Item 1. "Business - PROPERTY," in this report.
Item 3. Legal Proceedings
Details of the registrants' material rate proceedings, environmental regulation and proceedings, and other regulatory proceedings and litigation that are pending or that terminated in the fourth quarter of 1998 are discussed in Item 1. "Business - RATE MATTERS AND REGULATION," in this report.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1998, no matters were submitted to a vote of the security holders of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, or System Energy.
DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Directors
Information required by this item concerning directors of Entergy Corporation is set forth under the heading "Proposal 1--Election of Directors" contained in the Proxy Statement of Entergy Corporation, (the "Proxy Statement"), to be filed in connection with its Annual Meeting of Stockholders to be held May 14, 1999, ("Annual Meeting"), and is incorporated herein by reference. Information required by this item concerning officers and directors of the remaining registrants is reported in Part III of this document.
(a) Mr. Lupberger is a director of International Shipholding Corporation, New Orleans, LA.
Each officer of Entergy Corporation is elected yearly by the Board of Directors.
Directorships shown in footnote (a) above are generally limited to entities subject to Section 12 or 15(d) of the Securities and Exchange Act of 1934 or to the Investment Company Act of 1940.
PART II
Item 5. Market for Registrants' Common Equity and Related Stockholder Matters
Entergy Corporation
The shares of Entergy Corporation's common stock are listed on the New York Stock, Chicago Stock, and Pacific Exchanges.
The high and low prices of Entergy Corporation's common stock for each quarterly period in 1998 and 1997 were as follows:
1998 1997 High Low High Low (In Dollars)
First 30 1/8 27 5/16 28 3/8 24 Second 29 5/8 23 1/4 27 1/2 22 3/8 Third 30 13/16 26 3/16 28 24 1/16 Fourth 32 7/16 28 1/16 30 1/4 23
Consecutive quarterly cash dividends on common stock were paid to stockholders of Entergy Corporation in 1998 and 1997. In 1998, dividends of 45 cents per share were paid in the first and second quarters and dividends of 30 cents per share were paid in the third and fourth quarters. Quarterly dividends of 45 cents per share were paid in 1997.
As of February 28, 1999, there were 80,877 stockholders of record of Entergy Corporation.
Entergy Corporation's future ability to pay dividends is discussed in Note 8 to the financial statements. In addition to the restrictions described in Note 8, PUHCA provides that, without approval of the SEC, the unrestricted, undistributed retained earnings of any Entergy Corporation subsidiary are not available for distribution to Entergy Corporation's common stockholders until such earnings are made available to Entergy Corporation through the declaration of dividends by such subsidiaries.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
There is no market for the common stock of Entergy Corporation's wholly owned subsidiaries. Cash dividends on common stock paid by the subsidiaries to Entergy Corporation during 1998 and 1997, were as follows:
1998 1997 (In Millions)
Entergy Arkansas $ 92.6 $128.6 Entergy Gulf States $109.4 $ 77.2 Entergy Louisiana $138.5 $145.4 Entergy Mississippi $ 66.0 $ 59.2 Entergy New Orleans $ 9.7 $ 26.0 System Energy $ 72.3 $113.8
Information with respect to restrictions that limit the ability of System Energy and the domestic utility companies to pay dividends is presented in Note 8 to the financial statements and "Management's Financial Discussion and Analysis - Liquidity and Capital Resources".
Item 6. Selected Financial Data
Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM ENERGY" which follow each company's financial statements in this report, for information with respect to operating statistics.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES," " - SIGNIFICANT FACTORS AND KNOWN TRENDS," and "- RESULTS OF OPERATIONS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM ENERGY".
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Entergy Corporation and Subsidiaries. Refer to information under the heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS."
Item 8. Financial Statements and Supplementary Data.
Entergy Corporation and Subsidiaries: Report of Management 39 Audit Committee Chairperson's Letter 40 Management's Financial Discussion and Analysis 41 Report of Independent Accountants 51 Management's Financial Discussion and Analysis 52 Statements of Consolidated Income For the Years Ended December 31, 59 1998, 1997, and 1996 Statements of Consolidated Cash Flows For the Years Ended December 60 31, 1998, 1997, and 1996 Consolidated Balance Sheets, December 31, 1998 and 1997 62 Statements of Consolidated Retained Earnings and Paid-In Capital 64 for the Years Ended December 31, 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 65 Entergy Arkansas, Inc.: Report of Independent Accountants 66 Management's Financial Discussion and Analysis 67 Statements of Income For the Years Ended December 31, 1998, 1997, 70 and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 71 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 72 Statements of Retained Earnings for the Years Ended December 31, 74 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 74 Entergy Gulf States, Inc.: Report of Independent Accountants 76 Management's Financial Discussion and Analysis 77 Statements of Income (Loss) For the Years Ended December 31, 1998, 81 1997, and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 83 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 84 Statements of Retained Earnings for the Years Ended December 31, 86 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 87 Entergy Louisiana, Inc.: Report of Independent Accountants 88 Management's Financial Discussion and Analysis 89 Statements of Income For the Years Ended December 31, 1998, 1997, 91 and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 93 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 94 Statements of Retained Earnings for the Years Ended December 31, 96 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 97 Entergy Mississippi, Inc.: Report of Independent Accountants 98 Management's Financial Discussion and Analysis 99 Statements of Income For the Years Ended December 31, 1998, 1997, 102 and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 103 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 104 Statements of Retained Earnings for the Years Ended December 31, 106 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 107 Entergy New Orleans, Inc.: Report of Independent Accountants 108 Management's Financial Discussion and Analysis 109 Statements of Income For the Years Ended December 31, 1998, 1997, 112 and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 113 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 114 Statements of Retained Earnings for the Years Ended December 31, 116 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 117 System Energy Resources, Inc.: Report of Independent Accountants 118 Management's Financial Discussion and Analysis 119 Statements of Income For the Years Ended December 31, 1998, 1997, 121 and 1996 Statements of Cash Flows For the Years Ended December 31, 1998, 123 1997, and 1996 Balance Sheets, December 31, 1998 and 1997 124 Statements of Retained Earnings for the Years Ended December 31, 126 1998, 1997, and 1996 Selected Financial Data - Five-Year Comparison 127 Notes to Financial Statements for Entergy Corporation and 128 Subsidiaries
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries have prepared and are responsible for the financial statements and related financial information included herein. The financial statements are based on generally accepted accounting principles in the United States. Financial information included elsewhere in this report is consistent with the financial statements.
To meet their responsibilities with respect to financial information, management maintains and enforces a system of internal accounting controls designed to provide reasonable assurance, on a cost-effective basis, as to the integrity, objectivity, and reliability of the financial records, and as to the protection of assets. This system includes communication through written policies and procedures, an employee Code of Entegrity, and an organizational structure that provides for appropriate division of responsibility and the training of personnel. This system is also tested by a comprehensive internal audit program.
Independent public accountants provide an objective assessment of the degree to which management meets its responsibility for fairness of financial reporting. They regularly evaluate the system of internal accounting controls and perform such tests and other procedures as they deem necessary to reach and express an opinion on the fairness of the financial statements.
Management believes that these policies and procedures provide reasonable assurance that its operations are carried out with a high standard of business conduct.
J. WAYNE LEONARD Chief Executive Officer of Entergy Corporation and Chairman of the Board of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
C. JOHN WILDER Executive Vice President and Chief Financial Officer
ENTERGY CORPORATION AND SUBSIDIARIES
AUDIT COMMITTEE CHAIRPERSON'S LETTER
The Entergy Corporation Board of Directors' Audit Committee is comprised of five directors who are not officers of Entergy Corporation: Dr. Paul W. Murrill, Chairperson, George W. Davis, James R. Nichols, Eugene H. Owen, and Bismark A. Steinhagen. The committee held seven meetings during 1998.
The Audit Committee oversees Entergy Corporation's financial reporting process on behalf of the Board of Directors and provides reasonable assurance to the Board that sufficient operating, accounting, and financial controls are in existence and are adequately reviewed by programs of internal and external audits.
The Audit Committee discussed with Entergy's internal auditors and the independent public accountants (PricewaterhouseCoopers LLP) the overall scope, specific plans, and results of their respective audits, as well as Entergy Corporation's financial statements and the adequacy of Entergy Corporation's internal controls. The committee met, together and separately, with Entergy's internal auditors and independent public accountants, without management present, to discuss the results of their audits, their evaluation of Entergy Corporation's internal controls, and the overall quality of Entergy Corporation's financial reporting. The meetings were designed to facilitate and encourage private communication between the committee and the internal auditors and independent public accountants.
The Audit Committee believes that management maintains an effective system of internal controls which results in fairly presented financial statements.
DR. PAUL W. MURRILL Chairperson, Audit Committee
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
OVERVIEW
After a slow start in 1998, Entergy achieved strongcord results for the year in earnings per share and operating cash flow. In addition, Entergy's debt as a percentage of debt, preferred and common equity capital as of year-end was 48.6% in 1998, 56.5% in 1997, and 52.5% in 1996. Entergy's cash and resulting liquidity position improved significantly as compared to one year ago. These financial results were achieved primarily due to Entergy's new strategic focus, which resulted in the sale of several businesses.
In August 1998, Entergy's Board of Directors approved a new strategic focus that should significantly impact Entergy's future operations and financial results. This strategy aligns Entergy's strengths and the businesses it will pursue. These businesses are:
o domestic utility operations; o global power development; and o nuclear power operations.
Additionally, Entergy's power marketing and trading business provides the global power development and the nuclear operations businesses with market liquidity and price-risk management, and represents them in interfacing with the wholesale marketplace.
Consistent with its new strategic direction, Entergy sold several businesses. Proceeds from the sales were used, in part, to pay off debt associated with the acquisition of these businesses. Further information on these transactions is presented in Note 12 to the financial statements.
The discussion in the pages that follow reviews the most important items affecting Entergy and includes:
o the electric utility industry's continued progression toward competition; o sales of significant portions of Entergy's businesses not aligned with its new strategy; and o substantial improvement in Entergy's financial strength resulting from the sale of over $4 billion of assets.
The changes noted above create significant uncertainties. Resolution of the following uncertainties may have a material impact on Entergy:
o the timing and specific provisions of transition to competition legislation at the local and federal levels relating to the electric utility industry; o Entergy's ability to achieve fair recovery of its potentially stranded investments; o the impact of customer choice as more customers have freedom to choose their electricity supplier; and o Entergy's ability to achieve fair value for assets which may be sold as a result of the breakup of electric utility monopolies.
Both the changes and uncertainties highlighted above must be considered in evaluating Entergy's financial condition. A more detailed explanation of these items and other pertinent information impacting Entergy's financial strength follow.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Entergy's liquidity and capital resources were affected by the following in 1998:
o Cash flow from operations decreased compared to 1997 principally due to completion of rate phase-in plans and other rate activity at certain of the domestic utility companies, partially offset by an increase in net income from competitive businesses. o Net cash provided by investing activities increased substantially due to the sales of London Electricity and CitiPower. o Net cash used in financing activities changed significantly from 1997 primarily due to the retirement of the debt associated with the acquisition of London Electricity and CitiPower.
Operations
Net cash flow from operations for Entergy, the domestic utility companies, and System Energy for the years ended December 31, 1998, 1997, and 1996 was:
1998 1997 1996 (In Millions)
Entergy $1,679 $1,725 $1,528 Entergy Arkansas $ 357 $ 434 $ 377 Entergy Gulf States $ 415 $ 466 $ 322 Entergy Louisiana $ 339 $ 341 $ 352 Entergy Mississippi $ 172 $ 159 $ 182 Entergy New Orleans $ 41 $ 49 $ 44 System Energy $ 263 $ 278 $ 287
Competitive businesses contributed $151.7 million to Entergy Corporation's cash flow from operations in 1998. Substantially all of this contribution came from London Electricity and CitiPower, both of which were sold in December 1998.
Rate phase-in plans contributed to cash flow from operations in 1998. Under these plans, revenues collected exceed the cash cost of expenses. Such plans positively impact current cash flow from operations, but have no net income effect because the higher revenues are offset by the amortization of previously deferred costs. However, during 1998 the following phase-in plans were completed:
o Entergy Gulf States' Louisiana retail phase-in plan for River Bend was completed in February; o Entergy Mississippi's phase-in plan for Grand Gulf 1 was completed in September; and o Entergy Arkansas' phase-in plan for Grand Gulf 1 was completed in November.
Entergy New Orleans' phase-in plan for Grand Gulf 1 will be completed in 2001.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Investing Activities
Net cash provided by investing activities increased substantially in 1998 principally due to the sales of Entergy London and CitiPower. However, this increase was offset by the investment of the majority of the net proceeds from the Entergy London sale in BPS574 million ($947 million) of notes receivable which will mature in August 1999. Entergy has entered foreign currency forward contracts to hedge the U.S. dollar equivalent amount of these notes and their related interest at maturity. At maturity, Entergy expects to receive approximately $1 billion and will use the proceeds to reduce debt and fund future investments. Business dispositions are discussed in Note 12 to the financial statements.
Capital Resources
Entergy requires capital resources for:
o construction/capital expenditures; o debt and preferred stock maturities; o capital investments; o funding of subsidiaries; and o dividend payments.
Management provides more information on construction expenditures and long- term debt and preferred stock maturities in Note 9 to the financial statements.
Entergy's sources to meet the above include:
o internally generated funds; o cash on hand; o debt or preferred stock issuances; o bank financing under new or existing facilities; and o short-term borrowings.
During 1998, cash from operations and the sale of businesses and cash on hand met substantially all investing and financing requirements of the domestic utility companies and System Energy. Entergy Corporation received $488.5 million in dividend payments from the domestic utility companies and System Energy in 1998.
All debt and common and preferred stock issuances are subject to regulatory approval. Preferred stock and debt issuances are subject to issuance tests set forth in corporate charters, bond indentures, and other agreements. The domestic utility companies may also establish special purpose trusts or limited partnerships as financing subsidiaries for the purpose of issuing quarterly income preferred securities.
Management expects the domestic utility companies and System Energy to continue to refinance or redeem higher cost debt and preferred stock prior to maturity, to the extent market conditions and interest and dividend rates are favorable.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy's ability to invest in domestic and foreign generation businesses is subject to the SEC's regulations under PUHCA. Absent SEC approval, these regulations limit the aggregate amount that Entergy may invest in domestic and foreign generation businesses to an amount equal to 50% of consolidated retained earnings at the time an investment is made. Due to the sale of electric distribution businesses in the UK and Australia in 1998, Entergy will have the ability to make significant additional investments in domestic and foreign generation businesses.
Entergy's global power development business is currently constructing two combined cycle gas turbine merchant power plants in the UK. The first is a 1200 MW plant known as Saltend. It is expected to begin commercial operation in the first quarter of 2000. The second is a 792 MW plant known as Damhead Creek. It is expected to begin commercial operation in the fourth quarter of 2000. The financing of the construction of these two power plants is discussed in Note 7 to the financial statements.
In September 1998, Entergy's nuclear power business signed a long-term contract to provide management oversight of decommissioning activities at the Maine Yankee nuclear power plant through the projected completion of such activities in 2004. Management believes this arrangement is the first of its kind for decommissioning and reflects a growing trend among utilities to utilize outside management for nuclear activities. Also, Entergy's nuclear power business has agreed to acquire the 670 MW Pilgrim Nuclear Station, including the plant's nuclear fuel, for $80 million. This sale is expected to close in the second quarter of 1999.
Entergy has also made investments in energy-related businesses, including power marketing and trading. Under PUHCA, the SEC imposes a limit equal to 15% of consolidated capitalization on the amount that may be invested in such businesses without specific SEC approval. Entergy currently has considerable capacity to make additional investments of this type before such limits would be exceeded.
In 1998, Entergy Corporation paid $373.4 million in cash dividends on its common stock. Declarations of dividends on Entergy's common stock are made at the discretion of Entergy Corporation's Board of Directors (the Board). The Board declared quarterly dividends of $.30 per share on Entergy's common stock in the third and fourth quarters of 1998 and in the first quarter of 1999. These dividends represent a $.15 per share reduction from the previous level of Entergy's dividends. The reduction was made in order to strengthen Entergy's financial position and fund future investments. In the future, the Board will re-evaluate the level of Entergy common stock dividends, based upon Entergy's earnings and financial strength. Dividend restrictions are discussed in Note 8 to the financial statements.
In October 1998, the Board approved a plan for the repurchase of Entergy common stock through December 31, 2001 to fulfill the requirements of various compensation and benefit plans. The stock repurchase plan provides for purchases in the open market of up to 5 million shares for an aggregate consideration of up to $250 million.
Rate proceedings in Texas could have a material adverse impact on Entergy Gulf States' cash flow from operations. However, management believes that Entergy Gulf States' cash flow from operations will be sufficient to fund its capital requirements for the foreseeable future. The rate proceedings are discussed in Note 2 to the financial statements.
Entergy and its subsidiaries' capital and refinancing requirements and available lines of credit are more thoroughly discussed in Notes 4, 5, 6, 7, 9, and 10 to the financial statements.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy Corporation and System Energy
Pursuant to an agreement with certain creditors, Entergy Corporation has agreed to supply System Energy with sufficient capital to:
o maintain System Energy's equity capital at a minimum of 35% of its total capitalization (excluding short-term debt); o permit the continued commercial operation of Grand Gulf 1; o pay in full all System Energy indebtedness for borrowed money when due; and o enable System Energy to make payments on specific System Energy debt, under supplements to the agreement assigning System Energy's rights in the agreement as security for the specific debt.
The Capital Funds Agreement and other Grand Gulf 1 related agreements are more thoroughly discussed in Note 9 to the financial statements.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Domestic Competition
The electric utility industry has traditionally operated as a regulated monopoly, but is transitioning to an environment of increased retail and wholesale competition. This presents opportunities to compete for new customers and creates the risk of loss of existing customers. In addition, it presents opportunities to enter into new businesses and to restructure existing businesses. In an effort to position itself in a competitive environment, Entergy continues to work with regulatory and legislative authorities.
Regulatory and Legislative Activity
Transition-to-Competition Filings
Under historical ratemaking practice, regulated electric utilities are granted exclusive geographic franchises to sell electricity. In return, the utilities are obligated to make investments and incur obligations to serve customers. Prudently incurred costs are recovered from customers along with a return on investment. Additionally, regulators have allowed certain operating costs to be deferred for future recovery from customers. These costs have been recorded as regulatory assets in the financial statements.
As a result of the traditional ratemaking process, Entergy has recorded nuclear investments and nuclear purchase obligations on its balance sheets at amounts that could exceed future expected cash flows in a competitive marketplace. Entergy's domestic utility companies have made transition-to-competition filings requesting accelerated recovery of the majority of the companies' nuclear investments and related obligations over a seven-year period. These filings also seek protection for certain classes of ratepayers from possible cost shifting that may result from competition. To date only Entergy Arkansas has received partial approval for its filing. Management believes the Entergy Arkansas plan puts in place a process for achieving customer choice, meets Entergy's objectives of an orderly transition to competition, and mitigates potentially stranded costs. Management provides details concerning the domestic utility companies' current net investment in nuclear generation in Note 1 to the financial statements and concerning the transition-to-competition filings and other regulatory activity in Note 2 to the financial statements.
Open Access
Competition within the wholesale electric energy market has intensified with the implementation of open access transmission. Open access allows third-party suppliers to transmit energy to customers over transmission facilities owned by another entity. To implement open access to wholesale customers, FERC issued two orders in 1996 requiring all public utilities subject to FERC jurisdiction to provide wholesale transmission access to third parties and requiring each public utility to implement and maintain an open access same-time information system. Entergy's domestic utility companies filed tariffs to comply with the orders issued in 1996.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In response to FERC policy strongly favoring independent control over transmission operations as a means of enhancing competitive wholesale power markets, Entergy has proposed to FERC the formation of a regional transmission company (Transco). The proposed Transco would be:
o a separate legal entity regulated by FERC; o composed of the transmission system transferred to it by the domestic utility companies and other transmission owners in Entergy's region; o operated and maintained by employees who would work exclusively for the Transco and would not be employed by Entergy or the domestic utility companies; and o passively owned by the domestic utility companies, which will not control or otherwise direct its operation and management.
Management expects to make additional filings with federal, state, and local regulatory authorities seeking necessary approvals for the formation of the Transco.
Legislative Activity
The Arkansas and Texas state legislatures are considering legislation to restructure the retail electric utility industry and allow competition. Both of these legislatures convened in January 1999 and have begun addressing this issue. Entergy is actively participating in these deliberations.
The Texas legislature is currently considering legislation that would open the Texas retail market to competition. The most comprehensive proposed bill has been filed in the Texas Senate and calls for a competitive retail access date of January 1, 2002, market power mitigation measures, stranded cost recovery, and securitization of regulatory assets and stranded costs, among other things. The market power mitigation measures include a limit on the ownership of generation by a distribution company within a specified region. It is not clear what the implications of this limit would be for Entergy Gulf States or the Entergy system generally. However, it is possible that the legislation could require that Entergy Gulf States divest some of its generation assets. The bill also freezes rates to residential and certain commercial customers until the competitive retail access date and then implements a five-percent annual rate reduction for five years or until 40 percent of the market for those customers is lost. A similar proposed bill has been introduced in the Arkansas Senate. There can be no certainty as to the outcome of the legislation.
A number of bills have been introduced in the United States Congress to deregulate the electric power industry. Some of these bills would amend or repeal PUHCA and/or PURPA. The bills generally have provisions that would give consumers the ability to choose their own electric service provider. Entergy Corporation has supported legislation in Congress to repeal PUHCA. In June 1998, the Clinton Administration submitted a bill containing the above provisions, along with one allowing states to "opt out" of competition if they felt restructuring would harm residents. Congress took no action on any comprehensive electric restructuring legislation or repeal of PUHCA during 1998.
Industrial and Commercial Customers
In addition to the risks of losing customers due to competition, some large industrial and commercial customers of the domestic utility companies are exploring ways to reduce their energy costs. Among the alternatives available to these customers are self-generation and cogeneration. The domestic utility companies have responded by negotiating electric service contracts that may provide service to large industrial and commercial customers at tariffed rates lower than would otherwise be applicable.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Through December 1998, Entergy Gulf States and Entergy Louisiana had received notices from nine large industrial customers that they were proceeding with proposed cogeneration projects. As a result, it is expected that 1999 net income will decrease by approximately $8 million and sales will decline by 369,000 megawatt-hours from the prior year. These customers will continue to purchase energy at a reduced level from Entergy Gulf States and Entergy Louisiana.
State and Local Regulation
The retail regulatory philosophy is shifting in some jurisdictions from traditional cost-of-service regulation to performance-based regulation. Performance-based formula rate plans are designed to encourage increased efficiency and productivity while permitting utilities and their customers to share in the benefits. Entergy Mississippi and Entergy Louisiana have implemented performance-based rate plans. Entergy Louisiana's 1997 test year under the plan indicated that rates would not be materially changed. Entergy Mississippi implemented a $6.6 million rate reduction in May 1998 resulting from its plan.
All of the domestic utility companies have recently been ordered to grant base rate reductions and have refunded or credited customers for previous overcollections of rates. The continuing pattern of rate reductions reflects completion of rate phase-in plans, lower costs of service ordered by regulators, and the competitive environment in which the domestic utility companies operate. The domestic utility companies' retail and wholesale rate matters and proceedings are discussed more thoroughly in Note 2 to the financial statements.
The PUCT has published proposed "Code of Conduct" rules governing affiliate transactions. Although these rules have not been adopted, management believes that the rules would severely restrict the type and extent of services that Entergy's service companies could provide to Entergy Gulf States. Management believes that adoption of these rules would result in higher costs for Entergy Gulf States and its Texas and Louisiana customers. Other state or local regulators with jurisdiction over Entergy's utility subsidiaries may propose similar rules in the future.
Other Electric Utility Trends
In some areas of the United States, municipalities whose residents are served by investor-owned utilities are exploring the possibility of establishing new electric distribution systems, or extending existing ones. In some cases, municipalities are also seeking new delivery points in order to serve retail customers, especially large industrial customers that currently receive service from an investor-owned utility. Where successful, these efforts may result in the utility's inability to recover costs that it has incurred for the purpose of serving those customers.
Utility mergers and joint ventures involving domestic and overseas companies are another continuing trend in the transition to competition. In some areas of the country, utilities have either sold or are attempting to sell all or a substantial portion of their generation assets to focus their businesses on transmission and/or distribution services. FERC is currently advocating the creation by utilities of arrangements under which their transmission systems will be operated independently and on a regional basis.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Accounting Issues
Continued Application of SFAS 71
The domestic utility companies' and System Energy's financial statements currently reflect, for the most part, assets and costs based on existing cost-based ratemaking regulation in accordance with SFAS 71, "Accounting for the Effects of Certain Types of Regulation". Continued applicability of SFAS 71 to the financial statements requires that rates set by an independent regulator on a cost-of-service basis be charged to and collected from customers for the foreseeable future. The electric utility industry's movement toward a combination of competition and a modified regulatory environment could result in rates that are not based on cost of service. If a utility company is required to discontinue application of SFAS 71 for a portion or all of its operations, it could be required to remove regulatory assets and liabilities from its balance sheet.
Definitive outcomes have not yet been determined regarding the transition to competition filings in Entergy's jurisdictions; therefore, the regulated operations continue to apply SFAS 71. Discontinuation of the application of SFAS 71 could have a material adverse impact on Entergy's financial statements. The application of SFAS 71 is discussed more thoroughly in Note 1 to the financial statements.
Year 2000 Issues
Management has been evaluating its computer software and hardware, databases, embedded microprocessors (collectively referred to as "IT and non-IT assets"), suppliers, and other relationships to determine actions required to prevent problems related to the Year 2000, and the resources required to take such actions. Unless corrected, these problems may result in malfunctions in certain software applications, databases, and computer equipment with respect to dates on or after January 1, 2000. These malfunctions could disrupt operations of nuclear or fossil generating plants, operation of transmission and distribution systems, and access to interconnections with neighboring utilities, and could cause other operational problems.
Management has adopted a four-step approach to address Year 2000 issues including:
o an inventory of all IT and non-IT assets; o an assessment to determine if the IT and non-IT assets are critical to the business and, if so, whether Year 2000 has an impact on them; o remediation or replacement of critical systems determined to be Year 2000 deficient; and o certification of such critical systems to confirm Year 2000 compliance.
Management has completed its inventory of IT and non-IT assets, has identified systems and equipment that could be affected by the millennium change, and has assessed the risk of potential failure for most of its assets. Management defines services or products as Year 2000 "compliant" when they perform the business, office automation, or process control requirements as designed into the twenty-first century. Management defines an asset as "certified" as Year 2000 compliant after it has been modified, or upgraded if necessary, tested, and deployed in the operating environment. Certification of Entergy's assets that significantly affect operations is scheduled to be substantially complete by the end of the first quarter of 1999, and is on schedule and approximately 77% complete as of January 31, 1999. Certification will continue for assets that do not significantly affect operations, but do impact efficiency and profitability, throughout 1999.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Management is currently performing an assessment of its vendors that affect Entergy's operations with respect to Year 2000 issues. Entergy's goal is to receive written confirmation of the Year 2000 compliance of its critical vendors. Alternative suppliers or contingency plans will be considered for those suppliers that do not demonstrate sufficient Year 2000 readiness. Management will implement Year 2000 contingency plans for suppliers throughout 1999.
Maintenance or modification costs associated with Year 2000 compliance will be expensed as incurred, while the costs of new software will be capitalized and amortized over the software's useful life. Management's current estimate of maintenance and modification costs related to Year 2000 issues to be incurred in 1998 through mid-2000 is approximately $54 million. Entergy has incurred approximately $26 million of this total through January 1999. The sales of Entergy London and CitiPower in December 1998 decreased estimated expenses from $81 million at September 30, 1998 to the $54 million mentioned above. These expenses are being funded through operating cash flows. Additionally, total capitalized costs for projects accelerated due to Year 2000 issues are estimated to be $19 million. Entergy has incurred approximately $11 million of this total through January 1999.
An independent consultant has been engaged to assist management in its assessment of the risks of Year 2000 malfunctions. This assessment is currently in progress. Based on the risk determinations of this assessment, and the results of certification activities, management is creating and implementing contingency plans, as needed, throughout 1999 to address Year 2000 issues. Although Entergy is taking steps that it believes will address the Year 2000 issue, this issue presents risks that may not be entirely foreseen and eliminated and which could significantly affect utility operations and financial performance.
Market Risks
Entergy uses derivative instruments to manage the following market risks:
o the commodity price risk associated with its power marketing and trading business; o the currency exchange rate risk associated with the investment of the net proceeds of the sale of Entergy London; and o the interest rate risk associated with certain of its variable rate credit facilities.
Entergy's power marketing and trading business enters into sales and purchases of electricity and natural gas for delivery into the future. Because the market prices of electricity and natural gas can be volatile, Entergy's power marketing and trading business is exposed to risk arising from differences between the fixed prices in its commitments and fluctuating market prices. To mitigate its exposure, Entergy's power marketing and trading business enters into electricity and natural gas futures, swaps, option contracts, and electricity forward agreements.
Entergy's power marketing and trading business utilizes a value-at- risk model to assess the market risk of its derivative financial instruments. Value-at-risk represents the potential loss for an instrument or portfolio from adverse changes in market factors for a specified time period and confidence level. The value-at-risk was estimated using historical simulation calculated on a daily basis over a thirty-day period with a 95% confidence level and a holding period of two business days. Based on these assumptions, this business's value-at-risk as of December 31, 1998 was not material to Entergy.
Management's calculation of value-at-risk exposure represents an estimate of reasonably possible net losses that would be recognized on its portfolio of derivative financial instruments, assuming hypothetical movements in option contracts. It does not represent the maximum possible loss or an expected loss that may occur, because actual future gains and losses will differ from those estimated, based upon actual fluctuations in market rates, operating exposures, and the timing thereof, and changes in the portfolio of derivative financial instruments during the year.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
The notes receivable purchased with the proceeds of the Entergy London sale are denominated in BPS. To hedge currency exposure on these notes receivable, Entergy entered into currency forward agreements to fix the U. S. dollar amount that will be received upon maturity of the notes in August 1999. The investment of the sales proceeds and the forward agreements are discussed more thoroughly in Note 12 to the financial statements.
Entergy uses interest rate swaps to reduce the impact of interest rate changes on certain variable-rate credit facilities associated with its global power development business. The interest rate swap agreements involve the exchange of floating rate interest payments for fixed rate interest payments over the life of the agreements. These swaps are discussed more thoroughly in Note 7 to the financial statements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy Corporation
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and comprehensive income, of retained earnings and paid-in-capital, and of cash flows present fairly, in all material respects, the financial position of Entergy Corporation and its subsidiaries at December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Entergy Corporation's consolidated net income in 1998 would have increased as compared to 1997 by approximately 20%, excluding the effects of the items listed below. This increase was due to increased competitive business revenues, decreased interest charges, and decreased income taxes, partially offset by increased operating expenses and decreased domestic utility electric operating revenues. Net income in 1997 would have decreased as compared to 1996 by approximately 9%, excluding the effects of the items below. This decrease was due to decreased earnings from domestic utility operations, partially offset by increased earnings from competitive businesses, primarily London Electricity.
1998 1997 1996 (In Millions)
Net income $785.6 $300.9 $490.6 ------ ------ ------
Sales and write-downs of investments in 208.9 - - non-regulated businesses UK tax rate changes 31.7 64.7 - UK windfall profits tax - (234.1) - Power market counterparty default (27.0) - - Entergy Gulf States rate reserves (a) (129.0) (227.0) - Radioactive waste facility write-offs 9.3 (26.4) - Entergy Gulf States Cajun Settlement (b) - 146.6 - River Bend rate deferrals write-off - - (174.0) River Bend litigation accrual reversal - - 30.0 ------ ------- ------ $691.7 $577.1 $634.6 ====== ======= ======
(a) The effects of the Entergy Gulf States rate reserves in 1997 are reflected in the financial statement categories of domestic electric revenues (See other revenue herein), other income, and income taxes.
(b) The effects of the Entergy Gulf States Cajun Settlement in 1997 are reflected in the financial statement categories of domestic electric revenues (See other revenue herein), other operation and maintenance expenses, other income, and income taxes.
Note: The items included in the table above are identified based on judgment of management. Factors that management considers in identifying these items include significance, infrequency, unusual nature, and effect on cash flow.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Revenues and Sales
Domestic Utility Companies and System Energy
The changes in electric operating revenues for Entergy's domestic utility companies and System Energy for 1998 compared to 1997, and 1997 compared to 1996, are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($290.3) ($160.1) Rate riders (108.6) (3.6) Fuel cost recovery (80.6) 90.1 Sales volume/weather 187.3 31.3 Other revenue (including unbilled) (191.0) 146.8 Sales for resale 80.7 (16.6) ------- ------ Total ($402.5) $87.9 ======= ======
Base revenues
In 1998, base revenues decreased primarily due to base rate reductions, reserves for refunds, and other regulatory adjustments totaling $216.5 million ($129.0 million net of tax) at Entergy Gulf States.
In 1997, base revenues decreased due to reserves recorded at Entergy Gulf States for potential regulatory adjustments. These adjustments were based on management's estimates of the financial effect of potential adverse rulings in connection with the pending rate proceedings in Texas.
These rate reductions and other pending rate proceedings are discussed in Note 2 to the financial statements.
Rate rider revenues
Rate rider revenues do not affect net income because specific incurred expenses offset them.
In 1998, rate rider revenues decreased due to the decline in the Grand Gulf 1 cost recovery rate rider revenues at Entergy Arkansas, reflecting scheduled reductions in the phase-in plan that was completed in November 1998. Rate rider revenues also decreased due to reductions required by the settlement agreement between the APSC and Entergy Arkansas. The settlement agreement with the APSC is discussed in Note 2 to the financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1998, fuel cost recovery revenues decreased primarily due to lower pricing at Entergy Louisiana resulting in a change in generation mix.
In 1997, fuel cost recovery revenues increased due to a PUCT order that approved recovery of previously under-recovered fuel expenses by Entergy Gulf States.
Sales volume
In 1998, sales volume increased as a result of significantly warmer weather at all the domestic utility companies. Entergy established a new peak usage record for the system on July 8, 1998.
In 1997, sales volume increased primarily due to an increase in sales to industrial customers, particularly certain cogeneration customers who purchased replacement electricity from Entergy Gulf States. These increases were partially offset by the effects of milder weather in 1997.
Other revenue
In 1998, other revenue decreased primarily due to the revenue portion of the gain recognized in December 1997 on the Cajun Settlement at Entergy Gulf States, the effect of which was partially offset by regulatory reserves recorded at Entergy Gulf States in 1997. Other revenue also decreased due to unfavorable pricing of unbilled revenues resulting from rate reductions at Entergy Gulf States.
