FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31,June 30, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-11299 ENTERGY CORPORATION 13-5550175
(a Delaware corporation)
225 Baronne Street
New Orleans, Louisiana 70112
Telephone (504) 529-5262
1-10764 ARKANSAS POWER & LIGHT COMPANY 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 GULF STATES UTILITIES COMPANY 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 LOUISIANA POWER & LIGHT COMPANY 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
0-320 MISSISSIPPI POWER & LIGHT COMPANY 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 969-2311
0-5807 NEW ORLEANS PUBLIC SERVICE INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 984-9000
Indicate by check mark whether the registrants (1) have
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrants were
required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.
Yes X No
Common Stock Outstanding Outstanding at April 30,July 31, 1994
Entergy Corporation ($0.01 par value) 230,024,379227,376,479
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31,June 30, 1994
Page
Number
Definitions 1
Financial Statements:
Entergy Corporation and Subsidiaries:
Consolidated Balance Sheets 4
Statements of Consolidated Income 6
Statements of Consolidated Cash Flows 7
Selected Operating Results 9
Arkansas Power & Light Company:
Balance Sheets 10
Statements of Income 12
Statements of Cash Flows 13
Selected Operating Results 14
Gulf States Utilities Company:
Balance Sheets 15
Statements of Income 17
Statements of Cash Flows 18
Selected Operating Results 19
Louisiana Power & Light Company:
Balance Sheets 20
Statements of Income 22
Statements of Cash Flows 23
Selected Operating Results 24
Mississippi Power & Light Company:
Balance Sheets 25
Statements of Income 27
Statements of Cash Flows 28
Selected Operating Results 29
New Orleans Public Service Inc.:
Balance Sheets 30
Statements of Income 32
Statements of Cash Flows 33
Selected Operating Results 34
System Energy Resources, Inc.:
Balance Sheets 35
Statements of Income 37
Statements of Cash Flows 38
Notes to Financial Statements 39
Management's Financial Discussion and Analysis 5455
Part II:
Item 1. Legal Proceedings 67
Item 4. Submission of Matters to a Vote
of Security Holders 7370
Item 5. Other Information 7578
Item 6. Exhibits and Reports on Form 8-K 7781
Experts 8083
Signature 8184
This combined Form 10-Q is separately filed by Entergy
Corporation, Arkansas Power & Light Company, Gulf States
Utilities Company, Louisiana Power & Light Company, Mississippi
Power & Light Company, New Orleans Public Service Inc., and
System Energy Resources, Inc. Information contained herein
relating to any individual company is filed by such company on
its own behalf. Each company makes no representation as to
information relating to the other companies. This combined Form
10-Q supplements and updates the Form 10-K, for the calendar year
ended December 31, 1993, and the Form 10-Q for the quarter ended
March 31, 1994, filed by the individual registrants with the SEC,
on March 17, 1994, and mustshould be read in conjunction therewith.
DEFINITIONS
Certain abbreviations or acronyms used in the text are defined
below:
Abbreviation or Acronym Term
ALJ Administrative Law Judge
ANO Arkansas Nuclear One Steam Electric
Generating Station
ANO 2 Unit No. 2 of ANO
AP&L Arkansas Power & Light Company
APSC Arkansas Public Service Commission
Availability Agreement Agreement, dated as of June 21, 1974,
as amended, among System Energy and
AP&L, LP&L, MP&L, and NOPSI, and the
assignments thereof
Capital Funds Agreement Agreement, dated as of June 21, 1974,
as amended, between System Energy and
Entergy Corporation, and the assignments
thereof
CCLM Customer-Controlled Load Management (a
DSM activity utilizing residential time-
of-use rates)
City of New Orleans
or City New Orleans, Louisiana
Council Council of the City of New Orleans,
Louisiana
D.C. Circuit United States Court of Appeals for the
District of Columbia Circuit
DSM Demand-Side Management (Least Cost Plan
activities that influence electricity
usage by customers)
Entergy Corporation Entergy Corporation, a Delaware
corporation, successor to Entergy
Corporation, a Florida Corporation
Entergy Operations Entergy Operations, Inc., a subsidiary
of Entergy Corporation that has
operating responsibility for ANO, Grand
Gulf 1, River Bend, and Waterford 3 and ANO
Entergy or System Entergy Corporation and its various
direct and indirect subsidiaries
Entergy Power Entergy Power, Inc., a subsidiary of
Entergy Corporation that markets
capacity and energy from certain
generating facilities to other parties,
principally non-affiliates, for resale
Entergy Services Entergy Services, Inc.
FERC Federal Energy Regulatory Commission
First Quarter Form 10-Q The combined Quarterly Report on Form
10-Q for the quarter ended March 31,
1994, of Entergy, AP&L, GSU, LP&L, MP&L,
NOPSI, and System Energy
Form 10-K The combined Annual Report on Form 10-K
for the year ended December 31, 1993, of
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI,
and System Energy
G&R Bonds General and Refunding Mortgage Bonds
issued and issuable by MP&L and NOPSI
Grand Gulf Station Grand Gulf Steam Electric Generating
Station
Grand Gulf 1 Unit No. 1 of the Grand Gulf Station
GSU Gulf States Utilities Company
KWH Kilowatt-Hour(s)
Least Cost Plan Least Cost Integrated Resource Plan
(combination of demand- and supply-side
resources to be used by Entergy to
satisfy electricity demanddemand)
LP&L Louisiana Power & Light Company
LPSC Louisiana Public Service Commission
Merger The combination transaction,
consummated on December 31, 1993, by
which GSU became a subsidiary of Entergy
Corporation and Entergy Corporation
became a Delaware Corporation
Money Pool System Money Pool, which allows certain
System companies to borrow from, or lend
to, certain other System companies
MP&L Mississippi Power & Light Company
MPSC Mississippi Public Service Commission
1991 NOPSI Settlement Agreement, retroactive to October 4,
1991, among NOPSI, the Council and the
Alliance for Affordable Energy, Inc.
that settled certain Grand Gulf 1
prudence issues and pending litigation
related to a resolution adopted by the
Council disallowing the recovery by
NOPSI of $135 million of previously
deferred Grand Gulf 1-related costs
NOPSI New Orleans Public Service Inc.
NRC Nuclear Regulatory Commission
Owner Participant A corporation that, in connection with
the Waterford 3 sale and leaseback
transactions, has acquired a beneficial
interest in a trust, the Owner Trustee
of which is the owner and lessor of
undivided interests in Waterford 3
Owner Trustee Each institution and/or individual
acting as Owner Trustee under a trust
agreement with an Owner Participant in
connection with the Waterford 3 sale
and leaseback transactions
PUCT Public Utility Commission of Texas
Rate Cap The level of GSU's retail electric base
rates in effect at December 31, 1993,
for the Louisiana retail jurisdiction,
and the level in effect prior to the
Texas Cities Rate Settlement for the
Texas retail jurisdiction, that may not
be exceeded for the five years following
December 31, 1993
Reallocation Agreement 1981 Agreement, superseded in part by a
June 13, 1985 decision of the FERC,
among AP&L, LP&L, MP&L, NOPSI, and
System Energy relating to the sale andof
capacity ofand energy from the Grand Gulf
Station
River Bend River Bend Steam Electric Generating
Station, owned 70% by GSU
Revised Plan MP&L's Grand Gulf 1-related rate phase-
in plan, originally approved by the MPSC
in an order issued on September 16,
1985, as modified by the MPSC order
issued September 29, 1988, to bring such
plan into compliance with the
requirements of SFAS No. 92
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting
Standards as promulgated by the
Financial Accounting Standards Board
SFAS 109 SFAS No. 109, "Accounting for Income
Taxes"
System Agreement Agreement, effective January 1, 1983,
as subsequently modified by a June 13, 1985, decisiondecisions of
the FERC, among the System operating
companies relating to the sharing of
generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
System operating
companies AP&L, GSU, LP&L, MP&L, and NOPSI,
collectively
System or Entergy Entergy Corporation and its various
direct and indirect subsidiaries
Unit Power Sales
Agreement Agreement, dated as of June 10,
1982, as amended, among AP&L, LP&L,
MP&L, NOPSI, and System Energy, relating
to the sale of capacity and energy from
System Energy's share of Grand Gulf 1
Waterford 3 Unit No. 3 of the Waterford Steam
Electric Generating Station
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
----------- -----------
(In Thousands)
ASSETS
Utility Plant:
Electric $20,878,026$21,012,813 $20,848,844
Plant acquisition adjustment - GSU 377,052373,986 380,117
Electric plant under leases 664,806664,531 663,024
Property under capital leases - electric 173,954170,599 175,276
Natural gas 190,621158,249 156,452
Steam products 43,17675,586 75,689
Construction work in progress 651,028615,672 533,112
Nuclear fuel under capital leases 321,253299,730 329,433
Nuclear fuel 24,90148,114 17,760
----------- -----------
Total 23,324,81723,419,280 23,179,707
Less - accumulated depreciation and amortization 7,296,0567,408,935 7,157,981
----------- -----------
Utility plant - net 16,028,76116,010,345 16,021,726
----------- -----------
Other Property and Investments:
Decommissioning trust funds 197,532197,560 172,960
Other 185,612188,128 183,597
----------- -----------
Total 383,144385,688 356,557
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 169,93540,204 27,345
Temporary cash investments - at cost,
which approximates market 324,990375,039 536,404
----------- -----------
Total cash and cash equivalents 494,925415,243 563,749
Special deposits 9,24746,579 36,612
Notes receivable 17,07616,455 17,710
Accounts receivable:
Customer (less allowance for doubtful accounts of
$8.6$8.7 million in 1994 and $8.8 million in 1993) 296,603355,921 315,796
Other 61,54470,109 81,931
Accrued unbilled revenues 207,053291,188 257,321
Fuel inventory 86,58280,481 110,204
Materials and supplies - at average cost 359,209362,364 360,353
Rate deferrals 345,622359,943 333,311
Prepayments and other 95,960103,852 98,144
----------- -----------
Total 1,973,8212,102,135 2,175,131
----------- -----------
Deferred Debits and Other Assets:
Rate deferrals 1,785,1631,688,911 1,876,051
SFAS 109 regulatory asset - net 1,220,6741,389,180 1,385,824
Long-term receivables 235,546240,320 228,030
Unamortized loss on reacquired debt 246,673242,211 210,698
Other 640,825642,514 622,680
----------- -----------
Total 4,128,8814,203,136 4,323,283
----------- -----------
TOTAL $22,514,607$22,701,304 $22,876,697
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
----------- -----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $0.01$.01 par value, authorized 500,000,000
shares; issued 231,219,737 shares in 1994 and 1993 $2,312 $2,312
Paid-in capital 4,224,2074,224,208 4,223,682
Retained earnings 2,172,4932,318,200 2,310,082
Less - treasury stock (1,001,243(2,784,708 shares in 1994) 35,45688,298 -
----------- -----------
Total common shareholders' equity 6,363,5566,456,422 6,536,076
Preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 550,955 550,955
With sinking fund 324,803322,794 349,053
Long-term debt 7,309,6307,349,044 7,355,962
----------- -----------
Total 14,698,94414,829,215 14,942,046
----------- -----------
Other Noncurrent Liabilities:
Obligations under capital leases 310,508282,297 322,867
Other 294,907279,833 270,318
----------- -----------
Total 605,415562,130 593,185
----------- -----------
Current Liabilities:
Currently maturing long-term debt 371,210292,975 322,010
Notes payable 43,667149,867 43,667
Accounts payable 310,136363,043 413,727
Customer deposits 129,365131,314 127,524
Taxes accrued 135,207146,147 118,267
Accumulated deferred income taxes 80,312100,660 44,637
Interest accrued 201,505195,352 210,894
Dividends declared 117,88114,041 13,404
Deferred revenue - gas supplier judgment proceeds 4,349- 14,632
Deferred fuel cost 9,251- 4,528
Obligations under capital leases 185,603186,723 194,015
Other 202,616128,275 240,471
----------- -----------
Total 1,791,1021,708,397 1,747,776
----------- -----------
Deferred Credits:
Accumulated deferred income taxes 3,831,0363,826,960 3,849,439
Accumulated deferred investment tax credits 777,123769,777 802,273
Other 810,9871,004,825 941,978
----------- -----------
Total 5,419,1465,601,562 5,593,690
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $22,514,607$22,701,304 $22,876,697
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 ----------- -----------1994 1993
(In Thousands)Thousands, Except Share Data)
Operating Revenues:
Electric $1,340,252 $897,266$1,551,673 $1,051,484 $2,891,925 $1,948,750
Natural gas 54,079 29,14622,766 18,618 76,845 47,764
Steam products 11,70811,859 - ----------- -----------23,567 -
---------- ---------- ---------- ----------
Total 1,406,039 926,412
----------- -----------1,586,298 1,070,102 2,992,337 1,996,514
---------- ---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 314,728 176,935357,711 181,961 672,439 358,896
Purchased power 124,796 56,813109,833 78,720 234,629 135,533
Nuclear refueling outage expenses 16,825 17,099
Other operation16,244 15,580 31,989 30,582
Operation and maintenance 334,932 231,069367,223 245,437 703,235 478,603
Depreciation and decommissioning 160,809 110,130160,856 109,092 321,665 219,222
Taxes other than income taxes 72,852 48,41070,067 48,634 142,919 97,044
Income taxes 33,553 31,78689,753 70,925 123,306 102,711
Rate deferrals:deferrals
Rate deferrals - (1,313)(313) - (1,626)
Amortization of rate deferrals 93,674 62,740
----------- -----------88,676 59,492 182,350 122,232
---------- ---------- ---------- ----------
Total 1,152,169 733,669
----------- -----------1,260,363 809,528 2,412,532 1,543,197
---------- ---------- ---------- ----------
Operating Income 253,870 192,743
----------- -----------325,935 260,574 579,805 453,317
---------- ---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 3,535 2,1523,135 2,174 6,670 4,326
Miscellaneous - net 14,362 15,3876,659 15,197 17,892 30,034
Income taxes (8,197) (9,577)
----------- -----------(3,183) (5,640) (11,380) (15,217)
---------- ---------- ---------- ----------
Total 9,700 7,962
----------- -----------6,611 11,731 13,182 19,143
---------- ---------- ---------- ----------
Interest and Other Charges:
Interest on long-term debt 160,395 123,719158,866 123,110 319,261 246,829
Other interest - net 14,140 6,61411,444 5,435 22,455 11,499
Allowance for borrowed funds used
during construction (2,642) (1,526)(2,527) (1,495) (5,169) (3,021)
Preferred and preference dividend requirements of
subsidiaries and other 20,942 14,585
----------- -----------20,426 14,395 41,368 28,980
---------- ---------- ---------- ----------
Total 192,835 143,392
----------- -----------188,209 141,445 377,915 284,287
---------- ---------- ---------- ----------
Income before Cumulative Effect of
a Change in Accounting Principle 70,735 57,313144,337 130,860 215,072 188,173
Cumulative effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $57,188) - - - 93,841
----------- --------------------- ---------- ---------- ----------
Net Income $70,735 $151,154
=========== ===========$144,337 $130,860 $215,072 $282,014
========== ========== ========== ==========
Earnings per average common share
before cumulative effect of a
change in accounting principle $0.31 $0.33$0.63 $0.75 $0.94 $1.07
Earnings per average common share $0.31 $0.86$0.63 $0.75 $0.94 $1.61
Dividends declared per common share - - $0.90 $0.80
Average number of common shares
outstanding 230,584,786 175,108,922229,440,707 174,745,885 230,010,476 174,926,615
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
Operating Activities:
Net income $70,735 $151,154$215,072 $282,014
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (93,841)
Change in rate deferrals/excess capacity-net 80,768 36,290164,750 80,652
Depreciation and decommissioning 160,809 110,130321,665 219,222
Deferred income taxes and investment tax credits 1,064 (8,218)13,690 (372)
Allowance for equity funds used during construction (3,535) (2,152)(6,670) (4,326)
Amortization of deferred revenues (10,283) (9,311)
Provision for estimated losses and reserves (13,503) 9,934(14,632) (19,799)
Changes in working capital:
Receivables 89,848 35,943(62,170) (55,467)
Fuel inventory 23,622 4,06529,723 4,325
Accounts payable (103,591) (48,034)(50,684) (50,159)
Taxes accrued 16,940 9,50527,880 (4,384)
Interest accrued (9,389) (8,124)(15,542) (1,332)
Other working capital accounts 36 (770)(143,630) (77,205)
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (5,516) (5,706)(11,742) (9,969)
Provision for estimated losses and reserves (4,523) 23,003
Other 24,426 30,79645,014 56,989
-------- --------
Net cash flow provided by operating activities 322,431 155,634508,201 293,324
-------- --------
Investing Activities:
Construction/Construction / capital expenditures (175,107) (86,836)(327,154) (176,127)
Allowance for equity funds used during construction 3,535 2,1526,670 4,326
Nuclear fuel purchases (9,344) (17,015)(44,994) (40,401)
Proceeds from sale/leaseback of nuclear fuel 1,035 -16,144 22,868
Investment in nonregulated/nonutility properties 240 (58,229)(113) (58,531)
Decrease in other temporary investments - 9,01217,012
-------- --------
Net cash flow used in investing activities (179,641) (150,916)(349,447) (230,853)
-------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 100,00059,410 160,000
General and refunding mortgage bonds - 195,000
Bank notes and other long termOther long-term debt - 78843,644 79,053
Premium and expense on refinancing sale/leaseback bondbonds (47,602) -
Retirement of:
First mortgage bonds (400) (88,585)(85,600) (249,704)
General and refunding mortgage bonds - (84,400)
Bank notes and other(45,000) (99,400)
Other long-term debt (44) -(16,108) (21,919)
Repurchase of common stock (35,590) (6,524)(88,796) (21,874)
Redemption of preferred stock (24,250) (22,000)(26,259) (29,000)
Common stock dividends paid (103,728) (69,629)(207,149) (139,566)
Changes in short-term borrowings 106,200 1,200
-------- --------
Net cash flow provided by (used in)used in financing activities (211,614) 24,650(307,260) (126,210)
-------- --------
Net increase (decrease)decrease in cash and cash equivalents (68,824) 29,368(148,506) (63,739)
Cash and cash equivalents at beginning of period 563,749 379,792
-------- --------
Cash and cash equivalents at end of period $494,925 $409,160$415,243 $316,053
======== ========
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $169,748 $134,450$336,230 $270,222
Income taxes $(6,070) $14,197$79,097 $74,769
Noncash investing and financing activities:
Capital lease obligations incurred $20,547 $232$24,303 $22,868
Excess of fair value of decommissioning trust
assets over amount invested $15,634$7,477 -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
Electric Operating Revenues:
Residential $ 476.0 $ 323.1 $ 152.9 47
Commercial 339.1 227.0 112.1 49
Industrial 436.1 268.5 167.6 62
Governmental 38.9 31.1 7.8 25
--------- ------- -------
Total retail 1,290.1 849.7 440.4 52
Sales for resale 69.4 58.2 11.2 19
Other (19.3) (10.6) (8.7) (82)
--------- ------- -------
Total $ 1,340.2 $ 897.3 $ 442.9 49ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 489.1 $ 320.3 $ 168.8 53
Commercial 372.2 243.7 128.5 53
Industrial 461.5 276.5 185.0 67
Governmental 40.7 31.4 9.3 30
--------- --------- -------
Total retail 1,363.5 871.9 491.6 56
Sales for resale 90.7 76.0 14.7 19
Other 97.5 103.6 (6.1) (6)
--------- --------- -------
Total $ 1,551.7 $ 1,051.5 $ 500.2 48
========= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 6,062 4,072 1,990 49
Commercial 4,406 2,884 1,522 53
Industrial 9,728 5,853 3,875 66
Governmental 525 433 92 21
--------- ------- -------
Total retail 20,721 13,242 7,479 56
Sales for resale 1,736 1,704 32 2
