Executive Summary / Key Takeaways

• Entergy Mississippi, LLC ($EMP) is demonstrating robust financial performance, with significant net income and revenue growth in the third quarter and year-to-date 2025, driven by increased industrial demand, favorable weather, and strategic rate adjustments.
• The company is embarking on an ambitious capital investment plan of $5.50 billion through 2029, focused on modernizing its generation portfolio with advanced natural gas facilities enabled for future carbon capture and hydrogen co-firing, alongside critical transmission and distribution upgrades.
• A key strategic differentiator for Entergy Mississippi is its proactive engagement with data processing centers, leveraging state legislation for interim rate adjustments to recover associated infrastructure costs, signaling a forward-looking approach to serving high-growth industrial load.
• Entergy Mississippi's technological roadmap emphasizes future-proof generation, with the Traceview and Vicksburg Advanced Power Stations designed for hydrogen co-firing and carbon capture, positioning the company for long-term sustainability and operational flexibility.
• While maintaining a stable regional market position, Entergy Mississippi faces competitive pressures from larger, more diversified utilities; its localized regulatory expertise and targeted infrastructure investments are crucial for sustaining its competitive edge and driving future profitability.

A Utility's Evolution: Powering Mississippi's Future

Entergy Mississippi, LLC, a vital component of the broader Entergy Corporation , operates as an integrated utility, responsible for the generation, transmission, distribution, and sale of electric power across significant portions of Mississippi. The company's journey reflects a continuous adaptation to evolving energy demands and regulatory landscapes, shaping its current strategic focus on modernization and sustainable growth. This commitment is particularly evident in its proactive response to the burgeoning demand from large industrial customers, notably in the technology and primary metals sectors, which are increasingly seeking reliable and sustainable power solutions.

The company's historical trajectory has been marked by strategic adjustments to its power supply portfolio and rate mechanisms. A significant development occurred in January 2024, when state legislation empowered Entergy Mississippi to implement interim rate adjustments. These adjustments are designed to recover non-fuel related annual ownership costs for facilities directly or indirectly serving data processing centers, highlighting a forward-thinking approach to accommodate new, high-load industrial customers. This regulatory flexibility is a critical enabler for Entergy Mississippi's growth strategy, allowing it to invest confidently in the infrastructure required to support economic development within its service territory.

In a notable shift in its power generation mix, Entergy Mississippi increased its entitlement to capacity and energy from the Grand Gulf nuclear plant. Effective October 1, 2025, its share under the Unit Power Sales Agreement rose to 56.40%, following the removal of Entergy Louisiana as a party. This increased allocation of nuclear power underscores Entergy Mississippi's commitment to a diversified and increasingly carbon-free energy supply, a strategic move that enhances reliability and aligns with broader decarbonization goals.

Technological Edge: Building the Grid of Tomorrow

Entergy Mississippi's investment thesis is significantly bolstered by its strategic embrace of advanced generation technologies, designed not only to meet current demand but also to future-proof its energy infrastructure. The company is investing in state-of-the-art natural gas-fired power stations that incorporate critical differentiators for long-term sustainability.

The planned Traceview Advanced Power Station, a 754 MW combined cycle combustion turbine facility in Ridgeland, Mississippi, exemplifies this forward-thinking approach. Expected to cost in excess of $1 billion and be in service by 2029, this facility will be primarily natural gas-powered but crucially "enabled for future carbon capture and storage and for hydrogen co-firing optionality." Similarly, the Vicksburg Advanced Power Station, a 754 MW combined-cycle facility announced in October 2025, shares these characteristics, with an expected in-service date of 2028 and a cost exceeding $1 billion.

These technological choices offer tangible benefits. The "hydrogen co-firing optionality" provides a pathway to significantly reduce carbon emissions as hydrogen production scales and becomes more economically viable, offering a cleaner fuel source for power generation. The "carbon capture and storage" capability, while not carbon-free, allows for the capture of CO2 emissions from natural gas combustion, preventing their release into the atmosphere. This dual-pronged technological approach provides Entergy Mississippi with considerable operational flexibility and a strategic advantage in a rapidly evolving energy landscape, where environmental regulations and decarbonization mandates are becoming increasingly stringent. The stated goal is to modernize, decarbonize, expand, and diversify the utility's generation portfolio, directly contributing to its commitment to achieve net-zero greenhouse gas emissions by 2050.