In 1997, other revenue increased principally due to the revenue portion of the gain recognized on the Cajun Settlement at Entergy Gulf States, which totaled $154.5 million ($92.0 million net of tax). The effect of the Cajun Settlement was partially offset by regulatory reserves recorded at Entergy Gulf States in 1997 of $70 million ($41.6 million net of tax).
Sales for resale
In 1998, sales for resale increased due to increased sales to non- associated companies, particularly at Entergy Arkansas, and increased demand at Entergy Gulf States.
Competitive business revenues
Competitive business revenues increased by $2.4 billion in 1998 primarily due to increased sales volume in the power marketing and trading business. This business' volume increased dramatically in 1998 due to increased marketing efforts and significantly warmer weather. The impact on net income from these revenues was offset by increased power purchased for resale as discussed in Expenses below.
Competitive business revenues increased by $2.3 billion in 1997 primarily due to the February 1997 acquisition of London Electricity by Entergy London. London Electricity contributed $1.8 billion of revenues to Entergy results of operations during the eleven months it was included in 1997. Competitive business revenues also increased due to an increase of $396 million in power marketing and trading business revenues resulting from a full year of trading in 1997 as compared to six months in 1996.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Expenses
Operating expenses for 1997 include Entergy London's operating expenses of $1.7 billion, which are not comparative with 1996. This change is due to Entergy London's acquisition of London Electricity effective February 1997.
Purchased power expenses
In 1998, purchased power expenses increased primarily due to significantly increased power trading by the power marketing and trading business. The increased trading resulted in a $2.3 billion increase in purchased power expenses for this business. Additionally, in 1998, the power marketing and trading business incurred a $44 million ($27 million net of tax) counterparty default.
In 1997, purchased power expenses increased primarily due to higher power purchased for resale by the power marketing and trading business resulting from a full year of trading in 1997 as compared to six months in 1996.
Nuclear refueling outage expenses
In 1997, nuclear refueling outage expenses increased primarily due to the amortization of previously deferred November 1996 outage expenses at System Energy. These expenses were amortized over an 18-month period that began in December 1996. Prior to this outage, such costs were expensed as incurred. No nuclear refueling outage expenses were incurred at System Energy in 1996.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased primarily due to the following:
o The 1997 Cajun Settlement resulted in the transfer of the 30% interest in River Bend owned by Cajun to Entergy Gulf States. Entergy Gulf States' operating expenses in 1998 included 100% of River Bend's operation and maintenance expenses, as compared to 70% of such expenses for the year ended December 31, 1997. o Acquisition of security companies whose operation and maintenance expenses were included in 1998 but not in 1997. o Transmission expenses for the power marketing and trading business were higher due to significantly increased power trading sales volume.
These increases in other operation and maintenance expenses were partially offset by decreased non-refueling outage related contract work and maintenance performed at Entergy Louisiana in 1997. Operation and maintenance expenses also decreased at System Energy due to lower contract labor, materials and supplies expense, and insurance and materials and supplies refunds.
In 1997, other operation and maintenance expenses excluding Entergy London decreased primarily due to the Cajun Settlement at Entergy Gulf States in December 1997, which resulted in a reduction of operation and maintenance expenses of $72.2 million ($43 million net of tax). This decrease was partially offset by the $44 million ($26.4 million net of tax) reserves for the radioactive waste facility deferrals at Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Depreciation, amortization, and decommissioning
In 1997, depreciation, amortization, and decommissioning expenses increased principally due to:
o the reduction of the regulatory asset established at System Energy to defer depreciation associated with the sale and leaseback of a portion of Grand Gulf 1; and o increased plant additions and improvements.
Other regulatory charges
In 1998, other regulatory charges increased primarily due to:
o additional accruals of $74.0 million ($45.0 million net of tax) for the transition cost account at Entergy Arkansas; and o the decrease in the under-recovery of Grand Gulf 1-related costs at Entergy Mississippi.
The increase was partially offset by the $15.3 million ($9.3 million net of tax) reversal of the 1997 reserves for previously deferred radioactive waste facility costs in December 1998.
The settlement agreement with the APSC established the transition cost account to collect earnings in excess of an allowed return on equity for offset against potential stranded costs when retail access is implemented.
Amortization of rate deferrals
In 1998, the increase in operating expenses was partially offset by the decreased amortization of rate deferrals. The amortization of rate deferrals decreased because of the completion of phase-in plans at Entergy Arkansas, Entergy Gulf States, and Entergy Mississippi.
In 1997, rate deferral amortization increased primarily due to greater Grand Gulf 1 rate deferral amortization at Entergy Arkansas and Entergy New Orleans, as prescribed in the Grand Gulf 1 rate phase-in plans, and the December 1997 APSC settlement agreements for Entergy Arkansas.
Other
Other income
In 1998, other income increased primarily due to the following:
o the gains recorded on the sales of Entergy London of $327.3 million ($246.8 million net of tax) and CitiPower of $29.8 million ($19.3 million net of tax); and o the reserve for regulatory adjustments recorded at Entergy Gulf States was less in 1998 than in 1997.
These increases in 1998 were partially offset by:
o the $68.6 million ($35.9 million net of tax) loss on the sale of Efficient Solutions, Inc. in September 1998; o $32.8 million ($21.3 million net of tax) of write-downs of Entergy's investments in two Asian projects; and o interest income related to the Cajun Settlement recorded in December 1997 at Entergy Gulf States.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1997, other income decreased primarily due to the reserve for regulatory adjustments of $311 million ($185.4 million net of tax) and the 1996 $50 million ($30 million net of tax) reversal of reserves provided for the Cajun litigation at Entergy Gulf States. Partially offsetting this decrease was:
o $19.6 million ($11.6 million net of tax) of interest income related to the Cajun Settlement recorded in December 1997 at Entergy Gulf States; and o the $194 million ($174.0 million net of tax) write-off of River Bend rate deferrals at Entergy Gulf States in January 1996.
Interest charges
In 1998, interest charges decreased due to the retirement of certain long-term debt at the domestic utility businesses. This decrease was partially offset by an increase in the average amount of debt and preferred securities outstanding during 1998, compared to 1997, at Entergy London.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 25.3%, 61.0%, and 46.2%, respectively. The effective income tax rate decreased in 1998 principally due to:
o the UK windfall profits tax of $234.1 million at Entergy London recognized in 1997; o the tax effects of the Cajun Settlement in 1997; o recognition of $44 million of deferred tax benefits in 1998 related to expected utilization of Entergy's capital loss carryforwards; and o a $31.7 million reduction in taxes because of reductions in the UK corporation tax rate from 31% to 30% in the third quarter of 1998.
These decreases were partially offset by a reduction in the UK corporation tax rate from 33% to 31% in 1997, which lowered taxes in 1997 by $64.7 million.
The effective income tax rate increased in 1997 principally due to:
o the $234.1 million UK windfall profits tax at Entergy London; o the tax effects of the Cajun Settlement; and o the 1996 write-off at Entergy Gulf States.
These increases were partially offset by a reduction in the UK corporation tax rate from 33% to 31% in 1997, which lowered taxes by $64.7 million.
Income taxes are discussed in Note 3 to the financial statements.
Preferred Dividend Requirements
In 1997, preferred dividend requirements decreased principally due to stock redemptions.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy Arkansas, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, of retained earnings, and of cash flows present fairly, in all material respects, the financial position of Entergy Arkansas, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1998 and 1997 primarily due to decreased electric operating revenues and recovery of Grand Gulf 1 carrying charges. These decreases were partially offset by lower interest charges and operating expenses in 1998 and lower income taxes in 1997.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($7.0) ($8.1) Rate riders (106.0) 15.4 Fuel cost recovery (21.8) 10.3 Sales volume/weather 55.8 5.9 Other revenue (including unbilled) 11.4 (24.2) Sales for resale (39.4) (27.0) ------- ------ Total ($107.0) ($27.7) ======= ======
Rate rider revenue
Rate rider revenues do not affect net income because specific incurred expenses offset them.
In 1998, rate rider revenues decreased primarily due to the decline in the Grand Gulf 1 cost recovery rate rider revenues. This decline reflects scheduled reductions in the phase-in plan, which was completed in November 1998, and reductions required by the settlement agreement with the APSC.
In 1997, rate rider revenues increased as a result of increased Grand Gulf 1 rate rider revenues as a result of warmer weather during the second half of the year.
The settlement agreement with the APSC is discussed in more detail in Note 2 to the financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues decreased due to unfavorable pricing resulting from a change to a fixed fuel factor in January 1998, partially offset by an increase in generation.
In 1997, fuel cost recovery revenues increased primarily due to a change in fuel mix as a result of favorable pricing.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume/weather
In 1998, sales volume increased as a result of significantly warmer weather as compared to 1997.
Other revenue
In 1998, other revenue, primarily unbilled, increased as a result of significantly warmer weather as compared to 1997.
In 1997, other revenue, primarily unbilled, decreased due to:
o the volume difference in the unbilled beginning of year amount; and o the $10.6 million impact of a rate reduction implemented in 1997 related to the transition to competition filing with the APSC.
Sales for resale
In 1998, sales for resale decreased primarily due to a decrease in sales to associated companies as a result of reduced generation due to outages at both ANO1 and ANO2 and restricted generation due to disruption in coal deliveries during the second quarter of 1998. This decrease was partially offset by an increase in sales to non-associated companies as a result of short-term contracts with certain wholesale customers.
In 1997, sales for resale decreased as a result of a decrease in sales to associated companies, primarily due to changes in generation requirements and availability among the domestic utility companies.
Expenses
Fuel and purchased power expenses
In 1998, fuel expenses decreased primarily due to the impact of the under-recovered deferred fuel cost in excess of the fixed fuel factor implemented in January 1998, billed to retail customers.
In 1997, fuel and purchased power expenses decreased primarily as a result of significantly lower prices.
Other regulatory charges
In 1998, other regulatory charges increased as a result of additional accruals made in 1998 for the transition cost account, partially offset by a small over-recovery of Grand Gulf 1 related costs and the reversal of the 1997 write-off of previously deferred radioactive waste facility costs.
In 1997, other regulatory charges increased as a result of:
o the recognition of additional regulatory liabilities related to the APSC settlement agreement; and o the write-off of previously deferred radioactive waste facility costs.
The settlement agreement with the APSC and the transition cost account are discussed more thoroughly in Note 2 to the financial statements.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Amortization of rate deferrals
In 1998, the amortization of Grand Gulf 1 rate deferrals decreased due a decrease in the amortization prescribed in the Grand Gulf 1 rate phase-in plan, which was completed in November 1998.
In 1997, the amortization of Grand Gulf 1 rate deferrals increased due to an increase in the amortization prescribed in the Grand Gulf 1 rate phase-in plan.
Other
Other income
Other income decreased in 1998 and 1997 due to reduced Grand Gulf 1 carrying charges as a result of a decline in the deferral balance, which does not impact net income.
Interest charges
Interest charges decreased in 1998 and 1997 due to the retirement of certain long-term debt.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 39%, 31.6% and 34.9%, respectively.
The effective income tax rate increased in 1998 primarily due to the reversal of previously recorded AFUDC amounts included in depreciation.
The effective income tax rate decreased in 1997 primarily due to the impact of recording the tax benefit of Entergy Corporation's expenses as prescribed by the tax allocation agreement.
ENTERGY ARKANSAS, INC. STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1998 1997 1996 (In Thousands)
Retained Earnings, January 1 $479,705 $491,316 $492,386
Add: Net income 110,951 127,977 157,798 Increase in investment in subsidiary - - 42 -------- -------- -------- Total 110,951 127,977 157,840 -------- -------- --------
Deduct: Dividends declared: Preferred stock 10,201 10,988 16,110 Common stock 92,600 128,600 142,800 -------- -------- -------- Total 102,801 139,588 158,910 -------- -------- --------
Retained Earnings, December 31 (Note 8) $487,855 $479,705 $491,316 ======== ======== ========
See Notes to Financial Statements.
(1) Includes long-term debt (excluding currently maturing debt), preferred stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.
(2) Represents income before cumulative effect of accounting changes.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy Gulf States, Inc.
In our opinion, the accompanying balance sheets and the related statements of income (loss), of retained earnings, and of cash flows present fairly, in all material respects, the financial position of Entergy Gulf States, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income in 1998 as compared to 1997 would have increased by approximately 19%, excluding the special items listed below, due to decreased operating expenses, partially offset by increased income taxes. Net income in 1997 as compared to 1996 would have increased approximately 5%, excluding the items listed below, due to an increase in electric operating revenues.
1998 1997 1996 (In Millions)
Net income (loss) $ 46.4 $ 60.0 $ (3.9)
Rate reserves (a) (129.0) (227.0) - Cajun Settlement (b) - 146.6 - Radioactive waste facility write-offs - (7.4) - River Bend rate deferrals write-off - - (174.0) River Bend litigation accrual reversal - - 30.0 --------- --------- -------- $ 175.4 $ 147.8 $ 140.1 ========= ========= ========
(a) The effects of the rate reserves in 1997 are reflected in the financial statement categories of electric revenues (See other revenues herein), other income and income taxes.
(b) The effects of the Cajun Settlement in 1997 are reflected in the financial statement categories of electric revenues (See other revenues herein), other operation and maintenance expenses, other income and income taxes.
Note: The items included in the table above are identified by management based on judgment. Factors which management considers in identifying special items include significance, infrequency, unusual nature, and effect on cash flow.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($228.3) ($103.8) Fuel cost recovery 1.6 66.8 Sales volume/weather 61.2 46.2 Other revenue (including unbilled) (171.5) 150.0 Sales for resale 53.1 (23.7) ------- ------ Total ($283.9) $135.5 ======= ======
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Base revenues
In 1998, base revenues decreased due to base rate reductions and reserves for refunds to Louisiana and Texas retail customers totaling $216.5 million ($129.0 million net of tax).
In 1997, base revenues decreased primarily due to the following:
o the reserve for regulatory adjustments; o the provision for rate reductions implemented for Louisiana retail customers in November 1996 and February 1997; o aggressive pricing strategies for targeted customer segments; and o a change in the sales mix from residential customers to industrial customers.
The LPSC and PUCT rate issues and the River Bend plant-related costs are discussed in Note 2 to the financial statements.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
In 1997, fuel cost recovery revenues increased due to a PUCT order that approved recovery of under-recovered fuel expenses.
Sales volume
In 1998, sales volume increased due to significantly warmer weather and an increase in customer base.
In 1997, sales volume increased primarily due to an increase in sales to industrial customers, particularly certain cogeneration customers who purchased electricity from Entergy Gulf States for less than their production cost.
Other revenue
In 1998, other revenue decreased primarily due to the revenue recognized on the gain on the Cajun Settlement in December 1997 for the transfer of Cajun's 30% of River Bend, the effect of which was partially offset by regulatory reserves recorded in 1997. Other revenue also decreased due to unfavorable pricing of unbilled revenues due to rate reductions.
In 1997, other revenue increased due to the revenue recognized on the gain resulting from the Cajun Settlement for transfer of Cajun's 30% of River Bend, which totaled $154.5 million ($92.0 million net of tax). The effect of the Cajun Settlement was partially offset by regulatory reserves recorded at Entergy Gulf States in 1997 of $70 million ($41.6 million net of tax).
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
In 1998, sales for resale increased primarily due to additional revenues related to the sale of energy from the 30% interest in River Bend transferred by the Cajun bankruptcy trustee to Entergy Gulf States in December 1997. Sales for resale also increased due to increased sales to non-associated utilities as a result of increased demand.
In 1997, sales for resale decreased due to decreased sales to both associated and non-associated companies.
Gas and steam operating revenues
Gas operating revenues decreased in 1998 due to a lower unit price for gas purchased for resale.
Gas operating revenues increased in 1997 due to an increase in the fuel factor granted by the LPSC. This increase permits recovery of previously deferred gas costs. A decrease in steam operating revenues due to a change in a customer contract in 1997 and an increase in customer requirements in 1996 offset the increase in gas operating revenues.
Expenses
Fuel and purchased power
In 1998, fuel and purchased power expenses decreased primarily due to favorable gas and nuclear fuel prices and a shift in the generation mix as a result of these prices. Continued under-recovery of deferred expenses also contributed to the decrease in fuel expenses.
In 1997, fuel and purchased power expenses increased due to increased gas usage and increased energy requirements resulting from higher sales volume.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased as a result of the Cajun Settlement in December 1997, pursuant to which the 30% interest in River Bend owned by Cajun was transferred by the Cajun bankruptcy trustee to Entergy Gulf States. Entergy Gulf States now includes 100% of River Bend's operation and maintenance expenses in its operating expenses, as compared to 70% of such expenses for the year ended December 31, 1997.
In 1997, other operation and maintenance expenses decreased due to the Cajun Settlement, which resulted in a reduction of operation and maintenance expenses of $72.2 million ($43 million net of tax). This decrease was partially offset by the $12.4 million ($7.4 million net of tax) write-off of radioactive waste facility costs in December 1997.
Amortization of rate deferrals
In 1998, the amortization of rate deferrals decreased due to the completion in February of the Louisiana retail phase-in plan for River Bend.
In 1997, the amortization of rate deferrals increased based on the LPSC-approved River Bend phase-in plan. The River Bend phase-in plan is discussed in Note 2 to the financial statements.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Other income
In 1998, other income increased due to the 1997 reserve and settlement discussed below.
In 1997, other income decreased due to the reserve for regulatory adjustments of $311 million ($185.4 million net of tax) and the 1996 $50 million ($30 million net of tax) reversal of reserves provided for the Cajun litigation. These decreases were partially offset by interest income of $19.6 million ($11.6 million net of tax) related to the Cajun Settlement recorded in December 1997 and the 1996 $194 million ($174 million net of tax) write-off of River Bend rate deferrals.
Interest charges
Interest charges remained relatively unchanged in 1998. Total interest expense decreased as a result of the retirement, redemption, or refinancing of certain long-term debt in 1997 and 1998. This decrease was offset by an increase in other interest due to the interest component of the provisions recorded for anticipated rate refunds in Louisiana.
Interest expense decreased in 1997 due to the retirement of long-term debt.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 40.6%, 27.2%, and 104.0%, respectively.
The increase in the effective income tax rate in 1998 was due to a decrease in the flow-through of tax benefits related to operating reserves and the increased reversal of previously recorded AFUDC amounts included in depreciation.
The decrease in the effective income tax rate in 1997 was due to a decrease in regulatory operating reserves, which received flow through treatment in 1997, and the River Bend SFAS 121 write-down in 1996.
ENTERGY GULF STATES, INC. STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1998 1997 1996 (In Thousands)
Retained Earnings, January 1 $284,165 $325,312 $357,704
Add: Net income (loss) 46,393 59,976 (3,887)
Deduct: Dividends declared: Preferred and preference stock 19,011 21,862 28,336 Common stock 109,400 77,200 - Preferred and preference stock redemption and other (58) 2,061 169 -------- -------- -------- Total 128,353 101,123 28,505 -------- -------- --------
Retained Earnings, December 31 (Note 8) $202,205 $284,165 $325,312 ======== ======== ========
See Notes to Financial Statements.
(1) Includes long-term debt (excluding currently maturing debt), preferred and preference stock with sinking fund, preferred securities of subsidiary trust, and noncurrent capital lease obligations.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy Louisiana, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, of retained earnings, and of cash flows present fairly, in all material respects, the financial position of Entergy Louisiana, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 1998 primarily due to a decrease in operating expenses, partially offset by a decrease in electric operating revenues and higher income taxes.
Net income decreased in 1997 primarily due to a decrease in electric operating revenues and an increase in other operation and maintenance expenses, partially offset by lower income taxes.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($35.0) ($26.9) Fuel cost recovery (95.4) 29.7 Sales volume/weather 30.8 (23.8) Other revenue (including unbilled) (3.2) - Sales for resale 10.4 (4.6) ------ ------ Total ($92.4) ($25.6) ====== ======
Base revenues
Base revenues decreased in 1998 and 1997 due to base rate reductions that became effective in the latter parts of 1996 and 1997 and early 1998.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues decreased due to lower pricing resulting in a change in generation mix.
In 1997, fuel cost recovery revenues increased due to shifting generation requirements as a result of the extended Waterford 3 refueling outage.
Sales volume/weather
Sales volume increased in 1998 primarily due to significantly warmer weather. The increase in sales volume was partially offset by the loss of a large industrial customer as well as substantially lower sales to two other large industrial customers.
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume decreased in 1997 because of milder weather during the first half of 1997 and the loss of a large industrial customer, as well as substantially lower sales to another large industrial customer in 1997 due to customer cogeneration.
Sales for resale
Sales for resale increased in 1998 as a result of an increase in sales to associated companies, primarily due to changes in generation requirements and availability among the domestic utility companies.
Expenses
Fuel and purchased power expenses
In 1998, fuel and purchased power expenses decreased due to:
o lower gas prices; o a shift in mix to nuclear fuel; and o shifting generation requirements in 1997 as a result of the extended refueling outage at the Waterford 3 nuclear plant.
In 1997, fuel and purchased power expenses increased primarily due to shifting generation requirements resulting from the extended refueling outage at the Waterford 3 nuclear plant, partially offset by lower fuel prices.
Other operation and maintenance expenses
Other operation and maintenance expenses decreased in 1998 and increased in 1997, primarily due to the following:
o non-refueling outage related contract work at Waterford 3 during 1997; o maintenance performed at Waterford 3 in 1997; o the write-off of previously deferred radioactive waste facility costs in 1997; and o expenses related to fire damage sustained at the Little Gypsy fossil plant in September 1997.
Other
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 37.8%, 41.1%, and 38.3% respectively.
The effective income tax rate decreased in 1998 primarily due to accelerated tax depreciation deductions reflecting a shorter tax life on certain assets.
The effective income tax rate increased in 1997 primarily due to decreased amortization of deferred income taxes on property fully depreciated for income tax purposes.
ENTERGY LOUISIANA, INC. STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1998 1997 1996 (In Thousands)
Retained Earnings, January 1 $46,766 $63,764 $72,150
Add: Net income 179,487 141,757 190,762
Deduct: Dividends declared: Preferred stock 13,014 13,016 17,412 Common stock 138,500 145,400 179,200 Capital stock expenses - 339 2,536 -------- -------- -------- Total 151,514 158,755 199,148 -------- -------- --------
Retained Earnings, December 31 (Note 8) $74,739 $46,766 $63,764 ======== ======== ========
See Notes to Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy Mississippi, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, of retained earnings, and of cash flows present fairly, in all material respects, the financial position of Entergy Mississippi, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 1998 primarily as a result of an increase in operating expenses, partially offset by an increase in electric operating revenues.
Net income decreased in 1997 as a result of a decrease in electric operating revenues and an increase in other operation and maintenance expenses, partially offset by lower income taxes.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($10.2) ($7.7) Grand Gulf rate rider (2.6) (19.0) Fuel cost recovery 20.5 (14.5) Sales volume/weather 25.6 3.8 Other revenue (including unbilled) 0.6 (1.6) Sales for resale 5.0 18.0 ----- ------ Total $38.9 ($21.0) ===== ======
Base revenues
In 1998, base revenues decreased due to the formula rate plan reduction that became effective in 1998. There is discussion of the formula rate plan reduction in Note 2 to the financial statements.
Grand Gulf rate rider revenues
Rate rider revenues do not affect net income because specific incurred expenses offset them.
In 1997, as a result of the annual MPSC review, Entergy Mississippi's Grand Gulf 1 rate rider was decreased based on the estimate of costs for the next year. Therefore, Grand Gulf 1 rate rider revenues in 1997 were lower than in 1996.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues increased primarily due to the increase in generation.
In 1997, fuel cost recovery revenues decreased primarily as a result of an MPSC order, effective May 1, 1997 that changed fuel recovery pricing to a fixed fuel factor.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume/weather
In 1998, the sales volume increased as a result of significantly warmer weather.
Sales for resale
In 1997, sales for resale increased as a result of an increase in sales to associated companies due to changes in generation requirements and availability among the domestic utility companies.
Expenses
Fuel expenses
In 1998, fuel expenses increased primarily due to:
o the impact of the under-recovery of deferred fuel costs in excess of the fixed fuel factor applied in 1997. In January 1998, Entergy Mississippi increased its fixed fuel factor to recover actual fuel expenses more accurately. o the increased usage as a result of the change in the fuel mix from higher priced purchased power to lower-priced fossil fuel.
Purchased power expenses
In 1997, purchased power expenses increased due to:
o the increased usage as a result of the change in the fuel mix from higher priced fossil fuel to lower priced purchased power; and o an increase in generation and purchases related to increases in sales volume and sales for resale.
Other operation and maintenance
In 1997, other operation and maintenance expenses increased primarily due to:
o increased contract labor as a result of increased maintenance and plant outage expenses in 1997; and o increased loss reserves as a result of increased litigation reserves.
Other regulatory credits
In 1998, other regulatory credits decreased primarily due to less under-recovery of Grand Gulf related expenses in 1998 as compared to 1997.
Amortization of rate deferrals
In 1998, amortization of rate deferrals decreased due to the completion in September 1998 of the Grand Gulf 1 phase-in plan.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 30.9%, 28.6%, and 34.2% respectively.
The effective income tax rate for 1998 increased slightly due to decreased amortization of excess deferred taxes related to rate deferrals.
The effective income tax rate decreased in 1997 primarily due to the impact of recording the tax benefit of Entergy Corporation's expenses as prescribed by the tax allocation agreement.
ENTERGY MISSISSIPPI, INC. STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1998 1997 1996 (In Thousands)
Retained Earnings, January 1 $229,181 $225,764 $231,463
Add: Net income 62,638 66,661 79,211
Deduct: Dividends declared: Preferred stock 3,370 3,656 4,803 Common stock 66,000 59,200 79,900 Preferred stock expenses - 388 207 -------- -------- -------- Total 69,370 63,244 84,910 -------- -------- -------- Retained Earnings, December 31 (Note 8) $222,449 $229,181 $225,764 ======== ======== ========
See Notes to Financial Statements.
(1) Includes long-term debt (excluding currently maturing debt).
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Entergy New Orleans, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, of retained earnings, and of cash flows present fairly, in all material respects, the financial position of Entergy New Orleans, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly in 1998 compared to 1997 primarily due to an increase in operating revenues and other income and a decrease in income taxes, partially offset by increased operating expenses.
Net income decreased in 1997 compared to 1996 primarily due to an increase in taxes other than income taxes, partially offset by lower income taxes.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months ended December 31, 1998 and 1997 are as follows:
Increase/(Decrease) Description 1998 1997 (In Millions)
Base revenues ($9.8) ($13.6) Fuel cost recovery 14.5 (2.2) Sales volume/weather 13.9 (0.8) Other revenue (including unbilled) 1.0 16.7 Sales for resale 1.7 6.8 ----- ---- Total $21.3 $6.9 ===== ====
Base revenues
In 1998 and 1997, base revenues decreased primarily due to reductions in residential and commercial rates that went into effect in August 1997.
Fuel cost recovery revenues
Fuel cost recovery revenues do not affect net income because they are an increase to revenues that are offset by specific incurred fuel costs.
In 1998, fuel cost recovery revenues increased due to higher fuel prices and increased generation.
Sales volume/weather
In 1998, sales volume increased primarily due to significantly warmer weather.
Other revenue
In 1997, other revenue increased as a result of a rate refund recorded in 1996.
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales for resale
In 1997, sales for resale increased as a result of an increase in electric sales to associated companies primarily due to changes in generation requirements and availability among the domestic utility companies.
Gas operating revenues
Gas operating revenues decreased in 1998 and 1997 primarily due to lower gas prices.
Expenses
Fuel and purchased power expenses
In 1998, fuel and purchased power expenses increased primarily due to:
o an increase in purchased power primarily due to increased generation requirements as a result of significantly warmer weather and an increase in the price of purchased power; and o an over-recovery of gas and electric fuel cost in 1998 due to market price fluctuations.
This increase was partially offset by a decrease in the price of gas purchased for resale.
In 1997, fuel and purchased power expenses decreased primarily due to a shift from higher priced purchased power to lower priced fuel.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses increased primarily due to an increase in environmental reserves, regulatory commission expense, and administrative and general salaries.
Taxes other than income taxes
In 1997, taxes other than income taxes increased because of higher franchise taxes resulting from a December 1996 Council order increasing Entergy New Orleans' annual franchise fee from 2.5% to 5% of gross revenues.
Other regulatory credits
In 1997, other regulatory credits decreased primarily as a result of the 1996 deferral of Entergy New Orleans' portion of the proposed System Energy rate increase.
The proposed System Energy rate increase is discussed in Note 2 to the financial statements.
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Miscellaneous income
Miscellaneous income increased in 1998 primarily due to Entergy New Orleans' portion of System Fuel's gain on the sale of oil and gas properties and an increase in interest related to the Grand Gulf 1 Rate Deferral Plan.
The Grand Gulf 1 Rate Deferral Plan is discussed in Note 2 to the financial statements.
Income taxes
The effective income tax rates for 1998, 1997, and 1996 were 38.4%, 44.0%, and 37.7%, respectively.
The decrease in the effective income tax rate for 1998 was primarily due to a tax benefit recorded in 1998 related to a depreciation adjustment.
The increase in the effective income tax rate for 1997 was primarily due to decreased amortization in 1997 of deferred income taxes on property fully depreciated for federal income tax purposes.
Income taxes are discussed more thoroughly in Note 3 to the financial statements.
ENTERGY NEW ORLEANS, INC. STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1998 1997 1996 (In Thousands)
Retained Earnings, January 1 $61,558 $73,072 $81,261
Add: Net income 16,137 15,451 26,776
Deduct: Dividends declared: Preferred stock 965 965 965 Common stock 9,700 26,000 34,000 ------- ------- ------- Total 10,665 26,965 34,965 ------- ------- -------
Retained Earnings, December 31 (Note 8) $67,030 $61,558 $73,072 ======= ======= =======
See Notes to Financial Statements.
(1) Includes long-term debt (excluding currently maturing debt).
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of System Energy Resources, Inc.
In our opinion, the accompanying balance sheets and the related statements of income, of retained earnings, and of cash flows present fairly, in all material respects, the financial position of System Energy Resources, Inc. at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased slightly in 1998 and 1997 primarily due to the increase in other income.
Revenues
Operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1 and adding to such amount System Energy's effective interest cost for its debt. System Energy's proposed rate increase, which is subject to refund, is discussed in Note 2 to the financial statements.
Expenses
Fuel expenses
In 1998, fuel expenses decreased because of lower generation due to a scheduled nuclear refueling outage in April and May of this year. There was no refueling outage in 1997. Grand Gulf I was on-line for 318 days in 1998 as compared with 365 days in 1997, and 322 days in 1996.
Nuclear refueling outage expenses
In 1997, nuclear refueling outage expenses increased due to costs that were deferred from the November 1996 outage, which were amortized over an 18-month period that began in December 1996. Prior to this outage, such costs were expensed as incurred and no such expenses were incurred in 1996.
Other operation and maintenance expenses
In 1998, other operation and maintenance expenses decreased primarily because of lower contract labor and materials and supplies expense. Also contributing to the lower expense were insurance and materials and supplies refunds.
Depreciation, amortization and decommissioning
In 1997, depreciation, amortization, and decommissioning expenses increased as a result of the reduction of the regulatory asset established to defer the depreciation associated with the sale and leaseback in 1989 of a portion of Grand Gulf 1. The depreciation was deferred to match the collection of lease principal and revenues with the depreciation of the asset.
Other
Other income
Other income increased in both 1998 and 1997 as a result of the interest earned on System Energy's investment in the money pool, an inter- company borrowing arrangement designed to reduce the domestic utility companies' and System Energy's dependence on external short-term borrowings.
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Interest charges
Interest charges decreased in both 1998 and in 1997 due primarily to the retirement and refinancing of higher-cost long-term debt.
Income taxes
The effective income tax rates in 1998, 1997, and 1996 were 42.1%, 42.2%, and 45.4%, respectively.
The decrease in the effective income tax rate for 1997 is primarily due to the impact of recording the tax benefit of Entergy Corporation's expenses as prescribed by the tax allocation agreement.
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
The accompanying consolidated financial statements include the accounts of Entergy Corporation and its direct and indirect subsidiaries, including the domestic utility companies and System Energy, whose separate financial statements are included in this document. The financial statements presented herein result from these companies having registered securities with the SEC.
As required by generally accepted accounting principles, all significant intercompany transactions have been eliminated. Entergy Corporation's domestic utility subsidiaries and System Energy maintain accounts in accordance with FERC and other regulatory guidelines. Certain previously reported amounts have been reclassified to conform to current classifications, with no effect on net income or shareholders' equity.
As discussed in Note 12, Entergy Corporation sold its investments in Entergy London and CitiPower in December 1998. Accordingly, the consolidated balance sheet does not include amounts for these entities as of December 31, 1998, and the consolidated statements of income and cash flows for 1998 include amounts for Entergy London and CitiPower through the dates of their respective sales.
Use of Estimates in the Preparation of Financial Statements
The preparation of Entergy Corporation and its subsidiaries' financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Adjustments to the reported amounts of assets and liabilities may be necessary in the future to the extent that future estimates or actual results are different from the estimates used.
Revenues and Fuel Costs
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate, transmit, and distribute electricity (primarily to retail customers) in Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States generates, transmits, and distributes electricity primarily to retail customers in Texas and Louisiana; distributes gas at retail primarily in Baton Rouge, Louisiana; and also sells steam to a large refinery complex in Baton Rouge. Entergy New Orleans sells both electricity and gas to retail customers in the City of New Orleans, except for Algiers, where Entergy Louisiana is the electricity supplier.
System Energy's operating revenues recover operating expenses, depreciation, and capital costs attributable to Grand Gulf 1 from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Capital costs are computed by allowing a return on System Energy's common equity funds allocable to its net investment in Grand Gulf 1, plus System Energy's effective interest cost for its debt allocable to its investment in Grand Gulf 1. System Energy's proposed rate increase is discussed in Note 2 to the financial statements.
A portion of Entergy Arkansas' and Entergy Louisiana's purchase of power from Grand Gulf has not been included in the determination of the cost of service to retail customers by the APSC and LPSC, respectively, as described in Note 2.
The domestic utility companies accrue estimated revenues for energy delivered since the latest billings. The domestic utility companies' rate schedules include either fuel adjustment clauses or fixed fuel factors, both of which allow either current recovery or deferral of fuel costs until such costs are reflected in the related revenues. Fixed fuel factors remain in effect until changed as part of a general rate case, fuel reconciliation, or fixed fuel factor filing.
Utility Plant
Utility plant is stated at original cost. The original cost of utility plant retired or removed, plus the applicable removal costs, less salvage, is charged to accumulated depreciation. Maintenance, repairs, and minor replacement costs are charged to operating expenses. Substantially all of the utility plant is subject to liens from mortgage bond indentures.