--------- ------- -------
Total 22,457 14,946 7,511 50 ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 5,806 3,801 2,005 53
Commercial 4,813 3,069 1,744 57
Industrial 10,079 6,034 4,045 67
Governmental 553 441 112 25
--------- --------- -------
Total retail 21,251 13,345 7,906 59
Sales for resale 2,035 2,338 (303) (13)
--------- --------- -------
Total 23,286 15,683 7,603 48
========= ========= =======
Six Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 965.1 $ 643.4 $ 321.7 50
Commercial 711.3 470.7 240.6 51
Industrial 897.6 545.0 352.6 65
Governmental 79.6 62.5 17.1 27
--------- --------- -------
Total retail 2,653.6 1,721.6 932.0 54
Sales for resale 160.1 134.2 25.9 19
Other 78.2 93.0 (14.8) (16)
--------- --------- -------
Total $ 2,891.9 $ 1,948.8 $ 943.1 48
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 11,868 7,873 3,995 51
Commercial 9,219 5,953 3,266 55
Industrial 19,806 11,887 7,919 67
Governmental 1,079 874 205 23
--------- --------- -------
Total retail 41,972 26,587 15,385 58
Sales for resale 3,771 4,042 (271) (7)
--------- --------- -------
Total 45,743 30,629 15,114 49
========= ========= =======
Note: On December 31, 1993, GSU became a wholly-owned subsidiary of
Entergy Corporation. In accordance with the purchase method
of accounting, the 1993 second quarter and year to date operating
results do not include GSU became a wholly-owned subsidiary of Entergy
Corporation. In accordance with the purchase method of accounting, the 1993
first quarter operating results does not include GSU's operating results.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $4,107,725$4,170,215 $4,098,355
Property under capital leases 61,60859,744 62,139
Construction work in progress 221,518185,900 197,005
Nuclear fuel under capital lease 96,41186,226 93,606
---------- ----------
Total 4,487,2624,502,085 4,451,105
Less - accumulated depreciation and amortization 1,634,8411,663,306 1,604,318
---------- ----------
Utility plant - net 2,852,4212,838,779 2,846,787
---------- ----------
Other Property and Investments:
Investment in subsidarysubsidiary companies - at equity 11,232 11,232
Decommissioning trust fund 126,294123,834 108,192
Other - at cost (less accumulated depreciation) 4,3374,436 4,257
---------- ----------
Total 141,863139,502 123,681
---------- ----------
Current Assets:
Cash 33,22310,165 1,825
Accounts receivable:
Customer (less allowance for doubtful
accounts of $2.1 million in 1994 and 1993) 58,60770,350 65,641
Associated companies 25,14030,248 18,312
Other 12,17715,515 20,817
Accrued unbilled revenues 70,290108,436 83,378
Fuel inventory - at average cost 39,22524,575 51,920
Materials and supplies - at average cost 81,26678,550 81,398
Rate deferrals 97,080102,596 92,592
Deferred excess capacity 9,2109,304 9,115
Prepayments and other 23,18447,320 28,303
---------- ----------
Total 449,402497,059 453,301
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 446,832417,843 475,387
Deferred excess capacity 26,18024,034 28,465
SFAS 109 regulatory asset - net 243,924226,636 234,015
Unamortized loss on reaquiredreacquired debt 59,34658,523 60,169
Other 114,333118,512 112,300
---------- ----------
Total 890,615845,548 910,336
---------- ----------
TOTAL $4,334,301$4,320,888 $4,334,105
========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $0.01 par value, authorized
325,000,000 shares; issued and outstanding
46,980,196 shares in 1994 and 1993 $470 $470
Paid-in capital 590,844 590,844
Retained earnings 452,416467,813 448,811
---------- ----------
Total common shareholder's equity 1,043,7301,059,127 1,040,125
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 65,02763,027 70,027
Long-term debt 1,315,5481,321,150 1,313,315
---------- ----------
Total 2,600,6552,619,654 2,599,817
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 97,08284,752 94,861
Other 51,87155,684 59,750
---------- ----------
Total 148,953140,436 154,611
---------- ----------
Current Liabilities:
Currently maturing long-term debt 3,02028,020 3,020
Notes payable:
Associated companies 31,99217,641 21,395
Other 66734,667 667
Accounts payable:
Associated companies 38,12236,120 45,177
Other 74,94171,062 93,611
Customer deposits 15,23416,050 15,241
Taxes accrued 63,18058,641 43,013
Accumulated deferred income taxes 33,46934,872 32,367
Interest accrued 31,07631,318 31,410
Dividends declared 4,8834,833 5,049
Nuclear refueling reserve 5,024 3,070
Co-owner advances 39,43825,767 39,435
Deferred fuel cost 15,95120,292 16,130
Obligations under capital leases 60,93761,218 60,883
Other 24,158 29,78918,818 32,859
---------- ----------
Total 442,092459,319 440,257
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 876,561852,534 876,618
Accumulated deferred investment tax credits 151,798148,872 154,723
Other 114,242100,073 108,079
---------- ----------
Total 1,142,6011,101,479 1,139,420
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,334,301$4,320,888 $4,334,105
========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues: $371,091 $346,740Revenues $414,901 $383,651 $785,992 $730,391
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel relatedfuel-related expenses 63,474 58,95267,759 58,323 131,233 117,275
Purchased power 91,182 81,67093,427 92,761 184,609 174,431
Nuclear refueling outage expenses 8,634 12,4858,839 10,366 17,473 20,732
Other operation and maintenance 80,526 84,75589,372 90,624 169,898 177,498
Depreciation and decommissioning 35,718 33,43136,540 33,124 72,258 66,555
Taxes other than income taxes 9,115 7,3808,508 6,361 17,623 13,741
Income taxes (2,405) (3,115)17,323 7,661 14,918 4,546
Amortization of rate deferrals 40,173 34,22133,552 31,099 73,725 65,320
-------- -------- -------- --------
Total 326,417 309,779355,320 330,319 681,737 640,098
-------- -------- -------- --------
Operating Income 44,674 36,96159,581 53,332 104,255 90,293
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,154 1,279896 1,033 2,050 2,312
Miscellaneous - net 14,659 15,17211,997 14,906 24,561 30,077
Income taxes (5,771) (10,239)(3,913) (7,156) (9,684) (17,395)
-------- -------- -------- --------
Total 10,042 6,2128,980 8,783 16,927 14,994
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 25,233 27,26925,145 27,167 50,378 54,436
Other interest - net 3,915 9172,500 1,101 4,320 2,017
Allowance for borrowed funds used
during construction (820) (907)(847) (725) (1,667) (1,632)
-------- -------- -------- --------
Total 28,328 27,27926,798 27,543 53,031 54,821
-------- -------- -------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 26,388 15,89441,763 34,572 68,151 50,466
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $31,140) - - - 50,187
-------- -------- -------- --------
Net Income 26,388 66,08141,763 34,572 68,151 100,653
Preferred Stock Dividend Requirements
and Other 4,883 5,2624,866 5,299 9,749 10,561
-------- -------- -------- --------
Earnings Applicable to Common Stock $21,505 $60,819$36,897 $29,273 $58,402 $90,092
======== ======== ======== ========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
Operating Activities:
Net income $26,388 $66,081$68,151 $100,653
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (50,187)
Change in rate deferrals/excess capacity-net 26,257 19,87851,782 42,431
Depreciation and decommissioning 35,718 33,43172,258 66,555
Deferred income taxes and investment tax credits (11,751) (16,374)(20,012) (28,094)
Allowance for equity funds used during construction (1,154) (1,279)(2,050) (2,312)
Changes in working capital:
Receivables 21,934 26,478(36,401) (22,143)
Fuel inventory 12,695 16327,345 6,567
Accounts payable (25,725) (15,703)(31,606) (4,592)
Taxes accrued 20,167 17,63815,628 (2,620)
Interest accrued (334) 1,893(92) (546)
Other working capital accounts 1,391 (5,316)(38,907) (48,578)
Decommissioning trust contributions (2,545) (3,195)(5,288) (5,524)
Provision for estimated losses and reserves (8,224) 20,688
Other (14,857) 11,412
------- -------(12,839) (3,957)
-------- --------
Net cash flow provided by operating activities 88,184 84,920
------- -------79,745 68,341
-------- --------
Investing Activities:
Construction expenditures (40,188) (30,908)(74,778) (65,122)
Allowance for equity funds used during construction 1,154 1,279
------- -------2,050 2,312
Nuclear fuel purchases - (29,072)
Proceeds from sale/leaseback of nuclear fuel - 22,868
-------- --------
Net cash flow used in investing activities (39,034) (29,629)
------- -------(72,728) (69,014)
-------- --------
Financing Activities:
Proceeds from issuance of other long-term debt 27,992 44,519
Retirement of first mortgage bonds (400) (15,400)(600) (15,600)
Redemption of preferred stock (5,000) (5,000)
Change(7,000) (7,000)
Changes in short-term borrowings 10,597 (4,000)30,246 27,140
Dividends paid:
Common stock (17,900) (6,000)(39,400) (21,700)
Preferred stock (5,049) (5,481)
------- -------(9,915) (10,830)
-------- --------
Net cash flow used inprovided by financing activities (17,752) (35,881)
------- -------1,323 16,529
-------- --------
Net increase in cash and cash equivalents 31,398 19,4108,340 15,856
Cash and cash equivalents at beginning of period 1,825 -
------- --------------- --------
Cash and cash equivalents at end of period $33,223 $19,410
======= =======$10,165 $15,856
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $24,655 $24,976$49,205 $54,411
Income taxes $(242) $11,252$28,677 $41,854
Noncash investing and financing activities:
Capital lease obligations incurred $14,313 $232$14,626 $22,868
Excess of fair value of decommissionningdecommissioning trust
assets over amount invested $13,463$7,210 -
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
Electric Operating Revenues:
Residential $ 123.3 $ 118.9 $ 4.4 4
Commercial 66.3 63.8 2.5 4
Industrial 72.8 70.4 2.4 3
Governmental 4.1 3.8 0.3 8
------- ------- ------
Total retail 266.5 256.9 9.6 4
Sales for resale 110.9 95.8 15.1 16
Other (6.3) (6.0) (0.3) (5)
------- ------- ------
Total $ 371.1 $ 346.7 $ 24.4ARKANSAS POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended
Description 1994 1993 Increase %
(In Millions)
Electric Operating Revenues:
Residential $ 108.3 $ 103.7 $ 4.6 4
Commercial 74.8 69.3 5.5 8
Industrial 80.6 75.6 5.0 7
Governmental 4.1 4.0 0.1 3
--------- --------- -------
Total retail 267.8 252.6 15.2 6
Sales for resale 102.9 99.1 3.8 4
Other 44.2 32.0 12.2 38
--------- --------- -------
Total $ 414.9 $ 383.7 $ 31.2 8
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,141 1,106 35 3
Commercial 986 919 67 7
Industrial 1,441 1,347 94 7
Governmental 57 54 3 6
--------- --------- -------
Total retail 3,625 3,426 199 6
Sales for resale 4,053 3,943 110 3
--------- --------- -------
Total 7,678 7,369 309 4
========= ========= =======
Six Months Ended
Description 1994 1993 Increase %
(In Millions)
Electric Operating Revenues:
Residential $ 231.6 $ 222.6 $ 9.0 4
Commercial 141.1 133.1 8.0 6
Industrial 153.4 146.0 7.4 5
Governmental 8.2 7.8 0.4 5
--------- --------- -------
Total retail 534.3 509.5 24.8 5
Sales for resale 213.8 194.9 18.9 10
Other 37.9 26.0 11.9 46
--------- --------- -------
Total $ 786.0 $ 730.4 $ 55.6 8
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 2,579 2,476 103 4
Commercial 1,917 1,807 110 6
Industrial 2,805 2,642 163 6
Governmental 115 109 6 6
--------- --------- -------
Total retail 7,416 7,034 382 5
Sales for resale 8,507 7,915 592 7
--------- --------- -------
Total 15,923 14,949 974 7
========= ========= ======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,438 1,370 68 5
Commercial 931 888 43 5
Industrial 1,364 1,295 69 5
Governmental 58 55 3 5
------- ------- ------
Total retail 3,791 3,608 183 5
Sales for resale 4,454 3,972 482 12
------- ------- ------
Total 8,245 7,580 665 9
======= ======= ======
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $6,836,203$6,851,569 $6,825,989
Natural gas 43,17643,396 42,786
Steam products 75,72075,586 75,689
Property under capital leases 86,38285,884 86,039
Construction work in progress 58,01884,358 50,080
Nuclear fuel under capital leases 87,37289,057 94,828
---------- ----------
Total 7,186,8717,229,850 7,175,411
Less - accumulated depreciation and amortization 2,367,9352,409,052 2,323,804
---------- ----------
Utility plant - net 4,818,9364,820,798 4,851,607
---------- ----------
Other Property and Investments:
Decommissioning trust fund 19,05019,667 17,873
Other - at cost (less accumulated depreciation) 29,07029,644 29,360
---------- ----------
Total 48,12049,311 47,233
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 43,50511,108 3,012
Temporary cash investments - at cost,
which approximates market:
Associated companies 58,65139,759 -
Other 80,23981,008 258,337
---------- ----------
Total cash and cash equivalents 182,395131,875 261,349
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.2 million in 1994 and $2.4 million in 1993) 118,476139,097 117,369
Associated companies 6,6424,438 -
Other 21,08319,517 18,371
Accrued unbilled revenues 28,19935,184 32,572
Deferred fuel costs -13,092 5,883
Fuel inventory 18,90227,932 23,448
Materials and supplies - at average cost 88,86390,123 86,831
Rate deferrals 92,59395,222 90,775
Prepayments and other 28,72422,472 48,948
---------- ----------
Total 585,877578,952 685,546
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 614,210588,652 638,015
SFAS 109 regulatory asset - net 435,767437,143 432,411
Long-term receivables 227,237233,553 218,079
Unamortized loss on reacquired debt 69,24867,525 70,970
Other 198,673199,693 193,490
---------- ----------
Total 1,545,1351,526,566 1,552,965
---------- ----------
TOTAL $6,998,068$6,975,627 $7,137,351
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares in 1994 and 1993 $114,055 $114,055
Paid-in capital 1,152,344 1,152,304
Retained earnings 569,951511,991 666,401
---------- ----------
Total common shareholder's equity 1,836,3501,778,390 1,932,760
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 98,754 101,004
Long-term debt 2,368,7152,368,757 2,368,639
---------- ----------
Total 4,590,2634,532,345 4,688,847
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 142,841140,709 152,359
Other 45,68647,155 47,107
---------- ----------
Total 188,527187,864 199,466
---------- ----------
Current Liabilities:
Currently maturing long-term debt 425 425
Accounts payable:
Associated companies 13,31819,940 2,745
Other 68,649103,081 109,840
Customer deposits 22,44322,673 21,958
Taxes accrued 29,65831,511 22,856
Interest accrued 65,89156,472 59,516
Nuclear refueling reserve 23,90213,423 22,356
Obligations under capital leases 33,41634,233 41,713
Other 66,26159,504 98,074
---------- ----------
Total 323,963341,262 379,483
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,226,3731,243,022 1,222,999
Accumulated deferred investment tax credits 93,33392,212 94,455
Deferred River Bend finance charges 100,67594,585 106,765
Other 474,934484,337 445,336
---------- ----------
Total 1,895,3151,914,156 1,869,555
---------- ----------
Commitments and Contingencies (Note(Notes 1 and 2)
TOTAL $6,998,068$6,975,627 $7,137,351
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues:
Electric $402,104 $381,531$439,015 $423,200 $841,119 $804,731
Natural gas 15,846 12,5245,981 6,007 21,827 18,531
Steam products 11,708 10,12311,859 13,016 23,567 23,139
-------- -------- -------- --------
Total 429,658 404,178456,855 442,223 886,513 846,401
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel relatedfuel-related expenses and
gas purchased for resale 119,018 118,369119,341 126,945 238,359 245,314
Purchased power 60,220 36,27154,839 38,035 115,059 74,306
Nuclear refueling outage expenses 3,600 4,8002,520 3,360 5,040 6,720
Other operation and maintenance 100,970 93,468103,512 95,094 205,562 190,002
Depreciation and decommissioning 47,86749,209 47,277 97,076 94,554
Taxes other than income taxes 24,346 24,9049,664 23,643 34,010 48,547
Income taxes (821) (4,822)17,573 10,119 16,752 5,297
Amortization of rate deferrals 15,897 14,50316,840 15,761 32,737 30,264
-------- -------- -------- --------
Total 371,097 334,770373,498 360,234 744,595 695,004
-------- -------- -------- --------
Operating Income 58,561 69,40883,357 81,989 141,918 151,397
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 260 113379 144 639 257
Miscellaneous - net 4,443 3,9894,085 5,419 8,233 9,192
Income taxes (1,972) (4,751)(2,211) (3,143) (4,183) (7,894)
-------- -------- -------- --------
Total 2,731 (649)2,253 2,420 4,689 1,555
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 48,980 51,60448,770 51,009 97,750 102,613
Other interest - net 1,475 2,3754,057 2,430 5,237 4,589
Allowance for borrowed funds used
during construction (206) (227)(301) (96) (507) (323)
-------- -------- -------- --------
Total 50,249 53,75252,526 53,343 102,480 106,879
-------- -------- -------- --------
Income before Extraordinary Items and the
Cumulative Effect of Accounting Changes 11,043 15,00733,084 31,066 44,127 46,073
Extraordinary Items (net of income taxes) - (285) - (285)
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $6,940)$ 6,940) - - - 10,660
-------- -------- -------- --------
Net Income 11,043 25,66733,084 30,781 44,127 56,448
Preferred and Preference Stock
Dividend Requirements and Other 7,407 9,8917,529 10,306 14,936 20,197
-------- -------- -------- --------
Earnings Applicable to Common Stock $3,636 $15,776$25,555 $20,475 $29,191 $36,251
======== ======== ======== ========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
Operating Activities:
Net income $11,043 $25,667$44,127 $56,448
Noncash items included in net income:
Extraordinary items - 285
Cumulative effect of a change in accounting changesprinciple - (10,660)
Change in rate deferrals 15,897 14,50332,737 30,263
Depreciation and decommissioning 47,867 47,27797,076 94,554
Deferred income taxes and investment tax credits 1,150 (52)19,454 13,657
Allowance for equity funds used during construction (260) (113)(639) (257)
Changes in working capital:
Receivables (6,088) 12,893(29,924) (21,512)
Fuel inventory 4,546 1,615(4,484) 4,334
Accounts payable (30,618) (36,739)10,436 (19,219)
Taxes accrued 6,802 9,9358,655 18,352
Interest accrued 6,375 7,276(3,044) (1,861)
Other working capital accounts (8,093) 3,945(37,366) (5,273)
Decommissioning trust contributions (493) (739)(1,478) (1,478)
Purchased power settlement - (124,300)(169,300)
Other 5,648 19,0833,127 4,031
-------- --------
Net cash flow provided by (used in) operating activities 53,776 (30,409)138,677 (7,636)
-------- --------
Investing Activities:
Construction expenditures (20,824) (21,564)(68,109) (46,582)
Allowance for equity funds used during construction 260 113639 257
Nuclear fuel purchases (3,538)(16,145) (2,118)
Proceeds from sale/leaseback of nuclear fuel 1,03516,145 2,118
Refund of escrow account and other property - 8,5038,200
-------- --------
Net cash flow used in investing activities (23,067) (12,948)(67,470) (38,125)
-------- --------
Financing Activities:
Proceeds from the issuance of otherof:
Preference stock - 146,625
Other long-term debt - 21,44070,979
Retirement of other long-term debt - (17,974)(80,727)
Redemption of preferred stock (2,250) (4,500)(18,000)
Dividends paid:
Common stock (100,000)(183,600) -
Preferred and preference stock (7,413) (9,922)(14,831) (19,512)
-------- --------
Net cash flow used inprovided by (used in) financing activities (109,663) (10,956)(200,681) 99,365
-------- --------
Net decreaseincrease (decrease) in cash and cash equivalents (78,954) (54,313)(129,474) 53,604
Cash and cash equivalents at beginning of period 261,349 197,741
-------- --------
Cash and cash equivalents at end of period $182,395 $143,428$131,875 $251,345
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for
interestfor:
Interest - net of amount capitalized $40,192 $42,038
Excess$96,470 $100,488
Income taxes 7,573 -
Noncash investing and financing activities:
Capital lease obligations incurred 16,145 2,688
Deficiency of fair value of decommissioning
trust assets over amount invested $390($244) -
See Notes to Financial Statements.
