuel management, So we can take that savings and redeploy it. And now and in the near future, we look towards technology to round that out to give us a lift, the multiplier effect on clean processes and the efficiency that we're gaining. Now having spent 20 years in the tech industry, it probably won't surprise you that the examples I brought forward today have a tech component to them. And at first glance, may look like this the slide may look like techno speak, too many acronyms. Let me explain this in a very straightforward manner.
As you all know, we have been on a journey to install our advanced metering infrastructure, AMI. The benefits of that are putting information in our customers' hands on a minute or hour or daily basis whenever they want it to manage their bills to manage their life. It helps us with data and insights to more efficiently manage the grid. But what I love about this example is, well, we built that technology platform. We got all of that data.
We didn't stop there. We said, well, on that platform, what's the rest of our opportunity? We landed in an area called we refer to as meter to cash. And you've got to understand through all the years of working on this exactly how many hands are on that process. And the beauty of this example is it's classic CI.
We looked at the process. We measured the performance of the billing team, credit and collections teams, everything in between. And we went about eliminating the manual Excel spreadsheet reconciliations, the overtime hours that we spend back and forth making sure that those spreadsheets all tie out. We went down to the people licking the literal stamps that went out on the customer bills. We permanently reduced O and M.
And by the end of this year, we've got this process attached to AMI, humming efficiently, high quality, first time right, more efficient at a lower cost point. We take the cost that we save there and we put that towards solving other customer frictions. Another example around remote monitoring. Remote monitoring was an aspect of something we've been working on with our distribution automation plan, one of the early value propositions. This allows us again to permanently reduce O and M costs, fewer truck rolls, more efficient way to manage the customers' starts and stops and moves.
But this is a different type of opportunity with continuous improvement. The question is, well, if we see this benefit here, where else could we apply this? And that's where a dedicated CI team that sees this opportunity and sees its ability to scale and drive more value, more benefit, higher quality throughout the organization really comes alive. This could be applied to our nuclear fleet, generation, transmission. So those are the plans that we're now working on.
But these examples really only have tangible value. The accumulation of the examples only have tangible value if we monetize it and seize it. And our opportunity is clear and present before us. As you can see here on this slide depicted by a sea of blue diamonds, we're sitting middle of the pack in O and M Management, sitting in the middle, average, decent place to be. We don't aspire to be middle of the pack.
Our aspirations don't lie in being average, but have us looking our ambitions towards top quartile, topdecile where there's real opportunity and real value to be seized. To recap, the opportunity is real and we are so confident we can deliver. We have room to grow, building a track record of success. Our stakeholders are already receiving the benefits from the hard work to date. There's no finish line though in being the best.
Can't cross an invisible line, check a box, say, we're done, we've improved. No, That is the beauty of continuous improvement. You're never finished driving value. And if you take away one point, a single point let it be this, to be the best you have to build muscle memory. This is the way we work continuously improving every single day.
To be premier, you got to flex that muscle and you got to post the results. So watch us because that's exactly the sustained value we're
delivering.
Sustainable value means doing our part to address the effects of climate change. As we build the premier utility, we'll continue our industry leading environmental stewardship, while balancing the reliability of the system and our customers' affordable rates. At Energy, we have an environmental strategy for a cleaner world.
We are a national leader in sustainability and environmental stewardship. It is who we are. Recognizing the challenges posed by climate change, we have been that leader and a strong advocate for the environment for over the past 2 decades. We view that leadership as a responsibility and an imperative for us, for our stakeholders and as the title says, for a cleaner world. Good afternoon.
I'm Paul Henningkamp. It's great to be with you again. Today, I will discuss our environmental strategy, the results that we have achieved and some of the plans that we have going forward, plans that contain some pretty cool initiatives, initiatives that demonstrate our continued leadership in the space of the environment and initiatives that we hope you get as excited and as intrigued about as we are. Our strategy focuses on 3 key pillars: affordability, reliability and sustainability. And our track record demonstrates success.
We have a portfolio of resources that has gotten cleaner, more resilient and will continue to do so. A portfolio of resources that provides our customers their product, their needs at the lowest reasonable cost that maintains the grid's resilience and reliability and that delivers on our environmental outcomes. The risk of intermittent renewables failing to deliver is real. The risk of blackouts due to that very nature of intermittent renewables is very real. Studies after studies continue to show and highlight the need for flexible capacity, especially today when storage cannot fill that need.
Our strategy that looks to deliver the outcomes for all of our stakeholders is centered on delivering the results across all three of those pillars: affordability, reliability and sustainability. Entergy has been a long standing leader for the environment, a long standing advocate for the environment. In 2,001, we were the very first utility to voluntarily stabilize and cap our CO2 emissions. We upped that commitment twice, in 2,006 and in 2011. And last year, we introduced a new goal for the utility to reduce our utility CO2 emissions rate to 50% below 2,000 levels by 2,030.
And then today, you saw the announcement that we made our next commitment, net 0 emissions by 2,050. Now accomplishing that is going to take work. It's going to take partners. It's going to take innovation, and it's going to take effort by many to achieve that. But rest assured, we are committed to doing exactly that.
In fact, we've already started on some pretty cool initiatives, if you will, that will take us to that path. And I'm excited to be able to share a few of those with you later this afternoon. Now this long standing commitment, what has that led to? What have we delivered as a result of that leadership? Well, over the past 20 years since 2000, our emissions rate has maintained well below the sector average.
And we have a commitment to do even more with the 2,030 and 2,050 objectives that we have laid out. We are among the cleanest large scale fleets in the country, while at the same time being one of the largest producers of electricity in the country. In fact, since 2000 at the utility, our CO2 emissions rate have declined by over 32%, while the output of our product megawatt hours has increased by over 7%. And we have very minimal coal. In fact, in 2019, less than 5% of our revenue was derived from coal assets.
Less than 2% of our rate base was comprised of coal assets. And those numbers, those numbers are going to 0. We intend to retire all of our coal fired capacity by the end of 2,030. We've already announced plans to retire a majority of our coal assets, over 70% already announced. And we are aggressively pursuing other options to divest of the remainder.
Now coal is challenged from an environmental perspective, which is increasing the cost, and it's also challenged by other more competitive forms of generation. So not only are there compelling reasons to shut down coal from an environmental perspective, it's also compelling from an economic perspective, which is in the best interest of our customers. Now it's been said that Entergy is a heavy greenhouse gas emitter or that Entergy is heavy on coal. That is simply not the case. Coal barely makes up a portion of our portfolio today and will not make up any portion of our portfolio in the very near future.
Now Renewables, on the other hand, are a very different story. We are very committed to that portfolio and growing that portfolio. In the capital plan that Rod laid out to you, dollars 1,400,000,000 of investment today in renewables. That number is going to grow. It's going to grow significantly as we move towards achieving the 2,030 and 2,050 aspirations.
In March of this year, we signed and partnered in an agreement with Invenergy to help us co develop the portfolio in the Gulf South. I'm sure you're aware, Invenergy is a very strong renewables developer, and they've been a very good partner of ours as we look to expand this portfolio. We have already provided several proposals into self build evaluations currently underway, and we have several other projects in various phases of development with Invenergy. We're very excited about the opportunities that this presents and very excited about how we can continue to grow this portfolio and achieve our objectives. Now obviously, we have to do all of that in coordination, in conjunction with our regulators and other stakeholders and make sure we get the requisite approvals, but rest assured, our commitment is very real.
If you look at our portfolio of resources and a view of today, what it may look like in 2,030 and what it may look like in 2,050, you will see our portfolio continue to include an ever increasing mix of clean energy technologies. Now as we expand the portfolio to include those technologies back to our strategy, we will ensure that we balance that against the affordability and reliability requirements that we have. If you look at 2,030, potentially that renewable portfolio could look at 4 or 5 gigawatts of renewables. It may even be more depending on the ultimate path and plan chosen. If you look at 4 to 5 or more gigawatts, that would result in a portfolio that contains about 30% to 35% of carbon free resources.
So a very, very significant step forward for us. If you look at gas and you see maybe a large sliver of gas in some view, And we get asked, why are you building gas? And we don't really look at it as just building gas. We are building highly efficient, state of the art assets, assets that are very important and very critical that we achieve all of our objectives of affordability, reliability and sustainability. These assets are required for our customers to maintain their rates low.
They're critically important for the grid to maintain reliability and resiliency, and they're very important from a sustainability perspective. We will help achieve our objectives through these assets by burning gas yesterday, but we will be positioned to power those with hydrogen tomorrow. Now these will not be stranded assets. We are designing into these optionality, optionality that will have these assets available to perhaps capture the benefits of use of hydrogen or carbon capture and sequestration. In fact, we recently submitted a project, a proposal into the Entergy Texas RFP process.
And in our preliminary design for that power plant, we provided the consideration for both powering that unit with hydrogen as well as positioning it for carbon capture and sequestration if that technology those technologies should come to fruition and be economic in the future. The path to net 0 in 2,050 will require and we're headed down this path of a lot of collaboration, collaboration with customers, with industry partners, with technology providers, with many others in order for us to achieve net zero. We will pursue many paths to get there. We are continuing down the path of transforming our portfolio and retiring old, inefficient, dirtier assets. We are continuing to grow the renewable portfolio and will continue to significantly do so.
Continue to invest in our carbon free and nuclear resources, and we are looking at hydrogen, hydrogen co firing, hydrogen infrastructure, hydrogen pipeline. In fact, the partnership, which I'll cover a little bit more detail later with Mitsubishi Power, a lot of work has already been done in that regard. And that partnership is intended to help us advance the hydrogen option for our existing and new assets. We'll also look at carbon capture and sequestration and advanced nuclear. Obviously, a lot of work needs to be done in those spaces.
But should those technologies come to fruition, we'll be prepared to act on those. The partnership that we announced today with Mitsubishi, the objective of that is to develop strategies, alternatives, technologies to help us and others achieve net zero. We signed that agreement. It's in the form of a 10 year joint development agreement. 10 years because we recognize this is not easy work.
This is not something that's going to get done in a very short period of time. And the partnership with Mitsubishi Power is significant, not only because of our great relationship we've had with them and how they've helped us be successful to date, but everything that they bring to the table to help us achieve our aspirations. The power plant that I mentioned that we put into the Entergy Texas request for proposal. In that proposal, we had put in the option to fire that unit with 30% hydrogen upon commercial operations. We've been working with Mitsubishi Power on that option for almost 2 years.
Furthermore, in that proposal, we are planning to, assuming we get approval from the regulators, assuming we get selected and then get approval, we will move forward with powering that unit with 30% hydrogen by volume upon commercial operation. We will also put into the design what it will take to power that unit with 100 percent hydrogen. Already made a number of steps in that regard and more to come on what that may look like for us. We recognize that with the continued advancement of renewables and the scale of renewables and, as I mentioned earlier, the intermittent nature of renewables, storage will play an increasingly important role. So part of this collaboration is looking at large scale battery storage, large scale hydrogen storage and the infrastructure required to support that storage.
Furthermore, we're potentially looking at how can you power an electrolysis unit, hydrogen electrolysis unit by either renewables or nuclear. So this partnership, there's a lot of innovative thinking, a lot of creative thinking and there's a lot of hard work ahead of us. But this is pretty exciting for us. There's a lot of intrigue by a lot of the folks on our team and with Mitsubishi, and we look forward to delivering on some of these great ideas that we have. Now I talked before about collaboration and innovation and activity that we've already started.
So in addition to the work we've done with Mitsubishi in parallel with that, if you look at our infrastructure, we are well positioned to act on the potential for the hydrogen economy. We are well positioned because in the area of Texas, we own a spindletop facility in which there's 3 storage caverns. One of those caverns we could possibly convert to hydrogen. In fact, we've already started the evaluation on what it will take to convert a cavern and store large scale hydrogen. If you look at the existing infrastructure around that, there's quite a bit of pipeline already in place.