Utility plant includes the portions of Grand Gulf 1 and Waterford 3 that have been sold and leased back. For financial reporting purposes, these sale and leaseback arrangements are reflected as financing transactions.
Net utility plant by company and functional category, as of December 31, 1998, is shown below (in millions):
(1) The decommissioning liability related to the 30% of River Bend previously owned by Cajun and System Energy's decommissioning liability are recorded on the respective Balance Sheets in "Deferred Credits and Other Liabilities - Other".
Depreciation is computed on the straight-line basis at rates based on the estimated service lives and costs of removal of the various classes of property. Depreciation rates on average depreciable property are shown below:
AFUDC represents the approximate net composite interest cost of borrowed funds and a reasonable return on the equity funds used for construction. Although AFUDC increases both utility plant and earnings, it is only realized in cash through depreciation provisions included in rates. Jointly-Owned Generating Stations
Certain Entergy Corporation subsidiaries jointly own electric generating facilities with third parties. The investments and expenses associated with these generating stations are recorded by the subsidiaries to the extent of their respective undivided ownership interests. As of December 31, 1998, the subsidiaries' investment and accumulated depreciation in each of these generating stations were as follows:
(1)Includes an 11.5% leasehold interest held by System Energy. System Energy's Grand Gulf 1 lease obligations are discussed in Note 10 to the financial statements.
Income Taxes
Entergy Corporation and its subsidiaries file a U.S. consolidated federal income tax return. Income taxes are allocated to the subsidiaries in proportion to their contribution to consolidated taxable income. SEC regulations require that no Entergy Corporation subsidiary pay more taxes than it would have paid if a separate income tax return had been filed. In accordance with SFAS 109, "Accounting for Income Taxes", deferred income taxes are recorded for all temporary differences between the book and tax basis of assets and liabilities, and for certain credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Investment tax credits are deferred and amortized based upon the average useful life of the related property, in accordance with rate treatment.
Distribution Licenses
Distribution licenses represented the identifiable intangible assets related to London Electricity and CitiPower that exclusively permit distribution services to be provided within defined territories. Prior to the sales of Entergy London and CitiPower, licenses were being amortized over 40 years using the straight-line method during the periods in 1998, 1997, and 1996 in which Entergy owned these entities.
Reacquired Debt
The premiums and costs associated with reacquired debt of the domestic utility companies and System Energy (except that allocable to the deregulated operations of Entergy Gulf States) are being amortized over the life of the related new issuances, in accordance with ratemaking treatment.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
Investments
Entergy applies the provisions of SFAS 115, "Accounting for Investments for Certain Debt and Equity Securities", in accounting for investments in decommissioning trust funds. As a result, Entergy has recorded on the consolidated balance sheet $99 million of additional value in the decommissioning trust funds of the domestic utility companies and System Energy. This increase represents the amount by which the fair value of the securities held in such funds exceeds the amounts deposited from rate recovery, plus the related earnings on the amounts deposited. In accordance with the regulatory treatment for decommissioning trust funds, Entergy has recorded an offsetting amount in unrealized gains on investment securities as a regulatory liability in other deferred credits.
Foreign Currency Translation
All assets and liabilities of Entergy's foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect at the end of the period. Revenues and expenses are translated at average exchange rates prevailing during the period. The resulting translation adjustments are reflected in a separate component of shareholders' equity. Current exchange rates are used for U.S. dollar disclosures of future obligations denominated in foreign currencies. No representation is made that the foreign currency denominated amounts have been, could have been, or could be converted into U.S. dollars at the rates indicated or at any other rates.
Earnings per Share
The average number of common shares outstanding for the presentation of diluted earnings per share for the years 1998, 1997, and 1996 were greater by approximately 176,000, 140,000, and 165,000 shares, respectively, than the number of such shares for the presentation of basic earnings per share due to Entergy's stock option and other stock compensation plans discussed more thoroughly in Note 5.
Options to purchase approximately 149,000, 225,000, and 235,000 shares of common stock at various prices were outstanding at the end of 1998, 1997, and 1996, respectively, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the market price of the common shares at the end of each of the years presented.
Application of SFAS 71
The domestic utility companies and System Energy currently account for the effects of regulation pursuant to SFAS 71, "Accounting for the Effects of Certain Types of Regulation". This statement applies to the financial statements of a rate-regulated enterprise that meets three criteria. The enterprise must have rates that (i) are approved by the regulator; (ii) are cost-based; and (iii) can be charged to and collected from customers. These criteria may also be applied to separable portions of a utility's business, such as the generation or transmission functions, or to specific classes of customers. If an enterprise meets these criteria, it may capitalize costs that would otherwise be charged to expense if the rate actions of its regulator make it probable that those costs will be recovered in future revenue. Such capitalized costs are reflected as regulatory assets in the accompanying financial statements. SFAS 71 requires that rate-regulated enterprises assess the probability of recovering their regulatory assets at each balance sheet date. When an enterprise concludes that recovery of a regulatory asset is no longer probable, the regulatory asset must be removed from the entity's balance sheet.
SFAS 101, "Accounting for the Discontinuation of Application of FASB Statement No. 71", specifies how an enterprise that ceases to meet the criteria for application of SFAS 71 for all or part of its operations should report that event in its financial statements. In general, SFAS 101 requires that the enterprise report the discontinuation of the application of SFAS 71 by eliminating from its balance sheet all regulatory assets and liabilities related to the applicable segment. Additionally, if it is determined that a regulated enterprise is no longer recovering all of its costs and therefore no longer qualifies for SFAS 71 accounting, it is possible that an impairment may exist that could require further write-offs of plant assets.
During 1997, EITF 97-4: "Deregulation of the Pricing of Electricity - Issues Related to the Application of FASB Statements No. 71 and 101" was issued. This pronouncement specifies that SFAS 71 should be discontinued at a date no later than when the details of the transition to competition plan for all or a portion of the entity subject to such plan are known. However, other factors could cause the discontinuation of SFAS 71 before that date. Additionally, EITF 97-4 promulgates that regulatory assets to be recovered through cash flows derived from another portion of the entity that continues to apply SFAS 71 should not be written off; rather, they should be considered regulatory assets of the segment that will continue to apply SFAS 71.
As of December 31, 1998, the majority of the domestic utility companies' and System Energy's operations continue to meet each of the criteria required for the use of SFAS 71, and the companies have recorded significant regulatory assets.
During 1996, FERC issued orders that require utilities to provide open access to their transmission system to promote a more competitive market for wholesale power sales. As described in Note 2, the domestic utility companies have filed transition-to-competition proposals with their retail regulators providing, among other things, for accelerated recovery of certain capitalized costs to facilitate an orderly transition to a competitive retail power market. In response to these filings, certain regulatory commissions have begun proceedings to consider retail competition in their jurisdictions.
Regulators, other than in Arkansas, have generally deferred action on the plans in lieu of their general proceedings on competition. Entergy cannot, at this time, predict the completion dates or ultimate outcome of these proceedings. Accordingly, the domestic utility companies and System Energy anticipate that they will continue to meet the criteria for the application of SFAS 71 in the foreseeable future.
Domestic Deregulated Operations
Entergy Gulf States discontinued regulatory accounting principles for its wholesale jurisdiction and its steam department during 1989 and for the Louisiana retail deregulated portion of River Bend in 1991. The latter was in accordance with a deregulated asset plan representing an unregulated portion (approximately 24%) of River Bend (plant costs, generation, revenues, and expenses) established pursuant to a January 1992 LPSC order. The plan allows Entergy Gulf States to sell such generation to Louisiana retail customers at 4.6 cents per KWH or off-system at higher prices, with certain provisions for sharing such incremental revenue above 4.6 cents per KWH between ratepayers and shareholders.
The results of these deregulated operations (before interest charges) for the years ended December 31, 1998, 1997, and 1996 are as follows (in thousands):
The net investment associated with these deregulated operations was approximately $864 million as of December 31, 1998. This amount includes Cajun's interest in River Bend, which was transferred by Cajun's Trustee in Bankruptcy to Entergy Gulf States in late 1997 at a fair value of $139 million, based on management's estimate of its value at the time of transfer.
Impairment of Long-Lived Assets
Entergy periodically reviews long-lived assets whenever events or changes in circumstances indicate that recoverability of these assets is uncertain. Generally, the determination of recoverability is based on the net cash flows expected to result from such operations and assets. Projected net cash flows depend on the future operating costs associated with the assets, the efficiency and availability of the assets and generating units, and the future market and price for energy over the remaining life of the assets. Based on current estimates of future cash flows, management anticipates that future revenues from such assets and operations of Entergy will fully recover all related costs.
Assets regulated under traditional cost-of-service ratemaking, and thereby subject to SFAS 71 accounting, are generally not subject to impairment because this form of regulation assures that all allowed costs are subject to recovery. However, certain deregulated assets and other operations of the domestic utility companies totaling approximately $1.6 billion (pre-tax) could be affected in the future. Those assets include Entergy Arkansas' and Entergy Louisiana's retained shares of Grand Gulf 1, Entergy Gulf States' Louisiana deregulated asset plan, the Texas jurisdiction abeyed portion of the River Bend plant and the portion of the plant transferred from Cajun, and wholesale jurisdiction and steam department operations.
Change in Accounting for Nuclear Refueling Outage Costs (Entergy Corporation and System Energy)
System Energy filed a rate increase request with FERC in May 1995, which, among other things, proposed a change in the accounting recognition of incremental nuclear refueling outage costs from that of expensing those costs as incurred to deferring and amortizing those costs over the operating period immediately following the nuclear refueling outage. As described in Note 2, the FERC ALJ issued an initial decision in this proceeding in July 1996, agreeing to the change in recognition of outage costs proposed by System Energy. Accordingly, System Energy deferred the refueling outage costs incurred in the fourth quarter of 1996. As of December 31, 1996, System Energy's current assets included $24.0 million in deferred nuclear refueling outage costs, which were amortized over the next fuel cycle (approximately 18 months). Amortization of these costs in the fourth quarter of 1996 and in 1997 and 1998 amounted to $1.2 million, $16.4 million, and $6.4 million, respectively. This change had no material impact on the net income of either Entergy or System Energy because System Energy is recovering the refueling outage costs from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and these companies, in turn, will recover these costs from their ratepayers.
Derivative Financial Instruments
Entergy uses a variety of derivative financial instruments, including interest rate and foreign currency swaps, and natural gas and electricity futures, forwards, and options, as a part of its overall risk management strategy.
Entergy accounts for derivative financial instruments used to mitigate risk in accordance with hedge accounting. If such interest rate swap derivatives were to be sold or terminated, any gain or loss would be deferred and amortized over the remaining life of the debt instrument being hedged by the interest rate swap. If the debt instrument being hedged by the interest rate swaps were to be extinguished, any gain or loss attributable to the swap would be recognized in the period of the transaction.
Entergy's power marketing and trading business enters into sales and purchases of electricity and natural gas for delivery up to 12 months in the future. Financial instruments used in connection with marketing and trading activities are accounted for using the mark-to-market method. Under the mark-to-market method of accounting, derivative financial instruments are reflected at market value with resulting unrealized gains and losses recognized currently in income.
Additional information concerning Entergy's derivative instruments outstanding as of December 31, 1998 is included in Notes 7, 9, and 12 to the financial statements.
Fair Value Disclosures
The estimated fair value of financial instruments was determined using bid prices reported by dealer markets and by nationally recognized investment banking firms. The estimated fair value of derivative financial instruments is based on market quotes of the applicable interest or foreign currency exchange rates, or a survey of electricity forward prices. Considerable judgment is required in developing the estimates of fair value. Therefore, estimates are not necessarily indicative of the amounts that Entergy could realize in a current market exchange. In addition, gains or losses realized on financial instruments held by regulated businesses may be reflected in future rates and therefore do not accrue to the benefit or detriment of stockholders.
Entergy considers the carrying amounts of financial instruments classified as current assets and liabilities to be a reasonable estimate of their fair value because of the short maturity of these instruments. In addition, Entergy does not expect that performance of its obligations will be required in connection with certain off-balance sheet commitments and guarantees considered financial instruments. For these reasons, and because of the related-party nature of these commitments and guarantees, determination of fair value is not considered practicable. Additional information regarding financial instruments is included in Notes 4, 5, 7, and 9 to the financial statements.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will be effective for Entergy in 2000. This statement requires that all derivatives be recognized in the statement of financial position as either assets or liabilities and measured at fair value. The statement also requires the designation and reassessment of all hedging relationships. The changes in fair value of derivatives will be recognized in earnings or in comprehensive income, depending on the type of hedge relationship involved. The adoption of SFAS 133 is not expected to have a material effect on the financial position, results of operations, or cash flows of Entergy Corporation.
During 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", which will be effective for Entergy in 1999. This SOP requires that computer software costs that are incurred in the preliminary project stage be expensed as incurred. Once the capitalization criteria of the SOP have been met, external direct cost of materials and services used in developing or obtaining internal use computer software, as well as payroll and payroll- related costs of employees (to the extent of time spent directly on internal use computer software projects), and interest costs incurred in developing such computer software should be capitalized. Training costs and data conversion costs should be expensed as incurred, with certain exceptions. The adoption of SOP 98-1 is not expected to have a material effect on the financial position, results of operations, or cash flows of Entergy Corporation.
NOTE 2. RATE AND REGULATORY MATTERS
Retail Rate Proceedings
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
In December 1997, the APSC approved a settlement agreement, which provides for the following:
o accelerated amortization of Entergy Arkansas' Grand Gulf purchased power obligation in an amount totaling $165.3 million over the period from January 1999 to June 2004; o the establishment of a transition cost account to collect earnings in excess of an 11% return on equity to offset against stranded costs when retail access is implemented; o a rate freeze for at least a three-year period; o the establishment of four generic dockets to address competition and transition issues that must be resolved prior to retail access; and o rate decreases totaling $200 million over the two-year period 1998- 1999. However, the net income effect from these reductions is only approximately $22 million.
During 1998, Entergy Arkansas' operating expenses reflected reserves of $74.0 million ($45 million net of taxes) to record the 1998 accrual of excess earnings and an adjustment of the December 1997 accrual. As of December 31, 1998, the transition cost account balance was $90.6 million. Additional reserves may also be required in 1999 based on earnings reviews. In management's opinion, Entergy Arkansas continues to meet each of the criteria required for the continued application of SFAS 71. Refer to "Application of SFAS 71" in Note 1 for a discussion of this issue.
Filings with the PUCT and Texas Cities
Recovery of River Bend Costs (Entergy Corporation and Entergy Gulf States)
In March 1998, the PUCT issued an order disallowing recovery of $1.4 billion of company-wide abeyed River Bend plant costs and approximately $157 million of Texas retail jurisdiction deferred River Bend operating and carrying costs (Abeyed Deferrals). Based on its long-lived asset impairment policy, Entergy Gulf States wrote off Abeyed Deferrals of $169 million, net of tax, effective January 1, 1996. The River Bend plant costs have been held in abeyance since 1988, during which time they have been the subject of several appeals by Entergy Gulf States. As of December 31, 1998, such costs (net of taxes and depreciation) totaled approximately $249 million.
Following denial by the PUCT of its motion for rehearing, Entergy Gulf States has again appealed the PUCT's decision on this matter to the Travis County District Court in Texas. The settlement agreement discussed below, if approved, would require that Entergy Gulf States not act on its appeal before January 1, 2002 and would limit the potential recovery to $115 million net plant in service as of January 1, 2002, less depreciation over the remaining life of the plant beginning January 1, 2002 through the date the plant costs are included in rate base, provided that any such recovery shall not be used to increase rates above the level agreed to in the settlement agreement. Based on advice of counsel, management believes that it is probable that the matter will be remanded again to the PUCT for a further ruling on the prudence of the abeyed plant costs and it is reasonably possible that some portion of these costs will be included in rate base. Therefore, management believes that the reserves discussed below are adequate to reflect the probable outcome of the abeyed plant costs proceeding, but no assurance can be given that additional future reserves or write-offs will not be required.
In October 1998, the PUCT issued a final order in the judicial remand of the PUCT's 1988 decision to require Entergy Gulf States to use tax benefits generated by disallowed expenses to reduce rates. The PUCT's order reduced the amount of the requested recovery to $75 million, primarily by reducing the requested carrying costs based on an overall rate of return to the amounts allowed for the over- and under-billing for utility service. This allowed recovery was used to offset the retroactive rate refund discussed below. Following the overruling of its motion for rehearing, Entergy Gulf States filed an appeal in November 1998 contending that the PUCT had improperly reduced its recovery. No assurance can be given as to the timing or outcome of the appeal. The settlement discussed below, if approved, would require Entergy Gulf States to dismiss this appeal.
Rate Proceedings (Entergy Corporation and Entergy Gulf States)
As the result of an investigation of the reasonableness of Entergy Gulf States' rates, the PUCT in March 1995 ordered an annual base rate reduction of $36.5 million retroactive to March 31, 1994, which resulted in a 1995 refund to customers of $61.8 million (including interest). Entergy Gulf States and other parties have appealed the PUCT order, but no assurance can be given as to the timing or outcome of the appeal. The settlement discussed below, if approved, would require Entergy Gulf States and other signatories to the settlement to dismiss this appeal.
In accordance with the Merger agreement, Entergy Gulf States filed a rate proceeding with the PUCT in November 1996. In April 1996, certain cities served by Entergy Gulf States (Cities) instituted investigations of the reasonableness of Entergy Gulf States' rates. In May 1996, the Cities agreed to forego their pending investigation based on the assurance that any rate decrease ordered in the November 1996 filing would be retroactive to June 1, 1996, with accrued interest until refunded. The agreement further provided that no base rate increase would be retroactive. Subsequent to the November 1996 filing, the Cities passed ordinances reducing Entergy Gulf States' rates by $43.6 million. Entergy Gulf States appealed these ordinances to the PUCT, and these appeals were consolidated in the November 1996 rate proceeding before the PUCT. A proposal to achieve an orderly transition to retail electric competition in Texas, similar to the filing described below that Entergy Gulf States made with the LPSC, was included in the November 1996 filing. This filing with the PUCT was litigated in four phases as follows:
1. fuel factor/fuel reconciliation phase, of which Entergy Gulf States believes there was an under-recovered fuel balance of $41.4 million, including interest, for the period from July 1995 to June 1996; 2. revenue requirement phase; 3. cost allocation/rate design phase; and 4. competitive issues phase.
A supplemental filing with respect to the fourth phase was made with the PUCT in April 1997, outlining a comprehensive market reform proposal calling for the establishment of retail competition, service quality standards, a regional power exchange, and an independent system operator. Entergy Gulf States requested from the PUCT a reciprocal commitment to provide an opportunity for the full recovery of prudently incurred investments previously approved by regulators. The rebuttal testimony of Entergy Gulf States in the competition phase of the case modified its position to include elements from the 1997 proposed Texas legislation addressing retail access. Most notable were the provisions calling for a transition period through the year 2001 and rate reductions for residential and most commercial customers.
In June 1998, the PUCT began its deliberations on the Entergy Gulf States' rate case filed in November 1996. The PUCT did not accept settlements filed in March and June of 1998 by Entergy Gulf States and various intervenor groups. In July 1998, the PUCT issued an order and, after making modifications on rehearing, issued its second order on rehearing in October 1998. The second order on rehearing reduces Entergy Gulf States' Texas rates by approximately $111 million annually effective December 18, 1998, offset through May 1999 by accelerated recovery of accounting order deferrals, resulting in a net reduction of $69 million on an annual basis through that date. This order also required a refund of $76 million, subject to a true-up adjustment. This refund is calculated as a rate reduction and service quality refund retroactive to June 1996, offset by the accelerated recovery of the accounting order deferrals, a fuel surcharge, and recovery of amounts allowed in the income tax remand case discussed above. This refund amount was reduced by $32 million from the original refund ordered in the July 1998 order, but was offset by the passage of time from the original rate reduction's assumed effective date of August 1998 to the new assumed effective date of December 1, 1998. Entergy Gulf States filed a motion for reconsideration, which was overruled by the PUCT. The refunds pursuant to the PUCT's order began in August 1998 and the ordered rate decrease was implemented in December 1998. Entergy Gulf States has appealed the PUCT's October 1998 order on rehearing, but no assurance can be given as to the timing or outcome of the appeal. The settlement discussed below, if approved, would require Entergy Gulf States to dismiss this appeal. During 1997 and 1998, Entergy Gulf States' operating revenues reflected reserves of $381 million ($227 million net of taxes) and $114.3 million ($68.1 million net of taxes), respectively, which were recorded based on management's estimates of the probable outcome of the rate case and abeyed plant cost proceedings.
In the PUCT's October 1998 second order on rehearing, the PUCT also disallowed recovery of approximately $49 million of Entergy's affiliate costs allocated to Entergy Gulf States in Texas. Entergy's affiliate costs principally result from:
o managing fossil and nuclear generating plants; o managing transmission and distribution systems; o providing human resources, accounting, and legal services; and o providing other necessary services to Entergy Corporation's electric utility subsidiaries.
The PUCT has published proposed "Code of Conduct" rules governing affiliate transactions. Although these rules have not been adopted, management believes that the rules, if adopted as proposed, would severely restrict the type and extent of services that Entergy's service companies could provide to Entergy Gulf States. Management believes that adoption of these rules would result in higher costs for Entergy Gulf States and its Texas and Louisiana customers. Other state or local regulators with jurisdiction over Entergy's utility subsidiaries may propose similar rules in the future. Legislation currently pending in Texas and Arkansas also includes provisions governing affiliate transactions or the competitive use of information obtained in the course of the regulated utility business.
In November 1998, Entergy Gulf States filed a new rate application with the PUCT requesting the approval of tariffs and riders designed to collect a total non-fuel base rate revenue requirement for the Texas retail jurisdiction of $457.2 million based on the test year ended June 30, 1998. In December 1998, Entergy Gulf States updated this filing to reflect the base rate revenues from the PUCT's October 1998 second order on rehearing in its cost of service study. In the update, Entergy Gulf States agreed to cap the base rate revenue requirement at the level proposed in the initial filing. The modified filing seeks an annualized base rate increase of $84.6 million through January 31, 2000 and $95.5 million thereafter. Management cannot predict the ultimate outcome of this rate proceeding.
On February 1, 1999, Entergy Gulf States entered into a settlement agreement with all but one of the parties to Entergy Gulf States' pending Texas rate proceeding. If approved, the settlement agreement would resolve the pending approval of Entergy Gulf States' 1996 rate proceedings as well as its 1998 rate proceedings and all pending appeals in other matters, except for the appeal in the River Bend cost recovery proceeding. The settlement agreement provides for the following:
o an annual $4.2 million base rate reduction, effective March 1, 1999, which is in addition to the annual $69 million base rate reduction (net of River Bend accounting order deferrals) in the PUCT's second order on rehearing in October 1998; o a reduced fixed fuel factor, effective March 1, 1999; o a methodology for semi-annual revisions of the fixed fuel factor based on the market price of natural gas; o a base rate freeze through June 1, 2000; o remaining River Bend accounting order deferrals as of January 1, 1999, are to be amortized over three years on a straight-line basis, provided that such accounting order deferrals shall not be recognized in any subsequent base rate case or stranded cost calculation; o the dismissal of all pending appeals relating to Entergy Gulf States' proceedings with the PUCT, except the River Bend appeal discussed below; and o the potential recovery in the River Bend appeal is limited to $115 million net plant in service as of January 1, 2002, less depreciation over the remaining life of the plant beginning January 1, 2002 through the date the plant costs are included in rate base, provided that any such recovery shall not be used to increase rates above the level agreed to in the settlement agreement.
On February 19, 1999, the PUCT approved the implementation of new rates consistent with the terms of the settlement agreement on an interim basis, pending final approval of the settlement agreement. The new rates were made effective on March 1, 1999. The PUCT will hold a hearing on the settlement agreement on April 13, 1999, and a final decision is expected in May 1999. Management cannot predict the likelihood that the PUCT will approve the settlement agreement.
PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
In December 1995, Entergy Gulf States filed a fuel and purchased power reconciliation filing with the PUCT to recover $22.4 million, including interest, of fuel under-recoveries incurred during the period from January 1994 through June 1995. The PUCT issued an order on rehearing approving the recovery of $18.5 million of the under-recovered fuel balance. Entergy Gulf States has appealed portions of the PUCT's order to the Texas District Court. No assurance can be given as to the timing or outcome of these appeals. The settlement agreement discussed above, if approved, would require Entergy Gulf States to dismiss this appeal.
In September 1998, Entergy Gulf States filed an application with the PUCT for an increase in its fixed fuel factor and a surcharge to Texas retail customers for the cumulative under-recovery of fuel and purchased power costs. The proposed increase in the fixed fuel factor would have resulted in increased revenues of $55.6 million annually compared to the then current fixed fuel factor. The proposed surcharge was designed to recover $128.1 million, including interest, for fuel under-recoveries incurred during the period from July 1996 through June 1998. Hearings on this application were held in October 1998, and the PUCT issued an order in December 1998. The PUCT's order adopted the terms of a non-unanimous stipulation whereby a revised fuel factor and fuel surcharge would be implemented that would result in increased revenues of $42.4 million annually and recovery of $112.1 million of under-recovered fuel costs, inclusive of interest, over a 24-month period. These increases were implemented in the first billing cycle in February 1999. As discussed above, Entergy Gulf States has entered into a settlement agreement in its pending base rate proceeding under which the fixed fuel factor will be reduced effective March 1, 1999 and will be adjusted thereafter on a semi- annual basis. This fuel factor reduction was approved by the PUCT on an interim basis on February 18,1999. All amounts at issue in this proceeding will be the subject of a future fuel reconciliation proceeding before the PUCT, at which time the PUCT will consider the reasonableness of the Entergy Gulf States' fuel and purchased power expenses extending back to July 1, 1996. Management cannot predict the ultimate outcome of the fuel reconciliation proceeding.
NISCO Unrecovered Costs (Entergy Corporation and Entergy Gulf States)
In 1986, the PUCT ordered that the purchased power costs from NISCO in excess of Entergy Gulf States' avoided costs be disallowed. The PUCT disallowance resulted in approximately $12 million to $15 million of unrecovered purchased power costs on an annual basis, which Entergy Gulf States continued to expense as the costs were incurred. In April 1991, the Texas Supreme Court ordered the PUCT to allow Entergy Gulf States to recover reasonable and necessary purchased power payments in excess of its avoided cost in future proceedings. Based on a January 1992 filing by Entergy Gulf States requesting a new fixed fuel factor and a final reconciliation of fuel and purchased power costs incurred between December 1986 and September 1991, the PUCT in June 1993 concluded that purchased power costs from NISCO in excess of Entergy Gulf States' avoided costs were not reasonably incurred. In October 1993, Entergy Gulf States appealed the PUCT's order to the Travis County District Court where the matter is still pending. As of December 31, 1998, Entergy Gulf States had recorded $200.2 million of unrecovered purchased power costs and deferred revenue pending the appeal to the District Court. No assurance can be given as to the timing or outcome of the appeal. The settlement agreement discussed above, if approved, would require Entergy Gulf States to dismiss this appeal.
Filings with the LPSC
(Entergy Corporation and Entergy Gulf States)
Annual Earnings Reviews
In May 1995, Entergy Gulf States filed its second required post-Merger earnings analysis with the LPSC. Hearings on this review were held in December 1995. In October 1996, the LPSC issued an order requiring a $33.3 million annual base rate reduction and a $9.6 million refund. One component of the rate reduction removes from base rates approximately $13.4 million annually of costs that will be recovered in the future through the fuel adjustment clause. Subsequently, Entergy Gulf States appealed the LPSC's order and obtained an injunction to stay the order, except insofar as it requires the $13.4 million reduction, which Entergy Gulf States implemented in November 1996. In addition, pursuant to an October 1996 settlement with the LPSC, Entergy Gulf States will be allowed to recover $8.1 million annually related to certain gas transportation and storage facilities costs. This amount will be applied as an offset against any refund that may be required by a final judgment in Entergy Gulf States' appeal of the second post-Merger earnings review order.
In May 1996, Entergy Gulf States filed its third required post-Merger earnings analysis with the LPSC. Based on this filing, Entergy Gulf States implemented a $5.3 million annual rate reduction in June 1996. In September 1998, the LPSC issued an order in the third required post-Merger earnings analysis that required a refund of $44.8 million for the period June 1996 through May 1997, and a prospective rate reduction of $54.6 million effective September 20, 1998. Entergy Gulf States has appealed this order and has been granted injunctive relief pending a final decision on appeal.
In May 1997, Entergy Gulf States filed its fourth post-Merger earnings analysis with the LPSC. Hearings were concluded in 1998 and a final decision by the LPSC is expected during the first half of 1999.
In May 1998, Entergy Gulf States filed its fifth required post-Merger earnings analysis with the LPSC. This filing will be subject to review by the LPSC, which may result in a change in rates. Hearings are scheduled to begin in May 1999.
In July 1998, Entergy Gulf States implemented an $18 million rate reduction effective July 29, 1998 to reflect reductions that are expected to occur as a result of Entergy Gulf States' annual earnings reviews. In addition, Entergy Gulf States' operating revenues during the fourth quarter of 1998 reflect reserves of $102.2 million ($60.9 million net of taxes) based on management's estimates of the probable outcome of such annual earnings reviews as well as the LPSC fuel cost review discussed below. Proceedings on issues in the second, third, fourth and fifth post-Merger earnings analyses will continue.
LPSC Fuel Cost Review
In September 1996, the LPSC completed the second phase of its review of Entergy Gulf States' fuel costs, which covered the period October 1991 through December 1994. In October 1996, the LPSC issued an order requiring a $34.2 million refund. The refund includes a disallowance of $14.3 million of capital costs (including interest) related to certain gas transportation and storage facilities, which were recovered through the fuel clause, and which have been refunded pursuant to the October 1996 LPSC Settlement. Entergy Gulf States will be permitted to recover these costs in the future through base rates. Subsequently, Entergy Gulf States appealed and received an injunction to stay this order, except insofar as the order required the $14.3 million refund. In January 1999, the Louisiana Supreme Court affirmed the LPSC's October 1996 order. Pursuant to this decision, Entergy Gulf States expects to refund the remaining $19.9 million (including interest) in the first quarter of 1999. In 1998, management reserved for this refund in connection with estimates of the probable outcome of this proceeding and the annual earnings reviews discussed above.
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
In September 1996, Entergy Gulf States and Entergy Louisiana filed proposals with the LPSC designed to achieve an orderly transition to retail electric competition in Louisiana, while protecting certain classes of ratepayers from bearing the burden of cost shifting. The proposals consist of the following:
o no increase in rates for any customer class; o a universal service charge for customers that remain connected to Entergy Gulf States' or Entergy Louisiana's electric facilities but choose to purchase their electricity from another source; o a seven-year base rate freeze in the Louisiana areas serviced by Entergy Gulf States and Entergy Louisiana; and o complete recovery, over a seven-year period, of the remaining plant investment associated with River Bend and Waterford 3 as of December 31, 1995.
In February 1997, the LPSC identified certain issues embodied in the Entergy Gulf States and Entergy Louisiana proposals that will be addressed in those companies' existing rate dockets, and other issues that will be addressed in an ongoing generic regulatory proceeding examining electric utility industry restructuring. During 1998, hearings were conducted related to the quantification of potential stranded costs. The ALJ should issue a recommendation in 1999 for consideration by the LPSC.
During 1998, the LPSC also identified seven areas for consideration in the generic rulemaking docket on competition in the electric utility industry to address whether competition in the electric utility industry is in the public's best interest. Each Louisiana electric utility and intervening party filed comments and responses to the LPSC Staff's data requests, and hearings were held on each issue. This proceeding should produce a generic rulemaking order in 1999.
(Entergy Corporation and Entergy Louisiana)
In May 1997, Entergy Louisiana made its second annual performance- based formula rate plan filing with the LPSC for the 1996 test year. This filing resulted in a total rate reduction of approximately $54.5 million, which was implemented beginning in the first billing cycle of July 1997. Rates were reduced by an additional $0.7 million effective July 1, 1997, and by an additional $2.9 million effective March 1998. Upon completion of the hearing process in December 1998, the LPSC issued an order requiring an additional rate reduction and refund, although the amounts thereof were not quantified. Entergy Louisiana has appealed this order, and has obtained a preliminary injunction pending a final decision on appeal.
In September 1998, Entergy Louisiana made its third annual performance- based formula rate plan filing with the LPSC for the 1997 test year. The filing indicated that earnings were such that no change in rates would be warranted with the exception of the elimination of a $3.7 million one-time credit that will result in a rate increase in this amount. Hearings will be conducted on this filing in 1999, after which the LPSC may order further rate adjustments. In September 1998, the LPSC issued an order extending the annual performance-based formula rate plan filings for Entergy Louisiana for an additional three years, through an April 2000 filing for the 1999 test year.
Filings with the MPSC (Entergy Corporation and Entergy Mississippi)
In March 1998, Entergy Mississippi filed its annual earnings review with the MPSC under its performance-based formula rate plan for the 1997 test year. In April 1998, the MPSC issued an order approving a prospective rate reduction of $6.6 million. This rate reduction went into effect May 1, 1998.
From 1996 to the present, Entergy Mississippi and the MPSC have been addressing issues regarding an orderly transition to a more competitive market for electricity. As a result of these discussions and recent hearings held in April 1998, the MPSC issued a Revised Proposed Transition Plan (the Plan) in June 1998 that omitted the previous restriction on securitization of stranded costs and provided for enabling legislation necessary to implement the Plan in 2000. The Plan also provides for retail competition in Mississippi to begin January 1, 2001 and for recovery of allowable stranded costs through a non-bypassable charge during a transition period between January 2001 and the end of 2004. The MPSC conducted hearings in September 1998 on the market power and reliability studies previously filed (as requested by the MPSC) by the investor-owned utilities in Mississippi. During November 1998, the MPSC conducted hearings to address certification requirements and load dispatch and control rules.
Filings with the Council (Entergy Corporation and Entergy New Orleans)
In connection with the Council's rate investigation, Entergy New Orleans submitted its cost of service and revenue requirement filing along with its transition to competition plan in September 1997. In November 1997, the Council severed the traditional ratemaking issues from the transition filings and established separate dockets for electric competition and gas competition. Hearings related to the rate investigation were held and concluded in July 1998. Entergy New Orleans filed a settlement agreement before the Council, which was approved in November 1998. The settlement agreement required the following:
o base rate reductions for Entergy New Orleans' electric customers of $7.1 million effective January 1, 1999, $3.2 million effective October 1, 1999, and $16.1 million effective October 1, 2000; o a base rate reduction for Entergy New Orleans' gas customers of $1.9 million effective January 1999; and o no base rate increases prior to October 1, 2001.
In October 1998, the Council established a procedural schedule for the purpose of determining if natural gas retail competition is in the public's best interest. Under this procedural schedule, several technical conferences will be held, followed by filed testimony from all participants. Hearings are scheduled to begin in May 1999. The electric transition-to-competition filing made in September 1997 is generally similar to those filed for the other domestic utility companies. No procedural schedule has been established for that proceeding.