GULF STATES UTILITIES
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
Electric Department
Operating revenues:
Residential $ 123.8 $ 117.2 $ 6.6 6
Commercial 94.7 91.4 3.3 4
Industrial 153.0 154.7 (1.7) (1)
Governmental 6.3 6.7 (0.4) (6)
------- ------- ------
Total retail 377.8 370.0 7.8 2
Sales for resale 18.4 6.3 12.1 192
Other 5.9 5.2 0.7 13
------- ------- ------
Total Electric Department $ 402.1 $ 381.5 $ 20.6GULF STATES UTILITIES COMPANY
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Department Operating
Revenues:
Residential $ 132.7 $ 128.9 $ 3.8 3
Commercial 102.4 100.8 1.6 2
Industrial 159.9 165.5 (5.6) (3)
Governmental 6.4 6.5 (0.1) (2)
--------- --------- -------
Total retail 401.4 401.7 (0.3) -
Sales for resale 20.4 7.1 13.3 187
Other 17.2 14.4 2.8 19
--------- --------- -------
Total Electric Department $ 439.0 $ 423.2 $ 15.8 4
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,672 1,532 140 9
Commercial 1,462 1,369 93 7
Industrial 3,811 3,611 200 6
Governmental 74 72 2 3
--------- --------- -------
Total retail 7,019 6,584 435 7
Sales for resale 709 134 575 429
--------- --------- -------
Total Electric Department 7,728 6,718 1,010 15
Steam Department 421 415 6 1
--------- --------- -------
Total 8,149 7,133 1,016 14
========= ========= =======
Six Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Department Operating
Revenues:
Residential $ 256.5 $ 246.1 $ 10.4 4
Commercial 197.1 192.2 4.9 3
Industrial 312.9 320.2 (7.3) (2)
Governmental 12.7 13.2 (0.5) (4)
--------- --------- -------
Total retail 779.2 771.7 7.5 1
Sales for resale 38.8 13.4 25.4 190
Other 23.1 19.6 3.5 18
--------- --------- -------
Total Electric Department $ 841.1 $ 804.7 $ 36.4 5
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 3,273 2,950 323 11
Commercial 2,769 2,576 193 7
Industrial 7,386 7,022 364 5
Governmental 148 146 2 1
--------- --------- -------
Total retail 13,576 12,694 882 7
Sales for resale 1,250 261 989 379
--------- --------- -------
Total Electric Department 14,826 12,955 1,871 14
Steam Department 831 792 39 5
--------- --------- -------
Total 15,657 13,747 1,910 14
========= ========= ======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,601 1,418 183 13
Commercial 1,307 1,207 100 8
Industrial 3,575 3,411 164 5
Governmental 74 74 0 0
------- ------- ------
Total retail 6,557 6,110 447 7
Sales for resale 541 127 414 326
------- ------- ------
Total Electric Department 7,098 6,237 861 14
Steam Department 410 377 33 9
------- ------- ------
Total 7,508 6,614 894 14
======= ======= ======
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $4,652,930$4,669,176 $4,646,020
Electric plant under lease 226,395 225,083
Construction work in progress 163,492160,962 133,536
Nuclear fuel under capital lease 66,41560,549 61,375
Nuclear fuel 5,065 3,823
---------- ----------
Total 5,114,2975,122,147 5,069,837
Less - accumulated depreciation and amortization 1,529,1891,542,290 1,496,107
---------- ----------
Utility plant - net 3,585,1083,579,857 3,573,730
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 24,45225,324 22,109
Investment in subsidiary company - at equity 14,230 14,230
Other 1,0001,016 984
---------- ----------
Total 59,74260,630 57,383
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 6,4365,715 -
Temporary cash investments - at cost,
which approximates market 27,77028,036 33,489
---------- ----------
Total cash and cash equivalents 34,20633,751 33,489
Special deposits 3,1498,780 19,077
Accounts receivable:
Customer (less allowance for doubtful
accounts of $1.1 million in 1994 and 1993) 55,41678,098 66,575
Associated companies 5,8663,786 2,952
Other 8,8918,764 10,656
Accrued unbilled revenues 50,94864,656 64,314
Deferred fuel costs 7,2124,422 -
Accumulated deferred income taxes 3,393- 6,031
Materials and supplies - at average cost 84,06586,013 87,204
Rate deferrals 28,422 28,422
Prepayments and other 24,39338,420 16,510
---------- ----------
Total 305,961355,112 335,230
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 47,37240,485 54,031
SFAS 109 regulatory asset - net 350,157352,846 349,703
Unamortized loss on reaquiredreacquired debt 46,80445,754 47,853
Other 48,18147,131 46,068
---------- ----------
Total 492,514486,216 497,655
---------- ----------
TOTAL $4,443,325$4,481,815 $4,463,998
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
250,000,000 shares; issued and outstanding
165,173,180 shares in 1994 and 1993 $1,088,900 $1,088,900
Capital stock expense and other (5,771) (6,109)
Retained earnings 103,006115,311 89,849
---------- ----------
Total common shareholder's equity 1,186,1351,198,440 1,172,640
Preferred stock:
Without sinking fund 160,500 160,500
With sinking fund 118,802118,793 126,302
Long-term debt 1,457,7511,457,902 1,457,626
---------- ----------
Total 2,923,1882,935,635 2,917,068
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 32,08226,683 27,508
Other 29,60033,211 27,672
---------- ----------
Total 61,68259,894 55,180
---------- ----------
Current Liabilities:
Currently maturing long-term debt 25,315315 25,315
Notes payable-associatedpayable:
Associated companies 24,89354,954 52,041
Other 19,200 -
Accounts payable:
Associated companies 41,91135,082 33,523
Other 56,92859,036 76,284
Customer deposits 53,02253,705 52,234
Accumulated deferred income taxes 8,621 -
Taxes accrued 28,50524,070 15,110
Interest accrued 36,11841,080 42,141
Dividends declared 5,7015,647 5,938
Deferred revenue - gas supplier judgment proceeds 4,349- 14,632
Deferred fuel cost - 605
Obligations under capital leases 33,867 33,867
Other 8,3828,012 9,741
---------- ----------
Total 318,991343,589 361,431
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 845,538851,973 834,899
Accumulated deferred investment tax credits 187,128185,413 188,843
Deferred interest - Waterford 3 lease obligation 25,53025,688 25,372
Other 81,26879,623 81,205
---------- ----------
Total 1,139,4641,142,697 1,130,319
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,443,325$4,481,815 $4,463,998
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues: $383,826 $357,856Revenues $441,643 $399,570 $825,469 $757,426
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 58,108 62,59685,518 49,991 143,626 112,587
Purchased power 103,496 85,661101,841 104,571 205,337 190,232
Nuclear refueling outage expenses 4,591 4,5674,885 4,631 9,476 9,198
Other operation and maintenance 73,632 75,88386,143 82,668 159,775 158,551
Depreciation and decommissioning 37,392 35,38837,451 35,521 74,843 70,909
Taxes other than income taxes 14,437 11,55213,919 12,332 28,356 23,884
Income taxes 16,843 18,67524,313 23,497 41,156 42,172
Amortization of rate deferrals 6,659 6,6596,887 6,887 13,546 13,546
-------- -------- -------- --------
Total 315,158 300,981360,957 320,098 676,115 621,079
-------- -------- -------- --------
Operating Income 68,668 56,87580,686 79,472 149,354 136,347
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 1,111 603978 721 2,089 1,324
Miscellaneous - net 607 457130 444 441 650
Income taxes (10) 2,28550 (45) 40 2,240
-------- -------- -------- --------
Total 1,708 3,3451,158 1,120 2,570 4,214
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 31,197 31,11231,100 31,761 62,297 62,873
Other interest - net 2,884 3,7773,040 2,382 5,628 5,908
Allowance for borrowed funds used
during construction (801) (402)(649) (483) (1,450) (885)
-------- -------- -------- --------
Total 33,280 34,48733,491 33,660 66,475 67,896
-------- -------- -------- --------
Net Income 37,096 25,73348,353 46,932 85,449 72,665
Preferred Stock Dividend Requirements
and Other 6,119 6,4565,701 6,291 11,820 12,747
-------- -------- -------- --------
Earnings Applicable to Common Stock $30,977 $19,277$42,652 $40,641 $73,629 $59,918
======== ======== ======== ========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
Operating Activities:
Net income $37,096 $25,733$85,449 $72,665
Noncash items included in net income:
Change in rate deferrals 6,659 6,65913,546 13,546
Depreciation and decommissioning 37,392 35,38874,843 70,909
Deferred income taxes and investment tax credits 11,147 9,13325,253 26,730
Allowance for equity funds used during construction (1,111) (603)(2,089) (1,324)
Amortization of deferred revenues (10,283) (9,311)(14,632) (19,799)
Changes in working capital:
Receivables 23,376 12,076(10,807) (3,985)
Accounts payable (10,968) (34,287)(15,689) (16,449)
Taxes accrued 13,395 14,0698,960 1,334
Interest accrued (6,023) (3,986)(1,061) (247)
Other working capital accounts 2,796 13,481(15,707) (14,808)
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (1,204) (1,000)(2,408) (2,000)
Other (2,755) 4,119
------- -------1,464 8,231
-------- --------
Net cash flow provided by operating activities 99,517 15,444
------- -------147,122 78,776
-------- --------
Investing Activities:
Construction expenditures (41,381) (37,935)(78,552) (67,953)
Allowance for equity funds used during construction 1,111 603
------- -------2,089 1,324
-------- --------
Net cash flow used in investing activities (40,270) (37,332)
------- -------(76,463) (66,629)
-------- --------
Financing Activities:
Proceeds from the issuance of firstof:
First mortgage bonds - 100,000
ChangeOther long-term debt - 33,000
Changes in short-term borrowings (27,148) -22,113 32,706
Retirement of otherof:
First mortgage bonds (25,000) (100,919)
Other long-term debt (44) -(63) (21,799)
Redemption of preferred stock (7,500) (7,500)(7,509) (12,500)
Dividends paid:
Common stock (17,900) (30,600)(48,300) (33,400)
Preferred stock (5,938) (6,675)
------- -------(11,638) (13,089)
-------- --------
Net cash flow provided by (used in)used in financing activities (58,530) 55,225
------- -------(70,397) (16,001)
-------- --------
Net increase (decrease) in cash and cash equivalents 717 33,337262 (3,854)
Cash and cash equivalents at beginning of period 33,489 22,782
------- --------------- --------
Cash and cash equivalents at end of period $34,206 $56,119
======= =======$33,751 $18,928
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $37,730 $37,425$64,396 $64,971
Income taxes - $2,016$18,219 $17,840
Noncash investing and financing activities:
Capital lease obligations incurred $9,677 -
Excess of fair value of decommissioning trust
assets over amount invested $843$220 -
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
Electric Operating Revenues:
Residential $ 124.9 $ 109.6 $ 15.3 14
Commercial 80.8 73.2 7.6 10
Industrial 159.9 152.4 7.5 5
Governmental 7.9 7.5 0.4 5
------- ------- ------
Total retail 373.5 342.7 30.8 9
Sales for resale 6.9 6.3 0.6 10
Other 3.4 8.9 (5.5) (62)
------- ------- ------
Total $ 383.8 $ 357.9 $ 25.9LOUISIANA POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 139.4 $ 117.0 $ 22.4 19
Commercial 92.0 78.7 13.3 17
Industrial 169.1 152.3 16.8 11
Governmental 7.9 6.6 1.3 20
--------- --------- -------
Total retail 408.4 354.6 53.8 15
Sales for resale 8.8 12.6 (3.8) (30)
Other 24.4 32.4 (8.0) (25)
--------- --------- -------
Total $ 441.6 $ 399.6 $ 42.0 11
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,691 1,535 156 10
Commercial 1,118 1,025 93 9
Industrial 3,979 3,909 70 2
Governmental 99 92 7 8
--------- --------- -------
Total retail 6,887 6,561 326 5
Sales for resale 217 379 (162) (43)
--------- --------- -------
Total 7,104 6,940 164 2
========= ========= =======
Six Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 264.4 $ 226.6 $ 37.8 17
Commercial 172.8 151.9 20.9 14
Industrial 329.0 304.7 24.3 8
Governmental 15.8 14.1 1.7 12
--------- --------- -------
Total retail 782.0 697.3 84.7 12
Sales for resale 15.7 18.9 (3.2) (17)
Other 27.8 41.2 (13.4) (33)
--------- --------- -------
Total $ 825.5 $ 757.4 $ 68.1 9
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 3,371 3,019 352 12
Commercial 2,146 1,960 186 9
Industrial 7,956 7,734 222 3
Governmental 206 194 12 6
--------- --------- -------
Total retail 13,679 12,907 772 6
Sales for resale 345 519 (174) (34)
--------- --------- -------
Total 14,024 13,426 598 4
========= ========= ======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,680 1,484 196 13
Commercial 1,028 935 93 10
Industrial 3,977 3,825 152 4
Governmental 107 102 5 5
------- ------- ------
Total retail 6,792 6,346 446 7
Sales for resale 128 140 (12) (9)
------- ------- ------
Total 6,920 6,486 434 7
======= ======= ======
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $1,394,289$1,432,998 $1,389,229
Construction work in progress 104,20173,241 62,699
---------- ----------
Total 1,498,4901,506,239 1,451,928
Less - accumulated depreciation and amortization 573,732568,726 577,728
---------- ----------
Utility plant - net 924,758937,513 874,200
---------- ----------
Other Property and Investments:
Investment in subsidiary company - at equity 5,531 5,531
Other 4,7584,756 4,760
---------- ----------
Total 10,28910,287 10,291
---------- ----------
Current Assets:
Cash 41,876355 7,999
Notes receivable 6,9396,673 7,118
Accounts receivable:
Customer (less allowance for doubtful
accounts of $2.5 million in 1994 and 1993) 32,90037,412 33,155
Associated companies 5,02212,016 7,342
Other 3,3183,891 3,672
Accrued unbilled revenues 42,12460,997 57,414
Fuel inventory - at average cost 8,9874,542 8,652
Materials and supplies - at average cost 20,89321,664 20,886
Rate deferrals 101,459106,032 96,935
Prepayments and other 8,10214,806 13,763
---------- ----------
Total 271,620268,388 256,936
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 479,043451,204 504,428
Notes receivable 8,3096,767 9,951
Other 32,92829,741 20,931
---------- ----------
Total 520,280487,712 535,310
---------- ----------
TOTAL $1,726,947$1,703,900 $1,676,737
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
15,000,000 shares; issued and outstanding
8,666,357 shares in 1994 and 1993 $199,326 $199,326
Capital stock expense and other (1,762) (1,864)
Retained earnings 235,921251,472 236,337
---------- ----------
Total common shareholder's equity 433,485449,036 433,799
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 38,770 46,770
Long-term debt 476,194494,451 516,156
---------- ----------
Total 1,006,3301,040,138 1,054,606
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 654622 686
Other 8,93510,720 6,231
---------- ----------
Total 9,58911,342 6,917
---------- ----------
Current Liabilities:
Currently maturing long-term debt 88,25040,015 48,250
Notes payablepayable:
Associated companies 30,922 11,568
Other 30,000 - associated companies 71,589 11,568
Accounts payable:
Associated companies 35,27234,714 29,181
Other 23,85519,991 12,157
Customer deposits 21,68721,898 21,474
Taxes accrued 10,10624,013 24,252
Accumulated deferred income taxes 43,09945,237 41,758
Interest accrued 16,21518,954 23,171
Dividends declared 1,9551,797 1,985
Obligations under capital leases 148140 156
Other 15,90014,097 17,147
---------- ----------
Total 328,076281,778 231,099
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 310,783301,620 311,616
Accumulated deferred investment tax credits 36,73436,276 37,193
SFAS 109 regulatory liability - net 23,46622,988 23,626
Other 11,9699,758 11,680
---------- ----------
Total 382,952370,642 384,115
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,726,947$1,703,900 $1,676,737
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues: $187,417 $179,467Revenues $229,790 $229,506 $417,207 $408,973
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 22,795 9,93341,818 31,416 64,613 41,349
Purchased power 64,322 75,38958,558 71,294 122,880 146,683
Other operation and maintenance 36,573 33,40440,643 38,596 77,216 72,000
Depreciation and amortization 8,706 8,0189,051 7,980 17,757 15,998
Taxes other than income taxes 10,276 10,01110,460 9,823 20,736 19,834
Income taxes 1,225 99010,628 14,337 11,853 15,327
Amortization of rate deferrals 24,805 17,58824,804 17,589 49,609 35,177
-------- -------- -------- --------
Total 168,702 155,333195,962 191,035 364,664 346,368
-------- -------- -------- --------
Operating Income 18,715 24,13433,828 38,471 52,543 62,605
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 576 169445 226 1,021 395
Miscellaneous - net 94 502158 53 252 555
Income taxes (36) (187)(61) (20) (97) (207)
-------- -------- -------- --------
Total 634 484542 259 1,176 743
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 12,037 13,92211,159 12,799 23,196 26,721
Other interest - net 1,430 7411,844 753 3,274 1,494
Allowance for borrowed funds used
during construction (367) (121)(286) (161) (653) (282)
-------- -------- -------- --------
Total 13,100 14,54212,717 13,391 25,817 27,933
-------- -------- -------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 6,249 10,07621,653 25,339 27,902 35,415
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $19,456) - - - 32,706
-------- -------- -------- --------
Net Income 6,249 42,78221,653 25,339 27,902 68,121
Preferred Stock Dividend Requirements
and Other 2,075 2,3951,955 2,374 4,030 4,769
-------- -------- -------- --------
Earnings Applicable to Common Stock $4,174 $40,387$19,698 $22,965 $23,872 $63,352
======== ======== ======== ========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
Operating Activities:
Net income $6,249 $42,782$27,902 $68,121
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (32,706)
Change in rate deferrals 20,861 9,79144,127 19,215
Depreciation and amortization 8,706 8,01817,757 15,998
Deferred income taxes and investment tax credits 673 (2,531)(7,288) (4,878)
Allowance for equity funds used during construction (576) (169)(1,021) (395)
Changes in working capital:
Receivables 18,219 16,686(12,733) (14,370)
Fuel inventory (335) 3494,110 783
Accounts payable 17,789 5,67913,367 10,608
Taxes accrued (14,146) (16,511)(239) (3,217)
Interest accrued (6,956) (7,670)(4,217) 194
Other working capital accounts 4,799 (3,317)(4,002) (11,562)
Other (8,419) 1,688
------- -------(4,311) 4,533
-------- --------
Net cash flow provided by operating activities 46,864 22,089
------- -------73,452 52,324
-------- --------
Investing Activities:
Construction expenditures (58,989) (10,854)(80,224) (23,693)
Allowance for equity funds used during construction 576 169
------- -------1,021 395
-------- --------
Net cash flow used in investing activities (58,413) (10,685)
------- -------(79,203) (23,298)
-------- --------
Financing Activities:
Proceeds from the issuance of generalof:
General and refunding bonds - 125,000
Other long-term debt 15,652 -
Retirement of:
First mortgage bonds - (73,185)
General and refunding bonds -(30,000) (55,000)
Other long-term debt (16,045) (120)
Redemption of preferred stock (8,000) (8,000)
Dividends paid:
Common stock (4,600) (13,000)(8,800) (27,900)
Preferred stock (1,995) (2,427)
Change(4,054) (4,906)
Changes in short-term borrowings 60,02149,354 -
------- --------------- --------
Net cash flow provided by (used in)used in financing activities 45,426 (26,612)
------- -------(1,893) (44,111)
-------- --------
Net increase (decrease)decrease in cash and cash equivalents 33,877 (15,208)(7,644) (15,085)
Cash and cash equivalents at beginning of period 7,999 34,008
------- --------------- --------
Cash and cash equivalents at end of period $41,876 $18,800
======= =======$355 $18,923
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $19,590 $22,211$29,113 $27,356
Income taxes $(1,532) $3,428$8,577 $9,912
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- -----------------------------------------------------------------------------------
(In Millions)
Electric Operating Revenues:
Residential $ 76.1 $ 70.0 $ 6.1 9
Commercial 58.4 53.4 5.0 9
Industrial 44.1 40.0 4.1 10
Governmental 6.6 6.4 0.2 3
------ ------ -----
Total retail 185.2 169.8 15.4 9
Sales for resale 8.1 5.6 2.5 45
Other (5.9) 4.1 (10.0) (244)
------ ------ -----
Total $187.4 $179.5 $ 7.9 4
====== ====== =====
Billed Electric Energy
Sales (Millions of KWH):
Residential 976 890 86 10
Commercial 683 624 59 9
Industrial 692 623 69 11
Governmental 77 74 3 4
------ ------ -----
Total retail 2,428 2,211 217 10
Sales for resale 132 51 81 159
------ ------ -----
Total 2,560 2,262 298 13
====== ====== =====
MISSISSIPPI POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 75.0 $ 70.2 $ 4.8 7
Commercial 61.9 57.5 4.4 8
Industrial 45.0 42.3 2.7 6
Governmental 7.3 6.8 0.5 7
--------- --------- -------
Total retail 189.2 176.8 12.4 7
Sales for resale 15.5 12.9 2.6 20
Other 25.1 39.8 (14.7) (37)
--------- --------- -------
Total $ 229.8 $ 229.5 $ 0.3 -
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 869 773 96 12
Commercial 749 656 93 14
Industrial 713 651 62 10
Governmental 87 77 10 13
--------- --------- -------
Total retail 2,418 2,157 261 12
Sales for resale 441 315 126 40
--------- --------- -------
Total 2,859 2,472 387 16
========= ========= =======
Six Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 151.1 $ 140.2 $ 10.9 8
Commercial 120.3 110.9 9.4 8
Industrial 89.1 82.3 6.8 8
Governmental 13.9 13.2 0.7 5
--------- --------- -------
Total retail 374.4 346.6 27.8 8
Sales for resale 23.6 18.5 5.1 28
Other 19.2 43.9 (24.7) (56)
--------- --------- -------
Total $ 417.2 $ 409.0 $ 8.2 2
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,845 1,663 182 11
Commercial 1,432 1,280 152 12
Industrial 1,405 1,274 131 10
Governmental 164 151 13 9
--------- --------- -------
Total retail 4,846 4,368 478 11
Sales for resale 573 366 207 57
--------- --------- -------
Total 5,419 4,734 685 14
========= ========= =======
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
ASSETS
Utility Plant:
Electric $478,873$478,120 $476,976
Natural gas 114,902114,853 113,666
Construction work in progress 17,72622,750 15,205
-------- --------
Total 611,501615,723 605,847
Less - accumulated depreciation and amortization 334,716338,172 330,268
-------- --------
Utility plant - net 276,785277,551 275,579
-------- --------
Other Investments:
Investment in subsidiary company - at equity 3,259 3,259
-------- --------
Current Assets:
Cash and cash equivalents:
Cash 2,5978,224 1,176
Temporary cash investments - at cost,
which approximates market:
Associated companies 27,76417,522 10,034
Other 31,97229,996 32,107
-------- --------
Total cash and cash equivalents 62,33355,742 43,317
Accounts receivable:
Customer (less allowance for doubtful
accounts of $0.8 million in 1994 and 1993) 31,20330,965 35,801
Associated companies 1,1661,104 1,378
Other 774872 876
Accrued unbilled revenues 15,49221,915 19,643
Deferred electric fuel and resale gas costs 1,1413,862 6,323
Accumulated deferred income taxes 492 -
Materials and supplies - at average cost 9,2039,941 11,885
Rate deferrals 26,06827,678 24,587
Prepayments and other 10,7328,991 2,994
-------- --------
Total 158,112161,562 146,804
-------- --------
Deferred Debits and Other Assets:
Rate deferrals 197,706190,720 204,190
SFAS 109 regulatory asset - net 9,1649,699 9,004
Other 9,3499,638 8,769
-------- --------
Total 216,219210,057 221,963
-------- --------
TOTAL $654,375$652,429 $647,605
======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares in 1994 and 1993 $33,744 $33,744
Paid-in capital 36,201 36,156
Retained earnings subsequent to the elimination
of the accumulated deficit of $13.9 million on
November 30, 1988 101,911113,948 100,556
-------- --------
Total common shareholder's equity 171,856183,893 170,456
Preferred stock:
Without sinking fund 19,780 19,780
With sinking fund 3,450 4,950
Long-term debt 179,124164,136 188,312
-------- --------
Total 374,210371,259 383,498
-------- --------
Other Noncurrent Liabilities:
Accumulated provision for losses 18,022 18,022
Other 5,5616,716 3,351
-------- --------
Total 23,58324,738 21,373
-------- --------
Current Liabilities:
Currently maturing long-term debt 24,200 15,000
Accounts payable:
Associated companies 18,63517,998 23,080
Other 19,69723,292 22,011
Customer deposits 16,97816,987 16,617
Accumulated deferred income taxes 3,880- 4,968
Taxes accrued 11,01812,334 5,161
Interest accrued 4,7544,793 5,472
Dividends declared 374 432
Other 16,17416,337 6,935
-------- --------
Total 115,710116,315 99,676
-------- --------
Deferred Credits:
Accumulated deferred income taxes 102,265100,707 105,096
Accumulated deferred investment tax credits 11,40611,220 11,592
Other 27,20128,190 26,370
-------- --------
Total 140,872140,117 143,058
-------- --------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $654,375$652,429 $647,605
======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues:
Electric $78,855 $79,419$107,617 $101,565 $186,472 $180,984
Natural gas 38,233 29,14716,785 18,617 55,018 47,764
-------- -------- -------- --------
Total 117,088 108,566124,402 120,182 241,490 228,748
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses
and gas purchased for resale 33,915 26,13326,044 20,676 59,959 46,809
Purchased power 37,732 37,01335,209 39,450 72,941 76,463
Other operation and maintenance 19,671 21,97120,289 20,596 39,960 42,567
Depreciation and amortization 4,710 4,2924,743 4,303 9,453 8,594
Taxes other than income taxes 7,054 6,2706,877 6,738 13,931 13,008
Income taxes 619 1,1017,555 7,025 8,174 8,127
Rate deferrals:
Rate deferrals - (1,313)(313) - (1,626)
Amortization of rate deferrals 6,928 4,2715,805 3,918 12,733 8,189
-------- -------- -------- --------
Total 110,629 99,738106,522 102,393 217,151 202,131
-------- -------- -------- --------
Operating Income 6,459 8,82817,880 17,789 24,339 26,617
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 113 -124 34 237 34
Miscellaneous - net 510 378474 760 984 1,138
Income taxes (525) 192(184) (176) (709) 16
-------- -------- -------- --------
Total 98 570414 618 512 1,188
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 4,369 5,0444,095 5,358 8,464 10,402
Other interest - net 459 374479 366 938 740
Allowance for borrowed funds used
during construction (84) (2)(92) (31) (176) (33)
-------- -------- -------- --------
Total 4,744 5,4164,482 5,693 9,226 11,109
-------- -------- -------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 1,813 3,98213,812 12,714 15,625 16,696
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $6,592) - - - 10,948
-------- -------- -------- --------
Net Income 1,813 14,93013,812 12,714 15,625 27,644
Preferred Stock Dividend Requirements 375 432 833 903
and Other
458 471-------- -------- -------- --------
Earnings Applicable to Common Stock $ 1,355 $14,459$13,437 $12,282 $14,792 $26,741
======== ======== ======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
------- -------
(In Thousands)
Operating Activities:
Net income $1,813 $14,930$15,625 $27,644
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (10,948)
Change in rate deferrals 5,003 2,05610,379 5,461
Depreciation and amortization 4,710 4,2929,453 8,594
Deferred income taxes and investment tax credits (4,254) (1,384)(10,899) (1,157)
Allowance for equity funds used during construction (113)(237) (34)
Net pension expense - 2,204
Changes in working capital:
Receivables 9,063 2,4832,842 884
Accounts payable (6,759) (3,521)(3,801) (8,944)
Taxes accrued 5,857 2,9097,173 (706)
Interest accrued (718) 471(679) (522)
Other working capital accounts 9,726 (4,746)8,180 (8,611)
Other 2,180 1,097
------- -------3,752 628
-------- --------
Net cash flow provided by operating activities 26,508 7,639
------- -------41,788 14,493
-------- --------
Investing Activities:
Construction expenditures (5,634) (3,779)(10,855) (8,644)
Allowance for equity funds used during construction 113 -
------- -------237 34
-------- --------
Net cash flow used in investing activities (5,521) (3,779)
------- -------(10,618) (8,610)
-------- --------
Financing Activities:
Proceeds from the issuance of general
and refunding bonds - 70,000
Retirement of general and refunding bonds - (29,400)(15,000) (44,400)
Redemption of preferred stock (1,500) (1,500)
Dividends paid:
Common stock (1,400) (6,100)
Preferred stock dividend payments (471) (490)
------- -------(845) (961)
-------- --------
Net cash flow provided by (used in) financing activities (1,971) 38,610
------- -------(18,745) 17,039
-------- --------
Net increase in cash and cash equivalents 19,016 42,47012,425 22,922
Cash and cash equivalents at beginning of period 43,317 46,070
------- --------------- --------
Cash and cash equivalents at end of period $62,333 $88,540
======= =======$55,742 $68,992
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $5,244 $4,820$9,663 $11,407
Income taxes - $2,386$12,671 $8,236
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
SELECTED OPERATING RESULTS
For the Three Months Ended March 31, 1994 and 1993
(Unaudited)
Increase/
Description 1994 1993 (Decrease) %
- ----------------------------------------------------------------------------------
(In Millions)
Electric operating Revenues:
Residential $ 28.0 $ 24.6 $ 3.4 14
Commercial 39.0 36.5 2.5 7
Industrial 6.3 5.8 0.5 9
Governmental 13.9 13.4 0.5 4
------ ------ ------
Total retail 87.2 80.3 6.9 9
Sales for resale 1.4 2.5 (1.1) (44)
Other (9.7) (3.4) (6.3)(185)
------ ------ ------
Total $ 78.9 $ 79.4 $ (0.5) (1)
====== ====== ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 367 327 40 12
Commercial 457 437 20 5
Industrial 119 110 9 8
Governmental 210 202 8 4
------ ------ ------
Total retail 1,153 1,076 77 7
Sales for resale 29 81 (52) (64)
------ ------ ------
Total 1,182 1,157 25 2
====== ====== ======
NEW ORLEANS PUBLIC SERVICE INC.
