Moody's Investors Service Issues Statement on Louisiana Local Government Environmental Facilities and Community Development Authority

Moody's Investors Service announced that the issuance of Louisiana Local Government Environmental Facilities and Community Development Authority - System Restoration Bonds (Louisiana Utilities Restoration Corporation Project/ELL), Series 2023, would not result in a reduction, placement on review for possible downgrade or withdrawal of Moody's current ratings of the LCDA system restoration bonds. The principal methodology used in reaching this conclusion was the "Utility Cost Recovery Charge Securitizations Methodology" published in December 2022. The system restoration charges (SRCs) imposed by Louisiana Utilities Restoration Corporation (LURC) will be assessed on the same customers as the SRCs currently imposed in conjunction with the outstanding series of system restoration bonds.

Entergy Louisiana, LLC (Entergy Louisiana) expects the initial SRC for the series 2023 bonds to represent approximately 4% of the total electricity bill received by a typical residential customer in Entergy Louisiana's service territory. When combined with the SRCs related to the outstanding series of system restoration bonds that include a similar charge, Entergy Louisiana expects the cumulative SRCs to represent approximately 10% of a typical residential customer's electricity bill in its service territory. The combined charge is higher than the initial securitization charge of most other UCRC securitizations, however, the charge is still relatively low. Moody's has determined that the issuance of the series 2023 bonds will not result in the downgrade or withdrawal of the ratings currently assigned to the outstanding series of system restoration bonds.

Key Takeaways:

The issuance of Louisiana Local Government Environmental Facilities and Community Development Authority - System Restoration Bonds (Louisiana Utilities Restoration Corporation Project/ELL), Series 2023, will not result in a reduction, placement on review for possible downgrade or withdrawal of Moody's current ratings of the LCDA system restoration bonds.
The system restoration charges (SRCs) imposed by Louisiana Utilities Restoration Corporation (LURC) will be assessed on the same customers as the SRCs currently imposed in conjunction with the outstanding series of system restoration bonds.
Entergy Louisiana, LLC (Entergy Louisiana) expects the initial SRC for the series 2023 bonds to represent approximately 4% of the total electricity bill received by a typical residential customer in Entergy Louisiana's service territory.
The cumulative SRCs are expected to represent approximately 10% of a typical residential customer's electricity bill in Entergy Louisiana's service territory.
The combined charge is higher than the initial securitization charge of most other UCRC securitizations, however, the charge is still relatively low.
The charge is expected to decline over time as debt obligations are paid down according to the respective sinking fund schedules.

Statistics:

4%: The expected initial SRC for the series 2023 bonds as a percentage of the total electricity bill received by a typical residential customer in Entergy Louisiana's service territory.
10%: The expected cumulative SRCs as a percentage of a typical residential customer's electricity bill in Entergy Louisiana's service territory.
December 2022: The publication date of the "Utility Cost Recovery Charge Securitizations Methodology" used in reaching this conclusion.

Sources:

Moody's Investors Service, Utility Cost Recovery Charge Securitizations Methodology, published in December 2022.
Moody's Investors Service, "Louisiana Local Government Environmental Facilities and Community Development Authority - System Restoration Bonds" news release.