The cutaway that you see on this slide is an illustrative view of that spindletop storage facility that we own and on the surface and then below ground, the caverns and what they look like. And if you look at some of the infrastructure, so just to get you centered, this is in Texas. The area in the red square is the existing Sabine power plant, and that is where the proposed Orange County power station will go. And if you look off to the left, you see number 1, that's the location of Spindletop, where we own 3 caverns. And you see number 3 there, there's already a 3rd party that has a hydrogen storage cavern there.
And then the blue lines are the hydrogen pipelines. You can see they run pretty close to where that Orange County power station would be. In fact, they're within a couple of miles. We've already spoken to the pipeline operators about their ability to power the unit with 30% hydrogen upon commercial operations. And they have all indicated they are very capable of doing so.
We are starting to explore with them what would it take to go to 100%. And we're also looking at what would we need to do and how could we support that. So again, pretty exciting, pretty innovative stuff that we're really looking forward to bring to reality and bring to fruition. Our long standing environmental leadership and commitment to the environment is because of the legacy of Wayne Leonard and the leadership of Leo and the Board. We were first in 2,001.
We have one of the cleanest fleets in the country today. We will have 0 coal, and we will achieve our commitments and objectives for 2,030 and 2,050. It is what you would expect from a national leader in the sustainability and environmental stewardship. It is who we are.
As a business, we are a catalyst for change and growth for the employees and communities and everyone that relies on us. Energy is committed to steady, predictable growth in earnings and dividend. We're excelling at cost management and creative continuous improvement measures to create headroom for incremental investments in our stakeholders. We're evolving the mindset of how our business functions operate to create growth opportunities and investments our customers want. And our financial health supports our growth.
Good afternoon. My name is Drew Marsh. I'm Chief Financial Officer at Entergy. Over the last few years, we've established a strong financial base at Entergy. It's benefiting all of our stakeholders, including our owners.
But that's not good enough. We aim to become the premier utility. Today, I'm going to talk to you about how we are building on that foundation and how we are on track to achieve our financial objectives. I'm going to discuss our outlooks and I'll discuss our financing strategy. Along the way, I'll talk to you about some of the things that we might be able to do to improve our outlooks going forward.
I'll start with our overall financial objectives and that is to grow the utility while managing our risk. And we measure our growth in utility through steady, predictable earnings and dividend growth. And we began managing our risk with things that you are familiar with, like our customer centric capital plan, our progressive regulatory mechanisms and constructive regulatory relationships and our solid balance sheet. But today, you're learning more about some of the disciplined cost management programs, including continuous improvement that Julie talked about, as well as new customer solutions opportunities that Rod covered and Leo will discuss even more in a few minutes. I'll talk about some of the opportunities that we've identified in our financial outlook that create potential for more headroom and risk mitigation going forward.
If we are successful at managing the risk and growing our utility, we should be able to lower our overall cost of capital. And having that lower cost of capital allows us to invest and invent on behalf of our customers and realize benefits for all of our key stakeholders. Top of mind for everyone, of course, is Hurricane Laura. And a couple of days ago, we put out our initial estimates for overall financial impact. The cost is estimated to be between $1,500,000,000 $1,700,000,000 And you can see the significant destruction to the local distribution network in the Lake Charles and Beaumont areas.
But what sets LoRa apart is the unprecedented damage to our transmission system. In addition, our support costs are much higher because of the impact of COVID-nineteen. That includes more PP and E, more social distancing, more lodging costs to the tune of $100,000,000 to $150,000,000 We are working hard now to think about how do we expedite recovery of those costs while managing those costs for our customers. And we expect to seek securitization in both Louisiana and Texas to do that. As Rod said, we have some of the lowest rates in the country.
And even after the impact of Hurricane Laura, we will still have some of the lowest rates in the country. And Louisiana and Texas have the lowest rates with an Entergy. But we're not done because we're always seeking ways to lower the impact on our customers, and so we are also seeking federal support. And in the last few weeks, a number of federal officials have visited the Gulf Coast and seen firsthand the devastation on our energy infrastructure. They acknowledge that.
They also acknowledge the impact of the industrial economy in that area of the country on the overall economy of our nation as a whole. And so we are leaving no stone unturned as we continue to find ways to lower the impact on our customers and potentially to help pay for hardening the system against future storms like Hurricane Laura. Moving to the ongoing plan, Rod talked about the customer centric $21,000,000,000 capital plan. That projects out to rate base growth of about 8% per year. That's consistent with where we've been over the last few years, but there are a number of productive projects that are still out there in all areas of the value chain, including the potential for more renewables, the potential for hardening the transmission system, the potential for reliability and technology investment in the distribution network.
That's where the new opportunities like continuous improvement and customer solutions revenue come in. They give us the opportunity to increase the headroom in the bill. And if we have more headroom, we can invest more productively on behalf of our customers. That rate base growth translates to 5% to 7% earnings per share growth over the next few years. That's consistent with our financial objective, but it's not new.
Back in 2016, I told you that we expect over the next 5 years to grow at about 6% a year, and we've done that. So the current outlook is simply an extension of where we've been and what we've been doing. I will note that in 2022, we expect to close and sell Palisades, the last nuclear plant in the EWC fleet. After that, we anticipate that EWC will no longer be an adjustment in our ETR adjusted earnings per share metric. Lastly, the other half of our growing the utility objective is the dividend.
And we've talked for a number of years about targeting a 65% payout ratio and that occurs in 2021. Next year, we expect to reach that 65% payout ratio target. And at that point, we anticipate that our dividend growth rate will begin to match our earnings per share growth rate at 5% to 7%. Digging a little deeper into the financial statement, we'll talk about sales, the top line. But the bottom line on sales is literally the bottom line on this slide, and that is we anticipate a 1% annual growth rate overall in our sales over the 5 year period.
You can see some of the nuances there in our residential and our commercial sales. You see initial impacts of COVID, but over the 5 year period, they end up about flat to slightly lower versus 2019. Our industrial sales after taking a 1 year pause due to COVID resumed their growth and by the end of 2024, we expect to see about 2.5% annualized growth in our industrial space. The pace at which all of this happens is slightly different than what we have been anticipating. Back in the spring, we talked about on our Q1 call, we talked about a V shaped recovery in the economy and our sales growth mimicked that recovery.
But more recent economic forecasts call for a more gradual recovery in the economy. So now our sales growth is reflecting that more gradual recovery. This is significantly de risking our overall sales outlook by lowering it to this gradual recovery. I'll also mention that Hurricane Moore is not reflected on this chart. We expect to offset that with O and M savings, some from the storm and some from us running ahead of our objectives this year on O and M.
And lastly, I'd like to talk about the fact that we are looking beyond sales in our future. Our customer solutions revenue should not be tied to our sales expectations, but it does give us an opportunity to create more headroom in our customer bills and that opportunity gives us more investment room going forward. Speaking of O and M, I already mentioned that we're running slightly ahead of our $100,000,000 of O and M reductions that we mentioned on our Q1 call. Beyond 2020, our O and M expectations are a little higher than what we showed you last summer. There are 3 main reasons associated with that.
The first is energy efficiency, which lowers the fuel costs for our customers and is offset directly in the top line. Also, our benefit expenses are a little bit higher, primarily due to pension, and that's driven by lower interest rates. And so we also expect some partial offset of those benefit expense increases in our interest expense line. The 3rd area that we are paying close attention to is distribution investments. And Rod talked about our need to invest in our distribution network.
He talked about the capital investment, but there's also an O and M component. And that O and M component allows us to set the foundation for our customer solutions opportunity. We must engage our customers in order to improve our Net Promoter Score and improve our reliability in order to gain their trust, because without their trust in what we do every day, we won't be able to gain their investment in our customer solutions. But that's still not good enough. We continue to mature our O and M tools, and that includes our O and M Flexibility tool, which we introduced 2 years ago.
And it was intended originally to manage the volatility in weather as we introduced the Entergy adjusted metric. So we put it together for the first time last year. And as we experienced negative weather, we were able to flex our costs down later in the year as weather got better. We flexed our costs up and we were able to benefit our customers, our communities and our employees along with our owners. This year also started with some negative weather, but then came COVID and now LoRa.
And so this tool has been an important piece of how we have met our expectations this year. It's important that we have steady predictable earnings growth. That allows us to lower our overall cost of capital. And that lower cost of capital gives us more headroom to invest on behalf of our customers. And if we can do that, we can benefit all 4 of our key stakeholders.
The right side of the slide is continuous improvement and Julie talked about the permanent cost reductions and how it creates headroom for incremental investment, provides benefits to attract and retain our employees and lowers our revenue requirements. But importantly, it also helps us reduce our regulatory risk. And that regulatory risk comes in a lot of different ways. One example is our current Siri case in front of the FERC. We're very comfortable with the case we have with Siri at the FERC, but there is risk involved.
Continuous improvement gives us the opportunity to meet or exceed our financial objectives out into the future, even with regulatory risk. The last area that I want to mention associated with costs is our pension. Of course, we've had pension risk for a number of years and we have done a lot to reduce that pension risk. That includes nearly $3,000,000,000 of pension contributions over the last few years, nearly $1,000,000,000 of liability reduction associated with various programs. And this year, we have lowered our discount rate on our liability to 3% for 2021.
It was over 5% just a couple of years ago, and on the return on assets, we've lowered our expectation for returns to 6.75%. That's consistent with the median in the space. That's also down from about 8.5% just a few years ago. The risk reduction associated with the pension and the risk reduction associated with our sales combined to give us a much better opportunity to meet or exceed our expectations in the future. Turning to our financing strategy.
Paul discussed the $1,400,000,000 of renewable investments that we have in our current capital plan. And we are constantly looking for ways in which we can create more headroom in our customer bills. One way that we might be able to do that is through structured financing of those renewable investments. It could benefit us in 3 separate ways. 1, we could create more headroom in our bill.
2, we can redeploy that headroom to some other place in the value chain. And third, it can lower our cost of capital and make our renewable investments more competitive in our RFPs. To do that, we need to bring on a 3rd party investor. And that 3rd party investor will allow us to accelerate the benefit of an investment tax credit to today and allow our customers to realize that much faster. That creates the first bit of opportunity to redeploy in headroom.
The second piece is reflected on the right side of the chart, and you can see that the green line shows we have structured the payments back to the utility. That creates the opportunity for more headroom going forward and more opportunity to redeploy on our customers' behalf. We're just beginning to scratch the surface of this in our financial plan. And only one project, the Sunflower Project in Mississippi, is currently even looking at a tax equity structure. Another area in which we are closely monitoring is tax policy.
You all are familiar with what happened in 2018 when the tax rate went from 35% to 21%. I'm going to use that to illustrate what might happen if under certain scenarios the tax rate goes up again. I'll start with our excess ADIT or excess deferred taxes. When the tax rate went down, we found that we had over collected about $1,400,000,000 from our customers. To date, we've already returned $1,100,000,000 of that.
If the tax rate were to go back up, some of that money would likely come back to the operating companies from our customers, but it would be offset in rate base and an efficient regulatory environment that shouldn't make much difference. More importantly is the amount of taxes that we collect from $300,000,000 If tax rates went up, we would have to work with our retail regulators to get those extra tax collections into our rates. That's important for cash flow because most of those taxes are deferred taxes. And as we saw lower cash collections, it actually decreased our cash flow because of those deferred taxes. And if tax rates go up and we collect more deferred taxes, that should increase our cash flow.