SELECTED OPERATING RESULTS
For the Three and Six Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 33.6 $ 29.4 $ 4.2 14
Commercial 41.1 38.3 2.8 7
Industrial 6.8 6.2 0.6 10
Governmental 15.1 14.0 1.1 8
--------- --------- -------
Total retail 96.6 87.9 8.7 10
Sales for resale 3.1 3.3 (0.2) (6)
Other 7.9 10.4 (2.5) (24)
--------- --------- -------
Total $ 107.6 $ 101.6 $ 6.0 6
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 433 387 46 12
Commercial 498 469 29 6
Industrial 135 127 8 6
Governmental 234 218 16 7
--------- --------- -------
Total retail 1,300 1,201 99 8
Sales for resale 101 104 (3) (3)
--------- --------- -------
Total 1,401 1,305 96 7
========= ========= =======
Six Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 61.6 $ 54.0 $ 7.6 14
Commercial 80.1 74.8 5.3 7
Industrial 13.1 12.0 1.1 9
Governmental 29.0 27.4 1.6 6
--------- --------- -------
Total retail 183.8 168.2 15.6 9
Sales for resale 4.5 5.8 (1.3) (22)
Other (1.8) 7.0 (8.8) (126)
--------- --------- -------
Total $ 186.5 $ 181.0 $ 5.5 3
========= ========= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 800 714 86 12
Commercial 955 906 49 5
Industrial 254 237 17 7
Governmental 445 420 25 6
--------- --------- -------
Total retail 2,454 2,277 177 8
Sales for resale 130 185 (55) (30)
--------- --------- -------
Total 2,584 2,462 122 5
========= ========= =======
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
ASSETS
Utility Plant:
Electric $3,027,642$3,027,236 $3,027,537
Electric plant under lease 438,411438,136 437,941
Construction work in progress 42,66543,941 41,442
Nuclear fuel under capital lease 71,05563,899 79,625
---------- ----------
Total 3,579,7733,573,212 3,586,545
Less - accumulated depreciation 694,415718,198 669,666
---------- ----------
Utility plant - net 2,885,3582,855,014 2,916,879
---------- ----------
Other Investments:
Decommissioning trust fund 27,73628,734 24,787
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 10,783- 2,424
Temporary cash investments - at cost,
which approximates market:
Associated companies 61,07865,563 46,601
Other 70,336112,244 147,107
---------- ----------
Total cash and cash equivalents 142,197177,807 196,132
Accounts receivable:
Associated companies 63,07770,458 57,216
Other 2,7523,908 2,057
Materials and supplies - at average cost 70,29671,982 69,765
Recoverable income taxes 64,60060,000 63,400
Prepayments and other 7,8936,228 4,835
---------- ----------
Total 350,815390,383 393,405
---------- ----------
Deferred Debits and Other Assets:
Recoverable income taxes 9,3565,741 29,289
SFAS 109 regulatory asset - net 385,098385,844 384,317
Unamortized loss on reacquired debt 57,27956,718 17,258
Other 127,219130,589 125,131
---------- ----------
Total 578,952578,892 555,995
---------- ----------
TOTAL $3,842,861$3,853,023 $3,891,066
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
March 31,June 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
---------- ----------
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares in 1994 and 1993 $789,350 $789,350
Paid-in capital 7 7
Retained earnings 192,323196,036 228,574
---------- ----------
Total common shareholder's equity 981,680985,393 1,017,931
Long-term debt 1,512,2981,542,648 1,511,914
---------- ----------
Total 2,493,9782,528,041 2,529,845
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 16,1098,898 24,679
Other 18,22918,375 18,229
---------- ----------
Total 34,33827,273 42,908
---------- ----------
Current Liabilities:
Currently maturing long-term debt 230,000200,000 230,000
Accounts payable:
Associated companies 1,5579,587 1,928
Other 20,48123,781 18,223
Taxes accrued 7,27410,032 20,952
Interest accrued 47,17842,352 48,929
Obligations under capital leases 55,000 55,000
Other 2,5281,136 2,805
---------- ----------
Total 364,018341,888 377,837
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 779,171782,702 775,630
Accumulated deferred investment tax credits 112,980112,111 113,849
Other 58,37661,008 50,997
---------- ----------
Total 950,527955,821 940,476
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,842,861$3,853,023 $3,891,066
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
Three Months Ended Six Months Ended
1994 1993 -------- --------1994 1993
(In Thousands)
Operating Revenues: $147,847 $164,630Revenues $151,219 $153,527 $299,066 $318,157
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 11,987 15,113
Nuclear refueling outage expenses - 4712,234 15,229 24,221 30,342
Other operation and maintenance 21,540 21,05025,951 26,258 47,491 47,355
Depreciation and decommissioning 22,969 22,67622,998 22,742 45,967 45,418
Taxes other than income taxes 6,873 6,2196,645 6,661 13,518 12,880
Income taxes 20,136 23,19417,612 17,098 37,748 40,292
-------- -------- -------- --------
Total 83,505 88,29985,440 87,988 168,945 176,287
-------- -------- -------- --------
Operating Income 64,342 76,33165,779 65,539 130,121 141,870
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 322 101312 160 634 261
Miscellaneous - net 1,837 1,6661,517 1,678 2,616 3,046
Income taxes (1,720) 1,337681 953 (1,039) 2,290
-------- -------- -------- --------
Total 439 3,1042,510 2,791 2,211 5,597
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 41,177 46,36240,697 46,034 81,874 92,396
Other interest - net 2,435 1,3832,760 1,121 4,457 2,206
Allowance for borrowed funds used
during construction (380) (92)(93) (760) (185)
-------- -------- -------- --------
Total 43,232 47,65343,077 47,062 85,571 94,417
-------- -------- -------- --------
Net Income $21,549 $31,782$25,212 $21,268 $46,761 $53,050
======== ======== ======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the ThreeSix Months Ended March 31,June 30, 1994 and 1993
(Unaudited)
1994 1993
-------- --------
(In Thousands)
Operating Activities:
Net income $21,549 $31,782$46,761 $53,050
Noncash items included in net income:
Depreciation and decommissioning 22,969 22,67645,967 45,418
Deferred income taxes and investment tax credits 5,705 5,9468,689 8,763
Allowance for equity funds used during construction (322) (101)(634) (261)
Amortization of debt discount 1,685 1,1063,424 2,229
Changes in working capital:
Receivables (6,556) 4,540(15,093) 6,063
Accounts payable 1,887 (7,554)13,217 (6,609)
Taxes accrued (13,678) (9,856)(10,920) 3,480
Interest accrued (1,751) 1,167(6,577) (265)
Other working capital accounts (3,866) (5,039)(5,279) (3,513)
Recoverable income taxes 18,733 14,66326,948 26,204
Decommissioning trust contributions (1,241) (1,511)(2,503) (2,445)
Other 8,285 (384)8,867 13,788
-------- --------
Net cash flow provided by operating activities 53,399 57,435112,867 145,902
-------- --------
Investing Activities:
Construction expenditures (2,254) (1,850)(4,280) (5,311)
Allowance for equity funds used during construction 322 101634 261
Nuclear fuel purchases (54) -
-------- --------
Net cash flow used in investing activities (1,932) (1,749)(3,700) (5,050)
-------- --------
Financing Activities:
Proceeds from the issuance of first mortgage bonds 59,410 60,000
Retirement of first mortgage bonds (60,000) (60,000)
Premium and expenses paid on refinancing sale/leaseback bonds (47,602) -
Common stock dividend payments (57,800) (32,000)dividends paid (79,300) (63,800)
-------- --------
Net cash flow used in financing activities (105,402) (32,000)(127,492) (63,800)
-------- --------
Net increase (decrease) in cash and cash equivalents (53,935) 23,686(18,325) 77,052
Cash and cash equivalents at beginning of period 196,132 181,795
-------- --------
Cash and cash equivalents at end of period $142,197 $205,481$177,807 $258,847
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $42,561 $46,578$88,723 $92,638
Income taxes $(3,278) $(4,388)(refund) $4,730 ($6,741)
Noncash investing and financing activities:
Excess of fair value of decommissioning trust $291 -
assets over amount invested $938 -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend
Entergy Corporation and GSU
GSU has significant business relationships with Cajun Electric
Power Cooperative, Inc. (Cajun), including co-ownership of River
Bend and Big Cajun 2 Unit 3. GSU and Cajun own 70% and 30% of
River Bend, respectively, while Big Cajun 2 Unit 3 is owned 42%
and 58% by GSU and Cajun, respectively. GSU operates River Bend,
and Cajun operates Big Cajun 2 Unit 3.
In June 1989, Cajun filed a civil action against GSU in the U.
S. District Court for the Middle District of Louisiana. Cajun
stated in its complaint that the object of the suit is to annul,
rescind, terminate, and/or dissolve the Joint Ownership
Participation and Operating Agreement entered into on August 28,
1979 (Operating Agreement) relating to River Bend. Cajun alleges
fraud and error by GSU, breach of its fiduciary duties owed to
Cajun, and/or GSU's repudiation, renunciation, abandonment, or
dissolution of its core obligations under the Operating
Agreement, as well as the lack or failure of cause and/or
consideration for Cajun's performance under the Operating
Agreement. The suit seeks to recover Cajun's alleged $1.6
billion investment in the unit as damages, plus attorneys' fees,
interest, and costs. Two member cooperatives of Cajun have
brought an independent action to declare the River Bend Operating Agreement
void, based upon failure to get prior LPSC approval alleged to be
necessary. GSU believes the suits are without merit and is
contesting them vigorously.
A trial without jury began on April 12, 1994, on the portion of the suit by Cajun to
rescind the Operating Agreement began on April 12, 1994, and is
continuing. No assurance can be given as to the outcome of this
litigation. If GSU were ultimately unsuccessful in this
litigation and were required to make substantial payments, GSU
would probably be unable to make such payments and would probably
have to seek relief from its creditors under the Bankruptcy Code.
If GSU prevails in this litigation, no assurance can be provided
that Cajun's weak financial condition will allow funding of all
required costs of Cajun's ownership in River Bend.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies in connection with the
Merger, including any charge resulting from an adverse resolution
in the Cajun - River Bend litigation.
In July 1992, Cajun notified GSU that it would fund a limited
amount of costs related to the fourth refueling outage at River
Bend, completed in September 1992. Cajun has also not funded its
share of the costs associated with certain additional repairs and
improvements at River Bend completed during thethat refueling
outage. GSU has paid the costs associated with such repairs and
improvements without waiving any rights against Cajun. GSU
believes that Cajun is obligated to pay its share of such costs
under the terms of the applicable contract. Cajun has filed a
suit seeking a declaration that it does not owe such funds and
seeking injunctive relief against GSU. GSU is contesting such
suit and is reviewing its available legal remedies.suit.
In September 1992, GSU received a letter from Cajun alleging
that the operating and maintenance costs for River Bend are "far
in excess of industry averages" and that "it would be imprudent
for Cajun to fund these excessive costs." Cajun further stated
that until it is satisfied it would fund a maximum of $700,000
per week under protest forduring the remainder of 1992. In a
December 1992 letter, Cajun stated that it would also withhold
costs associated with certain additional repairs, the majority of
which the majority
will bewere incurred during athe fifth refueling outage that began April 15,completed
in July 1994. GSU believes that Cajun's allegations are without
merit and is considering its legal and other remedies available
with respect to the underpayments by Cajun. The total resulting
from Cajun's failure to fund repair projects, Cajun's funding
limitation on the fourth refueling outage,outages, and the weekly funding
limitation by Cajun was $36.7$37 million as of March 31,June 30, 1994, compared
with a $33.3 million unfunded balance as of December 31, 1993. These amounts are
reflected in long-term receivables.
GSU has been informed that Cajun has had serious financial
problems including the recent finding of imprudence by the LPSC
on Cajun's participation in the River Bend nuclear project.
During 1994, and for the next several years, it is expected that
Cajun's share of River Bend-related costs will be in the range of
$60 million to $70 million per year. Cajun's weak financial
condition could have a material adverse effect on GSU, including
a possible NRC action with respect to the operation of River Bend
and a need to bear additional costs associated with the co-owned
facilities. If GSU is required to fund Cajun's share of costs,
there can be no assurance that such payments will be recovered.
Cajun's weak financial condition could also affect the ultimate
collectibility of amounts owed to GSU, including any amounts
awarded in litigation.
Cajun - Transmission Service
Entergy Corporation and GSU
GSU and Cajun are parties to FERC proceedings related to
transmission service charge disputes. In April 1992, FERC issued
a final order. In May 1992, GSU and Cajun filed motions for
rehearings which are pending consideration by FERC. In June
1992, GSU filed a petition for review in the United States Court
of Appeals regarding certain of the issues decided by FERC. In
August 1993, the United States Court of Appeals rendered an
opinion reversing the FERC order regarding the portion of such
disputes relating to the calculations of certain credits and
equalization charges under GSU's service schedules with Cajun.
The opinion remanded the issues to FERC for further proceedings
consistent with its opinion. In January 1994, FERC denied GSU's
request to collect a surcharge while FERC considers the court's
remand.remand, which GSU has appealed.
GSU interprets the FERC order and the courtUnited States Court of
appeals'Appeals' decision to mean that Cajun would owe GSU approximately
$86$90 million as of March 31,June 30, 1994. GSU further estimates that if
it prevails in its May 1992 motion for rehearing, Cajun would owe
GSU approximately $119$125 million as of March 31,June 30, 1994. If Cajun
were to prevail in its May 1992 motion for rehearing to FERC, and
if GSU were not to prevail in its May 1992 motion for rehearing
to FERC, and if FERC does not implement the court's remand as GSU
contends is required, GSU estimates it would owe Cajun ap
proximately $77$81 million as of March 31,June 30, 1994. The above amounts
are exclusive of a $7.3 million payment by Cajun on December 31,
1990, which the parties agreed to apply to the disputed
transmission service charges. GSU and Cajun further agreed that
their positions at FERC would remain unaffected by the $7.3
million.million payment. Pending FERC's ruling on the May 1992 motions
for rehearing, GSU has continued to bill Cajun utilizing the
historical billing methodology and has booked underpaid
transmission charges, including interest, in the amount of $145.8$151
million as of March 31,June 30, 1994. This amount is reflected in long-
term receivables and in other deferred credits, with no effect on
net income.
Financial Condition
GSU
Although GSU received partial rate relief relating to River
Bend, GSU's financial position was strained from 1986 to 1990 by
its inability to earn a return on and fully recover its
investment and other costs associated with River Bend. GSU's
financial position has continued to improve; however, issues to
be finally resolved in PUCT rate proceedings and appeals thereof,
as discussed in Note 2, combined with the application of
accounting standards, may result in substantial write-offs and
charges that could result in substantial net losses being
reported in 1994, and subsequent periods, with resulting
substantial adverse adjustments to common shareholder's equity.
Future earnings will continue to be adversely affected by the
lack of full recovery and return on the investment and other
costs associated with River Bend.
Capital Requirements and Financing
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Construction expenditures (excluding nuclear fuel) for the
years 1994, 1995, and 1996, and long-term debt and preferred
stock maturities and cash sinking fund requirements for the
period 1994-1996, are estimated to total (in millions):
Long-term Debt and
Construction Expenditures Preferred Stock
Maturities and Cash
Sinking Fund
Construction Expenditures
Requirements
1994 1995 1996 1994-1996
Entergy $629 $560 $550 $1,413$1,415
AP&L $181 $172 $175 $ 83$112
GSU $140 $128 $119 $ 215$215
LP&L $134 $143 $142 $ 162$165
MP&L $130 $ 63 $ 63 $ 228$63 $63 $228
NOPSI $ 25 $ 26 $ 26$25 $26 $26 $ 81
$ 18 $ 22 $ 23 $ 645System Energy $18 $22 $23 $615
The System plans to meet the above requirements with
internally generated funds, including collections under the
System operating companies' rate phase-in plans, and cash on
hand, supplemented by the issuance of long-term debt and
preferred stock. See pages 130-131, 205-206, 240-241, 271-272,
and 301 of the Form 10-K and Notes 34 and 45 for information on the
possible issuance of preferred stock, common stock, and long-term
debt, and the possible retirement, redemption, purchase, or other
acquisition of outstanding securities by the System operating
companies and System Energy.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
Entergy Corporation, AP&L, GSU, LP&L, and System Energy
See pages 96-97, 133-134, 174-175, 208, and 304 of the
Form 10-K for information on nuclear liability, property and
replacement power insurance, and related NRC regulations.
See pages 97-98, 134, 175, 208-209, and 304-305 of the Form
10-K for information on the disposal of spent nuclear fuel, other
high-level radioactive waste, and decommissioning costs
associated with ANO, River Bend, Waterford 3, and Grand Gulf 1.
Decommissioning costs for ANO, and Waterford 3, are currently
estimatedand Grand Gulf 1 have
been recently revised to be approximately $806.3 million, (based on a recent
interim update to the 1992 update of the original cost study) and
$320.1
million, (based on a recently completed 1993 update to the
original cost study),and $365.9 million, respectively. In March 1994, AP&L
filed with the APSC thisan interim update of the ANO cost study,
which reflected significant increases in costs of low-level
radioactive waste disposal. AP&L expects to include the updated
costs in thean annual decommissioning cost rate rider filing withto be
submitted for approval to the APSC during the fourth quarter of
1994. As of January 1994, LP&L began funding $4.8 million
annually to fund the increased estimated costs for
decommissioning Waterford 3. LP&L plans to file its recently
revised cost study in connection with the LPSC's investigation of
LP&L's rates (see Note 2).
