Leases

12 Months Ended

Dec. 31, 2015

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

Entergy Arkansas [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

Entergy Louisiana [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

Entergy Mississippi [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

Entergy New Orleans [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

Entergy Texas [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361

System Energy [Member]

Leases

LEASES  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

General

As of December 31, 2015, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Year	Operating Leases		Capital Leases
	(In Thousands)
2016		$78,302		$4,694
2017	64,371		4,694
2018	53,073		3,909
2019	50,574		3,124
2020	33,337		3,065
Years thereafter	79,662		24,778
Minimum lease payments	359,319		44,264
Less:  Amount representing interest	—		13,918
Present value of net minimum lease payments		$359,319		$30,346

Total rental expenses for all leases (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions) amounted to $63.9 million in 2015, $59 million in 2014, and $63.7 million in 2013.

As of December 31, 2015 the Registrant Subsidiaries had a capital lease and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities with minimum lease payments as follows (excluding power purchase agreement operating leases, nuclear fuel leases, and the Grand Gulf and Waterford 3 sale and leaseback transactions, all of which are discussed elsewhere):

Capital Leases

Year	Entergy Mississippi
	(In Thousands)
2016		$1,570
2017	1,570
2018	785
2019	—
2020	—
Years thereafter	—
Minimum lease payments	3,925
Less:  Amount representing interest	329
Present value of net minimum lease payments		$3,596

Operating Leases

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas
	(In Thousands)
2016		$25,358		$16,757		$7,139		$1,960		$5,700
2017	18,600		14,245		5,596		1,730		4,841
2018	12,947		12,187		4,946		1,416		4,302
2019	13,555		12,677		4,619		1,233		3,194
2020	7,029		7,107		3,710		1,003		1,666
Years thereafter	28,390		6,903		6,028		1,733		1,695
Minimum lease payments		$105,879		$69,876		$32,038		$9,075		$21,398

Rental Expenses

Year	Entergy Arkansas		Entergy Louisiana		Entergy Mississippi		Entergy New Orleans		Entergy Texas		System Energy
	(In Millions)
2015		$13.6		$21.8		$5.4		$1.6		$4.0		$2.9
2014		$12.0		$20.7		$4.3		$1.2		$3.8		$2.0
2013		$12.0		$21.0		$4.6		$1.3		$4.1		$2.5

In addition to the above rental expense, railcar operating lease payments and oil tank facilities lease payments are recorded in fuel expense in accordance with regulatory treatment.  Railcar operating lease payments were $4.7 million in 2015, $4.8 million in 2014, and $8.6 million in 2013 for Entergy Arkansas and $1.1 million in 2015, $1.7 million in 2014, and $2.2 million in 2013 for Entergy Louisiana.  Oil tank facilities lease payments for Entergy Mississippi were $1.6 million in 2015, $1.6 million in 2014, and $3.4 million in 2013.

Power Purchase Agreements

As of December 31, 2015, Entergy Texas had a power purchase agreement that is accounted for as an operating lease under the accounting standards. The lease payments are recovered in fuel expense in accordance with regulatory treatment. The minimum lease payments under the power purchase agreement are as follows:

Year	Entergy Texas (a)		Entergy
	(In Thousands)
2016		$29,104		$29,104
2017	29,772		29,772
2018	30,458		30,458
2019	31,159		31,159
2020	31,876		31,876
Years thereafter	42,789		42,789
Minimum lease payments		$195,158		$195,158

(a) Amounts reflect 100% of minimum payments. Under a separate contract, Entergy Louisiana purchases 50% of the capacity and energy from the power purchase agreement from Entergy Texas.

Total capacity expense under the power purchase agreement accounted for as an operating lease at Entergy Texas was $29.9 million in 2015, $29.2 million in 2014, and $28.6 million in 2013.

Sale and Leaseback Transactions

Waterford 3 Lease Obligations

In 1989, in three separate but substantially identical transactions, Entergy Louisiana sold and leased back undivided interests in Waterford 3 for the aggregate sum of $353.6 million.  The leases expire in July 2017.  Entergy Louisiana is required to report the sale-leaseback as a financing transaction in its financial statements.

In December 2015, Entergy Louisiana agreed to purchase the undivided interests in Waterford 3 that are currently being leased. The purchase will be accomplished in a two-step transaction in which Entergy Louisiana will first acquire the equity participant’s beneficial interest in the leased assets, followed by a termination of the leases and transfer of the leased assets to Entergy Louisiana when the outstanding lessor debt is paid.