The bottom line here is the impact on our equity funding needs. Prior to tax reform, Entergy did not require any equity capital since the early 1980s. With tax reform, we require equity capital on an ongoing basis in order to finance our capital plan. If tax rates were to increase, that would reduce the need for equity in our forward capital plan. Speaking of our overall financing strategy, here are the 5 year sources and uses.
You see the $21,000,000,000 customer centric capital plan in there, as well as about $4,000,000,000 of dividend and dividend growth. That's financed by $18,000,000,000 of operating cash flow, about $5,000,000,000 of debt, most of that at the utility operating companies and about $2,500,000,000 of equity, a small slice. That equity is important to maintain our credit position and that credit position underpins our robust capital plan, and that capital plan is critical to support our steady predictable earnings per share and dividend growth. We still do not require any equity until the end of next year, as we said before. And when we do go to source that equity, there are a number of things that we intend to do in order to source that capital.
First of all, we expect to put an at the market program into place. We're also seeking approval from our shareholders to implement preferred equity in a shareholder friendly way. We will likely think about preferred debt at the operating companies to get some partial equity credit there. And then finally, we always have the opportunity to do a block trade at some point down the road. It's worth also mentioning that to the extent that we explore structured financing or the extent that there is a change in tax policy that could influence the timing and the amount of the equity that we might seek.
And then finally, as it relates to our credit and liquidity, we continue to target apparent debt to total debt ratio of below 25% and FFO to debt ratio of atorabove15%. At the end of August, we had a very robust liquidity position of nearly $4,000,000,000 That doesn't include the effects of Hurricane Laura. Obviously, as we invest to restore our system in the wake of Hurricane Laura, that is going to deplete our storm escrows and utilize some of our liquidity and our short term debt facilities to rebuild the system. That is why we are seeking expedited securitization in Louisiana and Texas to replenish those storm escrows, to replenish our liquidity and to keep our credit on track. We have a solid financial plan that keeps us on track to achieve our financial objectives.
It's expected to benefit all of our stakeholders and it keeps us on target to become the premier utility. But we're not valued as a premier utility today. We are a roughly median multiple, and we're a roughly median dividend yield. That means that we have a lot of opportunity for growth in the time ahead. Our financial objective is to grow the utility while managing our risk, and we are growing the utility by achieving our 5% to 7% earnings per share and dividend growth.
We're also on track to manage our risks. Given our customer centric capital plan, our progressive and constructive regulatory mechanisms and relationships and our solid balance sheet. We also have significant opportunities ahead of us. Through continuous improvement, through customer solutions and through financing strategies, those give us an opportunity to become the premier utility. Thank you.
Now you know who we are and what we want to be. We have challenged ourselves asking what does it take to be the best, to be the premier utility? It takes a bright vision, a clear strategy and an engaged and diverse work force. It takes a strong desire to be better in a rapidly changing world. Through years of hard work, discipline and innovation, we have made significant progress.
Now it's time to see what's next and how our stakeholders all benefit as we continue to build the premier utility.
As you can see, we're very, very excited about the plans for the future. And I hope that discussion that you've heard so far has given you the enthusiasm we have for the path in front of us. The fact of the matter is, as we sit here today, we are strategically, operationally and financially on track to meet the commitments that we've made to all 4 of our stakeholders. But now is the time for us to focus on making sure that we continue that opportunity and that when possible, we do even better. There's some really key fundamental actions that we need to take to make sure we do that.
1st and foremost is that we need to begin to think about our customers' objectives in a different way. We need to continue to look at the opportunities we have to not only decarbonize our own fleet, but to help decarbonize the economy around us. And finally, we need to continue to look at ways to continuously improve and develop investment opportunities for all 4 stakeholders that can create that sustainable value that we talk about, that enduring value of long term success for our customers, our employees, the communities we have, the privilege to serve and for you, our owners. So let me talk first about the customer. It was several years ago that an EEI Financial Conference, I jokingly started out by asking the crowd, some of you may have been in the crowd that day, how many of you by show of hands woke up this morning and decided today I need to buy some electricity.
It's probably the best laughs I got in the entire conference when I asked that question, but nobody raised their hand. I didn't even raise my hand that day. And I worked for the power company and I did not raise my hand. But every morning when I wake up and I wake up pretty early, it's always dark, the first action I take is to buy electricity and it comes in the form of light because I turn on the light. So was my objective to buy electricity?
No. My objective was to see and to do that, I needed to turn on the light and to turn on the light, I had to buy some electricity from Entergy. Now that may seem nuanced and it did at the time. And at the time, what we were talking about was a concept, was a culture. We were already beginning to lay the groundwork for that different kind of thinking.
And so it's not uncommon if you talk to employees around Entergy for them to talk about the fact that what our objective is, is really to focus on customer outcomes, not the input of electricity. Now don't get me wrong, that input and the reliability of that input is still the most fundamental way that we have to help our customers meet their objectives to achieve their wildest dreams while they consume the least amount of resources. But the reason that we need to look at their outcomes and not just our inputs is because they want more. And as technology, information, data and analytics change, their expectations change with them. And if we're going to meet those expectations, we need to that, it has long been our belief since the day I made that comment at the EEI conference that we will come up with investment opportunities that improve the level of service that our customers receive, improve their experience with us that we wouldn't have thought of if all we looked at was the input of electricity.
And we've come a long way since then.
Entergy doesn't operate in our economic ecosystem alone. We exist to create benefits for the customers we serve.
What we want to do is understand what the customer's goals are, what the vision of the customer of the future is and always have that at the center of our work and the way that we operate when we look at our innovation process.
We began with a broad understanding of consumer trends, marketplace trends and what's going on with our industry. And then we go and conduct research with our customers, usually ethnographic research that tells us what their motivations, needs, values and aspirations are.
One of the products we created in KeyString Labs is Power
Through. So we talked to
our commercial and industrial customers and they were really excited about this opportunity and it provides a service for both the utility and the customer. When it's not in use, the power goes back to the grid. And then when the customer is at a time of need, they obviously have access to the generator.
If you live in Mississippi, you know you can get a storm up in 2 seconds and you know that you're going to have outages. But with the new generator, we don't have fret about it.
We don't have to worry.
It's a selling point for the nursing home because we can tell them, hey, we've got a generator here that if power goes out, we can take care of your people 24, 7 and that will give them peace of mind.
One of the biggest benefits of the shore power concept, the project is helping meet the electrification and sustainability goals of the maritime industry. But to the extent that we can actually lower their cost of operation, we're creating an opportunity for economic growth where they get to expand into more products and services for their customers that in the end also create greater demand for us and our grid and products and services.
We have less wear and tear in our equipment. We're able to prolong the life of our generators and the life in between maintenance overhauls. Shore power's Block 4 is going to assist in air quality for local people. We live here, we fish here, we hunt here. The noise levels are going to be down in the port.
Emissions, obviously, will be cut down.
I like to think we build new products and services with our customers, which is very much tied to our overall corporate strategy.
Now some of those products that we're looking at in KeyString Labs today, which is the culmination of our efforts from the day that I mentioned, we needed to focus on outcomes, not inputs. In terms of the research and development we've done into how to go about being customer centric in this way is now starting to show tangible results. So some of the projects that they mentioned are currently in the financial plan and others have room to grow. So let's talk first about beneficial electrification in our shore power project, which could be way bigger than just shore power. That came about not by us thinking about shore power, but by us having a discussion with our customer, as you saw in the video, about their objectives.
And those objectives revolved around a couple of really key business attributes that they were after. 1, they wanted to reduce their own overall emissions because that was important to them and their own sustainability objectives. 2, cost. It costs money to burn diesel fuel while those ships are parked in dock. Given the low emissions of our fleet, there's a significant reduction in emissions if we provide them electricity rather than them run their own generators on diesel fuel and given the cost of our product, it's a financial benefit as well.
So they get cleaner air while they spend less money, which makes them more competitive in their business, improves their relationship with the local community and improves their employees' way of life. Now we've got 2 of those installations already in service, but we have room for more in the plan. There are no more in the financial plan that you saw Let's talk about power through backup generation. And it may seem simple because it's just backup generation, but we had to solve a problem that our commercial customers had. And that problem was, while they want a higher level of reliability, while they want to be there for their community in times of crisis like a storm, The economic reality is that it just doesn't make sense for them to buy, own, operate and maintain a backup generator.
And in fact, many of the customers that we talked to heard horror stories from their peers who had acquired backup generation. In addition to the fact that it wasn't economic for them, given the low rates and the high reliability of our system, it also was a situation where they didn't necessarily maintain those assets in between the times they were required. So then when they needed them, they weren't available. So how did we solve the problem? We came up with a dual use for a single asset.
So through a transfer switch in that backup generator, it's there and available for the customer when they need it, but when they don't need it, it's available to the utility to dispatch into the market. Now that has made it economic for both the customer and for us. And since we're maintaining it, they don't have the worry that it won't be available when they need it. So it's an innovative solution around a basic product that we wouldn't have thought of had we not interacted with our customer in the way we did. As you know, we've had one operational in Texas, which is already dispatched into the MISO market.
We have a 20 installation pilot in Mississippi. We hope to roll it out in the future into all jurisdictions and there's 440 such installations in the financial plan that you saw today and we would like to see more. Now microgrids is something that I've talked about with many of you in the past And the way I've talked to you about it is it's evolved for us is not as really a generation source, but really a reliability source. And many of the areas that we serve show up at the end of the line. Think of the Gulf of Mexico, think about in Texas where we bump up against ERCOT or even in rural Arkansas.
So we've been investigating these communities that we serve that are at the end of long transmission infrastructure with either very few or very important customers at the end. And we've been trying to figure out if microgrids could be a solution rather than significant redundancy to be built either to meet growth or to meet reliability needs in those areas. Microgrid seems like a good opportunity and the first place we saw one just happens to be associated with the same part of our service territory where shore power is showing up. There's growth in that part of the service territory, partly from shore power opportunities, but also from other opportunities that exist that create the need for more service and a higher level of service into those areas. Transmission infrastructure would be significantly costably 100 of 1,000,000 of dollars to get into those areas.
So localized generation, a micro grid, if you will, makes sense. It just so happens in the area that we're looking at this right now, there isn't a lot of land to site generation. And so the solution that we've come up with is the microgrid will actually be the equivalent of the New Orleans power station on a barge in that area. There's a couple of things. 1, it improves the opportunity for growth by providing a higher level of electrical infrastructure into that region.
And the other is that it provides opportunity for a high level of reliability because all of the power is not exposed to those transmission lines. So again, this is an opportunity that we would not have thought of had we not been engaged with our customers in the way we are and that microgrid is in the capital plan that you saw today. Now let's talk a little bit about beneficial say. Now let's talk a little bit about beneficial electrification, what is the equivalent of shore power and the opportunities abound for us in all parts of our service territory in different parts of the economy. Certainly, everyone in the utility business is focused on electric vehicles because transportation, as we all know, is the highest emitter of greenhouse gas in the country.
In most regions of the country, the utilities are the 2nd highest. It just so happens for us, for example, in Louisiana, that's not the case. Industry is the 2nd highest emitter of greenhouse gases in the state of Louisiana. Utilities are actually below that. The opportunity for us certainly exists inside electric vehicles.
It certainly exists for us in the ports with 37 ports in our service territory, 7 of those being in the 20 largest in the United States. But we also have a significant amount of industrial activity where fossil fuels are utilized, where it would be cheaper and more sustainable for us to electrify industrial processes than for those processes to continue as they are. So we believe there's a great opportunity in electrification beyond ports, beyond electric vehicles into some of the industrial customers that we have in the Gulf South. It's a great opportunity for us to find new investments. The fact of the matter is there is no shortage of investment opportunities for us.