ANO Matters
Entergy Corporation and AP&L
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations, and additional repairs were
made. Entergy Operations operated ANO 2 with no further steam
generator inspections until the refueling outage whichthat was
completed on April 23, 1994. Inspections during the outage
revealed additional cracks,cracks; however, most were smaller than those
seen in earlier inspections, except for one relatively large
crack. Based upon results of these inspections and an
inconclusive pressure test, Entergy Operations plans to inspect
the steam generator tubes during a mid-cycle outage tentatively
scheduled for January 1995. The operations and power output of
the unit have not been materially adversely affected.
Environmental Issues
GSU
GSU has been notified by the U. S. Environmental Protection
Agency (EPA) that it has been designated as a potentially
responsible party for the cleanup of sites on which GSU and
others have or have been alleged to have disposed of material
designated as hazardous waste. GSU is currently negotiating with
the EPA and state authorities regarding the cleanup of some of
these sites. Several class action and other suits have been
filed in state and federal courts seeking relief from GSU and
others for damages caused by the disposal of hazardous waste and
for asbestos-related disease allegedly resultedresulting from exposure on
GSU premises. While the amounts at issue in the cleanup efforts
and suits may be substantial, GSU believes that its results of
operations and financial condition will not be materially
affected by the outcome of the suits.
As of March 31,June 30, 1994, GSU has accrued cumulative amounts
related to the cleanup of six sites at which GSU has been
designated a potentially responsible party, totaling $25.2
million since 1990. Through March 31,June 30, 1994, GSU has expensed $7.4$7.1
million cumulatively on the cleanup, resulting in a remaining
liability of $17.8$18.1 million as of March 31,June 30, 1994.
Waterford 3 Lease Obligations
LP&L
In September 1989, LP&L entered into three substantially
identical, but entirely separate, transactions for the sale and
leaseback of three undivided portions (aggregating approximately
9.3%) of its 100% ownership interest in Waterford 3. See pages
210-211 of the Form 10-K and Note 45 below for information.
Upon the occurrence of certain events, LP&L may be obligated
to pay amounts sufficient to permit the Owner Participants to
withdraw from the lease transactions, and LP&L 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. These events include failure, at specified dates,
to maintain equity capital of at least 30% of adjusted
capitalization and a fixed charge coverage ratio of at least
1.50. As of March 31,June 30, 1994, LP&L's total equity capital
(including preferred stock) was 48.62%49.32% of adjusted
capitalization, and its fixed charge coverage ratio was 3.27.3.30.
Reimbursement Agreement
System Energy
Under the provisions of the Reimbursement Agreement, as
amended, and letters of credit related to the Grand Gulf 1 sale
and leaseback transactions, System Energy has agreed to a number
of covenants relating to the maintenance of equity at not less
than 33%, and common equity at not less than 29%, of adjusted
capitalization, and a fixed charge coverage ratio of at least
1.60. As of March 31,June 30, 1994, System Energy's equity and common
equity, in each case, approximated 34.03%34% of its adjusted
capitalization, and its fixed charge coverage ratio was 1.86.1.91.
Failure by System Energy to perform its covenants under the
Reimbursement Agreement could give rise to a draw under the
letters of credit and/or an early termination of the letters of
credit. If such letters of credit were not replaced in a timely
manner, a default under System Energy's related leases could
result.
See Note 2, "FERC Audit" belowAudit - Proposed Settlement," for
information on a FERC
order, that,proposed settlement, which, if ultimately
sustained and implemented, couldwould cause System Energy to fall
below the required equity and fixed charge coverage covenant
levels. System Energy has obtained the consent of the banks
(parties to the reimbursement agreement) to waive these
covenants, for the 12-month period beginning with the earlier of
thea write-off or the first refund, if the August 4 Order is implementedsuch write-off or refund
occurs prior to December 31, 1994. System Energy believes the
conditions included in the proposed settlement are covered by the
waiver. The waiver is conditioned upon System Energy not paying
any common stock dividends to Entergy Corporation until the
equity ratio covenant is once again met. If the proposed
settlement had been in effect as of June 30, 1994, System
Energy's common equity would have been approximately 32.52% of
its adjusted capitalization, and its fixed charge coverage ratio
would have been approximately 1.28. System Energy expects that
by the end of the 12 month waiver period, it will be in
compliance with the equity and fixed charge covenants. Also, see
pages 296-297 of the Form 10-K for further information.
System Fuels
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 133, 207, 242-243, 274, and 305 of the Form 10-K
for information on certain commitments and contingencies of
System Fuels, and related commitments and contingencies of AP&L,
LP&L, MP&L, NOPSI, and System Energy, respectively, in connection
with System Fuels' fuel procurement programs.
Other
Entergy Corporation and System Energy
See pages 96 and 302 of the Form 10-K for information on
Entergy Corporation's commitments to System Energy under the
Capital Funds Agreement.
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 302-303 of the Form 10-K for information on System
Energy relating to the Unit Power Sales, Availability, and
Reallocation Agreements. See also pages 132-133, 206-207, 242,
and 273-274 of the Form 10-K for information on commitments and
potential liabilities of AP&L, LP&L, MP&L, and NOPSI,
respectively, relating to these agreements.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend
Entergy Corporation and GSU
In May 1988, the PUCT granted GSU a permanent increase in
annual revenues of $59.9 million resulting from the inclusion in
rate base of approximately $1.6 billion of company-wide River
Bend plant investment and approximately $182 million of related
Texas retail jurisdiction deferred River Bend costs (Allowed
Deferrals). In addition, the PUCT disallowed as imprudent $63.5
million of company-wide River Bend plant costs and placed in
abeyance, with no finding of prudency,prudence, approximately $1.4 billion
of company-wide River Bend plant investment and approximately
$157 million of Texas retail jurisdiction deferred River Bend
operating and carrying costs. The PUCT affirmed that the
ultimate rate treatment of such amounts would be subject to
future demonstration of the prudencyprudence of such costs. GSU and
intervening parties appealed this order (Rate Appeal) and GSU
filed a separate rate case asking that the abeyed River Bend
plant costs be found prudent (Separate Rate Case). Intervening
parties filed suit in a Texas district court to prohibit the
Separate Rate Case. The district court's decision was ultimately
appealed to the Texas Supreme Court, which ruled in 1990 that the
prudence of the purported abeyed costs could not be relitigated
in a separate rate proceeding. The Texas Supreme Court's
decision stated that all issues relating to the merits of the
original PUCT order, including the prudence of all River Bend-
related costs, should be addressed in the Rate Appeal.
In October 1991, the Texas district court in the Rate Appeal
issued an order holding that, while it was clear the PUCT made an
error in assuming it could set aside $1.4 billion of the total
costs of River Bend and consider them in a later proceeding, the
PUCT, nevertheless, found that GSU had not met its burden of
proof related to the amounts placed in abeyance. The court also
ruled that the Allowed Deferrals should not be included in rate
base under a 1991 decision regarding El Paso Electric Company's
similar deferred costs (El Paso Case).costs. The court further stated that the PUCT
had erred in reducing GSU's deferred costs by $1.50 for each
$1.00 of revenue collected under the interim rate increases
authorized in 1987 and 1988. The court remanded the case to the
PUCT with instructions as to the proper handling of the Allowed
Deferrals. GSU's motion for rehearing was denied and, in
December 1991, GSU filed an appeal of the October 1991 district
court order. The PUCT also appealed the October 1991 district
court order, which served to supersede the district court's
judgment, rendering it unenforceable under Texas law.
In August 1992, the court of appeals in the El Paso Case
handed down its second opinion on rehearing modifying its
previous opinion on deferred accounting. The court's second
opinion concluded that the PUCT may lawfully defer operating and
maintenance costs and subsequently include them in rate base, but
that the Public Utility Regulatory Act prohibits such rate base
treatment for deferred carrying costs. The court stated that its
opinion would not preclude the recovery of deferred carrying
costs. The August 1992 court of appeals opinion was appealed to
the Texas Supreme Court where arguments were heard in September
1993. The matter is pending.
In September 1993, the Texas Third District Court of Appeals
(the Appellate Court) remanded the October 1991 district court
decision to the PUCT "to reexamine the record evidence to
whatever extent necessary to render a final order supported by
substantial evidence and not inconsistent with our opinion." The
Appellate Court specifically addressed the PUCT's treatment of
certain costs, statingheld that the PUCT's orderfailure to include the
company-wide $1.4 billion of River Bend construction costs in
rate base was not based on substantial evidence. The Appellate
Court also applied its most
recent ruling in the El Paso Case to theheld that GSU's deferred operating and maintenance
costs associated with the allowed portion of River Bend. However,Bend should be
included in rate base, but that its deferred River Bend carrying
costs should not be included in rate base.
In May 1994, the Appellate Court cautionedwithdrew its September 1993
opinion and entered a substitute opinion, changing its earlier
decision concerning the $1.4 billion of abeyed construction costs
and affirming the district court's decision that there was
substantial evidence to support the PUCT's 1988 decision not to
include those costs in GSU's rate base. While acknowledging that
the PUCT had exceeded its authority when it attempted to confinedefer a
decision on the inclusion of those costs in rate base in order to
allow GSU a further opportunity to demonstrate the prudence of
those costs in a subsequent proceeding, the Appellate Court found
that GSU had suffered no harm or lack of due process as a result
of the PUCT's error. Accordingly, the Appellate Court held that
the PUCT's action had the effect of disallowing the company-wide
$1.4 billion of River Bend construction costs for ratemaking
purposes. In its deliberationssubstituted opinion, the Appellate Court
repeated its earlier decision that GSU's deferred operating and
maintenance costs associated with the allowed portion of River
Bend should be included in rate base, but that its deferred River
Bend carrying costs should not be included in rate base. Since
the PUCT had included both carrying costs and operating and
maintenance costs in GSU's rate base, the Appellate Court
remanded the case to the evidence
addressedPUCT on this issue.
The Appellate Court's substituted opinion was entered by two
judges, with a third judge dissenting. The dissenting opinion
states that the result of the majority opinion is, among other
things, to deprive GSU of due process at the PUCT because the
PUCT never reached a finding on the $1.4 billion of construction
costs.
In June 1994, the Texas Supreme Court decided three cases
involving the inclusion of deferred costs in rate base. The
Texas Supreme Court held that there is no distinction between the
originaltreatment of deferred carrying costs and deferred operating and
maintenance costs, and that such costs capitalized pursuant to a
PUCT deferred accounting order may be included in rate case. Certain partiesbase
through a subsequent rate case to the caseextent that they are found
to have indicated their positionbeen prudently and reasonably incurred, that on remand,they are
related to property used and useful in providing service, and
that inclusion of those costs in rate base is necessary to
preserve the PUCT may
change its original order only with respect to matters
specifically discussedutility's financial integrity. This test differs
from the test applied by the Appellate Court which, if allowed,
would increase GSU's allowedin its substituted
opinion, and GSU has asked the Appellate Court to reconsider its
opinion in light of these Texas Supreme Court cases.
GSU has also asked the Appellate Court to reconsider its
substituted opinion as to the $1.4 billion in River Bend
investment, net of
accumulated depreciation and related taxes,construction costs. Barring further review by approximately $47
million as of March 31, 1994.the Appellate
Court, GSU believes that underwill appeal the Appellate Court's decision to the
PUCT would be free to reconsider
any aspect of its order concerning the abeyed $1.4 billion River
Bend investment. GSU has filed a motion for rehearing asking the
AppellateTexas Supreme Court to modify its order so as to permit the PUCT to
take additional evidence on remand. The PUCT and other parties
have also moved for rehearing on various grounds. The Appellate
Court has not yet ruled on any of these motions.both issues.
As of March 31,June 30, 1994, the River Bend plant costs disallowed
for retail ratemaking purposes in Texas, and the River Bend plant
costs held in abeyance, and the related cost deferrals totaled
(net of taxes) approximately $14 million, $298$295 million (both net
of depreciation), and $170 million, respectively. Allowed
Deferrals were approximately $93$92 million, net of taxes and
amortization, as of March 31,June 30, 1994. GSU estimates it has
collected approximately $146$148 million of revenues as of March 31,June 30,
1994, as a result of the originally ordered rate treatment by the
PUCT of these deferred costs. However, if the PUCT adopts the most
recent decision in the El Paso Case, the possible refunds
approximate $28 million as a resultIf recovery of the inclusionAllowed
Deferrals is not upheld, future revenues based upon those allowed
deferrals could also be lost, and no assurance can be given as to
whether or not refunds of deferred
carrying costs in rate base for the period July 1988 through
December 1990. However, if the PUCT reverses its decision to
reduce GSU'srevenue received based upon such
deferred costs by $1.50 for each $1.00 of revenue
collected under the interim rate increases authorized in 1987 and
1988, the potential refund of amounts described above couldpreviously recorded will be reduced by an amount ranging from $7 million to $19 million.required.
No assurance can be given as to the timing or outcome of the
remands or appeals described above. Pending further developments
in these cases, GSU has made no write-offs for the River Bend-
related costs. Management believes, based on advice from Clark,
Thomas & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the case will be remanded to the PUCT, and the PUCT will be
allowed to rule on the prudence of the abeyed River Bend plant
costs. Rate Caps imposed by the PUCT's regulatory approval of
the Merger could result in GSU being unable to use the full
amount of a favorable decision to immediately increase rates;
however, a favorable decision could permit some increases and/or
limit or prevent decreases during the period the Rate Caps are in
effect. At this time, management and legal counsel are unable to
predict the amount, if any, of the abeyed and previously
disallowed River Bend plant costs that ultimately may be
disallowed by the PUCT. A net of tax write-off as of March 31,June 30,
1994, of up to $312$309 million could be required based on an
ultimate adverse ruling by the PUCT's
ultimate ruling.PUCT on the abeyed and disallowed
costs.
In prior proceedings, the PUCT has held that the original
cost of nuclear power plants will be included in rates to the
extent those costs were prudently incurred. Based upon the
PUCT's prior decisions, management believes that its River Bend
construction costs were prudently incurred and that it is
reasonably possible that it will recover in rate base, or
otherwise through means such as a deregulated asset plan, all or
substantially all of the abeyed River Bend plant costs. However,
management also recognizes that it is reasonably possible that
not all of the abeyed River Bend plant costs may ultimately be
recovered.
As part of its direct case in the Separate Rate Case, GSU
filed a cost reconciliation study prepared by Sandlin Associates,
management consultants with expertise in the cost analysis of
nuclear power plants, which supports the reasonableness of the
River Bend costs held in abeyance by the PUCT. This
reconciliation study determined that approximately 82% of the
River Bend cost increase above the amount included by the PUCT in
rate base was a result of changes in federal nuclear safety
requirements and provided other support for the remainder of the
abeyed amounts.
There have been four other rate proceedings in Texas
involving nuclear power plants. Investment in the plants
ultimately disallowed ranged from 0% to 15%. Each case was
unique, and the disallowances in each were made on a case-by-case
basis for different reasons. Appeals of most, if not all, of
these PUCT decisions are currently pending.
The following factors support management's position that a
loss contingency requiring accrual has not occurred, and its
belief that all, or substantially all, of the abeyed plant costs
will ultimately be recovered:
1. The $1.4 billion of abeyed River Bend plant costs have
never been ruled imprudent and disallowed by the PUCT.
2. Sandlin Associates' analysis which supports the prudence
of substantially all of the abeyed construction costs.
3. Historical inclusion by the PUCT of prudent construction
costs in rate base.
4. The analysis of GSU's internal legal staff, which has
considerable experience in Texas rate case litigation.
Additionally, management believes, based on advice from
Clark, Thomas, & Winters, a Professional Corporation, legal
counsel of record in the Rate Appeal, that it is probablereasonably
possible that the Allowed Deferrals will continue to be recovered
in rates. Management also believes, based on advice from Clark,
Thomas, & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the deferred costs related to the $1.4 billion of abeyed River
Bend plant costs will be allowed. However, assumingrecovered in rates to the August
1992 courtextent that
the $1.4 billion of appeals' opinion in the El Paso Case is upheld and
applied to GSU and the deferredabeyed River Bend plant is recovered.
However, a write-off of the $170 million of deferred costs
currently held
in abeyancerelated to the $1.4 billion of abeyed River Bend plant costs
would be required if they are not allowed to be recovered in
rates as allowable
costs, a net of tax write-off of up to $170 million could be
required. In addition, future revenues based upon the deferred
costs previously allowed in rate base could also be lost and no
assurance can be given as to whether or not refunds (up to $28
million as of March 31, 1994) of revenue received based upon such
deferred costs previously recorded will be required.rates.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies, including any River
Bend write-down.
FERC Audit - Proposed Settlement
Entergy Corporation and System Energy
In December 1990, the FERC Division of Audits issued aan audit
report for System Energy for the years 1986 through 1988. The
report recommended among other things, that System Energy (1) write off, and not
recover in rates, approximately $95 million of Grand Gulf 1 costs
included in utility plant related to certain System income tax
allocation procedures alleged to be inconsistent with FERC's
accounting requirements, and (2) compute refunds for the years
1987 to date to correct for resulting overcollections from AP&L,
LP&L, MP&L, and NOPSI.
In August 1992, FERC issued an opinion and order (August 4
Order) which found that System Energy overstated its Grand Gulf 1
utility plant account by approximately $95 million as indicated
in FERC's report. The order required System Energy to make
adjusting accounting entries and refunds, with interest, to AP&L,
LP&L, MP&L, and NOPSI within 90 days from the date of the order.
System Energy filed a request for rehearing, and in October 1992,
FERC issued an order allowing additional time for its
consideration of the request. In addition, it deferred System
Energy's refund obligation until 30 days after FERC issues an
order on rehearing.
Should such refunds and adjusting entries be
necessary,In June 1994, System Energy, estimates that as of March 31, 1994, its
net income would be reduced by approximately $155.3 million.
This amount includes System Energy's potential refund obligation,
which is estimated to be $118.9 million (including interest) as
of March 31, 1994. The ongoing effect of this order, if
implemented, would be to reduce System Energy's revenues by
approximately $21.4 million during the first twelve months
following the write-off and by a comparable amount (but
decreasing by approximately $0.4 million per year) in each
subsequent year.
Assuming AP&L, LP&L, MP&L, and NOPSI
are requiredreached a tentative settlement with the FERC staff and other
parties. The proposed settlement, which is subject to approval
by FERC, would require System Energy to refund or credit
approximately $60 million to AP&L, LP&L, MP&L, and NOPSI, which
would in turn make refunds to their customers all of the System Energy refund (except for those
portions attributable to AP&L's and LP&L's retained share of
Grand Gulf 1 costs), implementation of the
August 4 Order. Additionally, System Energy would result inrefund or
credit a reduction in Entergy's
consolidated net incometotal of approximately $149.1$62 million, asplus interest, to
AP&L, LP&L, MP&L, and NOPSI over the period through July 2004.
The proposed settlement would also require the write-off of
March 31, 1994. However, this reduction could be partially
offset by (1) the write-offcertain related unamortized balances of deferred investment tax
credits by AP&L, LP&L, MP&L, and NOPSINOPSI. Had the proposed
settlement been effective in the second quarter of 1994, it would
have reduced Entergy Corporation's consolidated net income for
the quarter and six months ended June 30, 1994, by approximately
$71.5 million, partially offset by the write-off of the
unamortized balances of correspondingrelated deferred investment tax credits
(approximately $65.3of approximately $66.5 million as of March 31, 1994),($27.3 million for AP&L; $31.5
million for LP&L; $6 million for MP&L; and (2) any
recovery from ratepayers of deferred credits that have been
previously amortized and passed on$1.7 million for
NOPSI). Pursuant to ratepayers (approximately
$26.1 million as of March 31, 1994). The amount of such recovery
would depend on the associated retail rate treatment.
If the August 4 Order is implemented,proposed settlement, System Energy would
needalso reclassify from utility plant to other deferred debits
approximately $81 million of other Grand Gulf 1 costs. Although
excluded from rate base, System Energy would be permitted to
recover such 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 over
the next 10 years. System Energy currently plans to file with
FERC for approval of the proposed settlement in August 1994.
However, there can be no assurance that FERC will ultimately
approve the settlement in its current form.
As a result of the charges associated with the refunds,
System Energy requires the consent of certain banks (parties to
the reimbursement agreements) to temporarily waive the fixed
charge coverage and equity ratio covenants in the letters of
credit and reimbursement agreement related to the Grand Gulf 1
sale and leaseback transaction in order to avoid violation of the
covenants (see "Reimbursement Agreement" above).transaction. System Energy has obtained the
consent of the banks to waive these covenants, for the 12-month
period beginning with the earlier of the write-
offa write-off or the first
refund, if the August 4 Order is implementedsuch refund occurs prior to December 31, 1994. System
Energy believes the conditions included in the proposed
settlement are covered by the waiver. The waiver is conditioned
upon System Energy not paying any common stock dividends to
Entergy Corporation until the equity ratio covenant is once again
met. Absent a waiver, System Energy's failure to perform these
covenants could cause a draw under the letters of credit and/or
early termination of the letters of credit. If the letters of
credit were not replaced in a timely manner, a default or early
termination of System Energy's leases could result.
System Energy believes that its consolidated income tax
accounting procedures and related rate treatment are in
compliance with SEC and FERC requirements and is vigorously
contesting this issue. The ultimate resolution of this matter
cannot be predicted.
Texas Cities Rate Settlement
Entergy Corporation and GSU
In June 1993, 13 cities within GSU's Texas service area
instituted an investigation to determine whether GSU's current
rates were justified. In October 1993, the general counsel of
the PUCT instituted an inquiry into the reasonableness of GSU's
rates. In November 1993, a settlement agreement was filed with
the PUCT which provides for an initial reduction in GSU's annual
retail base revenues in Texas of approximately $22.5 million
effective for electric usage on or after November 1, 1993, and a
second reduction of $20 million to be effective September 1994.