The "so what" for investors is clear: these investments position Entergy Mississippi at the forefront of utility innovation, mitigating future regulatory risks associated with carbon emissions and potentially unlocking new revenue streams through the provision of cleaner energy. The ability to adapt to different fuel sources (natural gas, hydrogen) and manage emissions (carbon capture) provides a robust competitive moat, enhancing the company's long-term value proposition.

Financial Performance and Operational Momentum

Entergy Mississippi has demonstrated solid financial performance, reflecting the effectiveness of its strategic initiatives and operational execution. For the third quarter of 2025, the company reported net income of $122.04 million, a significant increase of $33.70 million compared to the same period in 2024. This growth was primarily fueled by $15 million in liquidated damages from a counterparty's termination of a purchased power agreement, higher other income, increased volume due to favorable weather, and higher retail electric prices.

Looking at the nine months ended September 30, 2025, net income rose to $253.18 million, an increase of $57.80 million over the prior year. This sustained growth was largely attributable to the same factors, with higher retail electric prices and increased industrial usage playing a pivotal role. Electric operating revenues for the third quarter of 2025 reached $577.13 million, up from $508.17 million in the third quarter of 2024. Year-to-date, electric operating revenues climbed to $1.49 billion, compared to $1.37 billion in the corresponding period of 2024.

A key operational highlight is the robust growth in industrial electric usage, which surged by 15% in the third quarter of 2025 and 10% for the nine months ended September 30, 2025. This expansion was driven by increased demand from large industrial customers, particularly in the technology and primary metals industries, as well as from small industrial customers. This trend underscores the economic vitality of Entergy Mississippi's service area and the increasing reliance of these sectors on a stable and evolving power supply.

However, operational expenses also saw an increase. Other operation and maintenance expenses rose in both the third quarter and nine months ended September 30, 2025, primarily due to higher vegetation maintenance costs, a greater scope of work in non-nuclear generation, and increased compensation and benefits. A regulatory charge of $21 million was recorded in the first quarter of 2025 to adjust the grid modernization over/under recovery deferral balance, reflecting ongoing investments in infrastructure. Interest expense also increased, largely due to the issuance of $600 million of 5.80 Series mortgage bonds in March 2025, a necessary step to fund the company's significant capital expenditure program.

Capital Deployment and Liquidity

Entergy Mississippi is poised for substantial capital deployment, with an ambitious investment plan totaling approximately $5.50 billion from 2026 through 2029. This includes projected investments of $2.20 billion in 2026, $1.70 billion in 2027, $0.90 billion in 2028, and $0.70 billion in 2029. These funds are allocated to modernize, decarbonize, expand, and diversify the company's generation portfolio, alongside crucial upgrades to its distribution and transmission systems to enhance reliability, resilience, and customer experience.

The company's liquidity position remains sound, supported by an increase in net cash flow provided by operating activities, which rose by $111.10 million for the nine months ended September 30, 2025. This was primarily driven by $108.40 million in advance payments related to customer agreements, higher customer collections (including $25 million of deferred revenue), and the $15 million liquidated damages payment. While net cash flow used in investing activities increased by $639.70 million, largely due to the significant non-nuclear generation construction expenditures, this outflow is a direct reflection of the company's aggressive investment strategy in new power stations.

Financing activities provided a substantial boost, with net cash flow increasing by $671.10 million for the nine months ended September 30, 2025. This was primarily due to the issuance of $600 million of 5.80 Series mortgage bonds in March 2025, an increase of $93.80 million in net customer advances for construction, and a $62.50 million capital contribution from Entergy Corporation (ETR). The company's debt to capital ratio increased to 52.80% as of September 30, 2025, from 50.40% at December 31, 2024, reflecting the net issuance of long-term debt to fund these critical investments. Entergy Mississippi maintains a $300 million credit facility expiring in June 2030, with no cash borrowings outstanding, providing additional financial flexibility.