And as Julie talked about continuous improvement, that continuous improvement opportunity allows us the opportunity like what we did in 2019 to improve the value proposition we give to all 4 stakeholders, whether it's investing for our customers to provide them a higher level of service, which also provides growth for you, our owners or whether it's providing more education, training and benefits for our employees or contributing as we always do to our communities through our programs to eradicate poverty, improve the environmental footprint, not only of the company, but of the communities we serve and to provide educational opportunities that those that otherwise wouldn't get it. And the opportunity, as Julie mentioned, is real. So she showed you that we're about in the middle of the pack in terms of an O and M standpoint on a benchmark basis. If you go a little bit deeper, if you were to get to top quartile or top decile, that could be $200,000,000 $300,000,000 $400,000,000 of opportunity for us to have a combination of lowering the price of our product, giving us investment opportunities to improve customer service or provide those benefits to the communities and our employees that we talked about.
And so in parallel to those continuous improvement opportunities, what we've been doing is identifying new opportunities that could be pulled forward into the plan. So I mentioned at the outset, the 20% to 24% plan with this 5% to 7% growth, we have a pretty clear line of sight on that and we wake up every morning trying to do better. If we're successful in our continuous improvement opportunities, then we could pull some of the capital forward from the 25 to 30 point of view, for example, and put it into the plan to improve the level of service for our customers, whether it be more customer solutions like low income rooftop solar or more power through installations or more shore power, those opportunities would exist for us to pull some of that forward in addition to grid hardening and grid modernization that we could do that would actually improve the reliability of the system. To date, we've identified about $2,000,000,000 worth of investment that we could roll forward into the current plan 2020 to 2024. Now that's obviously dependent on a couple of things.
1, we have to find the headroom to be able to do it through continuous improvement and 2, it's time dependent. So for example, if we were to find all the continuous improvement opportunities in 2024, we wouldn't be able to put $2,000,000,000 worth of investment in. But you understand what we're trying to do by in parallel to seeking continuous improvement, we're looking at the investment opportunities that could be put into the plan. Now we're also looking at other opportunities in the employee space and the community space and we need to prioritize those dollars when continuous improvement shows up. And we're pulling that forward from a pretty significant backlog of investment opportunities.
That 2025 to 2,030 period, we've identified $50,000,000,000 worth of investment opportunities that should improve the level of service we provide our customers. At the same point in time, it's that investment that would grow rate base that would benefit you as owners. Now, not all that $50,000,000,000 is going to be in the plan. It's about 1.5 times what would be required to continue that 5% to 7% growth rate in earnings. But obviously, what we're trying to do is identify that backlog of opportunities that given the opportunity through continuous improvement to push down the customer bill, we can invest on their behalf, so that we improve the level of service, improving the net promoter scores through higher level of reliability while we maintain some of the lowest prices in the United States.
So there's no shortage of opportunities across the board. And as Rod mentioned, you'll notice a lot of these investments get closer and closer and closer to the customer. They're more in the customer solutions enabling technology and distribution space as much as anywhere else, because that's where we get the most bang for your buck in terms of the reliability that our customers see. So with all of that, we're very excited about the opportunity in front of us, not only the one here and now to 5% to 7% growth in earnings and the ability to grow the dividend, but also the opportunity we have to focus on all 4 of those stakeholders and to be able to bring to bear
all of the might of
the corporation to be able to help them do better, whether it's our customers, our employees, the communities we serve or you, our owners. As I said at the outset, the reason we wanted to make sure we had Analyst Day today is because we're as excited as we've ever been about the prospects of the company, regardless of the challenges that we've seen and obviously they are challenges that we've had to overcome. But remember, all of the opportunities that we saw at the beginning of 2020 still exist. We still have some of the lowest rates in the United States and we intend to stay among the lowest rates in the United States. We still have a significant investment plan that improves the level of service for our customers, while we continue to maintain some of the lowest rates in the country.
We still have one of the cleanest large scale generating fleets in the country and we still are a leader in sustainability. And as we've proven today, we've got a laser focus on how we'll find a way to get to net 0 carbon by 2,050. All of that results in 5% to 7% growth in earnings and by next year, we'll start to grow the dividend commensurate with those earnings. But we want to do better. To be the premier utility means to do better And that's what we're here for.
So for those of you who are already investors, thank you for coming along on the journey with us. For those of you who are not yet investors, we look forward to you joining us as we move forward into the future. Thank you very much for your time.
Thank you very much, Leo. We will now take a short 5 minute break to set the stage up for Q and A. At this time, for members of the investor community wishing to ask management a question, please go ahead and dial into the participant phone line using the number that we sent And if you do ask a question, please remember to mute your computer to avoid any unpleasant echo or feedback. Thank you very much, and we'll see you all in 5 minutes.
Welcome back, everyone, to Entergy's 2020 Analyst Day. At this time, we will begin the question and answer session with Entergy's management team. And our first question comes from Shahriar Pourreza of Guggenheim Partners. Your line is now open.
Hey, good afternoon guys.
Good afternoon, Shahriar.
So I got one question for Drew and I just have a follow-up for Leo, if that's okay.
Sure.
Drew, so you announced a new equity plan over 5 years starting in 2021, which essentially implies equity needs that sort of breach your prior guide, which pointed to 5% to 10% of your annual CapEx. Just what's driving the higher equity versus your prior assumptions? And then just how are you sort of thinking about the timing of when you'll update investors on the means of achieving your equity needs, I. E. Blogs or converts, preferreds, ATMs, etcetera?
Sure, Shahriar. Thanks for the question. So in regards to the amount of the equity, the main thing, of course, is that we added 2 years and quite a bit of customer centric capital to the plan. So that's the primary driver. After that, I would call it fine tuning with our credit metrics to make sure that we achieve the credit goals that we have also laid out.
Those are the primary things. As for timing, our objective over the near term isn't any different than what we've stated previously. So it's no equity needed until the end of next year. And then after that point, we had a plan in place, but it's probably potentially a little bit uncertain with the potential for tax policy like I was discussing a few minutes ago, or if we were able to put some of our financing strategies to work, those could change the timing and even the amounts of equity capital that might be required for our financial plan. So I think those are I don't think that there's really in the near term, over the next year or so, there's really no difference in what we are talking about in terms of timing.
But after that, it's we have a plan out there, but it's somewhat uncertain given the world that we're in right now.
Got it. Terrific. And then, Leo, the CapEx that you suggest from $25,000,000,000 to $30,000,000 looks like an opportunity to how Entergy as a company grows into that kind of level of spending? Is how Entergy as a company grows into that kind of level of spending? Is it as simple as finding efficiencies?
And then just maybe elaborate a little bit on sort of the pull forward opportunities. And kind of lastly, there seems to be a level this level of spend can certainly, just from looking at rough math reach your 5% to 7% growth trajectory, but you seem to reiterate the continuation of that growth rate. Do these opportunities, assuming you find the efficiencies, provide room to achieve above that top end? So sort of thoughts there.
Yes, yes, sure. So I'm glad you asked the question because maybe I wasn't as clear as I want to be. As I said, the $50,000,000,000 ish of capital would be about 1.5 times what we need to hit the 5% to 7% growth rate. So I wasn't implying that we were going to spend it all. If we continue on the path we're on and we what I was trying to get across is we have ample opportunity to keep 5% to 7% going.
And if we find continuous improvement opportunities where we can manage the process of keeping our customer bills low, then we can pull forward is $50,000,000,000 we've identified $2,000,000,000 to do and meet all of our other objectives for all our stakeholders, we have to drive down our costs. And then obviously once we get to 25 and beyond, there's plenty of opportunity for us because we're looking at hardening the infrastructure on the distribution of the transmission system. Obviously, you saw what we're talking about with renewables and our new flexible generation that can utilize either natural gas or hydrogen as a fuel, all of those things exist, we would probably look at the closer to the customer ones as we got into refined continuous improvement. So now we're hard in the system or it's a new enabling technology or some more key string labs deployment etcetera. So I didn't mean to imply that we're going to 8,000,000 dollars That's not the financing plan Drew is put together, it's not an 8,000,000,000 a year.
What I meant to imply was that we can keep the rate base growth going to the point where we can continue to get 5% to 7% earnings growth beyond 2024. Does that help?
It does. And actually, yes, thank
you for that. And that's all the questions I had and congrats on one of the first virtual analyst days. Yes. Well, thank you guys.
We wish we could have done it in person, Shar, but times are what they are.
Our next question comes from Julien Dumoulin Smith at Bank of America. Your line is now open. [SPEAKER
JULIEN DUMOULIN SMITH:]
Hey, good afternoon. Congrats on getting it all done together.
Thanks, Jamie.
Absolutely. On the partnership financing, just to clarify this, does this reduce your future equity financing needs or does it create headroom for future further incremental renewable investments and or does it do both? Just wanted to clarify that. And then related, what are the barriers to partnership financing? You talk about it as potentially having certain hurdles.
Are they regulatory or just simply financial execution?
I'll let Drew take that one.
Okay. So I think it creates the opportunity to do both, Julien. So it creates the opportunity to use that extra bill headroom to invest in other things. Leo was just talking about and as you heard in the discussions, other areas of value chain, it could mean more renewables. So that's a significant opportunity for us.
But it also could mean just if we are in a utility that is over its cap from a revenue requirements perspective, and it helps us get under the cap, that could be accretive from an earnings perspective and also less capital deployed at the same time, which could lower our equity requirement. So there's opportunities in both spaces and it will depend on the utility and its current situation from a revenue requirement perspective and the like. And in terms of the approvals, we are working through that right now. We have, as I mentioned, approval already to do a tax equity partner in Mississippi. And I am anticipating that we will likely do that in Arkansas and in Texas at the same time.
So and I'm sure that once we've executed successfully there, it will happen in Louisiana and New Orleans. So my expectation is that we will likely go down this path at some point because it's going to be better for customers.
Excellent. And then as a follow-up on sorry, I hear an echo. Just as a follow-up on the utility side real quickly, just wanted to follow-up on the 80% that is approved. What is the remaining 20% over the 5 years? Clearly, you implied that it's in the back half, but just want to see if there's anything that is lumpier in that.
And then related, if I can ask on the utility as well, it seems like you guys are guiding to the mid to low 9s on an earned ROE basis. Are you kind of baking in some degradation in earned ROE in the 5 year outlook versus your starting point here? Rod?
Okay. So on the 80% versus the 90%, it's really the timing. In terms of what constitutes that differential, it would be resource planning predominantly outside of the normal annual FRP review process, but it's predominantly resource planning.
And then the ROEs. I don't believe we are anticipating a significant degradation associated with ROEs, but we do have a little bit of headroom for that in our forecast. If that happened, we feel like we could still continue to meet our expectations. And just to give a couple of examples of the resource plan and some of the renewable stuff and the RFP in Texas should be successful there. Those are examples of things that aren't yet approved and we would need to get approval at some point and they would come in late in the forecast period.
Thank you. Our next question comes from Durgesh Chopra at Evercore ISI. Your line is now open.
Hey, good afternoon guys. Thank you for taking my question. Sure.
Good afternoon.
Good afternoon. Thank you for putting Slide 12, much appreciated. I have two follow-up questions on that front. Just can you remind us, Drew, when are you expected to pay any significant amount of federal cash taxes? What year?
And then part 2, have you looked into and I appreciate it early, too many question marks, but have you looked into this provision under the Biden plan of a 15% alternative minimum tax on book income and if it would have any implications for Entergy.
Yes. So I haven't looked at the 15% AMT idea yet. We certainly have, as we talked about as I talked about in my remarks, that we've been thinking about the Biden plan and its potential cash flow impacts on us. So we are certainly going to be mindful of that. In terms of when we would currently pay a cash tax, we have a significant NOL out there.