Further,Pursuant to the settlement, provided for GSU to reducereduced rates with a $20 million
one-time bill credit in December 1993, and to refundrefunded approximately
$3 million to Texas retail customers on bills rendered in
December 1993. The PUCT approved the settlement agreement on
July 21, 1994. The cities' rate inquiries had beenwere settled earlier
on the same terms.
While no parties to the PUCT rate inquiry now oppose the
settlement agreement which has been filed in that case, the
settlement agreement is subject to review by the PUCT. The
presiding officer in the PUCT rate inquiry has set a June 8, 1994
hearing to consider the merits of the settlement agreement. The
cities, who are parties to the PUCT rate inquiry, have filed
testimonyFilings with the PUCT expressing their reservations about
certain aspects of the settlement. However, the cities have
announced that those reservations will not cause the cities to
oppose the settlement agreement.and Texas Cities
Entergy Corporation and GSU believes that the PUCT will
ultimately issue an order consistent with the settlement
agreement, but there can be no assurance in this regard.
In March 1994, the Texas Office of Public Utility Counsel
and certain cities served by GSU instituted a second
investigation of the reasonableness of GSU's rates. See Part II, Item 1. "Legal
Proceedings," for additional information.In June
1994, GSU provided the Cities with information GSU believes
supports the current rate level in compliance with their March
1994 investigation. GSU filed the same information with the PUCT
in June 1994, pursuant to provisions of the Merger agreement. In
August 1994, the Cities' consultants issued a report that
indicated GSU's current rates were approximately $40 to $50
million in excess of current requirements. GSU can provide no
assurance as to the ultimate outcome in this matter; however, any
rate reduction could be retroactive to March 31, 1994. A final
determination by the cities that GSU's rates should be reduced
can be appealed by GSU to the PUCT. GSU intends to vigorously
oppose any reductions in current rates.
Louisiana
GSU
Previous rate orders of the LPSC related to the River Bend
phase-in plan have been appealed, and pending resolution of
various appellate proceedings, GSU has made no write-off for the
disallowance of $30.6 million of rate deferrals that GSU recorded
for the period December 16, 1987, through February 18, 1988.
LPSC Investigation
Entergy Corporation, GSU, and LP&L
In response to a preliminary report of the LPSC indicating
that the rates of return on equity of several electric utilities
subject to the LPSC's jurisdiction may be too high, GSU provided
the LPSC with information GSU believes supports the current rate
level. In September 1993, the LPSC deferred review of GSU's base
rates until the first post-Merger earnings analysis is filed in
accordance with the LPSC Merger approval (scheduled for mid-
1994).approval. In May 1994, GSU made
the required first post-Merger earnings analysis filing with the
LPSC, which GSU believes supports the current level of rates.
Recognizing that LP&L was subject to a rate freeze until
March 1994, the LPSC requested LP&L to explain its "relatively
high cost of debt" compared to other electric utilities subject
to LPSC jurisdiction. LP&L responded to this request, and in an
August 1993 report to the LPSC, the LPSC's legal consultants
acknowledged LP&L's rationale for its cost of debt in comparison
to two other utilities subject to the LPSC's jurisdiction. In
October 1993, the LPSC approved a schedule to conduct a review of
LP&L's rates and rate structure upon the expiration of LP&L's
rate freeze. The LPSCDiscovery is currently underway and hearings are
scheduled to reviewbegin in December 1994. In August 1994, LP&L's
rates and&L will
file a cost of service analysis with the LPSC, which LP&L
believes will support its current rate structure in May 1994, which may result in a
further decrease in rates.level.
February 1994 Ice Storm
Entergy Corporation, AP&L, and MP&L
In early February 1994, an ice storm left more than 221,000
Entergy customers without electric power across the System's four-
state service area. The storm was the most severe natural
disaster ever to affect the System, causing damage to
transmission and distribution lines, equipment, poles, and
facilities in certain areas, primarily in Mississippi. Repair
costs are currently estimated to be $107.0$114.6 million, $26.3$27.5
million, and $70.8$78.7 million for the System, AP&L, and MP&L,
respectively with $75.1$83.8 million, $15.4$16.6 million, and $57.5$65.3 million
of these amounts estimated to be capitalized as plant-related
costs. The remaining balances have been charged against the
respective companies' regulatory storm damage reserves, except
for MP&L which recorded a deferred debit. On April 15, 1994,
MP&L filed for rate recovery of the non-plant costs related to
the ice storm. See Part II, Item 1. "Legal Proceedings," for
additional information on this filing. Estimated construction
expenditures (see Note 1) reflect the above amounts. Louisiana Supreme Court Ruling/Refund
GSUOn April
16, 1994, MP&L filed for rate recovery of costs related to the
ice storm. MP&L's filing, as subsequently amended, requested
recovery of the revenue requirement associated with MP&L's ice
storm costs recorded through April 30, 1994. MP&L intends to
make another ice storm rate filing with the MPSC by early 1995 to
recover ice storm costs recorded by MP&L after April 30, 1994.
In 1988, GSUearly August 1994, MP&L and the MPSC's Public Utilities Staff
(MPUS) entered into a joint venturestipulation with Conoco, Inc.,
Citgo Petroleum Corporation, and Vista Chemical Company
(Industrial Participants) whereby GSU's Nelson Units 1 and 2 were
soldrespect to a partnership (NISCO) consistingthe recovery of
ice storm costs recorded through April 30, 1994. Under the
stipulation, which must be approved by the MPSC, MP&L will
implement for five years, beginning in October 1994, an ice storm
rider schedule that will increase rates approximately $8 million
annually. At the end of the Industrial
Participants and GSU. The salefive year period, the revenue
requirement associated with the undepreciated ice storm
capitalized costs will be included in MP&L's base rates to the
extent that this revenue requirement does not result in MP&L's
rate of return on rate base being above the units by GSU to NISCO was
for an amount in excessbenchmark rate of
the units' depreciated cost. The
Industrial Participants are supplying the fuel for the units,
while GSU operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
NISCO representing the excess of NISCO's purchase price of the
units over GSU's depreciated cost of the units. GSU appealed the
1990 order. In March 1994, the Louisiana Supreme Court ruled in
favor of the LPSC, and GSU recorded an estimated refund provision
of $10.1 million, before related income taxes of $4.1 million.
Reserve for Revenue Reductionreturn under MP&L's formula rate plan.
NOPSI Rate Reduction/Credit
Entergy Corporation and NOPSI
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review byOn July 7, 1994, NOPSI and the Council's advisors of NOPSI's returnCouncil agreed that, based on
equity for the twelve month periodtest year ended September 30, 1993, indicates thatNOPSI's earnings exceeded
its revenue requirement by $24.95 million and in accordance with
the terms of the 1991 NOPSI maySettlement and a 1992 gas rate
settlement, there would be required to credit $21.5 million to
its customers. In early May 1994, NOPSI determined it was likely
thata prospective base rate reduction for
twelve months commencing July 14, 1994. The reduction, because
of the rate freeze, will be accomplished by means of a credit (to
be expressed on a per kwh basis) to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reductioncustomers' bills. The per
kilowatt hour credit will be approximately $14.3 million.calculated by dividing test year
overearnings by test year kwh consumption and applied to kilowatt
hour usage during the period ending July 13, 1995. In the first
quarter of 1994, NOPSI recorded a $14.3 million reserve for thisthe
anticipated revenue reduction, which reduced net income by $8.8
million (net of taxes)tax). The reserve will be reduced by the actual
credits prospectively applied to customers bills in accordance
with the terms of the July 7, 1994 agreement.
Management believes that any rate investigation by the
Council is expectedin accordance with the 1991 settlement agreement and a
1992 gas rate settlement which may propose a base rate reduction
to orderbe in effect after the expiration of the rate freeze should
reflect, as an offset, any rate reduction credit then in effect
as a hearingresult of overearnings during the rate freeze period. NOPSI
can provide no assurance as to the level of return on common
equity that will be achieved from operations, nor the amount of
rate reduction/credit, if any, prior to or after the end of the
rate freeze. NOPSI's earnings for the nine months ended June 30,
1994, are comparable to the earnings by NOPSI for the same period
included in the second quarter of 1994 to render a
final decision on the actual amount, method, and timing of the
credit.test year ended September 30, 1993.
LPSC Fuel Cost Review
GSU
In November 1993, the LPSC ordered a review of GSU's fuel
costs. The LPSC stated that fuel costs for the period October
1988 through September 1991 (Phase 1) would be reviewed based on
the number of outages at River Bend and the findings in the June
1993 PUCT fuel reconciliation case. Hearings beganIn July 1994, the LPSC made
a decision in the Phase 1 fuel review case and ordered GSU to
refund approximately $27 million to its customers. Under the
order, $13.1 million, which was not contested under a recent
Louisiana Supreme Court decision as discussed below, is to be
refunded immediately through a billing credit on August bills.
The remaining portion of the LPSC ordered refund, which is being
contested by GSU, is suspended to allow GSU 30 days to review the
report of special counsel and request rehearing of this remaining
portion. GSU will then be given an opportunity to address this
remaining refund portion in the LPSC's August open session.
Unless the LPSC amends its order in the August session, GSU plans
to appeal the order.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
Nelson Industrial Steam Company (NISCO) representing the excess
of NISCO's purchase price of the units over GSU's depreciated
cost of the units. GSU appealed the 1990 order. In March 1994,
and are
continuing.the Louisiana Supreme Court ruled in favor of the LPSC. GSU
recorded an estimated refund provision of $13.1 million, before
related income taxes of $5.3 million.
PUCT Fuel Cost Review
GSU
For information on the June 1993 PUCT fuel reconciliation
case, see page 165164 of the Form 10-K.
In June 1994, GSU filed a petition with the PUCT for the
reconciliation of over- and under-recovery of fuel and purchased
power expenses for the period October 1, 1991, through December
31, 1993, in accordance with the Texas merger settlement
agreement. GSU is required to reconcile its fuel costs from the
end of the period of its last fuel reconciliation through the
Merger closing date to reflect the fuel and purchased power costs
GSU incurred as a stand-alone company. GSU believes there was a
net under-recovery of approximately $4.6 million for the period
but has indicated that it does not propose to surcharge the under-
recovery at this time. A prehearing conference was held on July
18, 1994, at which time a procedural schedule was adopted which
provides for hearings to begin on January 9, 1995.
NOTE 3. LINES OF CREDIT AND RELATED BORROWINGS
See pages 89, 129, 169, 203, 239, 270, and 300 of the Form
10-K for information on Entergy Corporation's, the System
operating companies', and System Energy's short-term borrowing
authorizations, including the Money Pool, and certain limitations
thereon, and lines of credit with banks. As of June 30, 1994,
GSU had unused lines of credit for short-term borrowings of $5.0
million. On March 25, 1994, GSU received SEC authorization to
participate in the Money Pool. GSU is authorized to effect short-
term borrowings of up to $125 million, subject to increase to as
much as $455 million after further SEC approval. On April 21,
1994, AP&L, LP&L, and MP&L received SEC approval to increase
their short-term borrowing limits to $200 million (from $125
million), $200 million (from $125 million), and $113 million
(from $100 million), respectively. As of June 30, 1994, Entergy
Corporation and the System operating companies had outstanding
short-term borrowings from the Money Pool and/or from banks as
follows (in millions):
Company Money Pool Banks
Entergy Corporation - $43.0
AP&L $17.6 $34.0
GSU - -
LP&L $55.0 $19.2
MP&L $30.9 $30.0
NOPSI - -
NOTE 4. PREFERRED AND COMMON STOCK
Entergy Corporation
Entergy Corporation has a program to repurchase shares of
its outstanding common stock either on the open market or through
negotiated purchases or tender offers. Stock repurchases are
made from time to time depending upon market conditions and
authorization of the Entergy Corporation Board of Directors.
During the first threesix months of 1994, 1,005,0002,805,000 shares of common
stock were repurchased and were accounted for as treasury stock
using the average cost method, at a cost of $35.6$88.8 million.
AP&L
On January 3,In the first quarter of 1994, AP&L redeemed, pursuant to
sinking fund requirements, 200,000 shares of its 13.28% Series
Preferred Stock, $25 par value. On June 1, 1994, AP&L redeemed,
pursuant to sinking fund requirements, 80,000 shares of its 9.92%
Series Preferred Stock, $25 par value. On July 1, 1994, AP&L
redeemed, pursuant to sinking fund requirements, 20,000 shares of
its 10.60% Series Preferred Stock, $100 par value.
GSU
GSU has requested, but has not yet received, SEC
authorization to issue and sell, through December 31, 1995, up to
$700 million aggregate principal amount of preferred stock and/or
first mortgage bonds and medium term notes. The proceeds will be
used for general corporate purposes and the repayment and/or
redemption of certain outstanding securities. On March 15, 1994,
GSU redeemed, pursuant to sinking fund requirements, 22,500
shares of its Adjustable Rate Series B Preferred Stock, $100 par
value.
LP&L
On February 1,In the first quarter of 1994, LP&L redeemed, pursuant to
sinking fund requirements, 300,000 shares of its 12.64% Series
Preferred Stock, $25 par value. On May 2, 1994, LP&L redeemed,
pursuant to sinking fund requirements, 416 shares of its 14.72%
Series Preferred Stock, $25 par value, which represented the
remaining outstanding shares of this series. On July 1, 1994,
LP&L redeemed, pursuant to sinking fund requirements, 240,000
shares of its 10.72% Series Preferred Stock, $25 par value.
MP&L
On January 3,In the first quarter of 1994, MP&L redeemed, pursuant to
sinking fund requirements, 70,000 shares of its 9.76% Series
Preferred Stock, $100 par value, and 10,000 shares of its 12.00%
Series Preferred Stock, $100 par value. On MarchJuly 1, 1994, MP&L
redeemed, 10,000pursuant to sinking fund requirements, 70,000 shares of
its 12.00%9.00% Series Preferred Stock, $100 par value.
NOPSI
On March 1, 1994, NOPSI redeemed 15,000 shares of its 15.44%
Series Preferred Stock, $100 par value.
NOTE 4.5. LONG-TERM DEBT
AP&L
AP&L has requested, but has not yet received SEC authorization to enter into
arrangements for the issuance and sale, through December 31,
1996, of up to $200 million aggregate principal amount of tax-exempttax-
exempt bonds. The proceeds of the sale have been or will be used
to acquire and construct certain pollution control or sewage and
solid waste disposal facilities at AP&L's generating plants or to
refinance outstanding tax-exempt bonds issued for that purpose.
On June 22, 1994, AP&L entered into arrangements with Pope
County, Arkansas and Jefferson County, Arkansas for the issuance
and sale by these counties of $19.5 million of 6.30% Pollution
Control Revenue Refunding Bonds (Pope Bonds) due 2016 and $9.2
million of 6.30% Pollution Control Revenue Refunding Bonds
(Jefferson Bonds) due 2018, respectively. Funds provided by the
issuance of the Pope Bonds and Jefferson Bonds were used on July
15, 1994, to redeem $16.6 million of Pope County, Arkansas
Pollution Control Revenue Bonds 7.35% due 2006, $2.9 million of
Pope County, Arkansas Pollution Control Revenue Bonds 7.25% due
2008, and $9.2 million of Jefferson County, Arkansas Pollution
Control Revenue Bonds 7.25% due 2008. On February 1, 1994, AP&L
redeemed, pursuant to sinking fund requirements, $0.4 million of
its 8.75% Series First Mortgage Bonds due 1998. On May 1, 1994,
AP&L redeemed, pursuant to sinking fund requirements, $0.2
million of its 6.25% Series First Mortgage Bonds due 1996.
GSU
GSU has requested, but has not yet received, SEC
authorization to issue and sell, through December 31, 1995, up to
$700 million aggregate principal amount of its first mortgage
bonds, medium term notes and/or preferred stock. The proceeds
will be used for general corporate purposes and the repayment or
redemption of certain outstanding securities. GSU has also
requested SEC authorization to enter into arrangements for the
issuance and sale, through December 31, 1995, of up to $250
million aggregate principal amount of tax-exempt bonds for the
financing or refinancing of certain sewage and/or solid waste
disposal facilities. The proceeds from the sale of tax-exempt
bonds will be used to finance certain sewage and/or solid waste
disposal or pollution control facilities or to refinance
outstanding tax-exempt bonds issued for that purpose. In
addition, GSU has requested, but has not yet received, SEC
authorization to redeem, purchase or otherwise acquire its outstanding
pollution control revenue bonds and/or industrial development
revenue bonds through December 31, 1995. On July 1, 1994, GSU
redeemed, pursuant to sinking fund requirements, $0.425 million
of Iberville Parish 7.0% Series Pollution Control Revenue Bonds.
LP&L
LP&L has requested, but not yet received, SEC authorization
to undertake, should LP&L decide to do so, the refunding of
approximately $310 million of intermediate-term and long-term
bonds issued by the Owner Trustee when it acquired interests in
Waterford 3 in 1989. Such bonds became optionally redeemable in
July 1994. During the first six months of 1994, LP&L redeemed,
pursuant to sinking fund requirements, $0.2 million of various
series of its pollution control and industrial revenue bond
obligations. On June 1, 1994, LP&L retired $25 million of its
4.625% Series First Mortgage Bonds upon maturity. On July 20,
1994, LP&L entered into arrangements with the Parish of St.
Charles, Louisiana, whereby such parish issued and sold $20.4
million of its 6-7/8% Environmental Revenue Bonds due 2024.
MP&L
On April 1, 1994, MP&L retired $30 million of its 9.9%
Series G&R Bonds upon maturity. On April 20, 1994, MP&L entered
into arrangements with Warren County, Mississippi and Washington
County, Mississippi for the issuance of an aggregate of $16.0
million principal amount of 7% Pollution Control Revenue
Refunding Bonds due 2022, the proceeds of which were used to
redeem $8.1 million principal amount of 8.5% Warren County
pollution control revenue bondsPollution Control Revenue Bonds and $7.9 million principal amount
of 7.5% Washington County pollution control revenue bondsPollution Control Revenue Bonds on May
13, 1994. On July 14, 1994, MP&L issued in 1974.$25 million of its 8.25%
Series G&R Bonds due 2004. A portion of the net proceeds from
the issuance and sale of these G&R Bonds was used on July 15,
1994, to retire $18 million of MP&L's 11.11% Series G&R Bonds
upon maturity.
NOPSI
On May 2, 1994, NOPSI redeemed, pursuant to sinking fund
requirements, $15 million of its 10.95% Series G&R Bonds.
System Energy
On January 11, 1994, System Energy refinanced $435 million
aggregate principal amount of secured lease obligation bonds
originally issued as part of the financing for the sale and
leaseback of undivided portions of Grand Gulf 1. The secured
lease obligation bonds of $356 million, 7.43% series due 2011 and
$79 million, 8.2% series due 2014 are indirectly secured by liens
on, and a security interest in, certain ownership interests and
the respective leases relating to Grand Gulf 1. On April 28,
1994, System Energy issued $60 million of its 7-5/8% Series First
Mortgage Bonds due 1999. On May 2, 1994, System Energy redeemed,
pursuant to mandatory and optional sinking fund requirements, $60
million of its 11% Series First Mortgage Bonds due 2000.
NOTE 5.6. RETAINED EARNINGS
On JanuaryJuly 29, 1994, Entergy Corporation's Board of
Directors declared a common stock dividend of 45 cents per share
which was paid on March 1, 1994. In addition, on March 25, 1994, Entergy Corporation's Board of Directors
declared a common stock dividend of 45 cents per share payable
on JuneSeptember 1, 1994.
On
January 28, 1994, the Boards of Directors of the respective
companies listed below declared common stock dividends payable to
Entergy Corporation in the following amounts (in millions):
Date
Company Payable Amount
AP&L 2/1/94 $ 17.9
GSU * 2/1/94 $100.0
LP&L 2/1/94 $ 17.9
MP&L 2/1/94 $ 4.6
System 2/1/94 $ 57.8
Energy
* Prior to the February 1, 1994, dividend payment, GSU had not
paid a common dividend since June 1986.
NOTE 6.7. FAIR VALUE DISCLOSURE
The System adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. As a result, at June 30,
1994, the System has recorded on the balance sheet an additional
$15.6$7.5 million in decommissioning trust funds, representing the
amount by which the fair value of the securities held in such
funds exceeds the amounts recovered in rates and deposited in the
funds and the related earnings on the amounts deposited. Due to
the regulatory treatment for decommissioning trust funds, the
System recorded an offsetting amount in unrealized gains on
investment securities as a regulatory liability in other deferred
credits.
NOTE 7. LINES OF CREDIT AND RELATED BORROWINGS
See pages 89, 129, 169, 203, 239, 270, and 300 of the Form
10-K for information on Entergy Corporation's, the System
operating companies', and System Energy's short-term borrowing
authorizations, including the Money Pool, and certain limitations
thereon, and lines of credit with banks. As of March 31, 1994,
AP&L, GSU, LP&L, and MP&L had unused lines of credit for short-
term borrowings of $34.0 million, $3.2 million, $20.2 million,
and $30.0 million, respectively. On March 25, 1994, GSU received
SEC authorization to participate in the Money Pool. GSU is
authorized to effect short-term borrowings of up to $125 million,
subject to increase to as much as $455 million after further SEC
approval. On April 21, 1994, AP&L, LP&L, and MP&L received SEC
approval to increase their short-term borrowing limits to $200
million (from $125 million), $200 million (from $125 million),
and $113 million (from $100 million), respectively. As of March
31, 1994, Entergy Corporation and the System
operating companies had outstanding short-term borrowings from
the Money Pool and/or from banks as follows (in millions):
Company Money Banks
Pool
Entergy - $43
Corporation
AP&L $32 $0.6
LP&L $24.9 -
MP&L $71.6 -
__________________________________________
In the opinion of Entergy Corporation, AP&L, GSU, LP&L,
MP&L, NOPSI, and System Energy, the accompanying unaudited
condensed financial statements contain all adjustments
(consisting primarily of normal recurring accruals and
reclassifying previously reported amounts to conform to current
classifications) necessary for a fair statement of the results
for the interim periods presented. However, the business of
AP&L, GSU, LP&L, MP&L, and NOPSI is subject to seasonal
fluctuations with the peak period occurring during the summer
months. The results for the interim periods presented should not
be used as a basis for estimating results of operations for a
full year.