The purchase price will be approximately $112 million, of which $60 million will be paid in cash and the remaining approximately $52 million will be paid through the issuance of a non-interest bearing mortgage bond, payable in installments through July 2017. The $60 million cash payment represents the purchase price to acquire the undivided interests in the plant. Following the purchase, Entergy Louisiana will also continue to make payments on the lessor debt which remains outstanding. The combination of payments due on the approximately $52 million mortgage bond issued and the debt service on the lessor debt are equal in timing and amount to the remaining lease payments due from the expected closing of the transaction through the remainder of the lease term. Therefore, this transaction will not change the total amount of debt outstanding on Entergy Louisiana’s financial statements related to the Waterford 3 sale-leaseback. Payments include $7.8 million in July 2016 and $106.3 million in 2017. An additional lease payment of $9.2 million was made in January 2016, prior to the closing of this transaction. In February 2016 the FERC authorized the transaction. Consummation of the transaction is subject to customary closing conditions, and is expected to close in the first half of 2016.

Throughout the term of the lease, Entergy Louisiana had accrued a liability for the amount it expected to pay to retain the use of the undivided interests in Waterford 3 at the end of the lease term. Since the sale-leaseback transaction was accounted for as a financing transaction, the accrual of this liability was accounted for as additional interest expense. As of December 2015, the balance of this liability was $62.7 million. Upon entering into the agreement to purchase the equity participant’s beneficial interest in the undivided interests, Entergy Louisiana reduced the balance of the liability to $60 million, and recorded the $2.7 million difference as a credit to interest expense. The $60 million remaining liability will be eliminated upon payment of the cash portion of the purchase price.

Entergy Louisiana had previously issued $193.2 million of non-interest bearing first mortgage bonds as collateral for the equity portion of certain amounts payable under the leases. Upon the acquisition of the beneficial interests described above, these mortgage bonds will be surrendered for cancellation.

The lease transaction documents provide that, upon the occurrence of certain events, Entergy Louisiana may be obligated to assume the outstanding bonds used to finance the purchase of the interests in the unit and to pay an amount sufficient to withdraw from the lease transaction.  Such events include lease events of default, events of loss, deemed loss events, or certain adverse “Financial Events.”  “Financial Events” include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure period, to maintain (i) total equity capital at least equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage ratio of at least 1.50 computed on a rolling 12 month basis.  As of December 31, 2015, Entergy Louisiana was in compliance with these provisions.

As of December 31, 2015, Entergy Louisiana, in connection with the Waterford 3 sale and leaseback transactions, had future minimum lease payments (reflecting an overall implicit rate of 7.45%, and which include the equity portion of lease payments which will, upon the acquisition of the beneficial interests, be payable under the mortgage bond described above) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$16,938
2017	106,335
2018	—
2019	—
2020	—
Years thereafter	—
Total	123,273
Less: Amount representing interest	14,308
Present value of net minimum lease payments		$108,965

Grand Gulf Lease Obligations

In 1988, in two separate but substantially identical transactions, System Energy sold and leased back undivided ownership interests in Grand Gulf for the aggregate sum of $500 million.  The initial term of the leases expired in July 2015.  System Energy renewed the leases for fair market value with renewal terms expiring in July 2036. At the end of the new lease renewal terms, System Energy has the option to repurchase the leased interests in Grand Gulf or renew the leases at fair market value.  In the event that System Energy does not renew or purchase the interests, System Energy would surrender such interests and their associated entitlement of Grand Gulf’s capacity and energy.

System Energy is required to report the sale-leaseback as a financing transaction in its financial statements.  For financial reporting purposes, System Energy expenses the interest portion of the lease obligation and the plant depreciation.  However, operating revenues include the recovery of the lease payments because the transactions are accounted for as a sale and leaseback for ratemaking purposes.  Consistent with a recommendation contained in a FERC audit report, System Energy initially recorded as a net regulatory asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and continues to record this difference as a regulatory asset or liability on an ongoing basis, resulting in a zero net balance for the regulatory asset at the end of the lease term.  The amount was a net regulatory liability of $55.6 million and $62.9 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, System Energy, in connection with the Grand Gulf sale and leaseback transactions, had future minimum lease payments (reflecting an implicit rate of 5.13%) that are recorded as long-term debt, as follows:

	Amount
	(In Thousands)
2016		$17,188
2017	17,188
2018	17,188
2019	17,188
2020	17,188
Years thereafter	275,000
Total	360,940
Less: Amount representing interest	326,579
Present value of net minimum lease payments		$34,361