We're working through the audit process right now. In regards to the, I guess, the 2015 audit period, and there is quite a bit of NOL there. And as I've said before, not all NOLs are created equally, and we have to get all the way through the audit. So it may come down a little bit as we come through the audit. In fact, I expect it to.
I know that we have recently settled with the IRS in regards to Siri and the decommissioning position that we took there. In fact, we filed a couple of days ago at the FERC and to update the record. And we told you in the Q1 call that we were going to relinquish that position. And as we work through that with the IRS, we did actually settle with the IRS for a little over $100,000,000 of deduction. And at the same time, we relinquished the rest of the position.
So we did not get everything that we wanted there, but we did get some value. And that's important in the FERC case that we have because number 1, that means that our customers are going to get actual value out of the tax position there at the FERC, at Siri that we're at the FERC hearing right now. And that gives us that is going to amount to about $80,000,000 About $60,000,000 of it is associated with reduced revenue requirements and about $20,000,000 is associated with excess ADIT from tax reform now that we have a new deduction. And that's money that our customers would not have had given normal practices. And since we took on an uncertain tax position and risked penalty and interest with the IRS, we're able to secure that for our customers.
And I will also just add on that that the ALJ had previously been quite negative about that tax position and it proves that it was absolutely a legitimate position although uncertain because we did not get everything that we wanted out of that position. And then finally, I think it also means that it's what we've been saying about the discussion at the FERC is that the policy question rests with the FERC itself and not with the ALJ, which is a good thing because the FERC has an opportunity to create a policy that allows customers to benefit from uncertain tax positions down the road. So that's a long answer to your question about the NOL, but I thought I needed to say that because the overall NOL is going to come down a little bit now that we've settled. But it's still going to be several years before we reach a point where we are having to pay significant cash taxes.
Understood. I appreciate that color, Drew. Maybe just one quick follow-up, and this is dense. But maybe just the you mentioned the unprotected ADIT, but how about the protected ADIT, right? You're refunding that to customers currently over whatever the life of the asset, 20, 30 years.
Shouldn't that also be a small benefit to cash flow assuming the tax rate were to go up?
Yes, it should. Yes, absolutely, it should be a benefit as well. I didn't want to get too mired down in my discussion in tax talk. It was already probably dense enough. But yes, it will be a small benefit as well to our overall FFO because that's the equivalent to the unprotected, but stretched out much further.
Perfect. Love it. Thanks so much for all the color this morning.
Thank you. Thank you.
Thank you. Our next question comes from Steve Fleishman at Wolfe Research. Your line is now open.
Thank you. Thanks for the presentation today. That's kind of fun to watch on there. Well done.
Well, stay tuned, Steve.
Yes. Yes. So just first on Leo, maybe just on the concept of the continuous improvement and the potential $2,000,000,000 of CapEx that could be pulled forward and maybe some upside from that. Can you just, I guess, when maybe give a sense of like when we would know if that comes from potential to reality? Is this something we might know during 2021?
Or is it later on? And is it just about in terms of what drives it, is it just about executing on continued cost cutting efforts and then just making sure nothing else unexpected happens? Or just what would drive it versus status quo being the outcome?
Yes. Your third one around it, Steve. Now if you think back to last year in 2019 and that's the example that Julie gave, we had been working on it for a while and we got to a point where we had significant scale in the continuous improvement opportunities that we saw that we could permanently adjust where we were in the financial plan. And then we went through the capital that we have, the opportunity for plus other things that have to compete, what we want to do in the communities and what we want to do for our customers. And we made the call that it was significant enough in scale and certain enough in terms of execution that we would bake it into the plan and that's why we changed the numbers at that point in time on our Q2 call last year.
So the process is going to be similar. And you're right about you mentioned one thing that I think is critical, particularly as it relates to today's discussion. Nothing else happens. And obviously, 2020 is a year where something else has happened a couple of times. So we continue to work on the process and we continue to identify areas of continuous improvement in all those areas Julia was talking about.
At this point in time, obviously, between COVID and the storms and everything else that's going on, we're using all of those to manage where we are and continue to hold on to our outlooks. I would anticipate as time goes forward and we're successful in that execution because of the organization we've built and the culture that we've got that we would have more opportunities to do what we did last year and prioritize, hey, here's some investments that really benefit our customers through a higher level of service or a new technology and as well as what can we do for our communities, what can we do for our employees. Obviously, all of that's going to benefit owners. Not really a time schedule though to give you in terms of when we get to scale and when we would get to the execution and when if you can tell me when nothing else is going to happen, I would appreciate it. Maybe in your next report, you can write that, nothing will happen in 2021.
It will definitely be after all you know is I can tell you it will be after 2020.
Yes. If it's going to be a good thing that happens, it will be after 2020, I'm sure.
Yes. Okay. That's helpful. Second question is, you didn't talk a lot about regulatory updates, and I know those are maybe a little more mundane. But just could you just give an update on the Formula Replant extension filings and when we'll get outcomes on those and the like and how you're feeling about getting that done?
Sure, sure. Mr. West, do
you want to take that? Sure. Both Louisiana and Arkansas are the 2 states, Steve, as you know. Our expectation has been we'd have resolution in Louisiana in the Q4 of 2020, and we'd have resolution in Arkansas before that February early February due date. Both of those administrative proceedings are on track.
And so there's no new update in terms of the process. We're working through the procedural schedule and in constant communication, even in the context of the storms and all of the disruption that created. We've been in constant communication with the commission, their staff and specifically in Louisiana with our industrial customers who also play an important role in the regulatory process on continuing to push forward to meet the year end objectives in Louisiana and Q1 in Arkansas. So ongoing, Steve. And you did ask about our point of view.
We have every expectation that the FRPs in both of those jurisdictions will be renewed. Our point of view has not changed one bit. We've been reinforcing through the record and certainly with the regulators and customers that the FRP is meeting the objectives that were laid out. It provides the protection for customers and an incentive for us to continue doing what we're doing around customer centric investments in managing the resources to produce benefits. And so we have a compelling case for renewal, and we do expect that we will achieve renewal in both Louisiana and in Arkansas.
And I apologize, I had one more question. I forgot. Just the partnership with Invenergy and the renewables projects, if we see a couple of projects announced over the next 6 months or so, should we think about some of those already being in the capital plan through 2024 or not?
Yes. Some of those are already in the plan. Paul had mentioned the 1,400,000,000 dollars I don't know, Paul, if you want to
add to that. That $1,400,000,000 represents a little over 1 point 1 gigawatts maybe of renewables through the 2024 plan. So that's both build on transfer and potential for self build. So we should hear about that in the coming months.
Great. Thank you.
Thank you, Steve.
Thank you. And our next question comes from Jeremy Tonet at JPMorgan. Your line is now open.
Hi, good afternoon. Thanks for having me.
Hey, Jeremy.
Hi. Just want to circle back to customer build headroom. Had a couple of questions there. Could you give us a sense for how much build headroom might be created if industrial sales kind of return to prior 3% to 4% outlook that was thought that could happen before? Or even on the O and M side, if you reach the top quartile, top decile, how much bill headroom could be created there?
Any sense that you
could give us around that?
Yes, probably too early to say exactly. As I mentioned, if we were to get to top quartile to up decile in the O and M space, There's significant opportunity there. Now that was illustrative. Obviously, benchmarking needs to be done a whole bunch of different ways and by function, not just broad based like that, but we were trying to make sure we gave you a picture. But we do think that there's opportunity in there to either on the sales side or the O and M side to be able to create the opportunity to prioritize some of that spend that we talked about either in the capital space or for the employees or for the communities.
So probably too early to give you a feel for how much headroom that sales forecast would provide, but certainly you're on the right path. If the sales forecast continued to exceed our expectations like it has, that could be helpful or if it went back to the 3% to 4%, that would be helpful as well.
Got it. That makes sense.
And then just coming back to the equity here, any additional color on how much of the preferreds you think might be possible versus the straight common? I think there's $2,500,000,000 of equity that you talked about in the deck and just any thoughts on what the split could be? And where does it sit in the plan? Would that be kind of in the front end or the back end? Any color on the prep side would be great.
Drew? So we haven't identified exactly where we're going to do that just yet and how much might be preferred. I think we will probably use that tool. So we do need to seek shareholder approval, as I mentioned, for that in the spring. And so that will be part of a proxy discussion.
But we haven't penned a specific amount. I think the proxy will probably have a limit on how much we can do that's preferred. I've seen some of those in our research around what we might be able to do there. There's typically a limit on how much preferred you might be able to do. So that's about all that color I can give you right now, but it is a tool that we will utilize.
Our next question comes from Jonathan Arnold at Vertical Research Partners. Your line is now open.
Good afternoon, guys. And thanks for all the detail today and also the yes, good job on the presentation and the work great.
We're kind of in the NBA here. Industry here.
But it's slightly out of sync with the phone call, but I was trying to keep my eyes off the screen. At least it is. Quick question on just on a lot of equity. Drew, you have this sort of 10% of CapEx number out there before. If I look at this new number and divide it by 4 years, if it's 'twenty one through 'twenty four, it's more like 'fifteen.
If it's really late 'twenty one, I mean, I could get to a higher number. Is that the right way to start to think about this going forward? Is 15% a new bogey? Just sort of some perspective on the shift in how you're showing this.
Yes. No, that's a good question, Jonathan. No, that's I don't think that's the right way to think about it. If we had sold equity earlier in this year, that would have subtracted off of the $2,500,000,000 and you would have said, okay, so it's only $1,000,000,000 So are you at a lower number going forward? So I mean, it's I think it's just we said in that range, 10% in that range, it's just a matter of timing in the way it's working out.
And like I said earlier, it's a bit of fine tuning to make sure that we hit the metrics when we need to hit them. I think that's about it, I think
So we should think of that as sort of a 5 year plan type of number?
Yes. Absolutely.
Okay. That's helpful. And then one other thing on you're now talking about 2.5% customer bill CAGR and potentially another 30 basis points from Hurricane Laura recovery. Firstly, I mean, is that assuming securitizations or in that number, that would be the good outcome?
Yes, yes. That would be a securitization of about 10 years. And if we were to manage to do it a little bit longer, we could actually probably lower that impact.
Okay. So my bigger question on that is, before you were talking about at or below inflation, 2 percentage type of rate inflation now. It's looking like it will be closer to 3%. How do you get comfortable with that higher CAGR given everything you said about headroom and given the economic environment we're working through here?
Well, I'll start and then I'll let Rod take it. But obviously, our objective is going to continue to be to try to flatten that as much as we can even as it relates to the LoRa costs that would be helpful, for example, as Drew had mentioned, if we were to be able to find federal funding to be able to help either with storm cost recovery or with some of the hardening of the system, which would obviously take away some of the dollars in the capital plan that we currently have because some of those are for hardening the system. So all of those things could be helpful as well as our cost management continuous improvement. So we're going to do whatever we can to continue to manage it and we're starting from a within the customer bill, particularly given the fact that we think we can do better. Rob, I don't know if you want to answer that.
I think that's the point. And the message we send to the regulatory process is just that. On the storm piece and the 30 bps that Drew mentioned, we are aggressively with our regulators, not just Entergy, but with our regulators and our customers, especially those industrials are seeking the most effective way to get relief through the whether it's DOE, Community Development Block Grants, FEMA support for customers, notwithstanding the existing storm reserves and as Drew alluded to, securitization, there's no stone that we're not turning over in an effort to mitigate the impact of customer bills. And that's outside of just the capital plan. I'm talking specifically around storm.
But we own on a go forward basis, the process, the continuous improvement journey as Julie laid out, where we expect to meet customers' expectations around price and value. And that's why we started the conversation today about customer centricity and those outcomes, and we describe it as a guardrail. And so it's a marker for us about what it looks like if we did nothing to or if nothing happened as was earlier mentioned. But there are a lot of tools we have in the toolbox that we intend to put to work to mitigate the impact for customers.