Competitive Landscape and Strategic Positioning

Entergy Mississippi operates within a competitive utility landscape, primarily contending with other large, diversified utility holding companies in the southeastern United States. Key competitors include Southern Company (SO), Duke Energy (DUK), and American Electric Power (AEP). While these rivals often boast greater scale and broader geographic footprints, Entergy Mississippi carves out its competitive niche through localized expertise, strong regulatory relationships within Mississippi, and targeted infrastructure development.

Entergy Mississippi's localized approach, particularly its ability to secure regulatory approvals for interim rate adjustments related to data processing centers, provides a distinct advantage in attracting and serving high-growth industrial customers. This contrasts with the broader operational scope of companies like Southern Company, which, while benefiting from economies of scale, may face more complex regulatory environments across multiple states. Entergy Mississippi's focus on integrating advanced technologies like hydrogen co-firing and carbon capture into its new generation projects also positions it favorably against competitors, many of whom are also pursuing decarbonization but may have different technological roadmaps or timelines.

However, Entergy Mississippi's regional focus inherently limits its scale compared to national players. This can translate to higher operating costs and potentially slower innovation cycles in certain areas where larger competitors can spread research and development expenses across a wider asset base. For instance, while Entergy Mississippi's solar integration efforts are notable regionally, a company like Duke Energy, with its extensive R&D investments, might achieve faster advancements in broader renewable energy solutions.

The company's customer and supplier dynamics are also critical. The increasing demand from data centers presents a significant opportunity, but also a challenge to ensure sufficient, reliable, and increasingly clean power. Entergy Mississippi's strategic investments in advanced power stations directly address this, aiming to capture market share in this high-growth segment. Supplier dependencies, particularly for natural gas, expose the company to commodity price volatility, a risk managed through hedging strategies and regulatory cost recovery mechanisms.

Risks and Outlook

While Entergy Mississippi's strategic direction is compelling, investors must consider several key risks. Regulatory constraints and requirements are paramount, as changes in state or federal policies could impact cost recovery, project timelines, and profitability. Governmental actions, including shifts in international trade policy and tariffs, could lead to increased costs for capital investments and operation and maintenance expenses, as well as supply chain disruptions. Environmental regulations, particularly those related to emissions, could necessitate further capital expenditures and operational adjustments.

Despite these risks, Entergy Mississippi's outlook remains positive, underpinned by its substantial capital investment plan and strategic focus on serving growing industrial demand. The planned Traceview and Vicksburg Advanced Power Stations represent a significant step towards modernizing its generation fleet with future-ready technologies. The company's ability to secure regulatory approval for interim rate adjustments for data centers demonstrates a supportive regulatory environment for growth. Entergy Mississippi's commitment to decarbonization, coupled with its proactive investment in advanced generation and grid resilience, positions it to capitalize on evolving energy trends and maintain its role as a reliable power provider in Mississippi.

Conclusion

Entergy Mississippi, LLC is charting a course for sustained growth and enhanced value creation, firmly rooted in its strategic capital investments and a forward-looking approach to energy generation. The company's recent financial performance, marked by increased net income and robust industrial demand, underscores its operational effectiveness and the economic vibrancy of its service territory. At the core of its investment thesis lies a commitment to technological leadership, exemplified by the development of advanced natural gas power stations equipped for future hydrogen co-firing and carbon capture. These initiatives not only address the imperative for decarbonization but also provide a crucial competitive advantage in an industry increasingly focused on sustainable and flexible energy solutions.

While facing inherent competitive dynamics with larger utility players, Entergy Mississippi's strength lies in its deep regional expertise and its ability to forge strong regulatory partnerships that facilitate necessary infrastructure development. The substantial $5.50 billion capital expenditure plan through 2029, targeting generation modernization, grid resilience, and renewables expansion, signals a clear path for future growth. For discerning investors, Entergy Mississippi represents a compelling opportunity to participate in the evolution of a regulated utility that is strategically positioning itself for long-term success by embracing innovation, meeting critical industrial demand, and advancing towards a cleaner energy future.