In accordance with the purchase method of accounting, the
1993 second quarter and first quartersix months results of operations
for Entergy Corporation reported in its Statements of
Consolidated Income and Cash Flows do not include GSU's results
of operations. However, the Results of Operations discussion in
"Management's Financial Discussion & Analysis" is presented with
GSU's 1993 results of operations included for comparative
purposes. This information is not necessarily indicative of the
results of operations that would have occurred had the Merger
been consummated for the period for which it is being given
effect, nor is it necessarily indicative of future operating
results.
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Liquidity is important to Entergy due to the capital
intensive nature of its business, which requires large
investments in long-lived assets. While large capital
expenditures for the construction of new generating capacity are
not currently planned, the System nevertheless requires
significant capital resources primarily for the periodic maturity
of certain series of debt and preferred stock. See Note 1 for
additional information on the System's capital and refinancing
requirements in 1994 - 1996. Net cash flow from operations for
Entergy, the System operating companies, and System Energy for
the threesix months ended March 31,June 30, 1994 and 1993, was as follows (in
millions):
ThreeSix Months ThreeSix Months
Ended Ended
Company Ended 3/31/6/30/94 Ended 3/31/6/30/93
Entergy * $322.4 $155.6$ 508.2 $ 293.3
AP&L $ 88.279.7 $ 84.968.3
GSU $ 53.8 $(30.4)138.7 $ (7.6)
LP&L $ 99.5147.1 $ 15.478.8
MP&L $ 46.973.5 $ 22.152.3
NOPSI $ 26.541.8 $ 7.614.5
System Energy $ 53.4112.9 $ 57.4145.9
* Entergy's net cash flow from operations for the threesix months
ended March 31,June 30, 1993, excludes GSU because the Merger was not
yet consummated.
In the first quartersix months of 1994, as in recent years, cash
from operations, supplemented by cash on hand, was sufficient to
meet substantially all investing and financing requirements,
including capital expenditures, dividends, and debt/preferred
stock maturities. (However, MP&L required significant external funds in
the form ofsubstantially increased its
short-term borrowings because of unexpected costs incurred as a
result of an ice storm.) Entergy's ability to fund most of its
capital requirements with cash from operations results, in part,
from our continued efforts to streamline operations and reduce
costs as well as collections under the Grand Gulf 1 rate phase-in
plans, which exceed current cash requirements for Grand Gulf 1-related1-
related costs. (In the income statement, these revenue
collections are offset by the amortization of previously deferred
costs; therefore, there is no effect on net income.) The System
operating companies and System Energy have the ability, subject
to regulatory approval, to meet future capital requirements
through future debt or preferred stock issuances, as discussed
below. Also, in order to take
advantage of lowerthe extent current market interest and dividend
rates Entergy
Corporation's subsidiariesallow, the System operating companies and System Energy may
continue to refinance high-cost debt and preferred stock prior to
maturity.
Productive investment of excess funds is necessary to
enhance the long-term value of Entergy Corporation's common
stock. Entergy Corporation expects to invest approximately $150
million per year in nonregulated and nonutility businesses. See
"Significant Factors and Known Trends - Nonregulated Investments"
for additional information.
Entergy Corporation's current primary capital requirements
are to periodically invest in, or make loans to, its
subsidiaries. Entergy Corporation expects to meet these
requirements in 1994 - 1996 with internally generated funds and
cash on hand. Entergy Corporation also pays dividends on its
common stock, which aggregated $103.7$207.1 million in the first threesix
months of 1994. Declarations of dividends on common stock are
made at the discretion of Entergy Corporation's Board of
Directors (Board). Entergy Corporation's management has
announced that it intends to maintain the current dividend payout
level and recommend future dividend increases to the Board only
if such increases are justified by sustained earnings growth of
Entergy Corporation and its subsidiaries. Entergy Corporation
receives funds through dividend payments from its subsidiaries.
During the first quartersix months of 1994, these common stock dividend
payments totaled $198.2 million, including a $100 million dividend paid by GSU.$360.8 million. Certain restrictions may
limit the amount of these distributions (see page 94 of the Form
10-K and Note 2 ). See Note 5 for
information on dividends declared by Entergy Corporation, the
System operating companies, and System Energy in the first
quarter of 1994.2).
Entergy Corporation has a program to repurchase shares of
its outstanding common stock. The occurrence and amount of such
repurchaserepurchases depend upon market conditions and authorization from
Entergy Corporation's Board of Directors. See Note 34 for
additional information. Entergy Corporation has requested SEC
authorization for a $300 million bank line of credit, the
proceeds of which are expected to be used for common stock
repurchases, investments in non-regulatednonregulated and non-utilitynonutility
businesses, and other activities. Certain parties have
intervened in this proceeding, and the application is pending.
Certain agreements and restrictions limit the amount of
mortgage bonds and preferred stock that can be issued by each of
the System operating companies and System Energy. Based on the
most restrictive applicable tests as of March 31,June 30, 1994, and an
assumed annual interest or dividend rate of 8.5%9%, each of the
System operating companies and System Energy could have issued
bonds or preferred stock in the following amounts (in millions):
Company Bonds Preferred Stock
AP&L $ 860 $697218 $ 690
GSU $ 407424 $ -
LP&L $ 69 $750$ 714
MP&L $ 237 $231238 $ 209
NOPSI $ 72 $18487 $ 190
System $1,030Energy $ 291 *
Energy
* System Energy's charter does not provide for the issuance of
preferred stock.
In addition, the System operating companies and System
Energy have the conditional ability to issue bonds against the
retirement of bonds, in some cases without meeting an earnings
coverage test. AP&L may also issue preferred stock to refund
outstanding preferred stock without meeting an earnings coverage
test. GSU has no earnings coverage limitations on the issuance
of preference stock. For information on the System operating
companies' and System Energy's regulatory authorizations to issue
and acquire securities, see Notes 34 and 4,5, and pages 90-94, 129-131,129-
131, 170-172, 204-206, 239-241, 271-272, and 301 of the Form 10-K.10-
K. See Note 73 for information on the System's short-term
borrowings.
Entergy Corporation and GSU
See Notes 1 and 2, and Part II, Item 1. "Legal
Proceedings," regarding litigation with Cajun and River Bend rate
appeals. Substantial write-offs or charges resulting from
adverse rulings in these matters could result in substantial net
losses being reported in 1994, and subsequent periods, with
resulting substantial adverse adjustments to common shareholder's
equity. Also, adverse resolution of these matters could
adversely affect GSU's ability to continue to pay dividends and
obtain financing, which could in turn affect GSU's liquidity.
Entergy Corporation and System Energy
In connection with the financing of Grand Gulf 1, Entergy
Corporation has undertaken, to provide to System Energy
sufficient capital to (1) maintain System Energy's equity capital
at an amount equal to at least 35% of System Energy's total
capitalization (excluding short-term debt), (2) permit the
continuation of commercial operation of Grand Gulf 1, and (3)
enable System Energy to pay in full all borrowings of System
Energy, whether at maturity, on prepayment, on acceleration or
otherwise. In addition, Entergy Corporation has agreed to make
certain cash capital contributions, if required, to enable System
Energy to make payments when due on its long-term debt.
System Energy
The financial condition of System Energy significantly
depends on the continued commercial operation of Grand Gulf 1 and
on the receipt of payments from AP&L, LP&L, MP&L, and NOPSI.
Such payments are System Energy's only source of operating
revenues.
In addition, System Energy's financial condition could be
affected by the outcome of a pending FERC audit matter. In
December 1990,As
discussed in Note 2, FERC Division of Audits issued a report in
December 1990 that recommended that System Energy write off and
not recover in rates approximately $95 million of Grand Gulf 1
costs included in utility plant, and compute refunds for
over collectionsovercollections from AP&L, LP&L, MP&L, and NOPSI.
In August 1992, FERC issued an
opinion and order (August 4 Order) affirming an initial decision
by a FERC ALJ.June 1994, System Energy, filedAP&L, LP&L, MP&L, and NOPSI
reached a Requesttentative settlement with the FERC staff and certain
other parties. The proposed settlement, which is subject to
approval by FERC, would require System Energy to refund or credit
approximately $60 million to AP&L, LP&L, MP&L, and NOPSI, which
would in turn make refunds to their customers (except for Rehearing,those
portions attributable to AP&L's and in October 1992, FERC issued an order allowing additional time
for its considerationLP&L's retained share of
Grand Gulf 1 costs). Additionally, System Energy would refund or
credit a total of approximately $62 million, plus interest, to
AP&L, LP&L, MP&L, and NOPSI over the period through July 2004.
Interest on the $62 million refund and loss of the request,return on
certain Grand Gulf 1 costs will reduce Entergy's and it deferred System
Energy's refund obligation until 30 days after FERC issues an
order on rehearing. Ifnet income by approximately $10 million annually over
the decision is implemented,next 10 years. System Energy estimatescurrently plans to file with
FERC for approval of the proposed settlement in August 1994.
However, there can be no assurance that as of March 31, 1994, net income would be
reduced by $155.3 million. This amount includes refund
obligations of approximately $118.9 million (including interest).FERC will ultimately
approve the settlement in its current form. See Note 2 for
additional information.
NOPSI
As discussed in Note 2, under the terms of the 1991 NOPSI
Settlement and a 1992 gas rate settlement, the Council has the
right to review NOPSI's return on equity annually through October
31, 1996 under certain circumstances. Also, NOPSI is currently
operating under electric and gas base rate freezes through
October 31, 1996.
On July 7, 1994, NOPSI and the Council agreed that, based on
the test year ended September 30, 1993, NOPSI's earnings exceeded
its revenue requirement by $24.95 million and in accordance with
the terms of the 1991 NOPSI Settlement and a 1992 gas rate
settlement, there would be a prospective base rate reduction for
twelve months commencing July 14, 1994. The reduction, because of
the rate freeze, will be accomplished by means of a credit (to be
expressed on a per kwh basis) to customers' bills. NOPSI's
earnings for the nine months ended June 30, 1994, are comparable
to the earnings by NOPSI for the same period included in the test
year ended September 30, 1993. For additional information, see
Note 2.
RESULTS OF OPERATIONS
ENTERGY
On December 31, 1993, GSU became a subsidiary of Entergy
Corporation. In accordance with the purchase method of
accounting, the six months ended June 1993 first quarter results of operations
for Entergy Corporation and subsidiaries reported in its
Statements of Consolidated Income and Cash Flows do not include
GSU's results of operations. However, the following discussion
is presented with GSU's 1993 results of operations included for
comparative purposes.
Net Income
Consolidated net income decreased $7.0 million in the second
quarter of 1994 due primarily to increased costs related to the
Merger, and decreased miscellaneous income - net, partially
offset by a decrease in interest expense as explained below.
Consolidated net income decreased in the first quartersix months of
1994 due primarily to the one-time recording in the first quarter
of 1993 of the cumulative
effect of the change in accounting principle for unbilled
revenues for AP&L, GSU, MP&L, GSU, and NOPSI
andNOPSI. Excluding the effect of
implementing SFAS 109. Excluding these items,the change in accounting principle, net income forincreased in the
first quartersix months of 1994 decreased by approximately $3.0$1.3 million. This
increase was primarily due to a decrease was due primarily to
the recording of a reserve for revenue reduction by NOPSI as a
result of a review of NOPSI's return on equity in accordance with
the 1991 Settlement Agreement and a 1992 gas rate settlement (see
Note 2). This decrease was partially offset by increased retail
operating revenues caused by increased energy sales resulting
from colder than normal winter weather in 1994 and from non-
weather related growth. In addition, interest on long-termlong-
term debt and preferred dividend requirements decreased by approximately
$18.5 million as a result of
continued debt refinancing and stock redemption activities.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales,"
"Expenses," and "Other" below.
Revenues and Sales
See Entergy's "Selected Operating Results" for information
on operating revenues by source and KWH sales.
Electric operating revenues increased by approximately $62.1$85.4 million in the
second quarter and $147.5 million in the first quartersix months of 1994
due primarily to improving market conditions and increased retail
energy sales resulting from colder than normal winter weather and
a warmer than normal spring as compared to milder
weather in 1993. Additionally,
revenues were higher due to increased collections of Grand Gulf 1-related1-
related costs and increased fuel adjustment revenues, which do
not affectimpact net income. The increase in fuel adjustment revenues
was due to increased gasgas-fired generation resulting from
scheduled nuclear refueling outages at Waterford 3, and ANO 2, and
River Bend during the first quartersix months of 1994. A $14.3
million reduction in revenues, as discussed in "Net Income"Partially
offsetting the above partially offset these increases.increases were rate reductions at GSU, MP&L,
and NOPSI.
Gas operating revenues increased by approximately $12.4$10.6 million in the first
quartersix months of 1994 due primarily to increased retail sales
resulting from colder than normal winter weather, partially
offset by lower gas sales in 1994.the second quarter of 1994 due to a
warmer than normal spring.
Expenses
Purchased powerFuel for electric generation and fuel-related expenses
increased by approximately $32.3$48.8 million in the second quarter and $68.2 million
in the first quartersix months of 1994 due primarily to an increase in
generation requirements resulting from increased energy sales as
discussed in "Revenues and Sales" above.
Purchased power increased $33.9 million in the first six
months of 1994 due primarily to increased power purchasedpurchases from
nonassociated utilities due to changes in generation requirements
for the System operating companies resulting primarily from
increased energy sales and fuel-related costs. In addition,
purchased power increased in 1994 as a result of nuclear
refueling outages at Waterford 3 and ANO 2.
Nuclear refueling outage expenses decreased by approximately
$5.1$5.3 million in
the first quartersix months of 1994 due primarily to a reduction in
AP&L's monthly nuclear refueling outage accrual resultingstemming from revisions in estimatedimproved
outage expenses. The lower
monthly accrual began in the fourth quarter of 1993.durations and practices.
The amortization of rate deferrals increased by
approximately $16.4$13.4 million
in the second quarter and $29.9 million in the first quartersix months
of 1994 due primarily to collection of more Grand Gulf 1-related
costs from customers in 1994 as compared to 1993.
Interest expense decreased $11.7 million in the second
quarter and $23.8 million for in the first six months of 1994 due
primarily to the refinancing of high cost debt.
Preferred dividend requirements decreased $4.3 million in
the second quarter and $7.8 million for the first six months of
1994 due primarily to stock redemption activities.
Other
Other interest increased by approximately $5.2Miscellaneous income - net decreased $14.0 million in the
second quarter and $21.3 million in the first six months of 1994
due primarily to increased amortization of debt expense resulting from
continued refinancing of debt.plant acquisition adjustments
related to the Merger and to reduced Grand Gulf 1 carrying
charges at AP&L.
AP&L
Net Income
Net income increased in the second quarter of 1994 due
primarily to increased operating revenues.
Net income decreased in the first quartersix months of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues andrevenues. Excluding the effect of implementing SFAS 109.
Excluding the effects of the change in
accounting principle, and
SFAS 109, net income increased $7.9$17.7 million. This
increase is due primarily to increased energy sales.operating revenues.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See AP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues and sales increased in the
second quarter and first quartersix months of 1994 due primarily to
higher retail energy sales, an increase in sales for resale to
associated companies caused by changes in generation availability
and requirements among the System operating companies. Further, retail energy salescompanies, and
increased as a result of
non-weather related growth. The increase in energy sales was
partially offset by milder weather in 1994 and the loss of sales
due to an ice storm in February 1994.accrued unbilled revenues. Additionally, revenues were
higher due to increased collections of Grand Gulf 1-related costs
and increased recovery of fuel-related costs, which do not affectimpact
net income.
Expenses
Fuel and fuel-related expenses increased in the second
quarter and first quartersix months of 1994 primarily due to higher
energy sales.
Purchased power increased in the second quarter and first
quartersix months of 1994 as a result of changes in generation
availability and requirements among the System operating
companies and lower nuclear generation as a result of ANO 2's
refueling outage that was completed in mid-Marchlate April 1994.
The amortization of rate deferrals increased in the second
quarter and first six months of 1994 due to increased collection
of previously deferred Grand Gulf 1-related costs pursuant to the
step-up provisions of AP&L's rate phase-in plan.
Nuclear refueling outage expensesTotal income taxes increased in the first six months of 1994
due to higher pretax income, partially offset by the effect of
implementing SFAS 109 in the prior year.
Other
Miscellaneous income - net decreased in the second quarter
and first six months of 1994 due primarily to reduced Grand Gulf
1 carrying charges.
GSU
Net Income
Net income increased slightly in the second quarter of 1994
due primarily to a reductionrefund of franchise taxes, in AP&L's monthly
nuclear refueling outage accrual resulting from revisionsaddition to
increased operating revenues, offset in estimated outage expenses. The lower monthly accrual began in
the fourth quarter of 1993.
Totalpart by increased
operating expenses and income taxes decreased in the first quarter of 1994
due primarily to the cumulative effect of the change in
accounting principle for unbilled revenues and the effect of
implementation of SFAS 109 in the first quarter of 1993.
GSU
Net Incometaxes.
Net income decreased infor the first quartersix months of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues. Excluding the effect of the change in
accounting principle, net income decreased $4.0 million. This
decrease is$1.9 million due primarily to
increased operating expenses and income taxes, offset in part by
a $6.0 million netrefund of tax refund
provision madefranchise taxes, in March 1994 (see Note 2), andaddition to increased operations expense, partially offset by increased energy sales.operating
revenues.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
RevenuesRevenue and Sales
See GSU's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Operating revenues from retail energy sales to residential
and commercial customers increased infor the second quarter and
first quartersix months of 1994 due primarily to increased retail energy sales
resulting from colder than normal winter weather and warmer than
normal spring weather, offset in part by the effect of a $22.5
million annual rate reduction in Texas, which went into effect in
November 1993. Revenues from non-weather related
growth, andsales to industrial customers
decreased due to the effects of the rate reduction in Texas,
offset in part by increased salessales. Sales for resale increased as
a result of GSU's participation in the System power pool.
An additional $20 million annual rate reduction in Texas
will become effective in September 1994, which will result in
lower revenues and adversely affect net income to the extent the
effects cannot be offset by increased sales and reduced expenses.
Expenses
Purchased power increased in the firstsecond quarter of 1994 due
to GSU's participation in joint dispatching through the System
power pool resulting from increased energy sales as discussed
above. Purchased power increased in the first six months of 1994
for the same reasons as the second quarter of 1994, in addition
to the recording of a provision for refund of disallowed
purchased power costs resulting from a Louisiana Supreme Court
ruling, as discussed in Note 2.
Operation expenseand maintenance expenses increased in the second
quarter due primarily to charges associated with early retirement
and severance plans which totaled approximately $9.9 million.
For the first six months of 1994, operation and maintenance
expenses increased due primarily to one-timecharges associated with early
retirement and severance plans, as mentioned above, in addition
to costs associated with safety and performance improvements at River Bend.
Income taxes increased in the second quarter of 1994 and
first six months of 1994. A nonrecurring reduction to income
taxes related to a purchased power settlement was included in the
first and second quarters of 1993.
Taxes other than income taxes decreased in the second
quarter and first six months of 1994 due to a $15.1 million
franchise tax refund.
LP&L
Net Income
Net income increased in the second quarter and first quartersix
months of 1994.
Excluding the effect of implementing SFAS 109 in the first
quarter of 1993, net income increased by $5.6 million. This
increase is1994 due primarily to increased operating revenues
partially offset by increased other operation and maintenance expenses.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See LP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues increasedwere higher in the second
quarter and first quartersix months of 1994 primarily due primarily to increased
fuel adjustment revenues, which do not affect net income, and
increased energy sales to increasedretail customers, partially offset by a
decrease in accrued unbilled revenues. The increase in retail
energy sales resulting fromis primarily due to a colder winter and warmer
spring than normal winter weather in the prior year. Lower sales for resale to
nonassociated companies partially offset the increase in retail
energy sales in the first six months of 1994 .
Expenses
Fuel for electric generation and from
non-weather related growth.
Expenses
Purchased powerfuel-related expenses
increased in the second quarter and first quartersix months of 1994
primarily due primarily to higher energy sales and increased power purchased from nonassociated
utilitiesgas-fired
generation resulting from a scheduled nuclear refueling outage at
Waterford 3 during the first quarter of 1994, and also due to
increased retail energy sales as discussed above.3.
MP&L
Net Income
Net income decreased in the second quarter of 1994 due
primarily to increased operation and maintenance expenses.
Net income decreased in the first quartersix months of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues andrevenues. Excluding the effect of implementing SFAS 109.
Excluding the effects of the change in
accounting principle, and
implementing SFAS 109, net income decreased by $5.6$7.5 million. This
decrease is primarily due primarily to a decrease in accrued unbilled
revenues and increased operation and maintenance
expenses,
partially offset by an increase in operating revenues.expenses.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See MP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues increased in the second quarter
and first quartersix months of 1994 due to increased retail energy sales
resulting from colder than normal winter weather in 1994 and fromwarmer spring weather
than the prior year, non-weather related growth, and increased
sales for resale to associated and nonassociated companies.
These increases were partially offset by a decrease in unbilled
revenues.revenues and the effects of reduced rates under MP&L's formula
rate plan.
Expenses
Fuel for electric generation and fuel-related expenses
increased in the second quarter and first quartersix months of 1994 due
primarily to an increase in generation requirements resulting
primarily from increased energy sales as discussed in "Revenues
and Sales" above.
Purchased power expense decreased in the second quarter and
first quartersix months of 1994 due primarily to changes in generation
availability and requirements among the System operating
companies.
The amortization of rate deferrals increased in the second
quarter and first threesix months of 1994 reflecting the fact that
MP&L, based on the Revised Plan, collected more Grand
Gulf 1-related costs from its customers in the second quarter and
first quartersix months of 1994 than it recovered in the same period in
1993.