The Council is currently investigating the prudence of Entergy New Orleans' natural gas purchasing practices. The procedural schedule established for this docket requires all parties to file testimony through the first quarter of 1999 and hearings are expected to begin in May 1999.
River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States was amortizing $182 million of River Bend operating and purchased power costs, depreciation, and accrued carrying charges over a 20-year period; however, the PUCT recently accelerated the recovery of these deferrals to a three-year recovery period ending in May 1999. In 1998, Entergy Gulf States recorded reserves of $81.6 million ($48.6 million net of taxes) reflecting such accelerated recovery pending a final decision on Entergy Gulf States' appeal. The settlement agreement discussed above, if approved, would require Entergy Gulf States to dismiss this appeal; however, it also allows Entergy Gulf States to amortize the remaining deferral balance as of January 1, 1999 over three years on a straight-line basis, provided that such accounting order deferrals shall not be recognized in any subsequent base rate case or stranded cost calculation.
Also, in accordance with a phase-in plan approved by the LPSC, Entergy Gulf States deferred $294 million of its River Bend costs related to the period February 1988 through February 1991. These deferrals have been fully recovered pursuant to the phase-in plan, which expired in February 1998.
Grand Gulf 1 Deferrals
(Entergy Corporation and Entergy Arkansas)
Under the settlement agreement entered into with the APSC in 1985 and amended in 1988, Entergy Arkansas agreed to retain a portion of its Grand Gulf l-related costs, recover a portion of such costs currently, and defer a portion of such costs for future recovery. Deferrals ceased in 1990, and Entergy Arkansas has fully recovered such deferrals pursuant to the phase- in plan, which expired in November 1998. In 1996 and subsequent years, Entergy Arkansas retains 22% of its 36% share (approximately 7.92%) of Grand Gulf 1 costs and recovers the remaining 78%. In the event that Entergy Arkansas is not able to sell its retained share to third parties, it may sell such energy to its retail customers at a price equal to its avoided energy cost, which is currently less than Entergy Arkansas' cost of energy from its retained share.
(Entergy Corporation and Entergy Louisiana)
In a series of LPSC orders, court decisions, and agreements from late 1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to costs associated with Entergy Louisiana's share of capacity and energy from Grand Gulf l, subject to certain terms and conditions. In November 1988, Entergy Louisiana agreed to retain, and not recover from retail ratepayers, 18% of its 14% share (approximately 2.52%) of the costs of Grand Gulf l capacity and energy. Non-fuel operation and maintenance costs for Grand Gulf 1 are recovered through Entergy Louisiana's base rates. Entergy Louisiana is allowed to recover through the fuel adjustment clause 4.6 cents per KWH for the energy related to its retained portion of these costs. Alternatively, Entergy Louisiana may sell such energy to nonaffiliated parties at prices above the fuel adjustment clause recovery amount, subject to the LPSC's approval.
(Entergy Corporation and Entergy Mississippi)
Entergy Mississippi entered into a plan with the MPSC that provided, among other things, for the recovery by Entergy Mississippi, in equal annual installments over 10 years beginning October 1, 1988, of all Grand Gulf 1-related costs deferred through September 30, 1988, pursuant to a final order by the MPSC. Additionally, the plan provided that Entergy Mississippi would defer, in decreasing amounts, a portion of its Grand Gulf 1-related costs over four years beginning October 1, 1988. Entergy Mississippi recovered these deferrals along with related carrying charges over the six-year period from October 1992 to September 1998. The completion of the recovery of the deferred costs and associated carrying charges, offset by i) the accelerated recovery of Entergy Mississippi's Grand Gulf purchased power obligation, and ii) the recovery of a portion of Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase discussed herein, resulted in a $127.1 million annual rate reduction for Entergy Mississippi as of October 1, 1998. The reduction will not result in a decrease in Entergy Mississippi's income as the phase- in plan deferrals have now been fully amortized and no further expense associated with the phase-in plan will be recognized.
(Entergy Corporation and Entergy New Orleans)
Under Entergy New Orleans' various rate settlements with the Council in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not recover from ratepayers a total of $96.2 million of its Grand Gulf 1 costs. Entergy New Orleans was permitted to implement annual rate increases in decreasing amounts each year through 1995, and to defer certain costs and related carrying charges for recovery on a schedule extending from 1991 through 2001. As of December 31, 1998, the uncollected balance of Entergy New Orleans' deferred costs was $64.2 million.
FERC Settlement (Entergy Corporation and System Energy)
In November 1994, FERC approved an agreement settling a long-standing dispute involving income tax allocation procedures of System Energy. In accordance with the agreement, System Energy will refund a total of approximately $62 million, plus interest, to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans through June 2004. System Energy also reclassified from utility plant to other deferred debits approximately $81 million of other Grand Gulf 1 costs. Although such costs are excluded from rate base, System Energy is amortizing and recovering these costs over a 10-year period. Interest on the $62 million refund and the loss of the return on the $81 million of other Grand Gulf 1 costs will reduce Entergy's and System Energy's net income by approximately $10 million annually until 2004.
Proposed Rate Increase (System Energy, Entergy Mississippi, and Entergy New Orleans)
(System Energy)
System Energy filed an application with FERC in May 1995, for a $65.5 million rate increase. The request seeks changes to System Energy's rate schedule, including increases in the revenue requirement associated with decommissioning costs, the depreciation rate, and the rate of return on common equity. The request also includes a proposed change in the accounting recognition of nuclear refueling outage costs from that of expensing those costs as incurred to the deferral and amortization method described in Note 1. In December 1995, System Energy implemented the $65.5 million rate increase, subject to refund, for which a portion has been reserved. Following hearings on System Energy's request in July 1996, the ALJ issued an initial decision that agreed with certain of System Energy's proposals, including the change in accounting for nuclear refueling outage costs, while rejecting a proposed increase in return on common equity and recommending instead a slight decrease in the allowed return. The ALJ also rejected the proposed change in the decommissioning cost methodology. The decision of the ALJ is preliminary and may be modified in the final decision by FERC. No assurance can be given as to the timing or outcome of the rate increase request or the amount of any refunds in excess of reserves that may be required.
(Entergy Mississippi)
Entergy Mississippi's allocation of the proposed System Energy wholesale rate increase is $21.6 million annually. In July 1995, Entergy Mississippi filed a schedule with the MPSC that defers the retail recovery of the System Energy rate increase. The deferral plan, which was approved by the MPSC, began in December 1995, the effective date of the System Energy rate increase, and will end after the issuance of a final order by FERC. Under this plan, the deferral period ended September 1998, and the deferred amount would have been amortized over 48 months beginning in October 1998. Although the deferral period under the plan has ended, FERC has not yet issued an order. For that reason, Entergy Mississippi filed a revised deferral plan with the MPSC in August 1998 that provides for recovery, effective with October 1998 billings, of $11.8 million of the System Energy rate increase that was approved by the FERC ALJ's initial decision in July 1996. The $11.8 million is being amortized over the original 48-month period, which began in October 1998. The amount of System Energy's proposed increase in excess of the $11.8 million will continue to be deferred until the issuance of a final order by the FERC, or October 2000, whichever occurs first. These deferred amounts, plus carrying charges, will be amortized over a 45-month period beginning in October 2000.
(Entergy New Orleans)
Entergy New Orleans' allocation of the proposed System Energy wholesale rate increase is $11.1 million annually. In February 1996, Entergy New Orleans filed a plan with the Council to defer 50% of the amount of the System Energy rate increase. The deferral began in February 1996 and will end after the issuance of a final order by FERC.
Grand Gulf Accelerated Recovery Tariff
(Entergy Arkansas)
In April 1998, FERC approved the Grand Gulf Accelerated Recovery Tariff that Entergy Arkansas filed as part of the settlement agreement that was approved by the APSC in December 1997. The tariff was designed to allow Entergy Arkansas to pay down a portion of its Grand Gulf obligation in advance of the implementation of retail access in Arkansas. The tariff became effective on January 1, 1999. The settlement agreement with the APSC is discussed above in "Filings with the APSC." In December 1998, an intervenor group filed a motion with FERC to suspend this tariff, alleging that the tariff is inconsistent with FERC policy on accelerated depreciation announced in an August 1998 decision.
(Entergy Mississippi)
In September 1998, FERC approved the Grand Gulf Accelerated Recovery Tariff for Entergy Mississippi's allocable portion of Grand Gulf, which was filed with FERC in August 1998. The tariff provides for the acceleration of Entergy Mississippi's Grand Gulf purchased power obligation in an amount totaling $221.3 million over the period October 1, 1998 through June 30, 2004, and is used to offset the rate reduction described above in "Grand Gulf 1 Deferrals."
NOTE 3. INCOME TAXES
Income tax expenses for 1998, 1997, and 1996 consist of the following (in thousands):
Total income taxes differ from the amounts computed by applying the statutory income tax rate to income before taxes. The reasons for the differences for the years 1998, 1997, and 1996 are (amounts in thousands):
Significant components of net deferred tax liabilities as of December 31, 1998 and 1997, are as follows (in thousands):
As of December 31, 1998, Entergy has investment tax credit (ITC) carryforwards of $9.0 million and state net operating loss carryforwards of $25.7 million, all related to Entergy Gulf States. The ITC carryforwards include the 35% reduction required by the Tax Reform Act of 1986 and may be applied solely against the federal income tax liability of Entergy Gulf States. If these carryforwards are not utilized, they will expire between 1999 and 2002. The alternative minimum tax (AMT) credit carryforwards as of December 31, 1998 were $40.7 million, all related to Entergy Gulf States. This AMT credit can be carried forward indefinitely and may be applied solely against the federal income tax liability of Entergy Gulf States.
The valuation allowance is provided primarily against foreign tax credit carryforwards, which can be utilized against future taxable income in the United States. If these carryforwards are not utilized, they will expire between 2000 and 2003.
NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
In November 1996, SEC authorization was received by Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy to increase short-term borrowing limits to $235 million, $340 million, $225 million, $103 million, $35 million, and $140 million, respectively (for a total of $1.078 billion). This authorization is effective through November 30, 2001. Of these companies, only Entergy Mississippi had borrowings outstanding as of December 31, 1998. Entergy Mississippi had $445,000 of borrowings outstanding from the money pool. The money pool is an inter-company borrowing arrangement designed to reduce the domestic utility companies' dependence on external short-term borrowings. Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi had undrawn external lines of credit as of December 31, 1998, of $18 million, $47 million, and $24 million, respectively.
In September 1998, Entergy Corporation replaced its $300 million bank credit facility with a $250 million, 364 day bank credit facility. As of December 31, 1998, $120 million was outstanding under this facility.
In September 1996, Entergy Corporation and ETHC obtained a three-year $100 million bank line of credit which was increased to $300 million in 1998. Either Entergy Corporation or ETHC, with a guarantee from Entergy Corporation, can draw on this line. The proceeds are to be used exclusively for exempt telecommunication investments as defined in PUHCA. As of December 31, 1998, Entergy Corporation and ETHC had $165.5 million and $112.8 million, respectively, outstanding under this facility. In February 1999, in conjunction with the sale of Entergy Security, Entergy reduced this line of credit to $100 million. At that time, the Entergy Corporation indebtedness on the line of credit was paid off and the ETHC indebtedness was paid down to $62.8 million.
Other Entergy companies have SEC authorization to borrow through the money pool from Entergy Corporation and from commercial banks in an aggregate principal amount up to $265 million, of which $104.4 million was outstanding as of December 31, 1998. Some of these borrowings are restricted as to use, and are collateralized by certain assets.
In total, Entergy had committed short-term credit facilities in the amount of $639.2 million as of December 31, 1998, of which $128.2 million was unused. The weighted-average interest rate on Entergy's outstanding borrowings as of December 31, 1998 and 1997 was 5.97% and 7.09%, respectively. Commitment fees on the lines of credit for Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi are .125% of the undrawn amounts. The commitment fee for Entergy Corporation's $250 million credit facility is currently .15% of the undrawn amount and for Entergy Corporation/ETHC's $300 million credit facility is currently .17% of the undrawn amount. Commitment fees and interest rates on loans under these two credit facilities can fluctuate depending on the senior debt ratings of the domestic utility companies. There is further discussion of commitments for long-term financing arrangements in Note 7 to the financial statements.
NOTE 5. PREFERRED, PREFERENCE, AND COMMON STOCK (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
The number of shares authorized and outstanding, and dollar value of preferred and preference stock for Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans as of December 31, 1998, and 1997 were:
The following table summarizes information about stock options outstanding as of December 31, 1998:
To meet the requirements of the Employee Stock Investment Plan (ESIP), Entergy Corporation was authorized to issue or acquire, through March 31, 1997, up to 2,000,000 shares of its common stock to be held as treasury shares. In February 1997, Entergy received authority from the SEC to extend the ESIP for an additional three years ending on March 31, 2000. Under the extended plan, Entergy Corporation may issue either treasury shares or previously authorized but unissued shares. Under the terms of the ESIP, employees can choose each year to have up to 10% of their regular annual salary (not to exceed $25,000) withheld to purchase the Company's common stock at a purchase price equal to 85% of the lower of the market value on the first or last business day of the plan year ending March 31. Under the plan, the number of subscribed shares was 294,108; 319,457; and 327,017 in 1998, 1997, and 1996, respectively.
The fair value of ESIP shares granted was estimated on the date of the grant using the Black-Scholes option-pricing model with expected ESIP weighted-average assumptions:
1998 1997 1996
Stock price volatility 19% 19% 18% Expected term in years 1 1 1 Risk-free interest rate 5.1% 6.1% 5.4% Dividend yield 6.1% 7.4% 6.4% Dividend payment $1.80 $1.80 $1.80
The weighted-average fair value of those purchase rights granted was $5.94, $4.75, and $5.41 in 1998, 1997, and 1996, respectively. The impact on Entergy's net income would have been ($325,000), $48,000, and $894,000 in 1998, 1997, and 1996, respectively, had compensation cost for the ESIP been determined based on the fair value at the grant date for awards under the ESIP.
Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (Savings Plan). Effective December 31, 1997, the Employee Stock Ownership Plan of Entergy Corporation and Subsidiaries (ESOP) and the Gulf States Utilities Company Employees' Thrift Plan (GSU Thrift Plan) were merged into the Savings Plan. Subsequent to the merger, the Savings Plan constitutes two plans: a Profit Sharing Plan and an ESOP. The Savings Plan is a defined contribution plan covering eligible employees of Entergy and its subsidiaries who have completed certain service requirements. Entergy's subsidiaries' contributions to the Profit Sharing Plan and voluntary participant contributions to the ESOP, and any income thereon, are invested in shares of Entergy Corporation common stock. Management does not expect to make any future contributions to the ESOP.
The Profit Sharing Plan provides that the employing Entergy subsidiary may make matching contributions to the plan in an amount equal to 50% of the participant's basic contribution, up to 6% of their salary, in shares of Entergy Corporation common stock. Entergy's subsidiaries contributed $13.6 million in 1998 and $13.2 million in both 1997 and 1996 to the Entergy Savings Plan. Prior to the merger of the GSU Thrift Plan into the Entergy Savings Plan, Entergy Gulf States contributed $306,000 and $300,000 to the GSU Thrift Plan in 1997 and 1996, respectively.
Entergy Gulf States sponsors the Gulf States Utilities Company Employee Stock Ownership Plan (GSU ESOP). The GSU ESOP is available to all employees of the domestic utility companies' and certain other affiliate companies, upon completion of certain eligibility requirements. All contributions to the plan are invested in shares of Entergy Corporation common stock. Entergy Gulf States makes contributions to the GSU ESOP based on expected utilization of additional investment tax credits in the Entergy federal tax return and on expected participants' contributions. In 1998, Entergy Gulf States contributed $7.7 million. No contributions were made to the GSU ESOP during 1997, and 1996. Effective December 31, 1998, the GSU ESOP was merged into the Savings Plan due to the utilization of all available tax credits. Therefore, no additional contributions will be made to the GSU ESOP.
NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES
(Entergy Arkansas, Entergy Louisiana, Entergy Gulf States)
Entergy Arkansas Capital I, Entergy Louisiana Capital I, and Entergy Gulf States Capital I (Trusts) were established as financing subsidiaries of Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States, respectively, for the purpose of issuing common and preferred securities. The Trusts issue Cumulative Quarterly Income Preferred Securities (Preferred Securities) to the public and common securities to the parent company. Proceeds from such issues are used to purchase junior subordinated deferrable interest debentures (Debentures) from the parent company. The Debentures held by each Trust are its only assets. Each Trust uses interest payments received on the Debentures owned by it to make cash distributions on the Preferred Securities.
The Preferred Securities of the Trusts mature in the years 2045 and 2046. The Preferred Securities are redeemable at 100% of their principal amount at the option of Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States beginning in 2001 and 2002, or earlier under certain limited circumstances, including the loss of the tax deduction arising out of the interest paid on the Debentures. Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States have, pursuant to certain agreements, fully and unconditionally guaranteed payment of distributions on the Preferred Securities issued by their respective trusts. Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States are the owners of all of the common securities of their individual Trusts, which constitute 3% of each Trust's total capital.
NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Long-term debt as of December 31, 1998 was:
Long-term debt as of December 31, 1997 was:
(a) Consists of pollution control bonds, certain series of which are secured by non-interest bearing first mortgage bonds.
(b) Loan notes are included as current maturities of long-term debt based on the option of the holders to redeem such notes on March 31 of each year until their final maturity on March 31, 2003.
(c) The fair value excludes lease obligations, long-term DOE obligations, and other long-term debt and includes debt due within one year. It is determined using bid prices reported by dealer markets and by nationally recognized investment banking firms.
The annual long-term debt maturities (excluding lease obligations) and annual cash sinking fund requirements for debt outstanding as of December 31, 1998, for the next five years are as follows:
(a) Not included are other sinking fund requirements of approximately $66.2 million annually, which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.
(b) Not included are other sinking fund requirements of approximately $4.6 million annually, which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.
(c) Not included are other sinking fund requirements of approximately $53.7 million annually, which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.
(d) Not included are other sinking fund requirements of approximately $7.9 million annually, which may be satisfied by cash or by certification of property additions at the rate of 167% of such requirements.
In August 1997, EPDC entered into a BPS50 million ($82.5 million) credit facility to finance the acquisition of the Damhead Creek project. In December 1997, EPDC amended the credit facility and increased the amount of the revolver to BPS100 million ($165 million). As of December 31, 1998, approximately BPS6.8 million ($10.5 million) was outstanding under this facility. As of December 31, 1998, EPDC had obtained BPS89.7 million ($148.0 million) of letters of credit under the credit facility to support project commitments on the Saltend and Damhead Creek projects. The interest rate on the outstanding borrowings was 6.97% as of December 31, 1998.
In December 1997, Saltend Cogeneration Company (SCC), an indirect wholly-owned subsidiary of EPDC, entered into a BPS646 million ($1.07 billion) non-recourse senior credit facility (Senior Credit Facility) to finance the construction of a 1,200-MW gas-fired power plant in northeast England. Borrowings under the Senior Credit Facility are payable after completion of construction over a 15-year period beginning December 31, 2000. SCC also entered into a BPS72 million ($118 million) Subordinated Credit Facility that provides funding upon the earlier of completion of construction or July 31, 2000. The proceeds of borrowings under this facility will be used to repay a portion of the Senior Credit Facility. The Subordinated Credit Facility is payable over a 10-year period beginning December 31, 2000. The Senior Credit Facility is collateralized by all of the assets of SCC. In February 1998, SCC entered into 15-year interest rate swap agreements for 85% of the Senior Debt Facility on a fixed-rate basis of 6.7%. SCC is exposed to market risks from movements in interest rates if the counterparties to the interest rate swap agreements were to default on contractual payments. SCC does not anticipate nonperformance by any counterparty to these interest rate swap agreements. At December 31, 1998, SCC has outstanding interest rate swap agreements totaling a notional amount of $302.3 million. The estimated fair value of the interest rate swap agreements, which represent the estimated amount SCC would pay to terminate the swaps at December 31, 1998, is a net liability of $45 million. Certain cash balances, primarily related to SCC, are restricted from being used to make loans and advances or to pay dividends to EPDC by the amount required for debt payments, letter of credit expenses, and permitted project costs. The total restricted cash was $25.7 million as of December 31, 1998.
In December 1998, Damhead Creek Finance Limited (DCFL), an indirect wholly-owned subsidiary of EPDC, entered into a BPS463.4 million ($764.6 million) non-recourse senior credit facility (Senior Credit Facility) to finance the construction of a 792-MW gas-fired power plant in southeast England. Borrowings under the Senior Credit Facility are payable after completion of construction over a fifteen-year period beginning December 31, 2001. DCFL also entered into a BPS36.1 million ($59.6 million) Subordinated Credit Facility that provides funding upon the earlier of completion of construction or July 22, 2001. Borrowings under this facility will be used to repay a portion of the Senior Credit Facility. The Subordinated Credit Facility is payable over a ten-year period beginning December 31, 2001. All of the assets of DCFL are pledged as collateral under the Senior Credit Facility. Furthermore, the Senior Credit Facility requires DCFL to enter into interest rate hedge agreements for a majority of the project debt. Certain cash balances, primarily related to this project, are restricted from being used to make loans and advances or to pay dividends to EPDC by the amount required for debt payments, letter of credit expenses, and permitted project costs. The total restricted cash was $16.3 million at December 31, 1998.
NOTE 8. DIVIDEND RESTRICTIONS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System Energy)
Provisions within the Articles of Incorporation or pertinent indentures and various other agreements relating to the long-term debt and preferred stock of certain of Entergy Corporation's subsidiaries restrict the payment of cash dividends or other distributions on their common and preferred stock. Additionally, PUHCA prohibits Entergy Corporation's subsidiaries from making loans or advances to Entergy Corporation. As of December 31, 1998, Entergy Arkansas and Entergy Mississippi had restricted retained earnings unavailable for distribution to Entergy Corporation of $199.3 million and $15.8 million, respectively. During 1998, cash dividends paid to Entergy Corporation by its subsidiaries totaled $488.5 million.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Cajun - Coal Contracts (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States filed declaratory judgment actions in the U.S. Bankruptcy Court in which the Cajun bankruptcy case is pending. These actions were filed to seek rulings declaring that Entergy Gulf States is not liable for damages to certain coal suppliers and the rail and barge companies that transport coal to Big Cajun 2, Unit 3 if their contracts are rejected in the bankruptcy proceeding. Collectively, the coal suppliers and transporters have asserted claims in the Cajun bankruptcy case that exceed $1.6 billion. Entergy Gulf States believes the damages alleged are significantly exaggerated. In February 1999, the bankruptcy judge entered an order declaring that Entergy Gulf States has no obligation under the contracts between the coal suppliers and transporters and Cajun. Therefore, if the contracts are rejected in the bankruptcy proceeding, Entergy Gulf States will not be liable to the coal suppliers and transporters for the damages claimed by them. The decision of the bankruptcy judge is subject to appeal.
Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Construction expenditures (including AFUDC and excluding nuclear fuel) for Entergy for the years 1999, 2000, and 2001 are estimated to total $1.4 billion, $1.3 billion, and $1.4 billion, respectively. Entergy will also require $952 million during the period 1999-2001 to meet long-term debt and preferred stock maturities and cash sinking fund requirements. Entergy plans to meet these requirements primarily with internally generated funds and cash on hand, supplemented by proceeds of the issuance of debt and from outstanding credit facilities. Certain domestic utility companies and System Energy may also continue the acquisition or refinancing of all or a portion of certain outstanding series of preferred stock and long-term debt.
Sales Warranties and Indemnities (Entergy Corporation)
In the Entergy London and CitiPower sales transactions, Entergy or its subsidiaries made certain warranties to the purchasers. These warranties include representations regarding litigation, accuracy of financial accounts, and the adequacy of existing tax provisions. Notice of a claim on the CitiPower warranties must be given by December 2000, and Entergy's potential liability is limited to A$100 million ($60 million). Notice of a claim on the Entergy London warranties must be given by June 30, 2001, and Entergy's liability is limited to BPS1.4 billion ($2.3 billion) on certain tax warranties and BPS140 million ($232 million) on the remaining warranties. Entergy has also agreed to maintain the net asset value of the subsidiary that sold Entergy London at $700 million through June 30, 2001. Management believes it has adequately provided reserves for the ultimate resolution of such matters at December 31, 1998.
Fuel Purchase Agreements
(Entergy Arkansas and Entergy Mississippi)
Entergy Arkansas has long-term contracts with mines in Wyoming for the supply of low-sulfur coal to White Bluff and Independence (which is also 25% owned by Entergy Mississippi). These contracts, which expire in 2002 and 2011, provide for approximately 85% of Entergy Arkansas' expected annual coal requirements. Additional requirements are satisfied by spot market purchases.
(Entergy Gulf States)
Entergy Gulf States has a contract for a supply of low-sulfur Wyoming coal for Nelson Unit 6, which should be sufficient to satisfy the fuel requirements at Nelson Unit 6 through 2010. Cajun has advised Entergy Gulf States that Cajun has contracts that should provide an adequate supply of coal for the operation of Big Cajun 2, Unit 3.
Entergy Gulf States has long-term gas contracts that will satisfy approximately 17% of its annual requirements, which is the minimum volume Entergy Gulf States is required to purchase under the contracts. Additional gas requirements are satisfied under less expensive short-term contracts. Entergy Gulf States has a transportation service agreement with a gas supplier that provides flexible natural gas service to the Sabine and Lewis Creek generating stations.
(Entergy Louisiana)
In June 1992, Entergy Louisiana agreed to a renegotiated 20-year natural gas supply contract. Entergy Louisiana agreed to purchase natural gas in annual amounts equal to approximately one-third of its projected annual fuel requirements for certain generating units. Annual demand charges associated with this contract are estimated to be $7.8 million. Such charges aggregate $109 million for the years 1999 through 2012. Entergy Louisiana recovers the cost of fuel consumed during the generation of electricity through its fuel adjustment clause.
(Entergy Corporation)
Entergy's global power development business has entered into gas supply contracts at the project level to supply up to 100% of the gas requirements for the Saltend and Damhead Creek power plants located in the UK. Both contracts have 15-year terms, are expected to commence upon operations of the applicable power plant, and include a take or pay obligation for approximately 75% of the gas requirement for each plant.
Sales Agreements/Power Purchases
(Entergy Gulf States)
In 1988, Entergy Gulf States entered into a joint venture with a primary term of 20 years with Conoco, Inc., Citgo Petroleum Corporation, and Vista Chemical Company (collectively the Industrial Participants), whereby Entergy Gulf States' Nelson Units 1 and 2 were sold to NISCO, a partnership consisting of the Industrial Participants and Entergy Gulf States. The Industrial Participants supply the fuel for the units, while Entergy Gulf States operates the units at the discretion of the Industrial Participants and purchases the electricity produced by the units. Entergy Gulf States is continuing to sell electricity to the Industrial Participants. For the years ended December 31, 1998, 1997, and 1996, the purchases by Entergy Gulf States of electricity from the joint venture totaled $57.5 million, $70.7 million, and $62.0 million, respectively.
(Entergy Louisiana)
Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility. During 1998, 1997, and 1996, Entergy Louisiana made payments under the contract of approximately $77.8 million, $64.6 million, and $56.3 million, respectively. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $71.0 million in 1999, and a total of $3.5 billion for the years 2000 through 2031. Entergy Louisiana currently recovers the costs of purchased energy through its fuel adjustment clause.
System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans have ownership interests in System Fuels of 35%, 33%, 19%, and 13%, respectively. The owners of System Fuels have agreed to make loans to System Fuels to finance its fuel procurement, delivery, and storage activities. As of December 31, 1998, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans had approximately $11.0 million, $14.2 million, $5.5 million, and $3.3 million, respectively, in loans outstanding to System Fuels, which mature in 2008.
Nuclear Insurance (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
The Price-Anderson Act limits public liability for a single nuclear incident to approximately $9.8 billion. Protection for this liability is provided through a combination of private insurance (currently $200 million each for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) and an industry assessment program. Under the assessment program, the maximum payment requirement for each nuclear incident would be $88.1 million per reactor, payable at a rate of $10 million per licensed reactor per incident per year. Entergy has five licensed reactors. As a co-licensee of Grand Gulf 1 with System Energy, SMEPA would share 10% of this obligation. In addition, each owner/licensee of Entergy's five nuclear units participates in a private insurance program that provides coverage for worker tort claims filed for bodily injury caused by radiation exposure. The program provides for a maximum assessment of approximately $16 million for the five nuclear units in the event that losses exceed accumulated reserve funds.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy are also members of certain insurance programs that provide coverage for property damage, including decontamination and premature decommissioning expense, to members' nuclear generating plants. As of December 31, 1998, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy were each insured against such losses up to $2.3 billion. In addition, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are members of an insurance program that covers certain replacement power and business interruption costs incurred due to prolonged nuclear unit outages. Under the property damage and replacement power/business interruption insurance programs, these Entergy subsidiaries could be subject to assessments if losses exceed the accumulated funds available to the insurers. As of December 31, 1998, the maximum amounts of such possible assessments were: Entergy Arkansas - $17.9 million; Entergy Gulf States - $13.5 million; Entergy Louisiana - $15.5 million; Entergy Mississippi - $0.7 million; Entergy New Orleans - $0.4 million; and System Energy - $12.4 million. Under its agreement with System Energy, SMEPA would share in System Energy's obligation.
The amount of property insurance maintained for each Entergy nuclear unit exceeds the NRC's minimum requirement for nuclear power plant licensees of $1.06 billion per site. NRC regulations provide that the proceeds of this insurance must be used, first, to place and maintain the reactor in a safe and stable condition and, second, to complete decontamination operations. Only after proceeds are dedicated for such use and regulatory approval is secured would any remaining proceeds be made available for the benefit of plant owners or their creditors.
Spent Nuclear Fuel and Decommissioning Costs (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy provide for estimated future disposal costs for spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982. The affected Entergy companies entered into contracts with the DOE, whereby the DOE will furnish disposal service at a cost of one mill per net KWH generated and sold after April 7, 1983, plus a one-time fee for generation prior to that date. Entergy Arkansas is the only Entergy company that generated electricity with nuclear fuel prior to that date and has recorded a liability as of December 31, 1998 of approximately $130 million. The fees payable to the DOE may be adjusted in the future to assure full recovery. Entergy considers all costs incurred or to be incurred for the disposal of spent nuclear fuel, except accrued interest, to be proper components of nuclear fuel expense. Provisions to recover such costs have been or will be made in applications to regulatory authorities.
Delays have occurred in the DOE's program for the acceptance and disposal of spent nuclear fuel at a permanent repository. In February 1993, the DOE asserted that it did not have a legal obligation to accept spent nuclear fuel without an operational repository for which it has not yet arranged. Entergy Operations and System Fuels joined in lawsuits against the DOE in the U.S. Court of Appeals for the D.C. Circuit, seeking clarification of the DOE's responsibility to receive spent nuclear fuel beginning in 1998. The original suits asked for: 1) a ruling stating that the Nuclear Waste Policy Act requires the DOE to begin taking title to the spent fuel and to start removing it from nuclear power plants in 1998; 2) a mandate for the DOE's nuclear waste management program to begin accepting fuel in 1998 and for court monitoring of the program; and 3) the potential for escrow of payments to a nuclear waste fund instead of directly to the DOE. In July 1996, the court reversed the DOE's interpretation of the 1998 obligation and unanimously ruled that the Nuclear Waste Policy Act creates an unconditional obligation to begin acceptance of spent fuel by 1998, but did not make a ruling on the remedies.
In December 1996, the DOE notified contract holders that it anticipated it would not be able to begin such acceptance until after that date. In January 1997, Entergy Operations and a coalition of 36 electric utilities and 46 state agencies filed lawsuits to suspend payments to the Nuclear Waste Fund. The lawsuits asked the court to: (i) find that the December 1996 DOE letter demonstrates breach of contract on the part of the DOE; (ii) order utilities to place the Nuclear Waste Fund payments in an escrow account and not provide the funds to the DOE until it fulfills its obligation; (iii) prevent the DOE from taking adverse action against utilities that withhold payments; and (iv) order the DOE to submit a plan to the court describing how the agency intends to fulfill its obligation on an ongoing basis. In November 1997, the court reaffirmed the DOE's unconditional obligation to begin accepting spent fuel by January 1998, and ordered the DOE to proceed with contractual remedies consistent with the DOE's unconditional obligation. Nevertheless, the ruling did not address the plaintiffs' request for authority to withhold payments to the DOE. Therefore, in December 1997, Entergy Operations and a coalition of 27 utilities petitioned the DOE to suspend and escrow future payments to the DOE's waste fund beginning February 1, 1998. In January 1998, the DOE rejected the coalition's petition. In February 1998, Entergy Operations and the coalition of 36 electric utilities filed a motion with the court seeking enforcement of its November 1997 order and other relief. The court denied this petition in May 1998.
Pending DOE acceptance and disposal of spent nuclear fuel, all Entergy companies are responsible for their own spent fuel storage. Current on-site spent fuel storage capacity at Grand Gulf 1 and River Bend is estimated to be sufficient until approximately 2004 and 2008, respectively. The spent fuel pool at Waterford 3 is being expanded through the replacement of the existing storage racks with higher density storage racks. This expansion should provide sufficient storage for Waterford 3 until 2010. Current on-site spent fuel storage capacity at ANO is estimated to be sufficient until 2000. An ANO storage facility using dry casks began operation in 1996. This facility may be expanded as required. The initial cost of providing additional on-site spent fuel storage capability anticipated to be required at Grand Gulf 1 and River Bend is expected to be in the range of $5 million to $10 million per unit. In addition, about $3 million to $5 million per unit will be required every two to three years subsequent to 2000 for ANO and every four to five years subsequent to 2004 and 2008 for Grand Gulf 1 and River Bend, respectively, until the DOE's repository or storage facility begins accepting such units' spent fuel.
Total decommissioning costs as of December 31, 1998, for the Entergy nuclear power plants, excluding co-owner shares, have been estimated as follows: Total Estimated Decommissioning Costs (In Millions) ANO 1 and ANO 2 (based on a 1998 cost study reflecting 1997 dollars) $813.1 River Bend (based on a 1996 cost study reflecting 1996 dollars) 419.0 Waterford 3 (based on a 1994 updated study in 1993 dollars) 320.1 Grand Gulf 1 (based on a 1994 cost study using 1993 dollars) 365.9 -------- $1,918.1 ========
A decommissioning cost update was prepared for River Bend in 1998 that produced a revised decommissioning cost estimate of $562.7 million. The cost update was filed with the PUCT in November 1998 for review.