I think Rod showed in his presentation the impact of LoRa on where we sit. I said we start from a good space as it relates to where our customer rates are versus our peers today and it really didn't move as much to add those storm costs. And so if you think about the whole industry facing exactly the same kind of path that we're on, we should continue to maintain some of the lowest rates in the country with this capital plan, with this O and M level and with this financing strategy.
Perfect. Thank you very much guys.
Thank you, Jonathan.
Thank you. Our next question comes from Michael Lapides at Goldman Sachs. Your line is now open.
Hey, guys. Thank you for taking my question and congrats on the detailed Analyst Day.
Thanks,
Michael. I have one easy one, which is you're talking about your coal retirement plans and you still have the plans to retire White Bluffs, a large Arkansas, like almost 1.6 gigawatts facility at the end of the decade. Given how economically challenged many coal plants are, is there a scenario where you could pull forward the retirement of White Bluff to a much earlier date? Would that reduce customer bills if you did so? And how much would you need to backfill that lost capacity?
Paul, you want to take that?
Sure. So White Bluff in Arkansas would be at the end of 20 8, Independence Station would be at the end of 2,030. And we are currently undergoing that exact evaluation and evaluating what could we do to pull 1 or more of those units further up in the retirement cycle. We would need to evaluate and consider exactly what you put on the table, how much more generation is needed to backstop that, what transmission infrastructure might be needed, and does that all make economic sense for our customers. So that evaluation is underway and it would need to fit into our integrated resource planning, if you will, to pull one of those assets forward for retirement.
Got it. And if you were to pull Wipeout, because just the size of it, it's such a significant plant forward, I forget, in Arkansas, what's the process? Do you have to go through an RFP process to figure out replacement generation? Or do you do it you find it that whether it's self build or whether it's contracted and then just submit a CPC into the regulator? I forget how that works there.
Rod, do you want to take that?
Yes. In Arkansas, we have we submit a resource plan just like we do in the other states, if I recall correctly, Michael, to be direct on your question.
There are RFPs in Arkansas. And I suppose in other situations, when we've had an established RFP or we've recently had an had an RFP and someone comes with us with an offer that's highly competitive in whatever the RFP is that we just completed, sometimes we can use that for a build on transfer or an acquisition, but it will just depend on the situation.
Thank you. And our next question comes from Paul Freeman at Mizuho. Your line is now open.
Thanks. I guess my first question is, if the FERC were to mandate customer refunds, what would be timing of that? And would that potentially accelerate
your need to issue equity?
Drew, do you want to? Sure. So the and first of all, I think in the FERC, like I said earlier, we're very comfortable with our position at the FERC and related to Sirius. So we think we'll be successful there. Having said that, we will have to finance whatever the refund is.
My guess is that it will be either late next year or sometime in early 2022 depending on how long the case takes. But I don't know if that would mean more equity or not. It's too early to tell at this point. Paul?
But I think Paul, reiterate what Drew said is I think, 1st and foremost, we feel pretty good about where we are. And Drew actually, in one of the questions earlier, went through as it relates. And I know there's a couple of things going on with Siri at the FERC. And I think what you ought to also put that in the context of really haven't had a rate proceeding other than the monthly filings at Siri for 20 years, but now we've got license extension. So we had to we knew we were going to have to make a filing.
And so kind of going through the back and forth that a normal rate case typically would go through. But I think we should make the point, we feel very confident in our position. And as Drew described earlier as it relates to kind of where for example that tax position came out, that's just that's totally in line with every argument that we've been making. So we still feel pretty good about that. Okay.
And then I would assume also with securitization, if you were denied securitization, you would probably have that would be incremental to equity needs as well, right?
You're talking about in relation to LoRa, Paul?
Yes.
Yes. So sure, I mean we would have to go finance it in some way, but we feel very comfortable with the securitization option. Rod could talk about the relation or the conversations we've had with the regulatory folks in Louisiana and in Texas about that. But there's as you know, Paul, there's a strong track record for that. Interest rates are very low.
And so we're actually hoping to get expedited treatment to take advantage of the low interest rates and replenish escrows and get that in place as soon as next storm season, although I think that'll be a stretch. I know our regulatory folks pass out every time I say that, but I would like to do that of course. I'm the finance guy. Ron, I don't know if you want to add anything.
That's right. The regulators are aware of the benefits for customers because of the Katrina. Unfortunately, we have experience in these disruptive storms. Katrina Rita Resolution involved the federal government, community development block grants and most notably securitization. And so they're not unfamiliar with the benefits and certainly with the need to move sooner rather than later.
So we're very much aligned on asking the right question. What's the outcome that gives the customers the greatest opportunity to benefit as they're all in Louisiana and Texas recovering from the storm Laura in addition to all of the issues certainly we're all experiencing with COVID.
And then my last question is, just trying to understand, if you obtain tax equity financing on renewables, how would that affect the amount of rate base that would be recognized in a rate proceeding?
Drew, do you want to?
Sure. Paul, this is Drew. So it would lower the amount of rate base to be clear. And I was trying to explain some of that in my remarks earlier. So that would create more headroom to redeploy that into another spot.
As Leo was talking about, we have lots of opportunity to redeploy that. It could go into incremental renewables outside of that or other places in the value chain.
And the payment of the cash flows to the tax equity partner, is that somehow related to the amount of rate base that would be reduced or are they or is that uncorrelated?
Well, I think if we actually moved it into a tax equity partnership, the rate base would be 100%. It would be all completely moved out. And then we would have a small sliver, right.
Okay. So in other words, it would be treated as if it were an unregulated investment set?
I wouldn't say it exactly that way, but it would be outside of rate base.
Okay, perfect. Thank you so much and that's it for me.
Thank you.
Thank you. We have time for one last question, and that question comes from Ryan Levine at Citigroup. Your line is now open.
Thank you for taking my questions. Would you be able to comment on the background of your agreement with Mitsubishi and how you how that project was developed and over the longer term if there is opportunity to invest in any ancillary infrastructure whether storage or pipeline related to that development opportunity?
Sure. Paul, you want to talk about that?
Certainly. Mitsubishi Power has been a partner of ours for several years. So and it's not about one project. It's a 10 year joint development agreement in recognition of the work that's required to achieve net 0. And so within that partnership, we envision multiple projects that may come to fruition.
They would all go through the integrated resource planning process. They would all be have to go through and approve by, of course, our regulators, and it all be part of the customer centric focus that we have. So that came about because of the work that we've been doing with them over the CCGTs that we're building over the last several years. And as we started to think about the future, we recognized we were headed towards net 0. And so we've been in discussions with them on hydrogen for the next wave of new plants for almost 2 years.
And those discussions led to for the Orange County project, if that's perhaps the one you're speaking to in particular, to us to develop that with the option to power that with 30% hydrogen upon commercial operation and potentially design it right from the beginning for 100 percent power from hydrogen. Obviously, again, we would have to get selected for that project and would have to be approved by the regulators and others. But for that project, that would be near term, if you will. That selection is early next year. There's broader opportunities envisioned.
The importance of storage is critical for the grid. And so both battery storage, hydrogen storage and infrastructure are also envisioned to be part of that partnership. So I'd say it came about because of a great relationship we have with a strong technology provider that can help us achieve the commitments we have laid out for 2030 and 2050.
And I'd just add, Ryan, I think the where we sit from a portfolio standpoint and where we are in the country and the energy infrastructure, as you saw in Paul's presentation, our nuclear fleet, our growing renewables fleet, the whole end to end process in the hydrogen space is pretty exciting for us all the way from the electrolysis of it to using it to fuel these plants that we're building now. So it's a it's not only a very, very interesting partnership, we're in a great position and a great place to be able to take advantage of it. And it really what's exciting for us is, as Paul mentioned, we see evidence that no matter how much we grow the renewable portfolio, we still have to maintain the operational capability of the system and it has to be cost effective. With the addition of looking at carbon capture and looking at hydrogen, you get that control of the system that others are going to be lacking. So it's a pretty exciting opportunity all the way around.
Are there any unique characteristics of hydrogen storage relative to NGL or any other product storage in the region that may limit the expansion or growth opportunity?
Paul? Well, it's certainly not the same as gas, but there is quite a bit of infrastructure today. There is pipeline infrastructure today. There is hydrogen storage today. And I had commented that at our spindletop facility, we will be looking at what it will take to convert 1 of those to hydrogen.
The initial assessment, there are no roadblocks to doing that. It would require investment to be able to do it because it's not the same gas. The molecules are not the same. If you look at the power plant itself, there would be some nominal investment required Because if you look at the heating value of hydrogen versus natural gas or the energy released upon combustion, it's not the same. Hydrogen is about a third of that for natural gas.
So your piping would need to be different. It would need to be sized different. The enclosure is different. But there's certainly not anything that we've seen unique about hydrogen that would be a showstopper to be able to move it forward to on a broader scale and use on a broader scale for us.
Appreciate it. Thank you.
Thanks, Ryan. Okay. I guess we're out of time for the business section of the program today. I really appreciate all of you taking the time to be with us today here in the bubble as we were able to, I think, put on a pretty solid program even though we didn't get the opportunity to interact in person. We're going to take a 5 minute break and then I hope you all hang around because we have a very timely and a very important discussion with Doctor.
Henry Louis Gates, who's going to be here. So I think it's well worth your time to stick around. So thank you all very much. We really appreciate your time.
Good afternoon. I'm Marcus Brown, Interviews Executive Vice President of General Counsel. First, let me thank you again Through the presentations and conversations today, we hope you have gained an understanding of our strategy for creating long term sustainable value for all of our stakeholders as we work to become the premier utility in our industry. These stakeholders include our customers, employees, communities and of course you, our owners. This year in particular, the global pandemic combined with the national focus on social justice has impacted each of these stakeholders in unique ways.
From our customers, we're working to keep their health, businesses and personal livelihoods on track To our employees, we have demonstrated tremendous flexibility and adaptability as we have adjusted to working differently. And to our communities, especially our communities of color, who have been disproportionately impacted by COVID-nineteen, while with the support of allies are also engaging in protests calling for justice and equality across all strata of our society. As I introduce our speaker of the day, our final speaker in particular, it's important that all of you understand why we asked Doctor. Henry Louis Gates, Jr. To join us.
At Entergy, we recognize that long term value creation by our company or any company is inextricably tied to meeting commitments to all of our stakeholders. And while companies work feverishly to develop new business strategies aimed at confronting social equity concerns, we also recognize that there is no consensus on the best way to do this. These social challenges are an increasing area of focus for investors as they have recognized the importance of how the S component of environmental, social and governance or ESG factor into long term value creation. Now we don't have all the answers, but we believe there are 2 components to any effective social equity strategy that companies must consider. 1st, there must be a commitment from leadership to honestly and openly address these issues.
We must walk the walk. Boards and executive teams must better reflect the rich diversity of the communities they serve. 2nd, leadership must then develop strategies that are grounded in some meaningful knowledge and understanding of the very people and circumstances they hope to impact. Several years ago, we developed a comprehensive diversity, inclusion and belonging strategy with the goal that we not only better reflect the rich diversity of the communities we serve, but also capitalize on that diversity as a competitive advantage, so that every employee has the resources, training and development and leadership support to do their very best work. And we have taken concrete steps to execute on that strategy.
Some examples include, we have created high school engineering and energy academies in Arkansas and Mississippi that provide a pathway for disadvantaged students to someday work in our company. These academies serve as talent incubators and make it more likely that these students will find their way into college and careers in energy. We're also creating pipeline opportunities for our engineers of color to enter our workforce as evidenced by our ongoing partnership with Historically Black Colleges and Universities. One example is our partnership with Southern University's Engineering School right here in Louisiana, where we provide funding for labs and educational equipment, student internships and faculty development. And for the past 2 decades, we have been focused on helping to close the wealth gap for black and brown families in our communities through such as the individual development accounts.
