Entergy Louisiana Lines Up Investors To Build Its Waterford 6 Gas Plant, Up To $1.875 Billion, Off Its Books
Under a lease signed in October, investors fund construction, but Entergy Louisiana must buy the plant at their cost if regulators reject it.
Entergy Louisiana has put construction of its Waterford 6 power plant into the hands of outside investors, who will spend up to $1.875 billion on the project under a build-to-suit lease signed in October, according to Entergy's quarterly report filed Monday. The utility will not carry the unfinished plant or a matching liability on its balance sheet, but it stays on the hook if Louisiana regulators say no.
How the lease works
The investors bought the in-process project from Entergy Louisiana for $167.5 million, and the $1.875 billion ceiling includes that initial price. Entergy Louisiana serves as construction agent and builds the plant as it designed it.
Because the utility does not control the project under construction, the 10-Q says it will recognize neither the asset nor a liability during the build. Rent is priced off the Secured Overnight Financing Rate, with a spread that moves with Entergy Louisiana's credit rating, and it is charged on everything the investors have spent, carrying costs included.
The prior quarter's filing had only floated a third-party financing approach for Waterford 6.
A buyout if regulators refuse
If the Louisiana Public Service Commission (LPSC) rejects the project, or certain other events outside Entergy Louisiana's control occur, either side can terminate. Entergy Louisiana would then have to buy the unfinished plant at the investors' costs to date, including carrying costs.
If Entergy Louisiana defaults as construction agent, the investors could replace it, accelerate the lease balance, or force a sale to a third party, among other options.
The initial term runs seven years from closing, which is roughly four years past when the plant is expected to be ready to sync with the grid. Entergy Louisiana can buy the plant at any time at the investors' total cost plus fees and carrying charges. A purchase within two years of the lease starting requires a secured note to the investors, due at the end of the term and prepayable after two years.
At term's end, it must renew for five more years with the investors' unanimous consent, buy the plant, or sell it for them and owe or be owed any gap between their cost and the sale price.
Capital plan behind it
Entergy, which generates, transmits and distributes electricity through utilities in Arkansas, Louisiana, Mississippi and Texas, reported third-quarter earnings of $1.98 per share, up from $1.53 a year earlier, and narrowed its 2026 adjusted guidance to $4.35 to $4.45 per share.
The filing lays out planned 2027 construction and capital investment of $17.24 billion, excluding spending funded by customer advances, falling to $16.37 billion in 2028.
Two dates stand out. The prior filing put the Waterford 6 plant's application cost at about $2,027 million. Separately, Entergy must elect during the fourth quarter whether to buy the Votaw Solar assets or waive the right and drop the project from the grid operator's interconnection queue.
The LPSC's decision on Waterford 6 is expected in the first quarter of 2027, which determines whether the buyout clause is ever triggered.
Sources
- 10-Q Filing — Entergy Corp. (ETR) — SEC EDGAR
- 10-Q Filing — Entergy Corp. (ETR), Q2 FY2026 filed 2026-07-31 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, earningsrelease3q26_ex991.htm) — Entergy Corp., filed 2026-11-02 — SEC EDGAR
- Entergy: Q3 Earnings Snapshot — Associated Press
- Entergy: Q3 Earnings Snapshot – WTOP News — wtop.com
- Entergy Q3 2026 Earnings Call Transcript — benzinga.com
- Entergy (ETR) Beats Q3 Earnings and Revenue Estimates — Yahoo Finance
- Entergy reports third quarter 2026 financial results – Company Announcement - FT.com — Financial Times