Entergy Arkansas and Entergy Louisiana are authorized to recover in rates amounts that, when added to estimated investment income, should be sufficient to meet the above estimated decommissioning costs for ANO and Waterford 3, respectively. In the Texas retail jurisdiction, Entergy Gulf States is recovering in rates River Bend decommissioning costs that total $385.2 million, based on the 1996 cost study. Entergy Gulf States included decommissioning costs based on the 1998 update in the PUCT rate review filed in November 1998. That review is ongoing. In the Louisiana retail jurisdiction, Entergy Gulf States included decommissioning costs, based on the 1996 study, in the LPSC rate review filed in May 1996. In June 1996, a rate decrease was implemented that included decommissioning revenue requirements based on the 1996 study. In September 1998, the LPSC issued an order accepting the 1996 cost study amount of $419 million. The September 1998 order has been appealed. System Energy was previously recovering in rates amounts sufficient to fund $198 million (in 1989 dollars) of its Grand Gulf 1 decommissioning costs. System Energy included decommissioning costs (based on the 1994 study) in its rate increase filing with FERC. Rates requested in this proceeding were placed into effect in December 1995, subject to refund. FERC has not yet issued an order in the System Energy rate case.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy periodically review and update estimated decommissioning costs. Although Entergy is presently under-recovering for Grand Gulf and River Bend, based on the above estimates, applications have been and will continue to be made to the appropriate regulatory authorities to reflect in rates any future change in projected decommissioning costs. The amounts recovered in rates are deposited in trust funds and reported at market value as quoted on nationally traded markets or as determined by widely used pricing services. These trust fund assets largely offset the accumulated decommissioning liability that is recorded as accumulated depreciation for Entergy Arkansas, Entergy Gulf States, and Entergy Louisiana, and is recorded as other deferred credits for System Energy. The liability associated with the trust funds received from Cajun with the transfer of Cajun's 30% share of River Bend is also recorded as other deferred credits by Entergy Gulf States.
The cumulative liabilities and actual decommissioning expenses recorded in 1998 by Entergy were as follows:
Cumulative 1998 Cumulative Liabilities as of 1998 Trust Decommissioning Liabilities as of December 31, 1997 Earnings Expenses December 31, 1998
ANO 1 and ANO 2 $227.0 $10.8 $15.6 $253.4 River Bend 180.7 2.1 5.8 188.6 Waterford 3 60.2 2.9 8.8 71.9 Grand Gulf 1 83.2 5.2 18.9 107.3 ------ ----- ----- ------ $551.1 $21.0 $49.1 $621.2 ====== ===== ===== ======
In 1997 and 1996, ANO's decommissioning expense was $17.3 million and $20.1 million, respectively; River Bend's decommissioning expense was $7.5 million and $6.0 million, respectively; Waterford 3's decommissioning expense was $8.8 million in both years, and Grand Gulf 1's decommissioning expense was $19.0 million in both years. The actual decommissioning costs may vary from the estimates because of regulatory requirements, changes in technology, and increased costs of labor, materials, and equipment. Management believes that actual decommissioning costs are likely to be higher than the estimated amounts presented above.
The SEC has questioned certain of the financial accounting practices of the electric utility industry regarding the recognition, measurement, and classification of decommissioning costs for nuclear plants in the financial statements of electric utilities. In response to these questions, the FASB has been reviewing the accounting for decommissioning and has expanded the scope of its review to include liabilities related to the closure and removal of all long-lived assets. If current electric utility industry accounting practices with respect to nuclear decommissioning and other closure costs are changed, annual provisions for such costs could increase.
The EPAct contains a provision that assesses domestic nuclear utilities with fees for the decontamination and decommissioning of the DOE's past uranium enrichment operations. The decontamination and decommissioning assessments are being used to set up a fund into which contributions from utilities and the federal government will be placed. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy's annual assessments, which will be adjusted annually for inflation, are approximately $3.8 million, $0.9 million, $1.4 million, and $1.6 million (in 1998 dollars), respectively, for approximately 15 years. As of December 31, 1998, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy had recorded liabilities of $30.2 million, $5.3 million, $11.5 million, and $11.3 million, respectively, for decontamination and decommissioning fees in other current liabilities and other noncurrent liabilities. These liabilities were offset in the consolidated financial statements by regulatory assets. FERC requires that utilities treat these assessments as costs of fuel as they are amortized and recover these costs through rates in the same manner as other fuel costs.
ANO Matters (Entergy Corporation and Entergy Arkansas)
Cracks in steam generator tubes at ANO 2 were discovered and repaired during an outage in March 1992. Further inspections and repairs were conducted at subsequent refueling and mid-cycle outages, including the most recent mid-cycle outage in May 1998. Turbine modifications were installed in May 1997 to restore most of the output lost due to steam generator fouling and tube plugging. The unit may be approaching the current limit for the number of steam generator tubes that can be plugged with the unit in operation. If the established limit is reached during a future outage, it could become necessary for Entergy Operations to insert sleeves in steam generator tubes that were previously plugged. In October 1996, Entergy Corporation's Board of Directors authorized Entergy Arkansas and Entergy Operations to negotiate a contract for the fabrication and installation of replacement steam generators at ANO 2. Entergy estimates the cost of fabrication and replacement of the steam generators to be approximately $150 million. Entergy Operations has entered into contracts, with certain cancellation provisions, for the design, fabrication, and installation of replacement steam generators. It is anticipated that the steam generators will be installed during a planned refueling outage in 2000. In December 1998, the APSC issued an order finding replacement of the ANO 2 steam generators is in the public interest. Entergy Operations periodically meets with the NRC to discuss the results of inspections of the steam generator tubes, as well as the timing of future inspections.
Environmental Issues
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP for the clean-up of certain hazardous waste disposal sites. Entergy Gulf States is currently negotiating with the EPA and state authorities regarding the clean-up of these sites. Several class action and other suits have been filed in state and federal courts seeking relief from Entergy Gulf States and others for damages caused by the disposal of hazardous waste and for asbestos-related disease allegedly resulting from exposure on Entergy Gulf States premises. While the amounts at issue in the clean-up efforts and suits may be substantial, Entergy Gulf States believes that its results of operations and financial condition will not be materially adversely affected by the outcome of the suits. As of December 31, 1998, a remaining provision of $20 million existed relating to the clean-up of the remaining sites at which Entergy Gulf States has been designated as a PRP.
(Entergy Louisiana)
During 1993, the LDEQ issued new rules for solid waste regulation, including regulation of wastewater impoundments. Entergy Louisiana has determined that certain of its power plant wastewater impoundments were affected by these regulations and has chosen to upgrade or close them. As a result, a remaining recorded liability in the amount of $5.9 million existed as of December 31, 1998, for wastewater impoundment upgrades and closures. Completion of this work is pending LDEQ approval. Cumulative expenditures relating to the upgrades and closures of wastewater impoundments are $7.1 million as of December 31, 1998.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the City of New Orleans pursuant to City franchise ordinances. These ordinances contain a continuing option for the City to purchase Entergy New Orleans' electric and gas utility properties.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three identical transactions for the sale and leaseback of undivided interests (aggregating approximately 9.3%) in Waterford 3. In July 1997, Entergy Louisiana caused the lessors to issue $307,632,000 aggregate principal amount of Waterford 3 Secured Lease Obligation Bonds, 8.09% Series due 2017, to refinance the outstanding bonds originally issued to finance the purchase of the undivided interests by the lessors. The lease payments were reduced to reflect the lower interest costs. Upon the occurrence of certain events, Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions. Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are defendants in numerous lawsuits filed by former employees asserting that they were wrongfully terminated and/or discriminated against due to age, race, and/or sex. Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy New Orleans are vigorously defending these suits and deny any liability to the plaintiffs. However, no assurance can be given as to the outcome of these cases.
Grand Gulf 1-Related Agreements
Capital Funds Agreement (Entergy Corporation and System Energy)
Entergy Corporation has agreed to supply System Energy with sufficient capital to (i) maintain System Energy's equity capital at an amount equal to a minimum of 35% of its total capitalization (excluding short-term debt), and (ii) permit the continued commercial operation of Grand Gulf 1 and pay in full all indebtedness for borrowed money of System Energy when due. In addition, under supplements to the Capital Funds Agreement assigning System Energy's rights as security for specific debt of System Energy, Entergy Corporation has agreed to make cash capital contributions to enable System Energy to make payments on such debt when due.
System Energy has entered into agreements with Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby they are obligated to purchase their respective entitlements of capacity and energy from System Energy's 90% ownership and leasehold interest in Grand Gulf 1, and to make payments that, together with other available funds, are adequate to cover System Energy's operating expenses. System Energy would have to secure funds from other sources, including Entergy Corporation's obligations under the Capital Funds Agreement, to cover any shortfalls from payments received from Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans under these agreements.
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy has agreed to sell all of its 90% owned and leased share of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with specified percentages (Entergy Arkansas-36%, Entergy Louisiana-14%, Entergy Mississippi-33%, and Entergy New Orleans-17%) as ordered by FERC. Charges under this agreement are paid in consideration for the purchasing companies' respective entitlement to receive capacity and energy and are payable irrespective of the quantity of energy delivered so long as the unit remains in commercial operation. The agreement will remain in effect until terminated by the parties and the termination is approved by FERC, most likely upon Grand Gulf 1's retirement from service. Monthly obligations for payments under the agreement are approximately $21 million, $8 million, $19 million, and $10 million for Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, respectively.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans are individually obligated to make payments or subordinated advances to System Energy in accordance with stated percentages (Entergy Arkansas-17.1%, Entergy Louisiana-26.9%, Entergy Mississippi-31.3%, and Entergy New Orleans-24.7%) in amounts that, when added to amounts received under the Unit Power Sales Agreement or otherwise, are adequate to cover all of System Energy's operating expenses as defined, including an amount sufficient to amortize the cost of Grand Gulf 2 over 27 years. (See Reallocation Agreement terms below.) System Energy has assigned its rights to payments and advances to certain creditors as security for certain obligations. Since commercial operation of Grand Gulf 1, payments under the Unit Power Sales Agreement have exceeded the amounts payable under the Availability Agreement. Accordingly, no payments under the Availability Agreement have ever been required. If Entergy Arkansas or Entergy Mississippi fails to make its Unit Power Sales Agreement payments, and System Energy is unable to obtain funds from other sources, Entergy Louisiana and Entergy New Orleans could become subject to claims or demands by System Energy or its creditors for payments or advances under the Availability Agreement (or the assignments thereof) equal to the difference between their required Unit Power Sales Agreement payments and their required Availability Agreement payments.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans entered into the Reallocation Agreement relating to the sale of capacity and energy from Grand Gulf and the related costs, in which Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans agreed to assume all of Entergy Arkansas' responsibilities and obligations with respect to Grand Gulf under the Availability Agreement. FERC's decision allocating a portion of Grand Gulf 1 capacity and energy to Entergy Arkansas supersedes the Reallocation Agreement as it relates to Grand Gulf 1. Responsibility for any Grand Gulf 2 amortization amounts has been individually allocated (Entergy Louisiana- 26.23%, Entergy Mississippi-43.97%, and Entergy New Orleans-29.80%) under the terms of the Reallocation Agreement. However, the Reallocation Agreement does not affect Entergy Arkansas' obligation to System Energy's lenders under the assignments referred to in the preceding paragraph. Entergy Arkansas would be liable for its share of such amounts if Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans were unable to meet their contractual obligations. No payments of any amortization amounts will be required so long as amounts paid to System Energy under the Unit Power Sales Agreement, including other funds available to System Energy, exceed amounts required under the Availability Agreement, which is expected to be the case for the foreseeable future.
Reimbursement Agreement (System Energy)
In December 1988, System Energy entered into two separate, but identical, arrangements for the sale and leaseback of an approximate aggregate 11.5% ownership interest in Grand Gulf 1. In connection with the equity funding of the sale and leaseback arrangements, letters of credit are required to be maintained to secure certain amounts payable for the benefit of the equity investors by System Energy under the leases. The current letters of credit are effective until January 15, 2000.
Under the provisions of a bank letter of credit reimbursement agreement, System Energy has agreed to a number of covenants relating to the maintenance of certain capitalization and fixed charge coverage ratios. System Energy agreed, during the term of the reimbursement agreement, to maintain its equity at not less than 33% of its adjusted capitalization (defined in the reimbursement agreement to include certain amounts not included in capitalization for financial statement purposes). In addition, System Energy must maintain, with respect to each fiscal quarter during the term of the reimbursement agreement, a ratio of adjusted net income to interest expense (calculated, in each case, as specified in the reimbursement agreement) of at least 1.60 times earnings. As of December 31, 1998, System Energy's equity approximated 37.33% of its adjusted capitalization, and its fixed charge coverage ratio was 2.58.
Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
In addition to those discussed above, Entergy and the domestic utility companies are involved in a number of legal proceedings and claims in the ordinary course of their business. While management is unable to predict the outcome of such litigation, it is not expected that the ultimate resolution of these matters will have a material adverse effect on results of operations, cash flows, or financial condition of these entities.
NOTE 10. LEASES
General
As of December 31, 1998, Entergy had capital leases and non-cancelable operating leases for equipment, buildings, vehicles, and fuel storage facilities (excluding nuclear fuel leases and the sale and leaseback transactions) with minimum lease payments as follows:
Capital Leases
Entergy Entergy Year Entergy Arkansas Gulf States (In Thousands)
1999 $26,926 $10,953 $12,063 2000 25,380 9,646 11,829 2001 23,677 9,646 11,853 2002 19,415 9,646 9,720 2003 19,566 9,646 9,720 Years thereafter 59,031 32,565 26,466 ----------------------------------- Minimum lease payments 173,995 82,102 81,651 Less: Amount representing interest 40,538 23,898 15,540 ----------------------------------- Present value of net minimum lease payments $133,457 $58,204 $66,111 ===================================
Operating Leases
Entergy Entergy Entergy Year Entergy Arkansas Gulf States Louisiana (In Thousands)
1999 $66,644 $22,781 $17,437 $4,597 2000 64,047 22,620 17,157 4,522 2001 57,708 22,699 14,914 1,167 2002 48,666 20,173 12,226 1,025 2003 34,576 9,221 11,763 917 Years thereafter 146,003 37,171 45,236 - ------------------------------------------ Minimum lease payments $417,644 $134,665 $118,733 $12,228 ==========================================
Rental expense for Entergy's leases (excluding nuclear fuel leases and the sale and leaseback transactions) amounted to approximately $69.4 million, $70.7 million, and $62.1 million in 1998, 1997, and 1996, respectively. These amounts include $19.4 million, $19.7 million, and $26.0 million, respectively, for Entergy Arkansas; $18.1 million, $17.6 million, and $11.8 million, respectively, for Entergy Gulf States; and $13.3 million, $12.8 million, and $13.7 million, respectively, for Entergy Louisiana.
Nuclear Fuel Leases (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System Energy)
As of December 31, 1998, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy each had arrangements to lease nuclear fuel in an aggregate amount up to $110 million, $75 million, $80 million, and $100 million, respectively. As of December 31, 1998, the unrecovered cost base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's, and System Energy's nuclear fuel leases amounted to approximately $95.6 million, $46.6 million, $75.8 million, and $64.6 million, respectively. The lessors finance the acquisition and ownership of nuclear fuel through credit agreements and the issuance of notes. The credit agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy have been extended and now have termination dates of December 2000, December 2000, January 2000, and February 2001, respectively. Such termination dates may be extended from time to time with the consent of the lenders. The intermediate-term notes issued pursuant to these fuel lease arrangements have varying maturities through February 15, 2001. It is expected that additional financing under the leases will be arranged as needed to acquire additional fuel, to pay interest, and to pay maturing debt. However, if such additional financing cannot be arranged, the lessee in each case must purchase sufficient nuclear fuel to allow the lessor to meet its obligations.
Lease payments are based on nuclear fuel use. The table below represents the nuclear fuel lease expense and related interest charged to operations by the domestic utility companies and System Energy in 1998, 1997, and 1996:
1998 1997 1996 Lease Lease Lease Expense Interest Expense Interest Expense Interest (In Millions)
Entergy Arkansas $50.5 $4.9 $53.7 $6.4 $53.9 $7.1 Entergy Gulf States 26.1 3.1 25.5 3.2 27.1 4.2 Entergy Louisiana 36.8 3.9 29.4 3.7 39.8 4.9 System Energy 35.4 4.7 41.1 5.4 37.7 5.5 ------------------------------------------------------- Total $148.8 $16.6 $149.7 $18.7 $158.5 $21.7 =======================================================
Sale and Leaseback Transactions
Waterford 3 Lease Obligations (Entergy Louisiana)
Entergy Louisiana is the lessee of three separate undivided interests in Waterford 3 under three separate, but substantially identical, long-term net leases. The lessors under such leases acquired the undivided interests (aggregating approximately 9.3%) in Waterford 3 from Entergy Louisiana in three separate sale-leaseback transactions that occurred in 1989. Entergy Louisiana is leasing back the interests on a net lease basis over an approximate 28-year basic lease term. Approximately 87.7% of the aggregate consideration paid by the lessors for their respective undivided interests was provided to the lessors from the issuance of Waterford 3 Secured Lease Obligation Bonds (Initial Series Bonds) in 1989. Interests were acquired from Entergy Louisiana with funds obtained from the issuance and sale by the purchasers of intermediate-term and long-term secured lease obligation bonds. The lease payments to be made by Entergy Louisiana will be sufficient to service such debt.
Entergy Louisiana did not exercise its option to repurchase the undivided interests in Waterford 3 in September 1994. As a result, Entergy Louisiana was required to provide collateral for the equity portion of certain amounts payable by Entergy Louisiana under the leases. Such collateral was in the form of a new series of non-interest-bearing first mortgage bonds in the aggregate principal amount of $208.2 million issued by Entergy Louisiana in September 1994.
In July 1997, Entergy Louisiana caused the Waterford 3 lessors to issue $307.6 million aggregate principal amount of Waterford 3 Secured Lease Obligation Bonds, 8.09% Series due 2017, to refinance the outstanding bonds originally issued to finance the purchase of the undivided interests by the lessors. The lease payments have been reduced to reflect the lower interest costs.
Upon the occurrence of certain events (including lease events of default, events of loss, deemed loss events or certain adverse "Financial Events" with respect to Entergy Louisiana), Entergy Louisiana may be obligated to pay amounts sufficient to permit the Owner Participants to withdraw from the lease transactions, and Entergy Louisiana may be required to assume the outstanding bonds issued by the Owner Trustee to finance, in part, its acquisition of the undivided interests in Waterford 3. "Financial Events" include, among other things, failure by Entergy Louisiana, following the expiration of any applicable grace or cure periods, to maintain (1) as of the end of any fiscal quarter, total equity capital (including preferred stock) at least equal to 30% of adjusted capitalization, or (2) in respect of the 12-month period ending on the last day of any fiscal quarter, a fixed charge coverage ratio of at least 1.50. As of December 31, 1998, Entergy Louisiana's total equity capital (including preferred stock) was 47.5% of adjusted capitalization and its fixed charge coverage ratio was 3.10.
As of December 31, 1998, Entergy Louisiana had future minimum lease payments (reflecting an overall implicit rate of 7.45%) in connection with the Waterford 3 sale and leaseback transactions, which are recorded as long- term debt, as follows (in thousands):
1999 $49,108 2000 42,573 2001 40,909 2002 39,246 2003 59,709 Years thereafter 472,429 -------- Total 703,974 Less: Amount representing interest 350,374 -------- Present value of net minimum lease payments $353,600 ========
Grand Gulf 1 Lease Obligations (System Energy)
In December 1988 System Energy entered into two arrangements for the sale and leaseback of an aggregate 11.5% undivided ownership interest in Grand Gulf 1 for an aggregate cash consideration of $500 million. System Energy is leasing back the undivided interest on a net lease basis over a 26 1/2-year basic lease term. System Energy has options to terminate the leases and to repurchase the undivided interest in Grand Gulf 1 at certain intervals during the basic lease term. Further, at the end of the basic lease term, System Energy has an option to renew the leases or to repurchase the undivided interest in Grand Gulf 1.
Due to "continuing involvement" by System Energy, the sale and leaseback arrangements of the undivided portions of Grand Gulf 1, as described above, are required to be reflected for financial reporting purposes as financing transactions in System Energy's financial statements. The amounts charged to expense for financial reporting purposes include the interest portion of the lease obligations and depreciation of the plant. However, operating revenues include the recovery of the lease payments because the transactions are accounted for as sales and leasebacks for ratemaking purposes. The total of interest and depreciation expense exceeds the corresponding revenues realized during the early part of the lease term. Consistent with a recommendation contained in a FERC audit report, System Energy recorded as a net deferred asset the difference between the recovery of the lease payments and the amounts expensed for interest and depreciation and is recording such difference as a deferred asset on an ongoing basis. The amount of this deferred asset was $85.9 million and $84.0 million as of December 31, 1998, and 1997, respectively.
As of December 31, 1998, System Energy had future minimum lease payments (reflecting an implicit rate of 7.02%), which are recorded as long- term debt as follows (in thousands):
1999 $42,753 2000 42,753 2001 46,803 2002 53,827 2003 48,524 Years thereafter 610,913 -------- Total 845,573 Less: Amount representing interest 364,272 -------- Present value of net minimum lease payments $481,301 ========
NOTE 11. POSTRETIREMENT BENEFITS (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
Pension Plans
Entergy has two postretirement benefit plans, "Entergy Corporation Retirement Plan for Non-Bargaining Employees" and "Entergy Corporation Retirement Plan for Bargaining Employees," covering substantially all of its domestic employees. The pension plans are noncontributory and provide pension benefits that are based on employees' credited service and compensation during the final years before retirement. Entergy Corporation and its subsidiaries fund pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended. The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.
Total 1998, 1997, and 1996 pension cost of Entergy Corporation and its subsidiaries, including amounts capitalized, included the following components (in thousands):
The funded status of Entergy's various pension plans as of December 31, 1998 and 1997 was (in thousands):
The significant actuarial assumptions used in computing the information above for the domestic utility companies and System Energy for 1998, 1997, and 1996 were as follows:
1998 1997 1996
Weighted-average discount rate 6.75% 7.25% 7.75% Weighted-average rate of increase in future compensation levels 4.6% 4.6% 4.6% Expected long-term rate of return on plan assets 9.0% 9.0% 9.0%
Transition assets of Entergy are being amortized over the greater of the remaining service period of active participants or 15 years.
Other Postretirement Benefits
Entergy also provides certain health care and life insurance benefits for retired employees. Substantially all domestic employees may become eligible for these benefits if they reach retirement age while still working for Entergy.
Effective January 1, 1993, Entergy adopted SFAS 106, which required a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions. The domestic utility companies have sought approval, in their respective regulatory jurisdictions, to implement the appropriate accounting requirements related to SFAS 106 for ratemaking purposes. Entergy Arkansas received an order permitting deferral, as a regulatory asset, of the difference between its annual cash expenditures for postretirement benefits other than pensions and the SFAS 106 accrual, for a five-year period that began January 1, 1993. In December 1997, the APSC issued an order allowing the 15-year amortization of this regulatory asset. In 1998, Entergy Arkansas began to recover its SFAS 106 expenses (including the amortization of the regulatory asset) in rates as allowed by the APSC. Entergy Mississippi is expensing its SFAS 106 costs, which are reflected in rates pursuant to an order from the MPSC in connection with Entergy Mississippi's formulary incentive rate plan. Entergy New Orleans is expensing its SFAS 106 costs. Pursuant to the PUCT's May 26, 1995, amended order, Entergy Gulf States is currently collecting the Texas portion of its SFAS 106 costs in rates. The LPSC ordered Entergy Gulf States and Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions, but the LPSC retains the flexibility to examine individual companies' accounting for postretirement benefits to determine if special exceptions to this order are warranted.
Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, the portion of Entergy Gulf States regulated by the PUCT, and System Energy fund postretirement benefit obligations collected in rates. System Energy is funding on behalf of Entergy Operations postretirement benefits associated with Grand Gulf 1. Entergy Louisiana and Entergy Gulf States continue to fund a portion of these benefits regulated by the LPSC and FERC on a pay-as-you-go basis. The assets of the various postretirement benefit plans other than pensions include common stocks, fixed-income securities, and a money market fund. At January 1, 1993, the actuarially determined accumulated postretirement benefit obligation (APBO) earned by retirees and active employees was estimated to be approximately $241.4 million and $128 million for Entergy (other than Entergy Gulf States) and for Entergy Gulf States, respectively. Such obligations are being amortized over a 20-year period beginning in 1993.
Total 1998, 1997, and 1996 postretirement benefit costs of Entergy Corporation and its subsidiaries, including amounts capitalized and deferred, included the following components (in thousands):
The funded status of Entergy's postretirement plans as of December 31, 1998 and 1997 was (in thousands):
The assumed health care cost trend rate used in measuring the APBO of Entergy was 6.0% for 1999, gradually decreasing each successive year until it reaches 5.0% in 2006. A one percentage-point change in the assumed health care cost trend rate for 1998 would have the following effects (in thousands):
The significant actuarial assumptions used in determining the APBO for 1998, 1997, and 1996 were as follows:
1998 1997 1996
Weighted-average discount rate 6.75% 7.25% 7.75% Weighted-average rate of increase in future compensation levels 4.6% 4.6% 4.6% Expected long-term rate of return on plan assets 9.0% 9.0% 9.0%
NOTE 12. DISPOSITION OF SUBSIDIARY BUSINESSES (Entergy Corporation)
In August 1998, Entergy's Board of Directors approved a new strategic direction for Entergy that included the sale of several businesses. These businesses include Entergy London and its wholly-owned subsidiary London Electricity; CitiPower Pty.; Edesur, S.A.; Entergy Security, Inc.; Efficient Solutions, Inc.; and certain portions of Entergy's telecommunications businesses. The results of operations of these businesses are included in Entergy's Consolidated Statements of Income and Comprehensive Income through their respective dates of sale. Gains or losses arising from sales concluded in 1998 are included in "Other Income (Deductions), Sale of non-regulated businesses" in that statement.
In September 1998, Entergy sold its energy management subsidiary, Efficient Solutions, Inc. (formerly Entergy Integrated Solutions, Inc.). The loss on the sale was approximately $69 million ($36 million net of tax, or $0.15 per common share).
In December 1998, Entergy sold its London, England electricity distribution and supply subsidiary, London Electricity. The gain on the sale was approximately $327 million ($247 million net of tax, or $1.00 per common share). The majority of the net proceeds from the London Electricity sale were invested in notes receivable totaling BPS574 million ($947 million). The banks obligated on the notes receivable are each rated by Standard & Poor's at A-1+ on their short-term obligations. These notes mature in August 1999.
Entergy has entered into foreign currency forward contracts to hedge the U.S. dollar equivalent amount of these notes and related accrued interest at maturity. The forward contracts are in the notional amount of BPS600 million, mature in August 1999, and lock in an average spot rate of $1.666125 to BPS1. The banks obligated on the forward contracts are rated by Standard & Poor's at A-1 or above on their short-term obligations. At maturity, Entergy expects to receive approximately $1 billion, including accrued interest, from the notes after the effects of hedging. Management's estimate of the fair value of the forward contracts as of December 31, 1998, based on quoted currency exchange rates, is a net asset of approximately $7.3 million.
In December 1998, Entergy sold its Melbourne, Australia electricity distribution subsidiary, CitiPower. The gain on the sale was approximately $30 million ($19 million net of tax, or $0.08 per common share).
In January 1999, Entergy sold its security monitoring subsidiary, Entergy Security, Inc., at a small gain. This gain will be reflected in Entergy's 1999 results of operations.
The businesses sold through December 31, 1998 collectively represented $6.7 billion of Entergy's total assets at the time of their respective sales and generated $177 million of Entergy's net income, excluding gains or losses from disposition, for the year ended December 31, 1998. Further information on the results of operations and total assets of Entergy London and CitiPower is included in Note 14 to the financial statements.
An adjustment to the carrying amounts of Entergy's investments in businesses located in Asia was recorded in the fourth quarter 1998. The adjustment reduced net income by $22 million, or $0.09 per common share. Management believes that the sale prices of businesses remaining to be sold at December 31, 1998 will exceed their net book value, and no further adjustments to their carrying values are necessary.
NOTE 13. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
The various domestic utility companies purchase electricity from and/or sell electricity to other domestic utility companies, System Energy, and Entergy Power (in the case of Entergy Arkansas) under rate schedules filed with FERC. In addition, the domestic utility companies and System Energy purchase fuel from System Fuels; receive management, technical, advisory, operating, and administrative services from Entergy Services; and receive management, technical, and operating services from Entergy Operations.
As described in Note 1, all of System Energy's operating revenues consist of billings to Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
The tables below contain the various affiliate transactions among the domestic utility companies and System Entergy (in millions).
Intercompany Revenues
Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy
1998 $162.0 $16.7 $16.7 $88.3 $11.0 $602.4 1997 $230.8 $15.9 $ 3.4 $85.5 $11.1 $633.7 1996 $283.6 $22.1 $ 6.8 $66.4 $ 2.9 $623.6
Intercompany Operating Expenses (excluding transactions with Entergy Operations)
Entergy Entergy Entergy Entergy Entergy System Arkansas Gulf States Louisiana Mississippi New Orleans Energy (1) 1998 $353.7 $419.7 $269.0 $338.1 $194.9 $39.6 1997 $335.0 $416.4 $326.7 $316.1 $177.1 $36.5 1996 $346.7 $395.7 $331.3 $294.6 $185.9 $ 8.6
(1)Includes $18.8 million in 1998, $16.5 million in 1997, and $38.8 million in 1996 for power purchased from Entergy Power.
Operating Expenses Paid or Reimbursed to Entergy Operations
Entergy Entergy Entergy System Arkansas Gulf States Louisiana Energy
1998 $167.5 $114.2 $125.0 $62.8 1997 $162.1 $ 63.5 $133.3 $64.7 1996 $163.3 $133.7 $ 97.7 $98.1
NOTE 14. BUSINESS SEGMENT INFORMATION (Entergy Corporation and Entergy New Orleans)
In 1998, Entergy adopted SFAS 131, "Disclosures about Segments of an Enterprise and Related Information." Entergy's reportable segments as of December 31, 1998 are domestic utility and power marketing and trading. Entergy's international electric distribution businesses, Entergy London and CitiPower, were sold in December 1998. These businesses would have been a reportable segment had they been held as of December 31, 1998, and financial information regarding them is also provided below.
Domestic utility provides retail electric service in portions of Arkansas, Louisiana, Mississippi, and Texas, and provides natural gas utility service in portions of Louisiana. Entergy's power marketing and trading segment markets wholesale electricity, gas, other generating fuels, and electric capacity, and markets financial instruments to third parties. Entergy's reportable segments are strategic business units managed separately due to their different operating and regulatory environments.
Entergy's segment financial information is as follows (in thousands):
The All Other category includes the parent Entergy Corporation, segments below the quantitative threshold for separate disclosure, and other business activities. Other segments principally include global power development and nuclear power operations and management. Other business activities principally include the gains on the sales of Entergy London and CitiPower, and the loss on the sale of Efficient Solutions. Reconciling items are principally intersegment activity.
Products and Services
In addition to retail electric service, Entergy New Orleans supplies natural gas services in the City of New Orleans. Revenue from these two services is disclosed in Entergy New Orleans' Statements of Income.
Geographic areas
For the years ended December 31, 1998, 1997, and 1996, Entergy did not derive material revenues from outside of the United States, other than from Entergy London and CitiPower, which are noted above.
Long-lived assets as of December 31 were as follows (in thousands):
1998 1997 1996
Domestic $ 14,863,488 $15,228,107 $ 15,599,221
Foreign $ 465,094 $ 2,904,721 $ 623,902 ------------ ----------- ------------- Consolidated $ 15,328,582 $18,132,828 $ 16,223,123 ============ =========== =============
NOTE 15. QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
The business of the domestic utility companies and System Energy is subject to seasonal fluctuations with the peak periods occurring during the third quarter. Operating results for the four quarters of 1998 and 1997 were:
Earnings (Loss) per Average Common Share (Entergy Corporation)
1998 1997 Basic and Diluted Basic and Diluted
First Quarter $0.20 $ 0.47 Second Quarter $0.83 $ 0.61 Third Quarter $1.01 $ 0.33 Fourth Quarter $0.96 $(0.38)
Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure.
No event that would be described in response to this item has occurred with respect to Entergy, System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or Entergy New Orleans.
PART III
Item 10. Directors and Executive Officers of the Registrants (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy)
All officers and directors listed below held the specified positions with their respective companies as of the date of filing this report.
(a) Mr. Meiners is a director of Trustmark National Bank, Jackson, MS, and Trustmark Corporation, Jackson, MS.
Each director and officer of the applicable Entergy company is elected yearly to serve by the unanimous consent of the sole stockholder, Entergy Corporation, at its annual meeting.
Directorships shown in footnote (a) above are generally limited to entities subject to Section 12 or 15(d) of the Securities and Exchange Act of 1934 or to the Investment Company Act of 1940.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement of Entergy Corporation to be filed in connection with its Annual Meeting of Stockholders to be held on May 14, 1999, under the heading "Section 16(a) Beneficial Ownership Reporting Compliance", which information is incorporated herein by reference.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information called for by this item concerning the directors and officers of Entergy Corporation is set forth in the Proxy Statement under the headings "Executive Compensation Tables", "General Information About Nominees", and "Director Compensation", which information is incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, AND SYSTEM ENERGY
Summary Compensation Table
The following table includes the Chief Executive Officer and the four other most highly compensated executive officers in office as of December 31, 1998 at Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy (collectively, the "Named Executive Officers"). This determination was based on total annual base salary and bonuses from all Entergy sources earned by each officer for the year 1998. See Item 10, "Directors and Executive Officers of the Registrants," for information on the principal positions of the Named Executive Officers in the table below.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
As shown in Item 10, most Named Executive Officers are employed by several Entergy companies. Because it would be impracticable to allocate such officers' salaries among the various companies, the table below includes the aggregate compensation paid by all Entergy companies.
(a) Includes the following:
(1) 1998 benefit accruals under the Defined Contribution Restoration Plan as follows: Mr. Cordaro $345; Mr. Gallaher $6,908; Mr. Hintz $8,748; Mr. Jackson $8,361; Mr. Keith $4,771; Mr. Lupberger $16,131; Mr. Maulden $12,982; and Mr. Meiners $3,934.
(2) 1998 employer contributions to the Entergy Stock Ownership Plan of $688 each for Mr. Cordaro, Mr. Domino, Mr. Gallaher, Mr. Hintz, Mr. Jackson, Mr. Keith, Mr. Langston, Mr. McNeal, and Mr. Meiners, and $403 for Mr. Lupberger.
(3) 1998 employer contributions to the System Savings Plan as follows: Mr. Cordaro $4,800; Mr. Domino $4,721; Mr. Gallaher $4,800; Mr. Hintz $4,800; Mr. Jackson $4,800; Mr. Keith $4,800; Mr. Langston $4,555; Mr. Lupberger $4,800; Mr. McNeal $4,457; Mr. Maulden $4,800; Mr. Meiners $4,766; and Mr. Packer $4,018.