Now these IDAs, which have helped hundreds of families led predominantly by women of color, achieve the dream of homeownership, which remains a cornerstone for building generational wealth. Beyond these very important efforts, we recognize that you can't enhance the diversity profile of your workforce without doing the work. This is required to create a culture where employees feel like they belong. So they choose to stay and contribute to the success of your company. The hard work I'm talking about is having tough conversations about the issues that matter to our diverse employees.
We know that we can't move past those issues if we can't talk about them. With our employees this past spring, our executive team led an open discussion on race and equality in the wake of a nationwide protest for social justice. It was raw. It was difficult, but it was a necessary step to demonstrate our commitment to establishing the psychological safety for other employees to also speak their truth. We are also providing customized training to both our leaders and employees on unconscious bias and how to have meaningful but difficult conversations that we believe will help break down barriers and create stronger teams.
Now those of you who are familiar with Doctor. Gates know that much of his work has focused on creating cultural understanding and building bridges where there have been barriers. Doctor. Gates is the Alphonse Fletcher University Professor and Director of the Hutchings Center For African American Research at Harvard University. He is an Emmy Award winning filmmaker, cultural critic and journalist who has authored or co authored more than 20 books and created numerous documentaries, including Faces of America, African American Lives and Still I Rise, America Since MLK and perhaps its most celebrated and well known work Finding Your Roots is now in season number 6 on PBS.
Doctor. Gates holds a bachelor's degree in history from Yale University and a doctorate in English Literature from Clare College at the University of Cambridge. Now as we continue this dialogue on race and more importantly, our journey to create a more diverse and inclusive environment here at Entergy, we welcome Doctor. Gates to this conversation. Now we'll start this conversation with a short video from Doctor.
Gates' award winning documentary recently aired on PBS, Reconstruction: America After the Civil War, after which I will be joined on screen by Doctor.
Gates.
On the evening of June 17, 2015, a stranger walked into an historic black church in Charleston, South Carolina, known as Mother and Manna. He prayed with the Wednesday night Bible study group for almost an hour. Then he opened fire.
We have 9 victims and I do believe this was a hate crime.
Friends say the 21 year old high school dropout was a loner, an unabashed racist with a deep hatred for black people.
He just said, I have to do it. He said, You rape our women and you've taken over our country.
The massacre in Charleston touched off not only a debate over the Confederate flag, but it touched off a debate all over the country. How did we get here and why is this happening?
It was easy, I guess, to think of that as a singular horror. And it was convenient, I think, to think of it that way. Unless you really wanted to understand how this could happen. And then that meant that you had to get into the history.
Most of us know that our country fought a civil war in the 1860s. But less is known about what came afterward. The chaotic, exhilarating and ultimately devastating period known as Reconstruction.
If we're looking for
the roots of the tragedy at Mother Emanuel, this is where we have to start.
The Reconstruction period is one of extraordinary excitement. The time in America could finally become that land of freedom that it had promised to be since the very beginning.
Black people actually sat in the House of Representatives and the Senate. Poor whites and black people saw a common cause with one another.
You're seeing this opportunity and imagining that we'll only get better. And looking back, what we know is those black folks had no idea of the cliff that they were heading towards.
We do not come here begging for our rights. We come here clothed in the garb of American citizenship.
I think all his years in the pulpit made him a really good speaker in the House. He stood up to the white supremacists who were basically calling him inferior. And he said, look at me, I have 2 eyes, I have 2 ears, I have 2 hands, I have 2 feet. How are we different when it comes to our manhood?
I was amazed when I began to read the speeches of Black Congressmen in that period. I mean, here are people who are arguing about what the laws of the nation will provide in terms of human rights and have sophisticated understanding of the underlying principles that make these freedoms necessary in a democratic society. The level of discourse was so far above the level of discourse in Congress today. It was shocking.
One of the most tragic aspects of Reconstruction is that the more African Americans achieve, the more they put their lives at risk.
I could hear the noise of the horses.
They coul Klux in my house.
They had on white gowns, masks on their faces.
75 men. They were
Ku Klux. They tore
the clothes off. I was blindfolded. They whipped
me. They whipped me.
They whipped me.
They put a rope around my neck to hang
in. Southern Democrats used violence and terror tactics to disrupt Republican control and plot their return to power. They saw themselves as the redeemers of their states.
Violence is efficient. It's easy. It's fast. And you can often do it under the cover of night. Klan attacks become so pervasive because that's how widespread the fear of Black Enfranchisement is.
The Klan is actually committing atrocities against everyone. They're attacking Freedmen and White Southerners who were sympathetic to the Union cause and to the Republican Party.
To their eyes, emancipation was wrong. They are washing the South with blood to redeem it.
This isn't simply a question of trying to return to earlier way of life. This is actually a political counterrevolution.
W. E. B. Du Bois summarized Reconstruction in one sentence. The slave went free, stood a brief moment in the sun and then moved back again towards slavery.
Yet African Americans had tasted freedom. They had begun to acquire land, build schools and create social institutions of their own. And though the tide was turning, they refused to give up on the promise of Reconstruction. The reputation of the South commenced almost as soon as the Civil War was over with the publication of a book called The Lost Cause. The Lost Cause argued that the intentions of the Confederacy had been righteous and admirable in spite of its military defeat.
30 years after the war, this idea took on a new life. The Lost Cause became the ideological justification for white supremacy.
Get to the 1890s. The loss cause became not about loss at all. It became a new kind of narrative about the victory over reconstruction.
There's a kind of entire mythology associated with what reconstruction was attempting to do that it involved the subordination of the white population by the black population, that the Reconstruction legislators were ignorant, venal or worse, predatory.
The Dunning School, for example, named for a Columbia University professor who was hell bent on proving the point that black people were incapable of self governance and that reconstruction had been a big failure and a big fiasco.
It was all wrong. So it becomes this way of justifying and making a case for why you need Jim Crow.
The Jim Crow system isn't just a series of laws. It's a set of beliefs, philosophies, attitudes and even stone monuments.
Confederate monuments were only one form of lost cause propaganda that spread across the South in the 1890s. Even more important was retelling and revising the story of slavery itself.
You get a proliferation now of images of slavery, which are more nostalgic. The lithograph printmakers publishing images of the old plantation with happy children, black children playing and an older guy playing a banjo.
There's an incredible romantic idea that during the Grand Old South, when African Americans were slaves, they were prosperous, they were happy, they were joyful, they had everything provided for them. In reality, it's a story that's very much grounded in rape and torture and exploitation, but became a story of familial love.
The happy slave, the bumbling simpleton,
the dangerous predator. Racist
stereotypes of African Americans came in all shapes and sizes and in vivid color. Newly developed mass printing techniques meant that an unprecedented number of demeaning images of black people could saturate American popular culture.
The architects of Jim Crow used popular culture and in cartoons all over magazines.
By 1915, with propaganda like the birth of the nation now accepted as historical fact, black people had little hope for equal rights. Their moment in the sun had long passed and the shadows were growing longer. But they never abandoned the hope that burned brightly in the earliest years of their emancipation.
If you say Reconstruction was an attempt to remake American society on the basis of equality, well, it didn't succeed in the long term. But it's very important to look at the agency of slaves, men, women, who seize the opportunity presented by the Civil War to push forward their own aspirations.
It's African Americans and radical whites who imagine a different sort of world, who make the high minded arguments for citizenship, for civil rights, for democracy.
People like Ida B. Wells, W. E. B. Du Bois, Frederick Douglass knew that they were talented and fully the equal of whites.
And they just could not accept this sort of second class citizenship. And each generation would kind of come to this conclusion again and again, and they would keep on fighting.
I think once we've tasted freedom, once we've experienced freedom, once we've been able to see our agency actually create schools and laws, it drives a constant willingness to continue to sacrifice, to continue to agitate, to continue to demand that which you have experienced. When we look around the world today, we see dynamics and elements of inequality, and we need to have an explanation for it. If you don't know the history of Reconstruction, if you don't know what was tried and then dismantled, then your inference about why we still have these problems is it's a problem with the people. It's a problem with their work ethic, their family structure, their values rather than it's a problem of an unfinished revolution, which Reconstruction was.
If we define reconstruction as the process by which our country tried to come to terms with the abolition of slavery, you might say it never ended, because we Americans are still grappling with what it means to be a truly multiracial society
Welcome, Doctor. Gates. Pleasure to have you. Look, we just watched the video clip, and let me just ask you the first question. You've done a lot of documentaries, but why did you decide to focus on the 12 years of post
Civil War Reconstruction right now,
that period from 18/65 to 18/77?
Marcus, that's a great question. Reconstruction was a period following the Civil War, as you said, between 18/65/18/77 when black people experienced more freedom and rights than at any other point in American history. It was Abraham Lincoln's new birth of freedom, America's 2nd founding, 12 years of black freedom followed by an alt right rollback, that sound familiar? I wanted to help people understand how 8 years of our first black president could be followed by the rise of white supremacy and an alt right rollback. So I wanted to go back in history and find an analogy.
And most schools don't teach about Reconstruction. They skip from Lee's surrender at Appomattox all the way to Rosa Parks, Doctor. King and the Civil Rights Movement, leaving lots of students wondering why if Abraham Lincoln freed the slaves, why do we need a civil rights movement? So I wanted to go back and explore this period. And the period as W.
E. B. Du Bois, you know, the greatest black intellectual of all, said and I quote in the film, the period was saw the slave going free, standing a brief moment in the sun and then moving back again towards slavery. So understanding Reconstruction and its rollback is pivotal to understanding the history of race relations in America today. There were these remarkable brilliant highlights, the passage of the 13th, the 14th and the 15th Amendment.
The 13th Amendment, and we all know from Ava DuVernay's film, the 13th Amendment is what finally abolished slavery. It wasn't emancipation proclamation. It was the 13th Amendment. The 14th Amendment established birthright citizenship. Yes, and that was 18/68.
You ever wonder there are only 33 nations that have birthright citizenship. You ever wonder why America has because it's the only way they could figure out how to make our formerly enslaved ancestors citizens. So if you were born on this soil, then you became a citizen. And the 14th Amendment also established due process and equal protection of the laws. And then finally, the Fifteenth Amendment ratified in 18/70 gave black men the right to vote.
But here is the curious thing. The Reconstruction Act of 1867 gained formerly enslaved black men the right to vote in the former Confederacy. And so I think of the summer of 1867 as the first freedom summer when in 10 of the 11 Confederate States, Black men got the right to vote. And Marcus, they registered to vote like crazy 80% and I want everybody to listen to this statistic. 80% of all eligible black men in the former Confederacy, now these are people who by and large were slaves, 95% were illiterate because it was illegal to teach our ancestors who were enslaved to read and write.
They registered to vote in the summer of 18/67. And guess what? In the general election of 18/68, they voted. Ulysses S. Grant won the presidency overwhelmingly in the electoral comments, but he only won the popular vote by 300,000 votes, 500,000 black men cast their ballots for Ulysses S.
Grant and black men had elected a president. And the same thing happened in 18/72. And we tend to forget how black the South was. South Carolina, Mississippi and Louisiana were majority black states. And I'm reminding people listening from Louisiana, Louisiana was a majority black state and Florida, Alabama and Georgia were almost majority black states.
And in this period, black people elected 16 Congressmen, including 2 senators and 2,000 black men were elected to public office during the whole period of reconstruction. 2000, so what happened? All of that van was wiped out. Starting in there was a massive pushback against all this black freedom. There were 8 major massacres between 18 the end of the Civil War in 18/76 in Memphis, New Orleans, Camilla, Colfax, Coshata, Vicksburg, Hamburg and Meridian.