(4) 1998 reimbursements for moving expenses as follows: Mr. Leonard $18,125 and Mr. Wilder $3,300.
(b) Restricted stock awards in 1998 are reported under the "Long-Term Incentive Plan Awards" table, and reference is made to this table for information on the aggregate number of restricted shares awarded during 1998 and the vesting schedule for such shares. At December 31, 1998, the number and value of the aggregate restricted stock holdings were as follows: Mr. Cordaro 4,500 shares, $140,063; Mr. Domino 3,252 shares, $101,219; Mr. Gallaher 7,497 shares, $233,344; Mr. Hintz 27,006 shares, $840,562; Mr. Jackson 27,000 shares, $840,375; Mr. Keith 4,500 shares, $140,063; Mr. Langston 4,506 shares, $140,249; Mr. Leonard 85,080 shares, $2,648,115; Mr. Lupberger 13,056 shares, $406,368; Mr. Maulden 13,500 shares, $420,188; Mr. Meiners 4,500 shares, $140,063; Mr. Packer 4,500 shares, $140,063; and Mr. Wilder 47,777 shares, $1,487,059. Accumulated dividends are paid on restricted stock when vested. No restrictions were lifted in 1998, 1997, and 1996. The value of restricted stock holdings as of December 31, 1998 is determined by multiplying the total number of shares held by the closing market price of Entergy Corporation common stock on the New York Stock Exchange Composite Transactions on December 31, 1998 ($31.125 per share).
(c) In addition to the restricted shares granted under the Long Term Incentive Plan Mr. Leonard and Mr. Wilder were granted 30,000 and 26,000 additional restricted shares, respectively. Restricted shares awarded will vest incrementally over a three-year period, beginning in 1999, based on continued service with Entergy Corporation. Restrictions will be lifted annually. The value Mr. Leonard and Mr. Wilder may realize is dependent upon both the number of shares that vest and the future market price of Entergy Corporation common stock. Accumulated dividends are not paid on Mr. Leonard's 30,000 shares and 21,000 shares of Mr. Wilder's restricted stock when vested. Accumulated dividends will be paid on 5,000 shares of Mr. Wilder's restricted stock when vested.
(d) Edwin Lupberger is the former Chief Executive Officer of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
(e) Includes Mr. Packer's living expenses of approximately $24,000 in 1998, $68,000 in 1997, and $11,700 in 1996, including taxes and housing. Includes Mr. Leonard's living expenses of approximately $18,000 in 1998.
(f) Includes $1,338,461 of severance payments; $9,553,226 of a lump sum distribution under the System Executive Retirement Plan (SERP); and a $168,623 payment under the Defined Contribution Restoration Plan.
Option Grants in 1998
The following table summarizes option grants during 1998 to the Named Executive Officers. The absence, in the table below, of any Named Executive Officer indicates that no options were granted to such officer.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
(a) Options were granted on January 22, 1998, pursuant to the Equity Ownership Plan. All options granted on this date have an exercise price equal to the closing price of Entergy Corporation common stock on the New York Stock Exchange Composite Transactions on January 22, 1998. These options became exercisable on July 22, 1998.
(b) Calculation based on the market price of the underlying securities assuming the market price increases over a ten-year option period and assuming annual compounding. The column presents estimates of potential values based on simple mathematical assumptions. The actual value, if any, a Named Executive Officer may realize is dependent upon the market price on the date of option exercise.
Aggregated Option Exercises in 1998 and December 31, 1998 Option Values
The following table summarizes the number and value of options exercised during 1998, as well as the number and value of all unexercised options held by the Named Executive Officers. The absence, in the table below, of any Named Executive Officer indicates that no options are held by such officer.
(a) Based on the difference between the closing price of Entergy Corporation's common stock on the New York Stock Exchange Composite Transactions on the exercise date and the option exercise price.
(b) Based on the difference between the closing price of Entergy Corporation's common stock on the New York Stock Exchange Composite Transactions on December 31, 1998, and the option exercise price.
Long-Term Incentive Plan Awards in 1998
The following Table summarizes the awards of restricted shares of Entergy Corporation common stock granted under the Equity Ownership Plan in 1998 to the Named Executive Officers.
(a) Restricted shares awarded will vest at the end of a three-year period, subject to the attainment of approved performance goals for Entergy. Restrictions are lifted based upon the achievement of the cumulative result of these goals for the performance period. The value any Named Executive Officer may realize is dependent upon both the number of shares that vest and the future market price of Entergy Corporation common stock.
(b) The threshold, target, and maximum levels correspond to the achievement of 50%, 100%, and 150%, respectively, of Equity Ownership Plan goals. Achievement of a threshold, target, or maximum level would result in the award of the number of shares indicated in the respective column. Achievement of a level between these three specified levels would result in the award of a number of shares calculated by means of interpolation.
Pension Plan Tables
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
Retirement Income Plan Table
Annual Covered Years of Service Compensation 15 20 25 30 35 $100,000 $22,500 $30,000 $37,500 $45,000 $52,500 200,000 45,000 60,000 75,000 90,000 105,000 300,000 67,500 90,000 112,500 135,000 157,500 400,000 90,000 120,000 150,000 180,000 210,000 500,000 112,500 150,000 187,500 225,000 262,500 650,000 146,250 195,000 243,750 292,500 341,250 950,000 213,750 285,000 356,250 427,500 498,750
All of the Named Executive Officers participate in a Retirement Income Plan, a defined benefit plan, that provides a benefit for employees at retirement from Entergy based upon (1) generally all years of service beginning at age 21 through termination, with a forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the final average compensation. Final average compensation is based on the highest consecutive 60 months of covered compensation in the last 120 months of service. The normal form of benefit for a single employee is a lifetime annuity and for a married employee is a 50% joint and survivor annuity. Other actuarially equivalent options are available to each retiree. Retirement benefits are not subject to any deduction for Social Security or other offset amounts. The amount of the Named Executive Officers' annual compensation covered by the plan as of December 31, 1998, is represented by the salary column in the Summary Compensation Table above.
The credited years of service under the Retirement Income Plan, as of December 31, 1998, for the following Named Executive Officers is as follows: Mr. Cordaro 40; Mr. Domino 28; Mr. Gallaher 29; Mr. Langston 27; Mr. Leonard 1; Mr. Maulden 33; Mr. McNeal 16; Mr. Meiners 28; and Mr. Packer 16. The credited years of service under the Retirement Income Plan, as of December 31, 1998 for the following Named Executive Officers, as a result of entering into supplemental retirement agreements, is as follows: Mr. Hintz 27; Mr. Jackson 19; Mr. Keith 32; Mr. Lupberger 35; and Mr. Wilder 15.
The maximum benefit under the Retirement Income Plan is limited by Sections 401 and 415 of the Internal Revenue Code of 1986, as amended; however, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy have elected to participate in the Pension Equalization Plan sponsored by Entergy Corporation. Under this plan, certain executives, including the Named Executive Officers, would receive an additional amount equal to the benefit that would have been payable under the Retirement Income Plan, except for the Sections 401 and 415 limitations discussed above.
In addition to the Retirement Income Plan discussed above, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy participate in the Supplemental Retirement Plan of Entergy Corporation and Subsidiaries and the Post-Retirement Plan of Entergy Corporation and Subsidiaries. Participation is limited to one of these two plans and is at the invitation of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy. The participant may receive from the appropriate Entergy company a monthly benefit payment not in excess of .025 (under the Supplemental Retirement Plan) or .0333 (under the Post-Retirement Plan) times the participant's average basic annual salary (as defined in the plans) for a maximum of 120 months. Mr. Hintz and Mr. Packer have entered into a Supplemental Retirement Plan participation contract, and Mr. Cordaro, Mr. Gallaher, Mr. Jackson, Mr. Keith, Mr. Lupberger, Mr. Maulden, and Mr. Meiners have entered into Post- Retirement Plan participation contracts. Current estimates indicate that the annual payments to each Named Executive Officer under the above plans would be less than the payments to that officer under the System Executive Retirement Plan discussed below.
System Executive Retirement Plan Table (1)
Annual Covered Years of Service Compensation 15 20 25 30+ $ 200,000 $90,000 $100,000 $ 110,000 $120,000 300,000 135,000 150,000 165,000 180,000 400,000 180,000 200,000 220,000 240,000 500,000 225,000 250,000 275,000 300,000 600,000 270,000 300,000 330,000 360,000 700,000 315,000 350,000 385,000 420,000 1,000,000 450,000 500,000 550,000 600,000 ___________
(1)Covered pay includes the average of the highest three years of annual base pay and incentive awards earned by the executive during the ten years immediately preceding his retirement. Benefits shown are based on a target replacement ratio of 50% based on the years of service and covered compensation shown. The benefits for 10, 15, and 20 or more years of service at the 45% and 55% replacement levels would decrease (in the case of 45%) or increase (in the case of 55%) by the following percentages: 3.0%, 4.5%, and 5.0%, respectively.
In 1993, Entergy Corporation adopted the System Executive Retirement Plan (SERP). This plan was amended in 1998. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are participating employers in the SERP. The SERP is an unfunded defined benefit plan offered at retirement to certain senior executives, which would currently include all the Named Executive Officers (except for Mr. Langston, Mr. Leonard, Mr. McNeal, and Mr. Packer). Participating executives choose, at retirement, between the retirement benefits paid under provisions of the SERP or those payable under the Supplemental Retirement Plan or the Post-Retirement Plan discussed above. The plan was amended in 1998 to provide that covered pay is the average of the highest three years annual base pay and incentive awards earned by the executive during the ten years immediately preceding his retirement. Benefits paid under the SERP are calculated by multiplying the covered pay times target pay replacement ratios (45%, 50%, or 55%, dependent on job rating at retirement) that are attained, according to plan design, at 20 years of credited service. The target ratios are increased by 1% for each year of service over 20 years, up to a maximum of 30 years of service. In accordance with the SERP formula, the target ratios are reduced for each year of service below 20 years. The credited years of service under this plan are identical to the years of service for Named Executive Officers (other than Mr. Jackson, Mr. Keith, and Mr. Wilder) disclosed above in the section entitled "Pension Plan Tables-Retirement Income Plan Table". Mr. Jackson, Mr. Keith, and Mr. Wilder have 25 years, 15 years, and 5 months, respectively, of credited service under this plan. Mr. Maulden's retirement benefits are discussed under the "Employment Contracts" section below. His benefits will be calculated based on the provisions in effect prior to the 1998 SERP amendment.
The amended plan provides that a single employee receives a lifetime annuity and a married employee receives the reduced benefit with a 50% surviving spouse annuity. Other actuarially equivalent options are available to each retiree. SERP benefits are offset by any and all defined benefit plan payments from Entergy. SERP benefits are not subject to Social Security offsets.
Eligibility for and receipt of benefits under any of the executive plans described above are contingent upon several factors. The participant must agree, without the specific consent of the Entergy company for which such participant was last employed, not to take employment after retirement with any entity that is in competition with, or similar in nature to, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy or any affiliate thereof. Eligibility for benefits is forfeitable for various reasons, including violation of an agreement with Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, certain resignations of employment, or certain terminations of employment without Company permission.
In addition to the Retirement Income Plan discussed above, Entergy Gulf States provides, among other benefits to officers, an Executive Income Security Plan for key managerial personnel. The plan provides participants with certain retirement, disability, termination, and survivors' benefits. To the extent that such benefits are not funded by the employee benefit plans of Entergy Gulf States or by vested benefits payable by the participants' former employers, Entergy Gulf States is obligated to make supplemental payments to participants or their survivors. The plan provides that upon the death or disability of a participant during his employment, he or his designated survivors will receive (i) during the first year following his death or disability an amount not to exceed his annual base salary, and (ii) thereafter for a number of years until the participant attains or would have attained age 65, but not less than nine years, an amount equal to one-half of the participant's annual base salary. The plan also provides supplemental retirement benefits for life for participants retiring after reaching age 65 equal to one- half of the participant's average final compensation rate, with one- half of such benefit upon the death of the participant being payable to a surviving spouse for life.
Entergy Gulf States amended and restated the plan effective March 1, 1991, to provide such benefits for life upon termination of employment of a participating officer or key managerial employee without cause (as defined in the plan) or if the participant separates from employment for good reason (as defined in the plan), with 1/2 of such benefits to be payable to a surviving spouse for life. Further, the plan was amended to provide medical benefits for a participant and his family when the participant separates from service. These medical benefits generally continue until the participant is eligible to receive medical benefits from a subsequent employer; but in the case of a participant who is over 50 at the time of separation and was participating in the plan on March 1, 1991, medical benefits continue for life. By virtue of the 1991 amendment and restatement, benefits for a participant under such plan cannot be modified once he becomes eligible to participate in the plan. Mr. Domino is a participant in this plan.
Compensation of Directors
For information regarding compensation of the directors of Entergy Corporation, see the Proxy Statement under the heading "Director Compensation", which information is incorporated herein by reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy currently have no non-employee directors, and none of the current directors of Entergy Corporation are compensated for their responsibilities as director.
Retired non-employee directors of Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum of five years of service on the respective Boards of Directors are paid $200 a month for a term of years corresponding to the number of years of active service as directors. Retired non-employee directors with over ten years of service receive a lifetime benefit of $200 a month. Years of service as an advisory director are included in calculating this benefit. System Energy has no retired non-employee directors.
Retired non-employee directors of Entergy Gulf States receive retirement benefits under a plan in which all directors who served continuously for a period of years will receive a percentage of their retainer fee in effect at the time of their retirement for life. The retirement benefit is 30 percent of the retainer fee for service of not less than five nor more than nine years, 40 percent for service of not less than ten nor more than fourteen years, and 50 percent for fifteen or more years of service. For those directors who retired prior to the retirement age, their benefits are reduced. The plan also provides disability retirement and optional hospital and medical coverage if the director has served at least five years prior to the disability. The retired director pays one-third of the premium for such optional hospital and medical coverage and Entergy Gulf States pays the remaining two-thirds. Years of service as an advisory director are included in calculating this benefit.
Employment Contracts, Termination of Employment Agreements, Retirement Agreements and Change-in-Control Arrangements
Entergy Gulf States
As a result of the Merger, Entergy Gulf States is obligated to pay benefits under the Executive Income Security Plan to those persons who were participants at the time of the Merger and who later terminated their employment under circumstances described in the plan. For additional description of the benefits under the Executive Income Security Plan, see the "Pension Plan Tables-System Executive Retirement Plan Table" section noted above.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
In connection with Mr. Leonard's employment, the Company entered into an agreement with him that provided for an annual salary of $600,000 and a potential annual incentive payout of 70%. In addition to participation in the incentive and stock option plans, Mr. Leonard received a signing bonus of $500,000 and a retention award of 30,000 restricted shares of Common Stock. As long as Mr. Leonard remains employed, the restrictions will be lifted on 10,000 shares per year beginning on his first employment anniversary. In lieu of participation in Entergy Executive Retirement Plans, Entergy agreed to provide Mr. Leonard with a retirement benefit comparable to the one provided by his previous employer. This benefit will be calculated on the basis of 60% of his highest three year average base salary and annual incentive payments, and will be offset by Mr. Leonard's vested retirement benefit from his previous employment. This retirement benefit can begin at age 55. If Mr. Leonard should resign prior to age 55 without permission, he will forfeit this replacement benefit and receive only regular accrued pension benefits. If he should resign prior to age 55 with the Corporation's permission, he will receive the replacement benefit, but discounted at the rate of 6.5% for each year before age 55. This benefit would not be payable until age 62. Mr. Leonard's agreement contains a "change of control" provision that provides for an immediate vesting of the 60% replacement pension benefit plus a lump sum payment of 2.99 times his average three years base pay.
Mr. Wilder entered into an employment agreement with the Corporation pursuant to which he will receive an annual salary of $400,000 and the potential maximum annual incentive payout of 90%. Mr. Wilder will be eligible for a pro-rata share of the performance award for the period 1998-2001 and the pro-rata share of stock option grant at the end of the first year. The Corporation granted Mr. Wilder a signing bonus of $300,000, and 21,000 shares of restricted stock upon which restrictions will be lifted on 7,000 shares each year beginning on his first employment anniversary. Mr. Wilder was offered participation in the System Executive Retirement Plan and was credited with 15 years of service. If Entergy terminates Mr. Wilder's employment within two years other than for just cause, he will receive his annual base salary and continuation of his health benefits for two years.; all remaining earned but unvested stock options and performance shares would immediately vest. Upon a change of control, if Mr. Wilder resigns for "good reason" his executive pension benefits will immediately vest and he will receive a lump sum payment of 2.99 times his average three years base pay.
In connection with his retirement, Mr. Lupberger entered into an agreement with the Corporation, which provided that he would receive, subject to certain conditions, a severance payment of $1,338,462 paid in a lump sum. In addition, Mr. Lupberger received all benefits he would have received under the incentive plans, pro rated through July 31, 1998, the last day of his employment. All amounts paid or earned are included in the Summary Compensation Table above, except for 93,333 shares of stock at an exercise price of $29.94 that he received at his pro rata share of the 1998 Long Term Incentive Award. Mr. Lupberger has until January 31, 2009 to exercise these options. Mr. Lupberger will receive all retirement benefits pursuant to the retirement plans in which he participated.
In connection with his early retirement, Mr. Maulden entered into an agreement with Entergy. Beginning on April 1, 1999, Mr. Maulden will continue to serve as Vice Chairman, and will continue to receive his base salary, incentive pay and all other benefits but will no longer be responsible for any organizational responsibilities. On April 1, 2000, his retirement date, Mr. Maulden will receive retirement benefits as though he had continued as an active employee until age 65 without the application of any early retirement discount factor. In addition, the Company has agreed to fund a named chair at the University of Arkansas at Little Rock for $1,000,000. The funding will be made in four equal installments to be paid directly to the university on April 1, 1999, 2000, 2001, and 2002.
Personnel Committee Interlocks and Insider Participation
The compensation of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy executive officers was set by the Personnel Committee of Entergy Corporation's Board of Directors, composed solely of Directors of Entergy Corporation. No current or former officers or employees of any Entergy company participated in deliberations concerning compensation during 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Entergy Corporation owns 100% of the outstanding common stock of registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy. The information with respect to persons known by Entergy Corporation to be beneficial owners of more than 5% of Entergy Corporation's outstanding common stock is included under the heading "Stockholders Who Own at Least Five Percent" in the Proxy Statement, which information is incorporated herein by reference. The registrants know of no contractual arrangements that may, at a subsequent date, result in a change in control of any of the registrants.
As of December 31, 1998, the directors, the Named Executive Officers, and the directors and officers as a group for Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy, respectively, beneficially owned directly or indirectly common stock of Entergy Corporation as indicated:
Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a) Sole Voting and Other Investment Beneficial Name Power Ownership(b)
Entergy Corporation W. Frank Blount* 5,634 - John A. Cooper, Jr.* 8,134 - George W. Davis* 300 - Norman C. Francis* 1,500 - Frank F. Gallaher** 15,223 45,000 Donald C. Hintz** 3,157 55,000 Jerry D. Jackson** 21,804 51,911 J. Wayne Leonard***(d) - - Robert v.d. Luft***(d) 8,884 - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden** 9,453 32,500 Adm. Kinnaird R. McKee* 3,367 - Paul W. Murrill* 3,011 - James R. Nichols* 7,014 - Eugene H. Owen* 4,292 - John N. Palmer, Sr.* 16,182 - Robert D. Pugh**** 6,400 6,500 (c) Wm. Clifford Smith* 7,598 - Bismark A. Steinhagen* 8,837 - All directors and executive officers 180,366 330,735
Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a) Sole Voting and Other Investment Beneficial Name Power Ownership(b)
Entergy Arkansas Frank F. Gallaher*** 15,223 45,000 Donald C. Hintz* 3,157 55,000 Jerry D. Jackson*** 21,804 51,911 R. Drake Keith*** 6,304 13,424 J. Wayne Leonard***(d) - - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden*** 9,453 32,500 All directors and executive officers 142,653 343,409
Entergy Gulf States John J. Cordaro*** 4,269 5,000 Joseph F. Domino*** 5,809 1,500 Frank F. Gallaher*** 15,223 45,000 Donald C. Hintz* 3,157 55,000 Jerry D. Jackson*** 21,804 51,911 J. Wayne Leonard***(d) - - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden*** 9,453 32,500 All directors and executive officers 152,704 339,235
Entergy Louisiana John J. Cordaro*** 4,269 5,000 Frank F. Gallaher*** 15,223 45,000 Donald C. Hintz* 3,157 55,000 Jerry D. Jackson*** 21,804 51,911 J. Wayne Leonard***(d) - - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden*** 9,453 32,500 All directors and executive officers 148,650 339,235
Entergy Corporation Common Stock Amount and Nature of Beneficial Ownership(a) Sole Voting and Other Investment Beneficial Name Power Ownership(b)
Entergy Mississippi Frank F. Gallaher*** 15,223 45,000 Donald C. Hintz* 3,157 55,000 Jerry D. Jackson*** 21,804 51,911 J. Wayne Leonard***(d) - - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden*** 9,453 32,500 Donald E. Meiners*** 11,337 11,250 All directors and executive officers 143,489 339,235
Entergy New Orleans Frank F. Gallaher** 15,223 45,000 Donald C. Hintz* 3,157 55,000 Jerry D. Jackson*** 21,804 51,911 J. Wayne Leonard***(d) - - Robert v.d. Luft*(d) 8,884 - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden** 9,453 32,500 Daniel F. Packer *** 2,271 - All directors and executive officers 141,213 327,985
System Energy Donald C. Hintz* 3,157 55,000 Nathan E. Langston** 8,666 1,500 J. Wayne Leonard*(d) - - Robert v.d. Luft*(d) 8,884 - Edwin Lupberger**(d) 30,203 116,824 (c) Jerry L. Maulden* 9,453 32,500 Steven C. McNeal** 2,571 1,500 C. John Wilder*** - - Jerry W. Yelverton* 7,334 8,250 All directors and executive officers 74,223 215,574
* Director of the respective Company ** Named Executive Officer of the respective Company *** Director and Named Executive Officer of the respective Company **** Mr. Pugh's term will expire at the Annual Meeting and he is not standing for re-election.
(a) Based on information furnished by the respective individuals. Except as noted, each individual has sole voting and investment power. The number of shares of Entergy corporation common stock owned by each individual and by all directors and executive officers as a group does not exceed one percent of the outstanding Entergy Corporation common stock.
(b) Includes, for the Named Executive Officers, shares of Entergy Corporation common stock in the form of unexercised stock options awarded pursuant to the Equity Ownership Plan as follows: John J. Cordaro, 5,000 shares; Joseph F. Domino, 1,500 shares; Frank F. Gallaher, 45,000 shares; Donald C. Hintz, 55,000 shares; Jerry D. Jackson, 51,911 shares; R. Drake Keith, 13,424 shares; Nathan E. Langston, 1,500 shares; Edwin Lupberger, 113,824 shares; Jerry L. Maulden, 32,500 shares; Steven C. McNeal, 1,500 shares; and Donald E. Meiners, 11,250 shares.
(c) Includes Common Stock held by Mrs. Pugh of 6,500 shares of which Mr. Pugh disclaims beneficial ownership and 2,500 shares held by Mrs. Lupberger of which Mr. Lupberger disclaims beneficial ownership. In addition, Mr. Lupberger owns 500 shares in joint tenancy with his mother, for which he disclaims beneficial ownership.
(d) Mr. Luft served as acting Chief Executive Officer of Entergy Corporation and a director of Entergy New Orleans and System Energy during 1998. Mr. Lupberger is the former Chief Executive Officer and a former director of Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans. Mr. Lupberger is a former director of System Energy. As of January 1, 1999, Mr. Leonard was appointed Chief Executive Officer and director of Entergy Corporation, and Chairman of the Board for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy.
Item 13. Certain Relationships and Related Transactions
During 1998, T. Baker Smith & Son, Inc. performed land surveying services for, and received payments of approximately $13,624 from, Entergy Louisiana, Inc. Mr. Wm. Clifford Smith, a director of Entergy Corporation, is President of T. Baker Smith & Son, Inc. Mr. Smith's children own 100% of the voting stock of T. Baker Smith & Son, Inc.
See Item 10, "Directors and Executive Officers of the Registrants," for information on certain relationships and transactions required to be reported under this item.
Other than as provided under applicable corporate laws, Entergy does not have policies whereby transactions involving executive officers and directors are approved by a majority of disinterested directors. However, pursuant to the Entergy Corporation Code of Conduct, transactions involving an Entergy company and its executive officers must have prior approval by the next higher reporting level of that individual, and transactions involving an Entergy company and its directors must be reported to the secretary of the appropriate Entergy company.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)1. Financial Statements and Independent Auditors' Reports for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are listed in the Index to Financial Statements (see pages 37 and 38)
(a)2. Financial Statement Schedules
Reports of Independent Accountants on Financial Statement Schedules (see page 212)
Financial Statement Schedules are listed in the Index to Financial Statement Schedules (see page S-1)
(a)3. Exhibits
Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy are listed in the Exhibit Index (see page E- 1). Each management contract or compensatory plan or arrangement required to be filed as an exhibit hereto is identified as such by footnote in the Exhibit Index.
(b) Reports on Form 8-K
Entergy Corporation A current report on Form 8-K, dated November 25, 1998, was filed with the SEC on November 25, 1998, reporting information under Item 5. "Other Events".
Entergy Corporation and Entergy London Investments A current report on Form 8-K, dated November 30, 1998, was filed with the SEC on December 1, 1998, reporting information under Item 5. "Other Events".
Entergy Corporation A current report on Form 8-K, dated December 4, 1998, was filed with the SEC on December 21, 1998, reporting information under Item 2.
Item 2. "Acquisition or Disposition of Assets" and Item 7. "Financial Statements, Pro Forma Financial Statements and Exhibits".
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY CORPORATION
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
J. Wayne Leonard (Chief Executive Officer and Director; Principal Executive Officer) and Robert v.d. Luft (Chairman of the Board and Director); W. Frank Blount, John A. Cooper, Jr., George W. Davis, N. C. Francis, Kinnaird R. McKee, Paul W. Murrill, James R. Nichols, Eugene H. Owen, John N. Palmer, Sr., Robert D. Pugh, Wm. Clifford Smith, and Bismark A. Steinhagen (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY ARKANSAS, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
R. Drake Keith (President, Chief Executive Officer and Director; Principal Executive Officer) and J. Wayne Leonard (Chairman of the Board and Director); Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, and Jerry L. Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
ENTERGY GULF STATES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY GULF STATES, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
Jerry D. Jackson (President, Chief Executive Officer-Louisiana and Director; Principal Executive Officer), Joseph F. Domino (President, Chief Executive Officer-Texas and Director; Principal Executive Officer), and J. Wayne Leonard (Chairman of the Board and Director); Frank F. Gallaher, Donald C. Hintz, and Jerry L. Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
ENTERGY LOUISIANA, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY LOUISIANA, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
Jerry D. Jackson (President, Chief Executive Officer and Director; Principal Executive Officer) and J. Wayne Leonard (Chairman of the Board and Director); Frank F. Gallaher, Donald C. Hintz, and Jerry L. Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY MISSISSIPPI, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
Donald E. Meiners (President, Chief Executive Officer and Director; Principal Executive Officer) and J. Wayne Leonard (Chairman of the Board and Director); Frank F. Gallaher, Donald C. Hintz, Jerry D. Jackson, and Jerry L. Maulden (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
ENTERGY NEW ORLEANS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ENTERGY NEW ORLEANS, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
Daniel F. Packer (President, Chief Executive Officer and Director; Principal Executive Officer) and J. Wayne Leonard (Chairman of the Board and Director); Donald C. Hintz and Jerry D. Jackson (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
SYSTEM ENERGY RESOURCES, INC.
By /s/ Nathan E. Langston Nathan E. Langston, Vice President and Chief Accounting Officer
Date: March 12, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston Nathan E. Langston Vice President and Chief March 12, 1999 Accounting Officer (Principal Accounting Officer)
Jerry W. Yelverton (President, Chief Executive Officer and Director; Principal Executive Officer) and J. Wayne Leonard (Chairman of the Board and Director), Donald C. Hintz and C. John Wilder (Directors).
By: /s/ Nathan E. Langston March 12, 1999 (Nathan E. Langston, Attorney-in-fact)
EXHIBIT 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment Nos. 2, 3, 4A, and 5A on Form S-8, and their related Prospectuses, to the registration statement of Entergy Corporation on Form S-4 (File Number 33-54298) and the registration statements and related Prospectuses on Form S-3 (File Numbers 333-02503 and 333-22007) of our reports dated February 18, 1999, on our audits of the consolidated financial statements and financial statement schedules of Entergy Corporation as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Arkansas, Inc. on Form S-3 (File Numbers 33-50289, 333-00103 and 333-05045) of our reports dated February 18, 1999, on our audits of the financial statements and financial statement schedule of Entergy Arkansas, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Gulf States, Inc. on Form S-3 (File Numbers 33-49739, 33-51181 and 333-60957), on Form S-8 (File Numbers 2-76551 and 2-98011) and on Form S-2 (File Number 333- 17911), of our reports dated February 18, 1999, on our audits of the financial statements and financial statement schedule of Entergy Gulf States, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Louisiana, Inc. on Form S-3 (File Numbers 33-46085, 33-39221, 33-50937, 333-00105, 333- 01329 and 333-03567) of our reports dated February 18, 1999, on our audits of the financial statements and financial statement schedule of Entergy Louisiana, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy Mississippi, Inc. on Form S-3 (File Numbers 33-53004, 33-55826, 33-50507 and 333-64023) of our reports dated February 18, 1999, on our audits of the financial statements and financial statement schedule of Entergy Mississippi, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of Entergy New Orleans, Inc. on Form S-3 (File Numbers 33-57926 and 333-00255) of our reports dated February 18, 1999, on our audits of the financial statements and financial statement schedule of Entergy New Orleans, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which are included in this Annual Report on Form 10-K.
We consent to the incorporation by reference in the registration statements and the related Prospectuses of System Energy Resources, Inc. on Form S-3 (File Numbers 33-47662, 33-61189 and 333-06717) of our report dated February 18, 1999, on our audits of the financial statements of System Energy Resources, Inc. as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, which is included in this Annual Report on Form 10-K.
PricewaterhouseCoopers LLP
New Orleans, Louisiana March 10, 1999
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Shareholders of Entergy Corporation
Our audits of the consolidated financial statements of Entergy Corporation and the financial statements of Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., and Entergy New Orleans, Inc. (which reports and financial statements are included in this Annual Report on Form 10-K) also included audits of the financial statement schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements.
PricewaterhouseCoopers LLP
New Orleans, Louisiana February 18, 1999
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule Page
I Financial Statements of Entergy Corporation: Statements of Income - For the Years Ended December 31, 1998, 1997, and 1996 S-2 Statements of Cash Flows - For the Years Ended December 31, 1998, 1997, and 1996 S-3 Balance Sheets, December 31, 1998 and 1997 S-4 Statements of Retained Earnings and Paid-In Capital - For the Years Ended December 31, 1998, 1997, and 1996 S-5 II Valuation and Qualifying Accounts 1998, 1997 and 1996: Entergy Corporation and Subsidiaries S-6 Entergy Arkansas, Inc. S-7 Entergy Gulf States, Inc. S-8 Entergy Louisiana, Inc. S-9 Entergy Mississippi, Inc. S-10 Entergy New Orleans, Inc. S-11
Schedules other than those listed above are omitted because they are not required, not applicable or the required information is shown in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the information is not applicable.
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed with the SEC, respectively, as the exhibits and in the file numbers indicated and are incorporated herein by reference. The exhibits marked with a (+) are management contracts or compensatory plans or arrangements required to be filed herewith and required to be identified as such by Item 14 of Form 10-K. Reference is made to a duplicate list of exhibits being filed as a part of this Form 10-K, which list, prepared in accordance with Item 102 of Regulation S-T of the SEC, immediately precedes the exhibits being physically filed with this Form 10-K.
(3) (i) Articles of Incorporation
Entergy Corporation
(a) 1 -- Certificate of Incorporation of Entergy Corporation dated December 31, 1993 (A-1(a) to Rule 24 Certificate in 70-8059).
System Energy
(b) 1 -- Amended and Restated Articles of Incorporation of System Energy and amendments thereto through April 28, 1989 (A-1(a) to Form U-1 in 70-5399).
Entergy Arkansas
(c) 1 -- Amended and Restated Articles of Incorporation of Entergy Arkansas and amendments thereto through April 22, 1996 (3(a) to Form 10-Q for the quarter ended March 31, 1996 in 1-10764).
Entergy Gulf States
(d) 1 -- Restated Articles of Incorporation of Entergy Gulf States and amendments thereto through April 22, 1996 (3(b) to Form 10-Q for the quarter ended March 31, 1996 in 1-2703).
Entergy Louisiana
(e) 1 -- Restated Articles of Incorporation of Entergy Louisiana and amendments thereto through April 22, 1996 (3(c) to Form 10-Q for the quarter ended March 31, 1996 in 1-8474).
Entergy Mississippi
(f) 1 -- Restated Articles of Incorporation of Entergy Mississippi and amendments thereto through November 17, 1997 (3(i)(f)1 to Form 10-K for the year ended December 31, 1997 in 0-320).
Entergy New Orleans
(g) 1 -- Restatement of Articles of Incorporation of Entergy New Orleans and amendments thereto through April 22, 1996 (3(e) to Form 10-Q for the quarter ended March 31, 1996 in 0-5807).
(3) (ii) By-Laws
(a) -- By-Laws of Entergy Corporation as amended September 14, 1998, and as presently in effect (3(a) to Form 10-Q for the quarter ended September 30, 1998).
(b) -- By-Laws of System Energy effective July 6, 1998, and as presently in effect (3(f) to Form 10-Q for the quarter ended June 30, 1998).
(c) -- By-Laws of Entergy Arkansas as of October 5, 1998, and as presently in effect (3(b) to Form 10-Q for the quarter ended September 30, 1998).
(d) -- By-Laws of Entergy Gulf States as of October 5, 1998, and as presently in effect (3(c) to Form 10-Q for the quarter ended September 30, 1998).
(e) -- By-Laws of Entergy Louisiana as of October 5, 1998, and as presently in effect (3(d) to Form 10-Q for the quarter ended September 30, 1998).
(f) -- By-Laws of Entergy Mississippi as of October 5, 1998, and as presently in effect (3(e) to Form 10-Q for the quarter ended September 30, 1998).
(g) -- By-Laws of Entergy New Orleans as of October 5, 1998, and as presently in effect (3(f) to Form 10-Q for the quarter ended September 30, 1998).
(4) Instruments Defining Rights of Security Holders, Including Indentures
Entergy Corporation
(a) 1 -- See (4)(b) through (4)(g) below for instruments defining the rights of holders of long-term debt of System Energy, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans.
(a) 2 -- Credit Agreement, dated as of September 13, 1996, among Entergy Corporation, Entergy Technology Holding Company, the Banks (The Bank of New York, Bank of America NT & SA, The Bank of Nova Scotia, Banque Nationale de Paris (Houston Agency), The First National Bank of Chicago, The Fuji Bank Ltd., Societe Generale Southwest Agency, and CIBC Inc.) and The Bank of New York, as Agent (the "Entergy-ETHC Credit Agreement") (filed as Exhibit 4(a)12 to Form 10-K for the year ended December 31, 1996 in 1-11299).
(a) 3 -- Amendment No. 1, dated as of October 22, 1996 to Credit Agreement Entergy-ETHC Credit Agreement (filed as Exhibit 4(a)13 to Form 10-K for the year ended December 31, 1996 in 1-11299).
(a) 4 -- Guaranty and Acknowledgment Agreement, dated as of October 3, 1996, by Entergy Corporation to The Bank of New York of certain promissory notes issued by ETHC in connection with acquisition of 280 Equity Holdings, Ltd (filed as Exhibit 4(a)14 to Form 10-K for the year ended December 31, 1996 in 1-11299).
(a) 5 -- Amendment, dated as of November 21, 1996, to Guaranty and Acknowledgment Agreement by Entergy Corporation to The Bank of New York of certain promissory notes issued by ETHC in connection with acquisition of 280 Equity Holdings, Ltd (filed as Exhibit 4(a)15 to Form 10-K for the year ended December 31, 1996 in 1-11299).
(a) 6 -- Guaranty and Acknowledgment Agreement, dated as of November 21, 1996, by Entergy Corporation to The Bank of New York of certain promissory notes issued by ETHC in connection with acquisition of Sentry (filed as Exhibit 4(a)16 to Form 10-K for the year ended December 31, 1996 in 1-11299).
(a) 7 -- Amended and Restated Credit Agreement, dated as of December 12, 1996, among Entergy, the Banks (Bank of America National Trust & Savings Association, The Bank of New York, The Chase Manhattan Bank, Citibank, N.A., Union Bank of Switzerland, ABN Amro Bank N.V., The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Mellon Bank, N.A., First National Bank of Commerce and Whitney National Bank) and Citibank, N.A., as Agent (filed as Exhibit 4(a)17 to Form 10-K for the year ended December 31, 1996 in 1-11299).
System Energy
(b) 1 -- Mortgage and Deed of Trust, dated as of June 15, 1977, as amended by twenty-one Supplemental Indentures (A-1 in 70-5890 (Mortgage); B and C to Rule 24 Certificate in 70-5890 (First); B to Rule 24 Certificate in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter ended June 30, 1981, in 1-3517 (Third); A-1(e)-1 to Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24 Certificate in 70-7021 (Fifth); B to Rule 24 Certificate in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in 70-7026 (Seventh); A-3(b) to Rule 24 Certificate in 70-7158 (Eighth); B to Rule 24 Certificate in 70-7123 (Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth); B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to Rule 24 Certificate in 70-7272 (Twelfth); B-1 to Rule 24 Certificate in 70-7382 (Thirteenth); B-2 to Rule 24 Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24 Certificate in 70-7946 (Fifteenth); A-2(c) to Rule 24 Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24 Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24 Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A- 2(g) to Rule 24 Certificate dated May 6, 1994, in 70-7946 (Nineteenth); A-2(a)(1) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twentieth); and A- 2(a)(2) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511 (Twenty-first)).
(b) 2 -- Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company and Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and System Energy (B-2(c)(1) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-3(d) to Rule 24 Certificate dated January 31, 1994 in 70-8215).
(b) 3 -- Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M. Carta (Steven Kaba, successor), as Owner Trustees, and System Energy (B-2(c)(2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B-4(d) Rule 24 Certificate dated January 31, 1994 in 70-8215).
(b) 4 -- Indenture (for Unsecured Debt Securities), dated as of September 1, 1995, between System Energy Resources, Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate in 70-8511).
Entergy Arkansas
(c) 1 -- Mortgage and Deed of Trust, dated as of October 1, 1944, as amended by fifty-fourth Supplemental Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121 (First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third); 7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149 (Fifth); 4(a)-6 in 2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh); 4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth); 2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in 70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in 2-24414 (Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c) in 2-28869 (Sixteenth); 2(d) in 2-28869 (Seventeenth); 2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646 (Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in 2-41080 (Twenty-first); C-1 to Rule 24 Certificate in 70-5151 (Twenty-second); C-1 to Rule 24 Certificate in 70-5257 (Twenty-third); C to Rule 24 Certificate in 70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in 70-5404 (Twenty-fifth); C to Rule 24 Certificate in 70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in 70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-5693 (Twenty-eighth); C-1 to Rule 24 Certificate in 70-6078 (Twenty-ninth); C-1 to Rule 24 Certificate in 70-6174 (Thirtieth); C-1 to Rule 24 Certificate in 70-6246 (Thirty-first); C-1 to Rule 24 Certificate in 70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in 70-6326 (Thirty-third); C-1 to Rule 24 Certificate in 70-6607 (Thirty-fourth); C-1 to Rule 24 Certificate in 70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate, dated December 1, 1982, in 70-6774 (Thirty-sixth); C-1 to Rule 24 Certificate, dated February 17, 1983, in 70-6774 (Thirty-seventh); A-2(a) to Rule 24 Certificate, dated December 5, 1984, in 70-6858 (Thirty-eighth); A-3(a) to Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to Rule 24 Certificate dated July 6, 1989 in 70-7346 (Forty-first); A-8(c) to Rule 24 Certificate, dated February 1, 1990 in 70-7346 (Forty-second); 4 to Form 10-Q for the quarter ended September 30, 1990 in 1-10764 (Forty-third); A-2(a) to Rule 24 Certificate, dated November 30, 1990, in 70-7802 (Forty-fourth); A-2(b) to Rule 24 Certificate, dated January 24, 1991, in 70-7802 (Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth); 4(c)(2) to Form 10-K for the year ended December 31, 1992 in 1- 10764 (Forty-seventh); 4(b) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-eighth); 4(c) to Form 10-Q for the quarter ended June 30, 1993 in 1-10764 (Forty-ninth); 4(b) to Form 10-Q for the quarter ended September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10- Q for the quarter ended September 30, 1993 in 1-10764 (Fifty-first); 4(a) to Form 10-Q for the quarter ended June 30, 1994 (Fifty-second); C-2 to Form U5S for the year ended December 31, 1995 (Fifty-third); and C-2(a) to Form U5S for the year ended December 31, 1996 (Fifty- fourth)).
(c) 2 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities between Entergy Arkansas and Bank of New York (as Trustee), dated as of August 1, 1996 (filed as Exhibit A-1(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).
(c) 3 -- Amended and Restated Trust Agreement of Entergy Arkansas Capital I, dated as of August 14, 1996 (filed as Exhibit A-3(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).
(c) 4 -- Guarantee Agreement between Entergy Arkansas (as Guarantor) and The Bank of New York (as Trustee), dated as of August 14, 1996, with respect to Entergy Arkansas Capital I's obligations on its 8 1/2% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-4(a) to Rule 24 Certificate dated August 26, 1996 in File No. 70-8723).
Entergy Gulf States
(d) 1 -- Indenture of Mortgage, dated September 1, 1926, as amended by certain Supplemental Indentures (B-a-I-1 in Registration No. 2-2449 (Mortgage); 7-A-9 in Registration No. 2-6893 (Seventh); B to Form 8-K dated September 1, 1959 (Eighteenth); B to Form 8-K dated February 1, 1966 (Twenty-second); B to Form 8-K dated March 1, 1967 (Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty- fourth); B to Form 8-K dated November 1, 1968 (Twenty- fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth); 2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4-2 to Form 10-K for the year ended December 31, 1984 in 1-2703 (Forty-eighth); 4-2 to Form 10-K for the year ended December 31, 1988 in 1-2703 (Fifty-second); 4 to Form 10- K for the year ended December 31, 1991 in 1-2703 (Fifty- third); 4 to Form 8-K dated July 29, 1992 in 1-2703 (Fifth-fourth); 4 to Form 10-K dated December 31, 1992 in 1-2703 (Fifty-fifth); 4 to Form 10-Q for the quarter ended March 31, 1993 in 1-2703 (Fifty-sixth); and 4-2 to Amendment No. 9 to Registration No. 2-76551 (Fifty- seventh)).
(d) 2 -- Indenture, dated March 21, 1939, accepting resignation of The Chase National Bank of the City of New York as trustee and appointing Central Hanover Bank and Trust Company as successor trustee (B-a-1-6 in Registration No. 2-4076).
(d) 3 -- Trust Indenture for 9.72% Debentures due July 1, 1998 (4 in Registration No. 33-40113).
(d) 4 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of January 15, 1997 (filed as Exhibit A-11(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).
(d) 5 -- Amended and Restated Trust Agreement of Entergy Gulf States Capital I dated January 28, 1997 of Series A Preferred Securities (filed as Exhibit A-13(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).
(d) 6 -- Guarantee Agreement between Entergy Gulf States, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of January 28, 1997 with respect to Entergy Gulf States Capital I's obligation on its 8.75% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-14(a) to Rule 24 Certificate dated February 6, 1997 in File No. 70-8721).
Entergy Louisiana
(e) 1 -- Mortgage and Deed of Trust, dated as of April 1, 1944, as amended by fifty-two Supplemental Indentures (7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c) in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in 2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862 (Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429 (Eighth); 4(c)-9 in 2-25801 (Ninth); 4(c)-10 in 2-26911 (Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659 (Twelfth); C to Rule 24 Certificate in 70-4793 (Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in 2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to Rule 24 Certificate in 70-5242 (Seventeenth); C to Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to Rule 24 Certificate in 70-5449 (Nineteenth); C-1 to Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to Rule 24 Certificate in 70-5598 (Twenty-first); C-1 to Rule 24 Certificate in 70-5711 (Twenty-second); C-1 to Rule 24 Certificate in 70-5919 (Twenty-third); C-1 to Rule 24 Certificate in 70-6102 (Twenty-fourth); C-1 to Rule 24 Certificate in 70-6169 (Twenty-fifth); C-1 to Rule 24 Certificate in 70-6278 (Twenty-sixth); C-1 to Rule 24 Certificate in 70-6355 (Twenty-seventh); C-1 to Rule 24 Certificate in 70-6508 (Twenty-eighth); C-1 to Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to Rule 24 Certificate in 70-6635 (Thirtieth); C-1 to Rule 24 Certificate in 70-6834 (Thirty-first); C-1 to Rule 24 Certificate in 70-6886 (Thirty-second); C-1 to Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to Rule 24 Certificate in 70-6993 (Thirty-fifth); A-2(a) to Rule 24 Certificate in 70-7166 (Thirty-sixth); A-2(a) in 70-7226 (Thirty-seventh); C-1 to Rule 24 Certificate in 70-7270 (Thirty-eighth); 4(a) to Quarterly Report on Form 10-Q for the quarter ended June 30, 1988, in 1-8474 (Thirty-ninth); A-2(b) to Rule 24 Certificate in 70-7553 (Fortieth); A-2(d) to Rule 24 Certificate in 70-7553 (Forty-first); A-3(a) to Rule 24 Certificate in 70-7822 (Forty-second); A-3(b) to Rule 24 Certificate in 70-7822 (Forty-third); A-2(b) to Rule 24 Certificate in File No. 70-7822 (Forty-fourth); A-3(c) to Rule 24 Certificate in 70-7822 (Forty-fifth); A-2(c) to Rule 24 Certificate dated April 7, 1993 in 70-7822 (Forty-sixth); A-3(d) to Rule 24 Certificate dated June 4, 1993 in 70-7822 (Forth- seventh); A-3(e) to Rule 24 Certificate dated December 21, 1993 in 70-7822 (Forty-eighth); A-3(f) to Rule 24 Certificate dated August 1, 1994 in 70-7822 (Forty- ninth); A-4(c) to Rule 24 Certificate dated September 28, 1994 in 70-7653 (Fiftieth); A-2(a) to Rule 24 Certificate dated April 4, 1996 in File No. 70-8487 (Fifty-first); and A-2(a) to Rule 24 Certificate dated April 3, 1998 in File No. 70-9141 (Fifty-second).
(e) 2 -- Facility Lease No. 1, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-1 in Registration No. 33-30660).
(e) 3 -- Facility Lease No. 2, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-2 in Registration No. 33-30660).
(e) 4 -- Facility Lease No. 3, dated as of September 1, 1989, between First National Bank of Commerce, as Owner Trustee, and Entergy Louisiana (4(c)-3 in Registration No. 33-30660).
(e) 5 -- Indenture for Unsecured Subordinated Debt Securities relating to Trust Securities, dated as of July 1, 1996 (filed as Exhibit A-14(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).
(e) 6 -- Amended and Restated Trust Agreement of Entergy Louisiana Capital I dated July 16, 1996 of Series A Preferred Securities (filed as Exhibit A-16(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).
(e) 7 -- Guarantee Agreement between Entergy Louisiana, Inc. (as Guarantor) and The Bank of New York (as Trustee) dated as of July 16, 1996 with respect to Entergy Louisiana Capital I's obligation on its 9% Cumulative Quarterly Income Preferred Securities, Series A (filed as Exhibit A-19(a) to Rule 24 Certificate dated July 25, 1996 in File No. 70-8487).
Entergy Mississippi
(f) 1 -- Mortgage and Deed of Trust, dated as of September 1, 1944, as amended by twenty-five Supplemental Indentures (7(d) in 2-5437 (Mortgage); 7(b) in 2-7051 (First); 7(c) in 2-7763 (Second); 7(d) in 2-8484 (Third); 4(b)-4 in 2-10059 (Fourth); 2(b)-5 in 2-13942 (Fifth); A-11 to Form U-1 in 70-4116 (Sixth); 2(b)-7 in 2-23084 (Seventh); 4(c)-9 in 2-24234 (Eighth); 2(b)-9(a) in 2-25502 (Ninth); A-11(a) to Form U-1 in 70-4803 (Tenth); A-12(a) to Form U-1 in 70-4892 (Eleventh); A-13(a) to Form U-1 in 70-5165 (Twelfth); A-14(a) to Form U-1 in 70-5286 (Thirteenth); A-15(a) to Form U-1 in 70-5371 (Fourteenth); A-16(a) to Form U-1 in 70-5417 (Fifteenth); A-17 to Form U-1 in 70-5484 (Sixteenth); 2(a)-19 in 2-54234 (Seventeenth); C-1 to Rule 24 Certificate in 70-6619 (Eighteenth); A-2(c) to Rule 24 Certificate in 70-6672 (Nineteenth); A-2(d) to Rule 24 Certificate in 70-6672 (Twentieth); C-1(a) to Rule 24 Certificate in 70-6816 (Twenty-first); C-1(a) to Rule 24 Certificate in 70-7020 (Twenty-second); C-1(b) to Rule 24 Certificate in 70-7020 (Twenty-third); C-1(a) to Rule 24 Certificate in 70-7230 (Twenty-fourth); and A-2(a) to Rule 24 Certificate in 70-7419 (Twenty-fifth)).
(f) 2 -- Mortgage and Deed of Trust, dated as of February 1, 1988, as amended by twelve Supplemental Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461 (Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to Rule 24 Certificate in 70-7419 (Second); A-4(b) to Rule 24 Certificate in 70-7554 (Third); A-1(b)-1 to Rule 24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24 Certificate dated November 24, 1992 in 70-7914 (Fifth); A-2(e) to Rule 24 Certificate dated January 22, 1993 in 70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh); A-2(i) to Rule 24 Certificate dated November 10, 1993 in 70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated July 22, 1994 in 70-7914 (Ninth); (A-2(l) to Rule 24 Certificate dated April 21, 1995 in File 70-7914 (Tenth); A-2(a) to Rule 24 Certificate dated June 27, 1997 in File 70-8719 (Eleventh); and A-2(b) to Rule 24 Certificate dated April 16, 1998 in File 70-8719 (Twelfth)).
Entergy New Orleans
(g) 1 -- Mortgage and Deed of Trust, dated as of May 1, 1987, as amended by seven Supplemental Indentures (A-2(c) to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b) to Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24 Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for the year ended December 31, 1992 in 0-5807 (Third); 4(a) to Form 10-Q for the quarter ended September 30, 1993 in 0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in File No. 0-5807 (Fifth); 4(a) to Form 8-K dated March 22, 1996 in File No. 0-5807 (Sixth); and 4(b) to Form 10-Q for the quarter ended June 30, 1998 in 0-5807 (Seventh)).
(10) Material Contracts
Entergy Corporation
(a) 1 -- Agreement, dated April 23, 1982, among certain System companies, relating to System Planning and Development and Intra-System Transactions (10(a)1 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(a) 2 -- Middle South Utilities (now Entergy Corporation) System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).
(a) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).
(a) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).
(a) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(a) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-41080).
(a) 7 -- Amendment, dated January 1, 1972, to Service Agreement with Entergy Services (5(a)-6 in 2-43175).
(a) 8 -- Amendment, dated April 27, 1984, to Service Agreement with Entergy Services (10(a)-7 to Form 10-K for the year ended December 31, 1984, in 1-3517).
(a) 9 -- Amendment, dated August 1, 1988, to Service Agreement with Entergy Services (10(a)-8 to Form 10-K for the year ended December 31, 1988, in 1-3517).
(a) 10-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(a)-9 to Form 10-K for the year ended December 31, 1990, in 1-3517).
(a) 11-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 for the year ended December 31, 1994 in 1-3517).
(a) 12-- Availability Agreement, dated June 21, 1974, among System Energy and certain other System companies (B to Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 13-- First Amendment to Availability Agreement, dated as of June 30, 1977 (B to Rule 24 Certificate, dated June 24, 1977, in 70-5399).
(a) 14-- Second Amendment to Availability Agreement, dated as of June 15, 1981 (E to Rule 24 Certificate, dated July 1, 1981, in 70-6592).
(a) 15-- Third Amendment to Availability Agreement, dated as of June 28, 1984 (B-13(a) to Rule 24 Certificate, dated July 6, 1984, in 70-6985).
(a) 16-- Fourth Amendment to Availability Agreement, dated as of June 1, 1989 (A to Rule 24 Certificate, dated June 8, 1989, in 70-5399).
(a) 17-- Eighteenth Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).
(a) 18-- Nineteenth Assignment of Availability Agreement, Consent and Agreement, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (C-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).
(a) 19-- Twenty-sixth Assignment of Availability Agreement, Consent and Agreement, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-2(c) to Rule 24 Certificate, dated November 2, 1992, in 70-7946).
(a) 20-- Twenty-seventh Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).
(a) 21-- Twenty-ninth Assignment of Availability Agreement, Consent and Agreement, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey as Trustees (B-2(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).
(a) 22-- Thirtieth Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans, and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-2(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).
(a) 23-- Thirty-first Assignment of Availability Agreement, Consent and Agreement, dated as of August 1, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-2(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).
(a) 24-- Thirty-second Assignment of Availability Agreement, Consent and Agreement, dated as of December 27, 1996, among System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans, and The Chase Manhattan Bank (filed as Exhibit B-2(a) to Rule 24 Certificate dated January 13, 1997 in File No. 70- 7561).
(a) 25-- Capital Funds Agreement, dated June 21, 1974, between Entergy Corporation and System Energy (C to Rule 24 Certificate, dated June 24, 1974, in 70-5399).
(a) 26-- First Amendment to Capital Funds Agreement, dated as of June 1, 1989 (B to Rule 24 Certificate, dated June 8, 1989, in 70-5399).
(a) 27-- Eighteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-2 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).
(a) 28-- Nineteenth Supplementary Capital Funds Agreement and Assignment, dated as of September 1, 1986, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (D-3 to Rule 24 Certificate, dated October 1, 1986, in 70-7272).
(a) 29-- Twenty-sixth Supplementary Capital Funds Agreement and Assignment, dated as of October 1, 1992, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(c) to Rule 24 Certificate dated November 2, 1992 in 70-7946).
(a) 30-- Twenty-seventh Supplementary Capital Funds Agreement and Assignment, dated as of April 1, 1993, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(d) to Rule 24 Certificate dated May 4, 1993 in 70-7946).
(a) 31-- Twenty-ninth Supplementary Capital Funds Agreement and Assignment, dated as of April 1, 1994, with United States Trust Company of New York and Gerard F. Ganey, as Trustees (B-3(f) to Rule 24 Certificate dated May 6, 1994, in 70-7946).
(a) 32-- Thirtieth Supplementary Capital Funds Agreement and Assignment, dated as of August 1, 1996, among Entergy Corporation, System Energy and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(a) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).
(a) 33-- Thirty-first Supplementary Capital Funds Agreement and Assignment, dated as of August 1, 1996, among Entergy Corporation, System Energy and United States Trust Company of New York and Gerard F. Ganey, as Trustees (filed as Exhibit B-3(b) to Rule 24 Certificate dated August 8, 1996 in File No. 70-8511).
(a) 34-- Thirty-second Supplementary Capital Funds Agreement and Assignment, dated as of December 27, 1996, among Entergy Corporation, System Energy and The Chase Manhattan Bank (filed as Exhibit B-1(a) to Rule 24 Certificate dated January 13, 1997 in File No. 70-7561).
(a) 35-- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated as of June 1, 1989, by and between Entergy Corporation, System Energy, Deposit Guaranty National Bank, United States Trust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7026).
(a) 36-- First Amendment to Supplementary Capital Funds Agreements and Assignments, dated as of June 1, 1989, by and between Entergy Corporation, System Energy, United States Trust Company of New York and Gerard F. Ganey (C to Rule 24 Certificate, dated June 8, 1989, in 70-7123).
(a) 37-- First Amendment to Supplementary Capital Funds Agreement and Assignment, dated as of June 1, 1989, by and between Entergy Corporation, System Energy and Chemical Bank (C to Rule 24 Certificate, dated June 8, 1989, in 70-7561).
(a) 38-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
(a) 39-- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 (1 to Rule 24 Certificate, dated October 30, 1981, in 70-6337).
(a) 40-- Operating Agreement dated as of May 1, 1980, between System Energy and SMEPA (B(2)(a) in 70-6337).
(a) 41-- Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).
(a) 42-- Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).
(a) 43-- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi, System Energy and SMEPA (B(3)(a) in 70-6337).
(a) 44-- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986, between System Energy and SMEPA (10(aaa) in 33-4033).
(a) 45-- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-3517).
+(a) 46-- Post-Retirement Plan (10(a)37 to Form 10-K for the year ended December 31, 1983, in 1-3517).
(a) 47-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a)-39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(a) 48-- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(a) 49-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(a) 50-- Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (Exhibit D-1 to Form U5S for the year ended December 31, 1987).
(a) 51-- First Amendment, dated January 1, 1990, to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).
(a) 52-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(a) 53-- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
(a) 54-- Fourth Amendment dated April 1, 1997 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-5 to Form U5S for the year ended December 31, 1996).
(a) 55-- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of September 20, 1990 (B-1(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).
(a) 56-- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of September 20, 1990 (B-2(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).
(a) 57-- Guarantee Agreement between Entergy Corporation and System Energy, dated as of September 20, 1990 (B-3(a) to Rule 24 Certificate, dated September 27, 1990, in 70- 7757).
(a) 58-- Loan Agreement between Entergy Operations and Entergy Corporation, dated as of September 20, 1990 (B-12(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(a) 59-- Loan Agreement between Entergy Power and Entergy Corporation, dated as of August 28, 1990 (A-4(b) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).
(a) 60-- Loan Agreement between Entergy Corporation and Entergy Systems and Service, Inc., dated as of December 29, 1992 (A-4(b) to Rule 24 Certificate in 70-7947).
+(a) 61-- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(a) 62-- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(a) 63-- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).
+(a) 64-- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a) 71 to Form 10- K for the year ended December 31, 1992 in 1-3517).
+(a) 65-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
+(a) 66-- Retired Outside Director Benefit Plan (10(a)63 to Form 10-K for the year ended December 31, 1991, in 1-3517).
+(a) 67-- Agreement between Entergy Corporation and Jerry D. Jackson. (10(a) 67 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(a) 68-- Supplemental Retirement Plan (10(a) 69 to Form 10- K for the year ended December 31, 1992 in 1-3517).
+(a) 69-- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).
+(a) 70-- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a) 72 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(a) 71-- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a) 73 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(a) 72-- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a) 74 to Form 10-K for the year ended December 31, 1992 in 1- 3517).
(a) 73-- Agreement and Plan of Reorganization Between Entergy Corporation and Gulf States Utilities Company, dated June 5, 1992 (1 to Current Report on Form 8-K dated June 5, 1992 in 1-3517).
+(a) 74-- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(a) 75-- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).
*+(a) 76--Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release.
*+(a) 77--Jerry L. Maulden's Retirement Letter Agreement.
*+(a) 78--Letter of Intent regarding the Employment of Wayne Leonard.
System Energy
(b) 1 through (b) 13-- See 10(a)-12 through 10(a)-24 above.
(b) 14 through (b) 26-- See 10(a)-25 through 10(a)-37 above.
(b) 27-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
(b) 28-- Joint Construction, Acquisition and Ownership Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B-1(a) in 70-6337), as amended by Amendment No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and Amendment No. 2, dated as of October 31, 1980 (1 to Rule 24 Certificate, dated October 30, 1981, in 70-6337).
(b) 29-- Operating Agreement, dated as of May 1, 1980, between System Energy and SMEPA (B(2)(a) in 70-6337).
(b) 30-- Installment Sale Agreement, dated as of December 1, 1983 between System Energy and Claiborne County, Mississippi (B-1 to First Rule 24 Certificate in 70-6913).
(b) 31-- Installment Sale Agreement, dated as of June 1, 1984, between System Energy and Claiborne County, Mississippi (B-2 to Second Rule 24 Certificate in 70-6913).
(b) 32-- Loan Agreement, dated as of October 15, 1998, between System Energy and Mississippi Business Finance Corporation (B-6(b) to Rule 24 Certificate in 70-8511).
(b) 33-- Amended and Restated Installment Sale Agreement, dated as of May 1, 1995, between System Energy and Claiborne County, Mississippi (B-6(a) to Rule 24 Certificate in 70-8511).
(b) 34- Amended and Restated Installment Sale Agreement, dated as of February 15, 1996, between System Energy and Claiborne County, Mississippi (filed as Exhibit B-6(a) to Rule 24 Certificate dated March 4, 1996 in File No. 70-8511).
(b) 35-- Facility Lease No. 1, dated as of December 1, 1988, between Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy (B-2(c)(1) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B- 3(d) to Rule 24 Certificate dated January 31, 1994 in 70- 8215).
(b) 36-- Facility Lease No. 2, dated as of December 1, 1988 between Meridian Trust Company and Stephen M. Carta (Stephen J. Kaba, successor), as Owner Trustees, and System Energy (B-2(c)(2) to Rule 24 Certificate dated January 9, 1989 in 70-7561), as supplemented by Lease Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24 Certificate dated April 21, 1989 in 70-7561) and Lease Supplement No. 2 dated as of January 1, 1994 (B- 4(d) Rule 24 Certificate dated January 31, 1994 in 70- 8215).
(b) 37-- Assignment, Assumption and Further Agreement No. 1, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(1) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).
(b) 38-- Assignment, Assumption and Further Agreement No. 2, dated as of December 1, 1988, among System Energy, Meridian Trust Company and Stephen M. Carta, and SMEPA (B-7(c)(2) to Rule 24 Certificate, dated January 9, 1989, in 70-7561).
(b) 39-- Collateral Trust Indenture, dated as of January 1, 1994, among System Energy, GG1B Funding Corporation and Bankers Trust Company, as Trustee (A-3(e) to Rule 24 Certificate dated January 31, 1994, in 70-8215), as supplemented by Supplemental Indenture No. 1 dated January 1, 1994, (A-3(f) to Rule 24 Certificate dated January 31, 1994, in 70-8215).
(b) 40-- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi, System Energy and SMEPA (B(3)(a) in 70-6337).
(b) 41-- Grand Gulf Unit No. 2 Supplementary Agreement, dated as of February 7, 1986, between System Energy and SMEPA (10(aaa) in 33-4033).
(b) 42-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a)-39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(b) 43-- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(b) 44-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(b) 45-- Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy (B-1(b) to Rule 24 Certificate, dated March 3, 1989, in 70-7604).
(b) 46-- System Energy's Consent, dated January 31, 1995, pursuant to Fuel Lease, dated as of February 24, 1989, between River Fuel Funding Company #3, Inc. and System Energy (B-1(c) to Rule 24 Certificate, dated February 13, 1995 in 70-7604).
(b) 47-- Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 48-- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(b) 49-- Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate, dated January 8, 1987, in 70-5399).
(b) 50-- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).
(b) 51-- First Amendment, dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).
(b) 52-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(b) 53-- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
(b) 54-- Service Agreement with Entergy Services, dated as of July 16, 1974, as amended (10(b)-43 to Form 10-K for the year ended December 31, 1988, in 1-9067).
(b) 55-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(b)-45 to Form 10-K for the year ended December 31, 1990, in 1-9067).
(b) 56-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a) -11 to Form 10-K for the year ended December 31, 1994 in 1-3517).
(b) 57-- Operating Agreement between Entergy Operations and System Energy, dated as of June 6, 1990 (B-3(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(b) 58-- Guarantee Agreement between Entergy Corporation and System Energy, dated as of September 20, 1990 (B-3(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).
+(b) 59-- Agreement between System Energy and Donald C. Hintz (10(b)47 to Form 10-K for the year ended December 31, 1991, in 1-9067).
(b) 60-- Amended and Restated Reimbursement Agreement, dated as of December 1, 1988 as amended and restated as of December 27, 1996, among System Energy Resources, Inc., The Bank of Tokyo-Mitsubishi, Ltd., as Funding Bank and The Chase Manhattan Bank (as successor by merger with Chemical Bank), as administrating bank, Union Bank of California, N.A., as documentation agent, and the Banks named therein, as Participating Banks (B-3(a) to Rule 24 Certificate dated January 13, 1997 in 70-7561).
+(b) 61-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
*+(b) 62--Letter to John Wilder offering Employment.
+(b) 63-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
Entergy Arkansas
(c) 1 -- Agreement, dated April 23, 1982, among Entergy Arkansas and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) 1 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(c) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)2 in 2-41080).
(c) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).
(c) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).
(c) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(c) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-41080).
(c) 7 -- Amendment, dated January 1, 1972, to Service Agreement with Entergy Services (5(a)- 6 in 2-43175).
(c) 8 -- Amendment, dated April 27, 1984, to Service Agreement, with Entergy Services (10(a)- 7 to Form 10-K for the year ended December 31, 1984, in 1-3517).
(c) 9 -- Amendment, dated August 1, 1988, to Service Agreement with Entergy Services (10(c)- 8 to Form 10-K for the year ended December 31, 1988, in 1-10764).
(c) 10-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(c)-9 to Form 10-K for the year ended December 31, 1990, in 1-10764).
(c) 11-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 to Form 10-K for the year ended December 31, 1994 in 1-3517).
(c) 12 through (c) 24-- See 10(a)-12 through 10(a)-24 above.
(c) 25-- Agreement, dated August 20, 1954, between Entergy Arkansas and the United States of America (SPA)(13(h) in 2-11467).
(c) 26-- Amendment, dated April 19, 1955, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-2 in 2-41080).
(c) 27-- Amendment, dated January 3, 1964, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-3 in 2-41080).
(c) 28-- Amendment, dated September 5, 1968, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-4 in 2-41080).
(c) 29-- Amendment, dated November 19, 1970, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-5 in 2-41080).
(c) 30-- Amendment, dated July 18, 1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-6 in 2-41080).
(c) 31-- Amendment, dated December 27, 1961, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-7 in 2-41080).
(c) 32-- Amendment, dated January 25, 1968, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-8 in 2-41080).
(c) 33-- Amendment, dated October 14, 1971, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-9 in 2-43175).
(c) 34-- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated August 20, 1954 (5(d)-10 in 2-60233).
(c) 35-- Agreement, dated May 14, 1971, between Entergy Arkansas and the United States of America (SPA) (5(e) in 2-41080).
(c) 36-- Amendment, dated January 10, 1977, to the United States of America (SPA) Contract, dated May 14, 1971 (5(e)-1 in 2-60233).
(c) 37-- Contract, dated May 28, 1943, Amendment to Contract, dated July 21, 1949, and Supplement to Amendment to Contract, dated December 30, 1949, between Entergy Arkansas and McKamie Gas Cleaning Company; Agreements, dated as of September 30, 1965, between Entergy Arkansas and former stockholders of McKamie Gas Cleaning Company; and Letter Agreement, dated June 22, 1966, by Humble Oil & Refining Company accepted by Entergy Arkansas on June 24, 1966 (5(k)-7 in 2-41080).
(c) 38-- Agreement, dated April 3, 1972, between Entergy Services and Gulf United Nuclear Fuels Corporation (5(l)-3 in 2-46152).
(c) 39-- Fuel Lease, dated as of December 22, 1988, between River Fuel Trust #1 and Entergy Arkansas (B-1(b) to Rule 24 Certificate in 70-7571).
(c) 40-- White Bluff Operating Agreement, dated June 27, 1977, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas (B-2(a) to Rule 24 Certificate, dated June 30, 1977, in 70-6009).
(c) 41-- White Bluff Ownership Agreement, dated June 27, 1977, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas (B-1(a) to Rule 24 Certificate, dated June 30, 1977, in 70-6009).
(c) 42-- Agreement, dated June 29, 1979, between Entergy Arkansas and City of Conway, Arkansas (5(r)-3 in 2-66235).
(c) 43-- Transmission Agreement, dated August 2, 1977, between Entergy Arkansas and City Water and Light Plant of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).
(c) 44-- Power Coordination, Interchange and Transmission Service Agreement, dated as of June 27, 1977, between Arkansas Electric Cooperative Corporation and Entergy Arkansas (5(r)-4 in 2-60233).
(c) 45-- Independence Steam Electric Station Operating Agreement, dated July 31, 1979, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas and City of Conway, Arkansas (5(r)-6 in 2-66235).
(c) 46-- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Operating Agreement (10(c) 51 to Form 10-K for the year ended December 31, 1984, in 1-10764).
(c) 47-- Independence Steam Electric Station Ownership Agreement, dated July 31, 1979, among Entergy Arkansas and Arkansas Electric Cooperative Corporation and City Water and Light Plant of the City of Jonesboro, Arkansas and City of Conway, Arkansas (5(r)-7 in 2-66235).
(c) 48-- Amendment, dated December 28, 1979, to the Independence Steam Electric Station Ownership Agreement (5(r)-7(a) in 2-66235).
(c) 49-- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Ownership Agreement (10(c) 54 to Form 10-K for the year ended December 31, 1984, in 1-10764).
(c) 50-- Owner's Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station (10(c) 55 to Form 10-K for the year ended December 31, 1984, in 1-10764).
(c) 51-- Consent, Agreement and Assumption, dated December 4, 1984, among Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station and United States Trust Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 1-10764).