And remember, cotton remained the number one export crop in the United States through the 1930s. Just because you ended slavery, somebody still hasn't picked that cotton, right? So they reinstituted a new form of slavery through sharecropping and through vagrancy laws, which led to idle black men being put on chain gangs. And then starting in 18/90, something called the Mississippi Plan was instituted. Each of the former Confederate States at State Constitutional Convention.
Now remember, you have the 13th, 14th to 15th Amendment and you can't just throw out a constitutional amendment. But with the new state constitution, you could go around or circumvent the rights guaranteed to black people. And you want to know how effective this was? It particularly was designed to take away the right of black men to vote. In 18/98 in the state of Louisiana, there were 130,000 black men who were eligible registered to vote.
After the Louisiana State Constitution by 19 04 Marcus, That number had been reduced precisely to 1342. The principal manifestation of the rollback of Reconstruction was voter suppression. His other manifestation was the creation of the Lost Cause mythology and the erection of all those Confederate statues, which Mitchell Andrew risked his career on taking down. And there was this woman who was the culture, historian general of the United Daughters of the Confederacy, her name was Mildred Lewis Rutherford. And she published a textbook called The Measuring Rhyme.
She said that all the libraries in America and all the teachers with guidelines about which textbooks that they could use in their classes or buy for their libraries, recounting the history of the Civil War or the history of Reconstruction. And this is what she said, I'm not quoting. It says, reject a book that says the South fought the Civil War to hold on to its slaves. Reject the book that speaks of the slaveholder of the South is cruel and unjust. Reject the book that glorifies Abraham Lincoln.
Her common core was the lost cause and that led to the construction of so many of the Confederate monuments that we see today. So the rollback of Reconstruction lasted far longer than Reconstruction itself and it continues to this day. Today's rollback was part of the reaction to the election of Barack Obama as our 1st Black President. There is no doubt about that. His 8 years in the White House stirred up massive racial resentment as we saw the Donald Trump's campaign and presidency, which capitalized on racial fear and manipulating the tropes of racism.
And this is why the history of Reconstruction matters, because the problems that emerged during Reconstruction have never been resolved in this country. So now it's time to change the narrative. We made this series to show that we could get through the nightmare of the rollback of reconstruction through the imposition of Jim Crow, which was the low point in the history of American race relations, then we could get through the new surge of white supremacist rhetoric, birtherism, the attack on affirmative action, which got me into Yale in 1969 and many of the people of color and women listening to us talk today have been enabled to take their position because of affirmative action. And that attack on affirmative action is important for us to defend against gerrymandering and voter suppression, xenophobia and anti immigrant feeling that are manifesting itself throughout our country today. This represents the new low point in American race relations and we have to fight that.
We cannot go back to the collapse of Reconstruction, the rise of white supremacy and the rise of Jim Crow. History repeats itself, Marcus, but only if we let. Only if we let.
Doctor. Gates, closing on a comment that history repeats itself leads me to a question. You're a historian and yet when you hear people talk about the current social justice protests, the things that are going on in society, they talk about it in terms of this being a tipping point, this being an opportunity where things will likely get likely be different. Do you see this current moment as a tipping point or how would you characterize where we are right now?
Well, it's a certain inflection point, but I don't believe that systemic racism, which stems from structural inequality that we've inherited from slavery and Jim Crow can just disappear overnight because of the horrors that we're feeling motivated by the terrible murder of George Floyd. I think it's going to take a systematic systemic approach and I think that you and your colleagues in the business world understand that. You cannot just snap your fingers and get rid of 100 years of racism. Look, you remember when Barack was elected, people were talking about the end of racism, the end of race. What happened to that narrative, man?
That all came back. And I think that we have to understand that it's going to take us all working together across racial boundaries joining hands to fight this rollback in rights. I think that we have to raise the minimum wage so that every American can have a decent standard of living and a livable income. I think we need an intense anti racist training for the police and that we have to develop intimate community relations with the police. I think that we should increase training in de escalation and communication.
And I think that we should hold the police accountable to the neighborhoods that they work in. I think that every American should have affordable and available healthcare, as President Obama clearly understood, regardless of their income. This should be a basic human right. I think the job training should be part of our continuing educational system available to everyone who seeks it and so should financial literacy. You don't did Dana Owens, Queen Leticia's family tree on Finding Your Roots.
Her father owned the business. You know what he taught him? 1 third, 1 third, 1 third. If you get a dollar, you take $0.33 that goes to Uncle Sam, dollars 0.33 in savings, dollars 0.33 you can buy bubblegum or Snickers. That kind of financial literacy, that simple principle, think about all the athletes who if they just did what they're what they're what they're will be wealthy the rest of their lives and instead end up bankrupt.
And I think that our churches in the Black community especially should be sites for the teaching of computer skills, black history and financial literacy. I think it's crucial to our future as a people. I think we have to defend affirmative action. I alluded to this earlier. Why do I say that I'm a child of affirmative action?
I got to Yale in September 1969. I was one of 96 black men and women to go to Yale. There were a lot of St. Aug people, a lot of Sheila Jackson Lee was in my class, Ben Carson was in my class. My friends joke, Ben, I like Ben and I have friends across the aisle.
I want to say that. I don't choose my friends by politics, but my friends joke that I knew Ben before he breathed all that ether from all those operations. But there were 96 of us that hit Yale's campus in September of 1969. And how many black men graduated 3 years before? 6 men, only 6.
What was there, a genetic blip in the race and all of a sudden there were dainty sparked black people in 1969 who hadn't existed before, affirmative action. I nobody has benefited from affirmative action more than I. So this is one black man who's going to go to his grave as an ardent and passionate defender of affirmative action. And as I said, white women have benefited from affirmative action even more than people of color. So I think it's important, especially as we mourn the passage of the notorious RBG that we defend women's rights and the rights of people in color.
But the most important thing, Marcus, is that we need a massive revolution in the way that we fund public education. We need to bust the dollars from rich school districts to the poor school districts so that the amount of money that we spend in this country per child per school district is exactly the same. I'm sitting here, you asked me where I was, I'm in my house in Harvard Square. You all know my day job. I teach at Harvard, just right, I just point to it right up the street.
And we have fabulous public schools here. You go to Princeton, you go to Palo Alto, fabulous public schools. I don't know the names of the neighborhoods in New Orleans. But the amount of money spent per child here should be exactly the same as spent in the poorest districts in New Orleans, the poorest districts in New York or Brooklyn or in Los Angeles. Why should people be discriminated against in, because they're poor in terms of access to an inferior education?
The public schools, that is the key to democracy. That is the key to social mobility in this country. That's how immigrants got off the boat, didn't speak English. That's how they went from the no class, the working class and the working class to the middle class. And we have to fight to make our public schools better.
And I think that we need to provide hardship pay for talented motivated teachers to work in the worst performing school districts because education is the final frontier in dismantling racism, integrating the American mind and fighting the rise of white supremacy. But the bottom line is that we have to crush any time white supremacy rears its ugly head. We, all of us who love democracy and freedom and the principles upon which this country were founded have to join hands and fight just like we have to fight antisemitism. We have to fight homophobia, Islamophobia. These are un American attitudes.
And we have to make this country live up to the noble principles upon which it was founded and we can only do that across the color line in interracial coalitions.
Doctor. Gates, there's so much in what you just said to unpack, but I want to go to a singular group right now because a lot of what you talked about focuses on what we can do in our communities, what we can do across society. And yet you talk to a lot of big corporations. I know we've had conversations about some of the people who have asked you to come in, particularly recently. And so when you think about our focus as big companies on sustainability in the communities we serve, but also on our employees, what kinds of considerations should we have as companies and how we might impact some of the things that you talked about that need to be impacted?
I mean, what is our role or some things we can consider?
Well, I think you've been, as I understand it from your remarks, a good beginning with implicit bias training. You indicated that that was being undertaken, right? Because we all have unconscious biases, implicit biases, biases and we need to be made aware of those so that we could filter them out when we're making actual decisions in the corporate world. But Marcus, when I think about the key to my success, the key to my success in the academy, in academia, which is a big corporation, our 40,000,000,000 a year corporation, I mean it's endowment, has been mentorship. Knowing how to reach out and secure mentorship and having people in the know, people in responsible positions mentor me.
Part of it is, I think having the wherewithal, the courage to say, I don't know, I need help. Would you help to train me? Being willing, when class starts, I'd say, well, Marcus, did you read the assignment? And you'd dodge your head, I know you hadn't read that book.
You know me too well. It's a matter
of I
think that it takes a certain point of self confidence if particularly if you're a woman or you're a person of color in a corporate setting to admit, I don't know what was just said in this room. I don't understand the concepts that you all are talking about. And I think that we have to have a mechanism where people can speak freely, be trained, seek out mentorship, understand this is how you go about comporting yourself. It goes from how you dress, how you speak, how you understand a problem. No one is born knowing how to do all these things.
We all have to be trained. And many of us come from underprivileged backgrounds where we didn't go to Harvard Business School or Stanford Business School. We need to be trained on the job. And I think every corporation should have a mentorship program for all people who want it, but particularly for people from disadvantaged groups and minorities. Nothing is more important than mentorship in terms of diversifying the corporate structure and your internal marketplace really.
When I think about all of what you've done in your career, but also I think about what's going on today. I mean, there's a lot going on in our society. There are a new wave of protest today following some decisions that were made into Kentucky, but we've had a long, long summer. As a historian, are you optimistic about our ability to effectively make progress on systemic racism or are you pessimistic? Where are you in terms of how you view where we are now?
Well, I'm constitutionally I have to confess this, constitutionally I'm an optimist and I'm a child of hope. My efforts now and I hope all of our efforts will be on getting people to vote. I think the most important thing that can happen between now and the beginning of November is voting, voting, voting. I think that is the lesson of the rise and fall of reconstruction. As you can see with those terrific numbers in Louisiana from 130,000 to 1342.
And we as Americans have to fight any manifestation of voter suppression, any attempt to suppress our sacred right to vote, any attempt to keep any segment of our population for voting. That's what President Obama warned us about his eulogy for my friend, Congressman John Lewis, from closing polling stations, to passing voter ID laws, to messing with the Postal Service. We as Americans can't let this happen. Our 4 mothers and fathers created the greatest donation in the history of this planet. And there are forces that are trying to tear it apart, trying to tear its principles apart.
And we can't let that happen. Voting is sacred. It's the key and the catalyst to everything else that's fundamental that makes America fundamentally the special place that it is and anyone who tampered with our right to vote is being un American. So to answer your question, as long as we protect our fellow citizens' right to vote, I'm optimistic about the future of this country. But if we allow the right to vote to be tampered with, then I am pessimistic because we've had far too many people, black and white, give their lives for the right to vote.
3,700 black men and women were lynched, Marcus, lynched after they took away the right to vote with those state constitutional conventions. We can't let them die in vain. The right to vote for women and men is what makes America the special place that it is and we have to do all that we can to protect that right.
Doctor. Gates, we could go on all day and I want to thank you for taking the time to have a conversation with us today. It's been thought provoking, but more importantly, I think it feeds into what we believe is that you can't create solutions for some of the problems we have without understanding the history that all this is based on. So thank you again.
Thank you, my brother. And thanks to everyone who listened and I hope to be in New Orleans in person when this COVID is over, so we can hang out.
We'd love to have you. We can have you now. We will get socially distance.
Okay. Well, you got a deal, but thanks for your hospitality. I appreciate it.
That concludes our Entergy Analyst Day. I'd like to say thank you to all of you all who took the time to participate on behalf of our management team, our 13,650 employees who are working every day to make us the premier utility. Thank you again.