(c) 52-- Power Coordination, Interchange and Transmission Service Agreement, dated as of July 31, 1979, between Entergy Arkansas and City Water and Light Plant of the City of Jonesboro, Arkansas (5(r)-8 in 2-66235).
(c) 53-- Power Coordination, Interchange and Transmission Agreement, dated as of June 29, 1979, between City of Conway, Arkansas and Entergy Arkansas (5(r)-9 in 2-66235).
(c) 54-- Agreement, dated June 21, 1979, between Entergy Arkansas and Reeves E. Ritchie ((10)(b)-90 to Form 10-K for the year ended December 31, 1980, in 1-10764).
(c) 55-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
+(c) 56-- Post-Retirement Plan (10(b) 55 to Form 10-K for the year ended December 31, 1983, in 1-10764).
(c) 57-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(c) 58-- First Amendment to Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(c) 59-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(c) 60-- Contract For Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, dated June 30, 1983, among the DOE, System Fuels and Entergy Arkansas (10(b)-57 to Form 10-K for the year ended December 31, 1983, in 1-10764).
(c) 61-- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).
(c) 62-- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).
(c) 63-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(c) 64-- Third Amendment dated January 1, 1994, to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
(c) 65-- Assignment of Coal Supply Agreement, dated December 1, 1987, between System Fuels and Entergy Arkansas (B to Rule 24 letter filing, dated November 10, 1987, in 70-5964).
(c) 66-- Coal Supply Agreement, dated December 22, 1976, between System Fuels and Antelope Coal Company (B-1 in 70-5964), as amended by First Amendment (A to Rule 24 Certificate in 70-5964); Second Amendment (A to Rule 24 letter filing, dated December 16, 1983, in 70-5964); and Third Amendment (A to Rule 24 letter filing, dated November 10, 1987 in 70-5964).
(c) 67-- Operating Agreement between Entergy Operations and Entergy Arkansas, dated as of June 6, 1990 (B-1(b) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(c) 68-- Guaranty Agreement between Entergy Corporation and Entergy Arkansas, dated as of September 20, 1990 (B-1(a) to Rule 24 Certificate, dated September 27, 1990, in 70-7757).
(c) 69-- Agreement for Purchase and Sale of Independence Unit 2 between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-3(c) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).
(c) 70-- Agreement for Purchase and Sale of Ritchie Unit 2 between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-4(d) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).
(c) 71-- Ritchie Steam Electric Station Unit No. 2 Operating Agreement between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-5(a) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).
(c) 72-- Ritchie Steam Electric Station Unit No. 2 Ownership Agreement between Entergy Arkansas and Entergy Power, dated as of August 28, 1990 (B-6(a) to Rule 24 Certificate, dated September 6, 1990, in 70-7684).
(c) 73-- Power Coordination, Interchange and Transmission Service Agreement between Entergy Power and Entergy Arkansas, dated as of August 28, 1990 (10(c)-71 to Form 10-K for the year ended December 31, 1990, in 1-10764).
+(c) 74-- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a)52 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(c) 75-- Entergy Corporation Annual Incentive Plan (10(a)54 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(c) 76-- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).
+(c) 77-- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 78-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
+(c) 79-- Agreement between Arkansas Power & Light Company and R. Drake Keith. (10(c) 78 to Form 10-K for the year ended December 31, 1992 in 1-10764).
+(c) 80-- Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 81-- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).
+(c) 82-- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 83-- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 84-- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 85-- Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-67 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(c) 86-- Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).
+(c) 87-- Summary Description of Retired Outside Director Benefit Plan. (10(c) 90 to Form 10-K for the year ended December 31, 1992 in 1-10764).
+(c) 88-- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(c) 89-- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).
(c) 90-- Loan Agreement dated June 15, 1993, between Entergy Arkansas and Independence Country, Arkansas (B-1 (a) to Rule 24 Certificate dated July 9, 1993 in 70- 8171).
(c) 91-- Installment Sale Agreement dated January 1, 1991, between Entergy Arkansas and Pope Country, Arkansas (B-1 (b) to Rule 24 Certificate dated January 24, 1991 in 70- 7802).
(c) 92-- Installment Sale Agreement dated November 1, 1990, between Entergy Arkansas and Pope Country, Arkansas (B-1 (a) to Rule 24 Certificate dated November 30, 1990 in 70- 7802).
(c) 93-- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Jefferson County, Arkansas (B-1(a) to Rule 24 Certificate dated June 30, 1994 in 70-8405).
(c) 94-- Loan Agreement dated June 15, 1994, between Entergy Arkansas and Pope County, Arkansas (B-1(b) to Rule 24 Certificate in 70-8405).
(c) 95-- Loan Agreement dated November 15, 1995, between Entergy Arkansas and Pope County, Arkansas (10(c) 96 to Form 10-K for the year ended December 31, 1995 in 1- 10764).
(c) 96-- Agreement as to Expenses and Liabilities between Entergy Arkansas and Entergy Arkansas Capital I, dated as of August 14, 1996 (4(j) to Form 10-Q for the quarter ended September 30, 1996 in 1-10764).
(c) 97-- Loan Agreement dated December 1, 1997, between Entergy Arkansas and Jefferson County, Arkansas (10(c)100 to Form 10-K for the year ended December 31, 1997 in 1-10764).
+(c) 98-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(c) 99-- Jerry L. Maulden's Retirement Letter Agreement (10(a)77 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(c) 100-- Letter of Intent regarding the Employment of Wayne Leonard (10(a)78 to Form 10-K for the year ended December 31, 1998 in 1-11299).
Entergy Gulf States
(d) 1 -- Guaranty Agreement, dated July 1, 1976, between Entergy Gulf States and American Bank and Trust Company (C and D to Form 8-K, dated August 6, 1976 in 1-2703).
(d) 2 -- Lease of Railroad Equipment, dated as of December 1, 1981, between The Connecticut Bank and Trust Company as Lessor and Entergy Gulf States as Lessee and First Supplement, dated as of December 31, 1981, relating to 605 One Hundred-Ton Unit Train Steel Coal Porter Cars (4- 12 to Form 10-K for the year ended December 31, 1981 in 1- 2703).
(d) 3 -- Guaranty Agreement, dated August 1, 1992, between Entergy Gulf States and Hibernia National Bank, relating to Pollution Control Revenue Refunding Bonds of the Industrial Development Board of the Parish of Calcasieu, Inc. (Louisiana) (10-1 to Form 10-K for the year ended December 31, 1992 in 1-2703).
(d) 4 -- Guaranty Agreement, dated January 1, 1993, between Entergy Gulf States and Hancock Bank of Louisiana, relating to Pollution Control Revenue Refunding Bonds of the Parish of Pointe Coupee (Louisiana) (10-2 to Form 10- K for the year ended December 31, 1992 in 1-2703).
(d) 5 -- Deposit Agreement, dated as of December 1, 1983 between Entergy Gulf States, Morgan Guaranty Trust Co. as Depositary and the Holders of Depository Receipts, relating to the Issue of 900,000 Depositary Preferred Shares, each representing 1/2 share of Adjustable Rate Cumulative Preferred Stock, Series E-$100 Par Value (4-17 to Form 10-K for the year ended December 31, 1983 in 1- 2703).
(d) 6 -- Agreement effective February 1, 1964, between Sabine River Authority, State of Louisiana, and Sabine River Authority of Texas, and Entergy Gulf States, Central Louisiana Electric Company, Inc., and Louisiana Power & Light Company, as supplemented (B to Form 8-K, dated May 6, 1964, A to Form 8-K, dated October 5, 1967, A to Form 8-K, dated May 5, 1969, and A to Form 8-K, dated December 1, 1969, in 1-2708).
(d) 7 -- Joint Ownership Participation and Operating Agreement regarding River Bend Unit 1 Nuclear Plant, dated August 20, 1979, between Entergy Gulf States, Cajun, and SRG&T; Power Interconnection Agreement with Cajun, dated June 26, 1978, and approved by the REA on August 16, 1979, between Entergy Gulf States and Cajun; and Letter Agreement regarding CEPCO buybacks, dated August 28, 1979, between Entergy Gulf States and Cajun (2, 3, and 4, respectively, to Form 8-K, dated September 7, 1979, in 1-2703).
(d) 8 -- Ground Lease, dated August 15, 1980, between Statmont Associates Limited Partnership (Statmont) and Entergy Gulf States, as amended (3 to Form 8-K, dated August 19, 1980, and A-3-b to Form 10-Q for the quarter ended September 30, 1983 in 1-2703).
(d) 9 -- Lease and Sublease Agreement, dated August 15, 1980, between Statmont and Entergy Gulf States, as amended (4 to Form 8-K, dated August 19, 1980, and A-3-c to Form 10-Q for the quarter ended September 30, 1983 in 1-2703).
(d) 10-- Lease Agreement, dated September 18, 1980, between BLC Corporation and Entergy Gulf States (1 to Form 8-K, dated October 6, 1980 in 1-2703).
(d) 11-- Joint Ownership Participation and Operating Agreement for Big Cajun, between Entergy Gulf States, Cajun Electric Power Cooperative, Inc., and Sam Rayburn G&T, Inc, dated November 14, 1980 (6 to Form 8-K, dated January 29, 1981 in 1-2703); Amendment No. 1, dated December 12, 1980 (7 to Form 8-K, dated January 29, 1981 in 1-2703); Amendment No. 2, dated December 29, 1980 (8 to Form 8-K, dated January 29, 1981 in 1-2703).
(d) 12-- Agreement of Joint Ownership Participation between SRMPA, SRG&T and Entergy Gulf States, dated June 6, 1980, for Nelson Station, Coal Unit #6, as amended (8 to Form 8- K, dated June 11, 1980, A-2-b to Form 10-Q For the quarter ended June 30, 1982; and 10-1 to Form 8-K, dated February 19, 1988 in 1-2703).
(d) 13-- Agreements between Southern Company and Entergy Gulf States, dated February 25, 1982, which cover the construction of a 140-mile transmission line to connect the two systems, purchase of power and use of transmission facilities (10-31 to Form 10-K, for the year ended December 31, 1981 in 1-2703).
+(d) 14-- Executive Income Security Plan, effective October 1, 1980, as amended, continued and completely restated effective as of March 1, 1991 (10-2 to Form 10-K for the year ended December 31, 1991 in 1-2703).
(d) 15-- Transmission Facilities Agreement between Entergy Gulf States and Mississippi Power Company, dated February 28, 1982, and Amendment, dated May 12, 1982 (A-2-c to Form 10-Q for the quarter ended March 31, 1982 in 1-2703) and Amendment, dated December 6, 1983 (10-43 to Form 10- K, for the year ended December 31, 1983 in 1-2703).
(d) 16-- Lease Agreement dated as of June 29, 1983, between Entergy Gulf States and City National Bank of Baton Rouge, as Owner Trustee, in connection with the leasing of a Simulator and Training Center for River Bend Unit 1 (A-2-a to Form 10-Q for the quarter ended June 30, 1983 in 1-2703) and Amendment, dated December 14, 1984 (10-55 to Form 10-K, for the year ended December 31, 1984 in 1- 2703).
(d) 17-- Participation Agreement, dated as of June 29, 1983, among Entergy Gulf States, City National Bank of Baton Rouge, PruFunding, Inc. Bank of the Southwest National Association, Houston and Bankers Life Company, in connection with the leasing of a Simulator and Training Center of River Bend Unit 1 (A-2-b to Form 10-Q for the quarter ended June 30, 1983 in 1-2703).
(d) 18-- Tax Indemnity Agreement, dated as of June 29, 1983, between Entergy Gulf States and PruFunding, Inc., in connection with the leasing of a Simulator and Training Center for River Bend Unit I (A-2-c to Form 10-Q for the quarter ended June 30, 1993 in 1-2703).
(d) 19-- Agreement to Lease, dated as of August 28, 1985, among Entergy Gulf States, City National Bank of Baton Rouge, as Owner Trustee, and Prudential Interfunding Corp., as Trustor, in connection with the leasing of improvement to a Simulator and Training Facility for River Bend Unit I (10-69 to Form 10-K, for the year ended December 31, 1985 in 1-2703).
(d) 20-- First Amended Power Sales Agreement, dated December 1, 1985 between Sabine River Authority, State of Louisiana, and Sabine River Authority, State of Texas, and Entergy Gulf States, Central Louisiana Electric Co., Inc., and Louisiana Power and Light Company (10-72 to Form 10-K for the year ended December 31, 1985 in 1- 2703).
+(d) 21-- Deferred Compensation Plan for Directors of Entergy Gulf States and Varibus Corporation, as amended January 8, 1987, and effective January 1, 1987 (10-77 to Form 10-K for the year ended December 31, 1986 in 1- 2703). Amendment dated December 4, 1991 (10-3 to Amendment No. 8 in Registration No. 2-76551).
+(d) 22-- Trust Agreement for Deferred Payments to be made by Entergy Gulf States pursuant to the Executive Income Security Plan, by and between Entergy Gulf States and Bankers Trust Company, effective November 1, 1986 (10-78 to Form 10-K for the year ended December 31, 1986 in 1- 2703).
+(d) 23-- Trust Agreement for Deferred Installments under Entergy Gulf States' Management Incentive Compensation Plan and Administrative Guidelines by and between Entergy Gulf States and Bankers Trust Company, effective June 1, 1986 (10-79 to Form 10-K for the year ended December 31, 1986 in 1-2703).
+(d) 24-- Nonqualified Deferred Compensation Plan for Officers, Nonemployee Directors and Designated Key Employees, effective December 1, 1985, as amended, continued and completely restated effective as of March 1, 1991 (10-3 to Amendment No. 8 in Registration No. 2- 76551).
+(d) 25-- Trust Agreement for Entergy Gulf States' Nonqualified Directors and Designated Key Employees by and between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A. (now Texas Commerce Bank), effective July 1, 1991 (10-4 to Form 10-K for the year ended December 31, 1992 in 1-2703).
(d) 26-- Lease Agreement, dated as of June 29, 1987, among GSG&T, Inc., and Entergy Gulf States related to the leaseback of the Lewis Creek generating station (10-83 to Form 10-K for the year ended December 31, 1988 in 1- 2703).
(d) 27-- Nuclear Fuel Lease Agreement between Entergy Gulf States and River Bend Fuel Services, Inc. to lease the fuel for River Bend Unit 1, dated February 7, 1989 (10-64 to Form 10-K for the year ended December 31, 1988 in 1- 2703).
(d) 28-- Trust and Investment Management Agreement between Entergy Gulf States and Morgan Guaranty and Trust Company of New York (the "Decommissioning Trust Agreement) with respect to decommissioning funds authorized to be collected by Entergy Gulf States, dated March 15, 1989 (10-66 to Form 10-K for the year ended December 31, 1988 in 1-2703).
(d) 29-- Amendment No. 2 dated November 1, 1995 between Entergy Gulf States and Mellon Bank to Decommissioning Trust Agreement (10(d) 31 to Form 10-K for the year ended December 31, 1995).
(d) 30-- Credit Agreement, dated as of December 29, 1993, among River Bend Fuel Services, Inc. and Certain Commercial Lending Institutions and CIBC Inc. as Agent for the Lenders (10(d) 34 to Form 10-K for year ended December 31, 1994).
(d) 31-- Amendment No. 1 dated as of January 31, to Credit Agreement, dated as of December 31, 1993, among River Bend Fuel Services, Inc. and certain commercial lending institutions and CIBC Inc. as agent for Lenders (10(d) 33 to Form 10-K for the year ended December 31, 1995).
(d) 32-- Partnership Agreement by and among Conoco Inc., and Entergy Gulf States, CITGO Petroleum Corporation and Vista Chemical Company, dated April 28, 1988 (10-67 to Form 10-K for the year ended December 31, 1988 in 1- 2703).
+(d) 33-- Gulf States Utilities Company Executive Continuity Plan, dated January 18, 1991 (10-6 to Form 10-K for the year ended December 31, 1990 in 1-2703).
+(d) 34-- Trust Agreement for Entergy Gulf States' Executive Continuity Plan, by and between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A. (now Texas Commerce Bank), effective May 20, 1991 (10-5 to Form 10-K for the year ended December 31, 1992 in 1-2703).
+(d) 35-- Gulf States Utilities Board of Directors' Retirement Plan, dated February 15, 1991 (10-8 to Form 10- K for the year ended December 31, 1990 in 1-2703).
+(d) 36-- Gulf States Utilities Company Employees' Trustee Retirement Plan effective July 1, 1955 as amended, continued and completely restated effective January 1, 1989; and Amendment No.1 effective January 1, 1993 (10-6 to Form 10-K for the year ended December 31, 1992 in 1- 2703).
(d) 37-- Agreement and Plan of Reorganization, dated June 5, 1992, between Entergy Gulf States and Entergy Corporation (2 to Form 8-K, dated June 8, 1992 in 1- 2703).
+(d) 38-- Gulf States Utilities Company Employee Stock Ownership Plan, as amended, continued, and completely restated effective January 1, 1984, and January 1, 1985 (A to Form 11-K, dated December 31, 1985 in 1-2703).
+(d) 39-- Trust Agreement under the Gulf States Utilities Company Employee Stock Ownership Plan, dated December 30, 1976, between Entergy Gulf States and the Louisiana National Bank, as Trustee (2-A to Registration No. 2- 62395).
+(d) 40-- Letter Agreement dated September 7, 1977 between Entergy Gulf States and the Trustee, delegating certain of the Trustee's functions to the ESOP Committee (2-B to Registration Statement No. 2-62395).
+(d) 41-- Gulf States Utilities Company Employees Thrift Plan as amended, continued and completely restated effective as of January 1, 1992 (28-1 to Amendment No. 8 to Registration No. 2-76551).
+(d) 42-- Restatement of Trust Agreement under the Gulf States Utilities Company Employees Thrift Plan, reflecting changes made through January 1, 1989, between Entergy Gulf States and First City Bank, Texas-Beaumont, N.A., (now Texas Commerce Bank ), as Trustee (2-A to Form 8-K dated October 20, 1989 in 1-2703).
(d) 43-- Operating Agreement between Entergy Operations and Entergy Gulf States, dated as of December 31, 1993 (B- 2(f) to Rule 24 Certificate in 70-8059).
(d) 44-- Guarantee Agreement between Entergy Corporation and Entergy Gulf States, dated as of December 31, 1993 (B- 5(a) to Rule 24 Certificate in 70-8059).
(d) 45-- Service Agreement with Entergy Services, dated as of December 31, 1993 (B-6(c) to Rule 24 Certificate in 70-8059).
+(d) 46-- Amendment to Employment Agreement between J. L. Donnelly and Entergy Gulf States, dated December 22, 1993 (10(d) 57 to Form 10-K for the year ended December 31, 1993 in 1-2703).
(d) 47-- Assignment, Assumption and Amendment Agreement to Letter of Credit and Reimbursement Agreement between Entergy Gulf States, Canadian Imperial Bank of Commerce and Westpac Banking Corporation (10(d) 58 to Form 10-K for the year ended December 31, 1993 in 1-2703).
(d) 48-- Third Amendment, dated January 1, 1994, to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
(d) 49-- Refunding Agreement between Entergy Gulf States and West Feliciana Parish (dated December 20, 1994 (B- 12(a) to Rule 24 Certificate dated December 30, 1994 in 70-8375).
(d) 50-- Agreement as to Expenses and Liabilities between Entergy Gulf States and Entergy Gulf States Capital I, dated as of January 28, 1997 (10(d)52 to Form 10-K for the year ended December 31, 1996 in 1-2703).
(d) 51-- Refunding Agreement between Entergy Gulf States and Parish of Iberville, State of Louisiana dated as of May 1, 1998 (B-3(a) to Rule 24 Certificate dated May 29, 1998 in 70-8721).
+(d) 52-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(d) 53-- Jerry L. Maulden's Retirement Letter Agreement (10(a)77 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(d) 54-- Letter of Intent regarding the Employment of Wayne Leonard (10(a)78 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(d) 55-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
Entergy Louisiana
(e) 1 -- Agreement, dated April 23, 1982, among Entergy Louisiana and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) 1 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(e) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).
(e) 3 -- Amendment, dated as of February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).
(e) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).
(e) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(e) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (5(a)-5 in 2-42523).
(e) 7 -- Amendment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 2-45916).
(e) 8 -- Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a) 7 to Form 10-K for the year ended December 31, 1984, in 1-3517).
(e) 9 -- Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(d)-8 to Form 10-K for the year ended December 31, 1988, in 1-8474).
(e) 10-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(d)-9 to Form 10-K for the year ended December 31, 1990, in 1-8474).
(e) 11-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 to Form 10-K for the year ended December 31, 1994 in 1-3517).
(e) 12 through (e) 24-- See 10(a)-12 through 10(a)-24 above.
(e) 25-- Fuel Lease, dated as of January 31, 1989, between River Fuel Company #2, Inc., and Entergy Louisiana (B-1(b) to Rule 24 Certificate in 70-7580).
(e) 26-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
(e) 27-- Compromise and Settlement Agreement, dated June 4, 1982, between Texaco, Inc. and Entergy Louisiana (28(a) to Form 8-K, dated June 4, 1982, in 1-8474).
+(e) 28-- Post-Retirement Plan (10(c)23 to Form 10-K for the year ended December 31, 1983, in 1-8474).
(e) 29-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(e) 30-- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(e) 31-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(e) 32-- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).
(e) 33-- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated January 1, 1990 (D-2 to Form U5S for the year ended December 31, 1989).
(e) 34-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(e) 35-- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
(e) 36-- Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, dated February 2, 1984, among DOE, System Fuels and Entergy Louisiana (10(d)33 to Form 10-K for the year ended December 31, 1984, in 1-8474).
(e) 37-- Operating Agreement between Entergy Operations and Entergy Louisiana, dated as of June 6, 1990 (B-2(c) to Rule 24 Certificate, dated June 15, 1990, in 70-7679).
(e) 38-- Guarantee Agreement between Entergy Corporation and Entergy Louisiana, dated as of September 20, 1990 (B-2(a), to Rule 24 Certificate, dated September 27, 1990, in 70-7757).
+(e) 39-- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(e) 40-- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(e) 41-- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).
+(e) 42-- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a) 71 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 43-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
+(e) 44-- Supplemental Retirement Plan (10(a) 69 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 45-- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 53 to Form 10-K for the year ended December 31, 1989 in 1-3517).
+(e) 46-- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a) 72 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 47-- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a) 73 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 48-- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries (10(a) 74 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 49-- Agreement between Entergy Corporation and Jerry D. Jackson (10(a) 67 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(e) 50-- Agreement between System Energy and Donald C. Hintz (10(b) 47 to Form 10-K for the year ended December 31, 1991 in 1-9067).
+(e) 51-- Summary Description of Retired Outside Director Benefit Plan (10(c)90 to Form 10-K for the year ended December 31, 1992 in 1-10764).
+(e) 52-- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(e) 53-- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).
(e) 54-- Installment Sale Agreement, dated July 20, 1994, between Entergy Louisiana and St. Charles Parish, Louisiana (B-6(e) to Rule 24 Certificate dated August 1, 1994 in 70-7822).
(e) 55-- Installment Sale Agreement, dated November 1, 1995, between Entergy Louisiana and St. Charles Parish, Louisiana (B-6(a) to Rule 24 Certificate dated December 19, 1995 in 70-8487).
(e) 56-- Agreement as to Expenses and Liabilities between Entergy Louisiana, Inc. and Entergy Louisiana Capital I dated July 16, 1996 (4(d) to Form 10-Q for the quarter ended June 30, 1996 in 1-8474).
+(e) 57-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(e) 58-- Jerry L. Maulden's Retirement Letter Agreement (10(a)77 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(e) 59-- Letter of Intent regarding the Employment of Wayne Leonard (10(a)78 to Form 10-K for the year ended December 31, 1998 in 1-11299).
Entergy Mississippi
(f) 1 -- Agreement dated April 23, 1982, among Entergy Mississippi and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a) 1 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(f) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).
(f) 3 -- Amendment, dated February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).
(f) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).
(f) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(f) 6 -- Service Agreement with Entergy Services, dated as of April 1, 1963 (D in 37-63).
(f) 7 -- Amendment, dated January 1, 1972, to Service Agreement with Entergy Services (A to Notice, dated October 14, 1971, in 37-63).
(f) 8 -- Amendment, dated April 27, 1984, to Service Agreement with Entergy Services (10(a) 7 to Form 10-K for the year ended December 31, 1984, in 1-3517).
(f) 9 -- Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(e) 8 to Form 10-K for the year ended December 31, 1988, in 0-320).
(f) 10-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(e) 9 to Form 10-K for the year ended December 31, 1990, in 0-320).
(f) 11-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 to Form 10-K for the year ended December 31, 1994 in 1-3517).
(f) 12 though (f) 24-- See 10(a)-12 - 10(a)-24 above.
(f) 25-- Installment Sale Agreement, dated as of June 1, 1974, between Entergy Mississippi and Washington County, Mississippi (B-2(a) to Rule 24 Certificate, dated August 1, 1974, in 70-5504).
(f) 26-- Installment Sale Agreement, dated as of July 1, 1982, between Entergy Mississippi and Independence County, Arkansas, (B-1(c) to Rule 24 Certificate dated July 21, 1982, in 70-6672).
(f) 27-- Installment Sale Agreement, dated as of December 1, 1982, between Entergy Mississippi and Independence County, Arkansas, (B-1(d) to Rule 24 Certificate dated December 7, 1982, in 70-6672).
(f) 28-- Amended and Restated Installment Sale Agreement, dated as of April 1, 1994, between Entergy Mississippi and Warren County, Mississippi, (B-6(a) to Rule 24 Certificate dated May 4, 1994, in 70-7914).
(f) 29-- Amended and Restated Installment Sale Agreement, dated as of April 1, 1994, between Entergy Mississippi and Washington County, Mississippi, (B-6(b) to Rule 24 Certificate dated May 4, 1994, in 70-7914).
(f) 30-- Substitute Power Agreement, dated as of May 1, 1980, among Entergy Mississippi, System Energy and SMEPA (B-3(a) in 70-6337).
(f) 31-- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Operating Agreement (10(c) 51 to Form 10-K for the year ended December 31, 1984, in 0-375).
(f) 32-- Amendment, dated December 4, 1984, to the Independence Steam Electric Station Ownership Agreement (10(c) 54 to Form 10-K for the year ended December 31, 1984, in 0-375).
(f) 33-- Owners Agreement, dated November 28, 1984, among Entergy Arkansas, Entergy Mississippi and other co-owners of the Independence Station (10(c) 55 to Form 10-K for the year ended December 31, 1984, in 0-375).
(f) 34-- Consent, Agreement and Assumption, dated December 4, 1984, among Entergy Arkansas, Entergy Mississippi, other co-owners of the Independence Station and United States Trust Company of New York, as Trustee (10(c) 56 to Form 10-K for the year ended December 31, 1984, in 0-375).
(f) 35-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
+(f) 36-- Post-Retirement Plan (10(d) 24 to Form 10-K for the year ended December 31, 1983, in 0-320).
(f) 37-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(f) 38-- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(f) 39-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(f) 40-- Sales Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (D to Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(f) 41-- Service Agreement, dated as of June 21, 1974, between System Energy and Entergy Mississippi (E to Rule 24 Certificate, dated June 26, 1974, in 70-5399).
(f) 42-- Partial Termination Agreement, dated as of December 1, 1986, between System Energy and Entergy Mississippi (A-2 to Rule 24 Certificate dated January 8, 1987, in 70-5399).
(f) 43-- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).
(f) 44-- First Amendment dated January 1, 1990 to the Middle South Utilities Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).
(f) 45-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(f) 46-- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
+(f) 47-- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a) 52 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(f) 48-- Entergy Corporation Annual Incentive Plan (10(a) 54 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(f) 49-- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).
+(f) 50-- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 51-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
+(f) 52-- Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 53-- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).
+(f) 54-- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 55-- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 56-- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 57-- Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-67 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(f) 58-- Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).
+(f) 59-- Summary Description of Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K for the year ended December 31, 1992 in 1-10764).
+(f) 60-- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(f) 61-- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(f) 62-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(f) 63-- Jerry L. Maulden's Retirement Letter Agreement (10(a)77 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(f) 64-- Letter of Intent regarding the Employment of Wayne Leonard (10(a)78 to Form 10-K for the year ended December 31, 1998 in 1-11299).
Entergy New Orleans
(g) 1 -- Agreement, dated April 23, 1982, among Entergy New Orleans and certain other System companies, relating to System Planning and Development and Intra-System Transactions (10(a)-1 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(g) 2 -- Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-2 in 2-41080).
(g) 3 -- Amendment dated as of February 10, 1971, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a)-4 in 2-41080).
(g) 4 -- Amendment, dated May 12, 1988, to Middle South Utilities System Agency Agreement, dated December 11, 1970 (5(a) 4 in 2-41080).
(g) 5 -- Middle South Utilities System Agency Coordination Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(g) 6 -- Service Agreement with Entergy Services dated as of April 1, 1963 (5(a)-5 in 2-42523).
(g) 7 -- Amendment, dated as of January 1, 1972, to Service Agreement with Entergy Services (4(a)-6 in 2-45916).
(g) 8 -- Amendment, dated as of April 27, 1984, to Service Agreement with Entergy Services (10(a)7 to Form 10-K for the year ended December 31, 1984, in 1-3517).
(g) 9 -- Amendment, dated as of August 1, 1988, to Service Agreement with Entergy Services (10(f)-8 to Form 10-K for the year ended December 31, 1988, in 0-5807).
(g) 10-- Amendment, dated January 1, 1991, to Service Agreement with Entergy Services (10(f)-9 to Form 10-K for the year ended December 31, 1990, in 0-5807).
(g) 11-- Amendment, dated January 1, 1992, to Service Agreement with Entergy Services (10(a)-11 to Form 10-K for year ended December 31, 1994 in 1-3517).
(g) 12 through (g) 24-- See 10(a)-12 - 10(a)-24 above.
(g) 25-- Reallocation Agreement, dated as of July 28, 1981, among System Energy and certain other System companies (B-1(a) in 70-6624).
+(g) 26-- Post-Retirement Plan (10(e) 22 to Form 10-K for the year ended December 31, 1983, in 1-1319).
(g) 27-- Unit Power Sales Agreement, dated as of June 10, 1982, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (10(a) 39 to Form 10-K for the year ended December 31, 1982, in 1-3517).
(g) 28-- First Amendment to the Unit Power Sales Agreement, dated as of June 28, 1984, between System Energy and Entergy Arkansas, Entergy Louisiana, Entergy Mississippi and Entergy New Orleans (19 to Form 10-Q for the quarter ended September 30, 1984, in 1-3517).
(g) 29-- Revised Unit Power Sales Agreement (10(ss) in 33-4033).
(g) 30-- Transfer Agreement, dated as of June 28, 1983, among the City of New Orleans, Entergy New Orleans and Regional Transit Authority (2(a) to Form 8-K, dated June 24, 1983, in 1-1319).
(g) 31-- Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement, dated April 28, 1988 (D-1 to Form U5S for the year ended December 31, 1987).
(g) 32-- First Amendment, dated January 1, 1990, to the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-2 to Form U5S for the year ended December 31, 1989).
(g) 33-- Second Amendment dated January 1, 1992, to the Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3 to Form U5S for the year ended December 31, 1992).
(g) 34-- Third Amendment dated January 1, 1994 to Entergy Corporation and Subsidiary Companies Intercompany Income Tax Allocation Agreement (D-3(a) to Form U5S for the year ended December 31, 1993).
+(g) 35-- Executive Financial Counseling Program of Entergy Corporation and Subsidiaries (10(a)52 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(g) 36-- Entergy Corporation Annual Incentive Plan (10(a)54 to Form 10-K for the year ended December 31, 1989, in 1-3517).
+(g) 37-- Equity Ownership Plan of Entergy Corporation and Subsidiaries (A-4(a) to Rule 24 Certificate, dated May 24, 1991, in 70-7831).
+(g) 38-- Amendment No. 1 to the Equity Ownership Plan of Entergy Corporation and Subsidiaries (10(a)71 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 39-- 1998 Equity Ownership Plan of Entergy Corporation and Subsidiaries (Filed with the Proxy Statement dated March 30, 1998).
+(g) 40-- Supplemental Retirement Plan (10(a)69 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 41-- Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a)53 to Form 10-K for the year ended December 31, 1989 in 1-3517).
+(g) 42-- Executive Disability Plan of Entergy Corporation and Subsidiaries (10(a)72 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 43-- Executive Medical Plan of Entergy Corporation and Subsidiaries (10(a)73 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 44-- Stock Plan for Outside Directors of Entergy Corporation and Subsidiaries, as amended (10(a)74 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 45-- Agreement between Entergy Corporation and Jerry D. Jackson (10(a)-67 to Form 10-K for the year ended December 31, 1992 in 1-3517).
+(g) 46-- Agreement between System Energy and Donald C. Hintz (10(b)-47 to Form 10-K for the year ended December 31, 1991 in 1-9067).
+(g) 47-- Summary Description of Retired Outside Director Benefit Plan (10(c)-90 to Form 10-K for the year ended December 31, 1992 in 1-10764).
+(g) 48-- Amendment to Defined Contribution Restoration Plan of Entergy Corporation and Subsidiaries (10(a) 81 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(g) 49-- System Executive Retirement Plan (10(a) 82 to Form 10-K for the year ended December 31, 1993 in 1-11299).
+(g) 50-- Edwin A. Lupberger's Confidential Settlement Agreement and Receipt and Release (10(a)76 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(g) 51-- Jerry L. Maulden's Retirement Letter Agreement (10(a)77 to Form 10-K for the year ended December 31, 1998 in 1-11299).
+(g) 52-- Letter of Intent regarding the Employment of Wayne Leonard (10(a)78 to Form 10-K for the year ended December 31, 1998 in 1-11299).
(12) Statement Re Computation of Ratios
*(a) Entergy Arkansas's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(b) Entergy Gulf States' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(c) Entergy Louisiana's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(d) Entergy Mississippi's Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(e) Entergy New Orleans' Computation of Ratios of Earnings to Fixed Charges and of Earnings to Fixed Charges and Preferred Dividends, as defined.
*(f) System Energy's Computation of Ratios of Earnings to Fixed Charges, as defined.
*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
*(a) The consent of PricewaterhouseCoopers LLP is contained herein at page 211.
*(24) Powers of Attorney
(27) Financial Data Schedule
*(a) Financial Data Schedule for Entergy Corporation and Subsidiaries as of December 31, 1998.
*(b) Financial Data Schedule for Entergy Arkansas as of December 31, 1998.
*(c) Financial Data Schedule for Entergy Gulf States as of December 31, 1998.
*(d) Financial Data Schedule for Entergy Louisiana as of December 31, 1998.
*(e) Financial Data Schedule for Entergy Mississippi as of December 31, 1998.
*(f) Financial Data Schedule for Entergy New Orleans as of December 31, 1998.
*(g) Financial Data Schedule for System Energy as of December 31, 1998.
_________________
* Filed herewith. + Management contracts or compensatory plans or arrangements.