Other operation and maintenance expenses increased in the
second quarter and first six months of 1994 due primarily to
scheduled maintenance at certain of MP&L's fossil-fueled
generating plants.
NOPSI
Net Income
Net income decreasedincreased slightly in the second quarter of 1994
due primarily to increased operating revenues.
Net income decreased for the first quartersix months of 1994 due
primarily to the one-time recording in the first quarter of 1993 of the cumulative effect of
the change in accounting principle for unbilled revenues offset byin 1993.
Excluding the effect of implementing SFAS
109. Excluding the effects of the change in accounting principle, and implementing SFAS 109, net
income decreased $1.9for the first six months of 1994 by $1.1
million. This decrease is due primarily to the recording of a
reserve for revenue reduction as a result of a review of NOPSI's
return on equity in accordance with the 1991 NOPSI Settlement and
a 1992 gas rate settlement (see Note 2).settlement.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See NOPSI's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
OperatingElectric operating revenues decreased in the first quarter of 1994
due to the recording of a reserve for revenue reduction of $14.3
million as discussed above. This decrease was partially offset
by increased retail energy sales resulting from colder than
normal winter weather in 1994 and from non-weather related
growth, increased fuel adjustment revenues, and accrued unbilled
revenues.
Expenses
Fuel and fuel-related expenses and gas purchased for resale increased in the second quarter
and first quartersix months of 1994 due primarily to an increase in
retail energy sales. The increase in electric operating revenues
in the amountfirst six months of 1994 was partially offset by the
recording of a reserve as discussed in "Net Income" above.
Electric energy sales increased in the second quarter and first
six months of 1994 due primarily to an increase in retail sales
resulting from a colder winter and warmer spring weather than in
the previous year, partially offset by a decrease in sales for
resale.
Gas operating revenues decreased in the second quarter of
1994 due primarily to a decrease in gas sales resulting from a
warmer spring than last year. For the first six months of 1994,
gas operating revenues increased due primarily to increased gas
sales in the first quarter as a result of a colder winter than
the prior year, partially offset by lower second quarter gas
sales due to a warmer spring.
Expenses
Fuel for electric generation and fuel-related expenses
increased in the second quarter and first six months of 1994 due
primarily to an increase in generation requirements resulting
from increased energy sales as discussed in "Revenue and Sales"
above.
Purchased power expense decreased in the second quarter and
first six months of 1994 due primarily to changes in generation
availability and requirements among the System operating
companies and increased generation.
Gas purchased for resale increased for the first six months
of 1994 due to increased gas sales as discussed in "Revenues and
anSales" above.
The increase in deferred gas costs due to higher gas sales.
The increase inthe amortization of rate deferrals in the
second quarter and the first quartersix months of 1994 is primarily a
result of the collection of larger amounts of previously deferred
costs under the 1991 NOPSI Settlement.
SYSTEM ENERGY
Net Income
Net income increased in the second quarter of 1994 due
primarily to the recording of a reserve for revenues in the
second quarter of 1993 as a result of a FERC investigation of the
return on equity of System Energy's formula wholesale rates and a
reduction in interest expense due to the refinancing of high-cost
debt. This increase was partially offset by a lower rate of
return on equity (reduced from 13% to 11%) in System Energy's
formula wholesale rates as a result of an August 1993 settlement
of a rate proceeding with FERC.
Net income decreased in the first quartersix months of 1994 due
primarily to a lower rate of return on equity (reduced from 13%
to 11%) in System Energy's formula wholesale rates as a result of
an August 1993 settlement of a rate proceeding with FERC. This
decrease in revenue wasFERC,
partially offset by a reduction in interest expense due to the
refinancing of high-cost debt.
Significant factors affecting the results of operations and
causing variances between the second quarters and first quartersix
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues
Operating revenues recover operating expenses, depreciation
and capital costs attributable to Grand Gulf 1. The 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 allocable to its investment in Grand Gulf 1.
Operating revenues decreased in the second quarter and first
quartersix months of 1994 due primarily to the reduction in System
Energy's rate of return on equity as discussed above and a lower
return on System Energy's decreasing investment in Grand Gulf 1
(caused by depreciation of the unit), and a decrease in operatingfuel
expenses.
Expenses
Fuel for electric generation and fuel-related expenses
decreased in the second quarter and first six months of 1994
primarily due to a lower per unit cost for nuclear fuel as a
result of a favorable market for uranium.
Interest expense decreased in the second quarter and first
quartersix months of 1994 due primarily to the refinancing of high-cost
long-term debt.
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy Corporation and GSU
Entergy Corporation-GSU Merger
On December 31, 1993, Entergy completed the Merger and
became one of the nation's largest electric utilities. With GSU
as its fifth retail operating company, Entergy gainsgained size,
expanded market area, economies of scale, an additional nuclear
unit (River Bend), and a more price-competitive fuel mix. As a
result of the Merger, Entergy estimates $850 million in fuel cost
savings and $670 million in operation and maintenance expense
savings over the next decade. It is possible that common
shareholders may experience some dilution in earnings in the
short term as a result of the Merger. However, Entergy
Corporation believes that the Merger will be beneficial to common
shareholders over the longer term, both in terms of the strategic
benefits and the economies and efficiencies expected to be
produced. For further information, see pages 103-104 and 180 of
the Form 10-K and "Litigation and Regulatory Proceedings" below.
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI
Competition
Entergy welcomes competition in the electric energy business
and believes that a more competitive environment should benefit
our shareholders, customers, and employees. However, competition
presents Entergy with many challenges. The following have been
identified by Entergy as its major competitive challenges.
Retail and Wholesale Rate Issues
Increasing competition in the utility industry brings an
increased need to stabilize or reduce retail rates. The retail
regulatory environment is shifting from traditional rate-base
regulation to incentive rate regulation. Incentive rate and
performance-based plans encourage efficiencies and productivity
while permitting utilities to share in the results. Retail
wheeling, which requires utilities to "wheel" or move power from
third parties to their own retail customers, is evolving. As a
result, the retail market is expected to become more competitive.
In the wholesale rate area, FERC approved in 1992, with certain
modifications, the proposal of AP&L, LP&L, MP&L, NOPSI, and
Entergy Power to sell wholesale power at market-based rates and
to provide to electric utilities "open access" to the System's
transmission system (subject to certain requirements). GSU was
later added to this filing. Various intervenors in the
proceeding filed petitions for review with the United States
Court of AppealsD.C. Circuit.
See Part II, Item 1. "Legal Proceedings," for information on a
ruling by the District of Columbia Circuit. FERC's
order,D.C. Circuit regarding Entergy's open access
transmission rates. Open access and market pricing, once it
takes effect, will increase marketing opportunities for the
System, but will also expose the System to the risk of loss of
load or reduced revenues due to competition with alternative
suppliers.
In connection with the Merger, AP&L agreed with its retail
regulator not to request any general retail rate increases that
would take effect before November 1998, with certain exceptions.
For further information, see pages 82-83 and 125-126 of the Form
10-K.
On March 31, 1994, North Little Rock, Arkansas, awarded AP&L
a wholesale electric contract which will provide estimated
revenues of $347 million over 11 years. Under the contract, the
price per KWH was reduced 18%, retroactive to March 1, 1994, with
increases in price through the year 2004. AP&L, which has been
serving North Little Rock for over 40 years, was awarded the
contract after intense bidding with threeseveral competitors. On April
29, 1994,FERC
accepted the contract; however, one of AP&L's competitors has
requested a rehearing and has filed a motion with FERC to
intervene in the approval process forcomplaints against AP&L and
North Little Rock challenging the contract. See Part II,
Item 5. "Other Information" for additional information.
In connection with the merger,Merger, GSU agreed with the LPSC and
PUCT to a five-year Rate Cap on retail electric rates, and to
pass through to retail customers the fuel savings and a certain
percentage of the nonfuel savings created by the Merger. Under
the terms of their respective Merger agreements, the LPSC and
PUCT will review GSU's base rates will be reviewed by the LPSC during the first post-
Mergerpost-Merger
earnings analysis scheduled for mid-1994, for reasonableness of its return on equity. TheIn
May 1994 and June 1994, GSU made the required first post-Merger
earning analysis filings with the LPSC and PUCT, will also
review GSU's base rates in accordance with its Merger approval
plan in mid-1994.respectively,
which GSU believes support the current levels of rates. For
further information, see pages 82-83 and 163-164 of the Form 10-K.10-
K. See Note 2 for information on recent filings by certain Texas
cities seeking a reduction in GSU's rates.
Cogeneration projects developed or considered by certain of
GSU's industrial customers over the last several years have
resulted in GSU developing and securing approval of rates lower
than the rates previously approved by the PUCT and LPSC for such
industrial customers. Such rates are designed to retain such
customers, and to compete for and develop new loads, and do not
presently recover GSU's full cost of service. The pricing
agreements at non-full cost of service based rates fully recover
all related costs but provide only a minimal return.
Substantially all of such pricing agreements expire no later than
1997. During the first quartersix months of 1994, KWH sales to GSU's
industrial customers at less than full cost of service, which
make up approximately 30%27% of the total industrial class,
increased 24%12%. Sales to the remaining industrial customers
decreased 2%increased 3%.
LP&L's five year rate freeze expired in March 1994. At the
same time, approximately $46 million of annual rate relief that
was included in LP&L's retail rates also expired. TheIn October
1993, the LPSC is
scheduledapproved a schedule to beginconduct a review of LP&L's
rates and rate structure upon the expiration of LP&L's rate
freeze. Discovery is currently underway and hearings are
scheduled to begin in MayDecember 1994. In August 1994, LP&L will
file a cost of service analysis with the LPSC , which may result in a further decrease in rates.LP&L
believes will support its current rate level. See Note 2 for
additional information.
In February 1994, the MPSC conducted a general review of
MP&L's current rates and in March 1994, the MPSC issued a final
order adopting a formula rate plan for MP&L that will allow for
periodic small adjustments in rates based on a comparison of
earned to benchmark returns and upon certain performance factors.
The order also adopted previously agreed-upon stipulations of a
required return on equity of 11% and certain accounting
adjustments that result in a 4.3% ($28.1 million) reduction in
MP&L's June 30, 1993, test-year operating revenues. Pursuant to
the MPSC's order, on March 18, 1994, MP&L filed rates designed to
provide for this reduction in operating revenues for the test
year. These rates are effective for service rendered on or after
March 25, 1994. See pages 83-84 and 235-236 of the Form 10-K for
further information.
In connection with the Merger, MP&L agreed with its retail
regulator not to request any general retail rate increases that
would take effect before November 1998, with certain exceptions.
For further information, see pages 82-83 and 236 of the Form 10-
K, and Part II, Item 1. "Legal Proceedings."
In connection with the Merger, NOPSI agreed with the Council
to reduce its annual electric base rates by $4.8 million
effective for bills rendered on or after November 1, 1993. NOPSI
is currently operating under electric and gas base rate freezes
through October 31, 1996. For further information, see pages 82-
83 and 266-268 of the Form 10-K.
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review by the Council's advisors of NOPSI's return on
equity for the twelve month period ended September 30, 1993,
indicates that NOPSI may be required to credit $21.5 million to
its customers. In early May 1994, NOPSI determined it was likely
that a credit to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reduction will be
approximately $14.3 million. In the first quarter of 1994, NOPSI
recorded a reserve for this revenue reduction which reduced net
income by $8.8 million (net of taxes). The Council is expected
to order a hearing in the second quarter of 1994 to render a
final decision on the actual amount, method, and timing of the
credit. NOPSI's future earnings may also be limited by the 1991
NOPSI Settlement and a 1992 gas rate settlement, as discussed
above, which may not allow NOPSI to earn a return on equity in
excess of 13.76%.
In light of the rate issues discussed above, Entergy is
aggressively reducing costs to avoid potential earnings erosions
that might result as well as to successfully compete by becoming
a low-cost producer.
To help minimize future costs, Entergy
remains committed to least cost planning. In December 1992, AP&L, LP&L, MP&L, and NOPSI each filed a
Least Cost Integrated
Resource Plan (Least Cost Plan) with their respective retail regulators.regulators, and GSU
is currently working with the PUCT regarding integrated resource
planning. IntegratedHowever, in response to an increasingly competitive
electric utility environment, AP&L, LP&L, MP&L, and NOPSI have
announced their intentions to revise their Least Cost Plan
activities. In this regard, AP&L, GSU, LP&L, MP&L, and NOPSI
intend to adopt the ratepayer impact measure test as their
primary economic criterion for DSM programs rather than the total
resource or least cost planning includes demand-side measures such as customer energy
conservation and supply-side measures such as more efficient
power plants. These measures are designed to delaytest that had been used in developing the building
of new power plants for the next 20 years. The System operating
companies plan to periodically file revisedinitial
Least Cost Plans. See pages 8-9, 19, 23-24, 25Therefore, absent overriding customer,
strategic, or public interests, AP&L, GSU, LP&L, MP&L, and 26-27NOPSI
will propose those DSM programs that have the potential for lower
rates to all customers, rather than DSM programs that, while
providing direct benefits to participants, may result in higher
rates for everyone, including non-participants. In addition,
AP&L, GSU, LP&L (outside the city of the Form 10-K,New Orleans), and MP&L will
no longer seek a pre-approved cost recovery rider as a mechanism
for recovering program costs, lost contributions and incentives.
See Part II, Item 1. "Legal Proceedings"Proceedings," for further information.information on
filings made by AP&L, LP&L, and MP&L with their respective
regulators in connection with proposed changes to their Least
Cost Plans. Notwithstanding the changes noted above, LP&L and
NOPSI intend to implement the five DSM programs already approved
by the Council. However, LP&L and NOPSI intend to pursue
appropriate changes in the Council ordinance establishing the
Least Cost Plans framework and planning criteria.
The Energy Policy Act of 1992
The Energy Policy Act of 1992 (Energy Act) is changing the
business of transmitting and distributing electricity. The
Energy Act encourages competition and affords utilities the
opportunities, and the risks, associated with an open and more
competitive market environment. The Energy Act increases
competition in the wholesale energy market through the creation
of exempt wholesale generators (EWGs). Entergy is competing in
this market through its independent power subsidiary, Entergy
Power Development Corporation. The Energy Act also gives FERC
the authority to order investor-owned utilities to provide
transmission access to or for other utilities, including EWGs.
In addition, the Energy Act allows utilities to own and operate
foreign generation, transmission, and distribution facilities.
See "Nonregulated Investments" below for further information.
Entergy Corporation and GSU
Litigation and Regulatory Proceedings
See Note 1 and Part II, Item 1. "Legal Proceedings," for
information on litigation with Cajun concerning Cajun's ownership
interest in River Bend and the possible material adverse effects
on GSU's financial condition in the event that GSU is ultimately
unsuccessful in this litigation, including a possible filing
under the bankruptcy laws.
See Note 2 for information on the possibility of material
adverse effects on GSU's financial condition and results of
operations as a result of substantial write-offs and/or refunds
in connection with outstanding appeals and remands regarding
approximately $1.4 billion of abeyed company-wide River Bend
plant costs and approximately $187 million of Texas retail
jurisdiction deferred River Bend operating and carrying costs.
System Energy
See Note 2 for information with respect to possible write-
offs and refunds bya proposed
settlement between System Energy which may result fromand FERC in connection with a
decision issued by FERC.FERC in August 1992.
Entergy Corporation
Nonregulated Investments
Entergy Corporation continues to seek new opportunities to
expand its electric energy business, including expansion into
related nonutility businesses. These opportunities include new
domestic ventures such as Entergy Systems and Service, Inc.
(Entergy SASI), the region's only full-service provider of energy-
efficient lighting and related services, previously established
ventures in Argentina, and planned investments in Asia, Central
America and South America. Entergy Corporation expects to invest
approximately $150 million per year in nonregulated business
opportunities. Additional shareholder and/or regulatory
approvals may be required for such acquisitions to take place.
In the first quartersix months of 1994, Entergy Corporation's
nonregulated investments reduced consolidated net income by
approximately $6.9$11.9 million. In the near term, these investments
are not likely to have a positive effect on earnings; but
management believes that these investments could contribute to
future earnings growth. See Part II, Item 1. "Legal
Proceedings," for information on a petition filed with the SEC by
the APSC, the Council, and the MPSC alleging that Entergy
Corporation has failed to comply with the terms of a 1992
settlement agreement relating to certain non-regulated
investments and Item 5. "Other Information" with respect to a new
Entergy Corporation subsidiary that is seeking exempt wholesale
generation status.
Entergy Corporation and AP&L
ANO Matters
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations and additional repairs were made.
Entergy Operations operated ANO 2 with no further steam generator
inspections until the refueling outage which was completed on
April 23, 1994. Inspections during the outage revealed
additional cracks,cracks; however, most were smaller than those seen in
earlier inspections except for one relatively large crack.
Based upon results of these inspections and an inconclusive
pressure test, Entergy Operations plans to inspect the steam
generator tubes during a mid-cycle outage tentatively scheduled
for January 1995. The operations and power output of the unit
have not been materially adversely affected.
GSU
Deregulated Portion of River Bend
As of March 31,June 30, 1994, GSU had not recovered a significant
amount of its investment in, or received any return associated
with, the portion of River Bend included in the deregulated asset
plan in Louisiana and the portion of River Bend placed in
abeyance as part of the Texas rate order which went into effect
in July 1988. See pages 157 and 165 of the Form 10-K for further
information. Future earnings will continue to be limited as long
as the limited recovery of the investment and lack of return
continues.
For the threesix months ended March 31,June 30, 1994, GSU recorded
revenues resulting from the sale of electricity from the
deregulated asset plan of approximately $8.9$18.0 million. OperationsOperation
and maintenance expenses, including fuel, were approximately
$10.6$18.4 million, and depreciation expense associated with the
deregulated asset plan investment was approximately $4.1$8.2 million
for the threesix months ended March 31,June 30, 1994. For the first quartersix months
of 1994, GSU recorded nonfuel revenue of $8.0$16.2 million (included
in the $8.9$18.0 million of total deregulated asset plan revenue
discussed above) which, absent the deregulated asset plan, would
not have been realized. The operationsoperation and maintenance expenses
and depreciation expense allocated to the deregulated asset plan
as detailed above would have been incurred at River Bend with or
without the deregulated asset plan. The future impact of the
deregulated asset plan on GSU's results of operations and
financial position will depend on River Bend's future operating
costs, the unit's efficiency and availability, and the future
market for energy over the remaining life of the unit. Based on
current estimates of the factors discussed above, GSU anticipates
that future revenues from the deregulated asset plan will fully
recover all related costs.
LPSC Fuel Cost Review
In November 1993, the LPSC ordered a review of GSU's fuel
costs. The LPSC stated that fuel costs for the period October
1988 through September 1991 would be reviewed based on the number
of outages at River Bend and the findings in the June 1993 PUCT
fuel reconciliation case. In July 1994, the LPSC made a decision
in the GSU/Louisiana Phase 1 fuel review case and ordered GSU to
refund approximately $27 million to its customers. Under the
order, $13.1 million, which was not contested under a recent
Louisiana Supreme Court decision as discussed in Note 2, is to be
refunded immediately through a billing credit on August bills.
The remaining portion of the LPSC ordered refund, which is being
contested by GSU, is suspended to allow GSU 30 days to review the
report of special counsel and request rehearing of this remaining
portion. GSU will then be given an opportunity to address this
remaining refund portion in the LPSC's August open session.
Unless the LPSC amends its order in the August session, GSU plans
to appeal the order.
Accounting for Decommissioning Costs
The Financial Accounting Standards Board has agreed to review the
accounting for removal costs, which includes the accounting for
decommissioning of nuclear plants. This project could possibly change
the System's, as well as the entire utility industry's, accounting for
such costs.
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
River Bend
Entergy Corporation and GSU
As discussed on pages 20-22, 80-82, and 160-163 of the Form
10-K, in May 1988, the PUCT granted GSU a permanent increase in
annual revenues of $59.9 million resulting from the inclusion in
rate base of approximately $1.6 billion of company-wide River
Bend plant investment and approximately $182 million of related
Texas retail jurisdiction deferred River Bend costs (Allowed
Deferrals). In addition, the PUCT disallowed as imprudent $63.5
million of company-wide River Bend plant costs and placed in
abeyance, with no finding of prudence, approximately $1.4 billion
of company-wide River Bend plant investment and approximately
$157 million of Texas retail jurisdiction deferred River Bend
operating and carrying costs. GSU has appealed the PUCT's order,
and that appeal is now pending in the Texas Third District Court
of Appeals (the Appellate Court).
In May 1994, the Appellate Court affirmed the lower court's
decision that there was substantial evidence to support the
PUCT's 1988 decision not to include $1.4 billion of abeyed
construction costs in GSU's rate base. While acknowledging that
the PUCT had exceeded its authority when it attempted to defer a
decision on the inclusion of those costs in rate base in order to
allow GSU a further opportunity to demonstrate the prudence of
those costs in a subsequent proceeding, the Appellate Court found
that GSU had suffered no harm or lack of due process as a result
of the PUCT's error. Accordingly, the Appellate Court held that
the PUCT's action had the effect of disallowing the company-wide
$1.4 billion of River Bend construction costs for ratemaking
purposes. The Appellate Court also found that GSU's deferred
operating and maintenance costs associated with the allowed
portion of River Bend should be included in rate base, but that
its deferred River Bend carrying costs should not be included in
rate base. Since the PUCT had included both carrying costs and
operating and maintenance costs in GSU's rate base, the Appellate
Court remanded the case to the PUCT on this issue.
The Appellate Court's May 1994 opinion was entered by two
judges, with a third judge dissenting. The dissenting opinion
states that the result of the majority opinion is, among other
things, to deprive GSU of due process at the PUCT because the
PUCT never reached a finding on the $1.4 billion of construction
costs.
In June 1994, the Texas Supreme Court decided three cases
involving the inclusion of deferred costs in rate base. The
Texas Supreme Court held that there is no distinction between the
treatment of deferred carrying costs and deferred operating and
maintenance costs, and that such costs capitalized pursuant to a
PUCT deferred accounting order may be included in rate base
through a subsequent rate case to the extent that they are found
to have been prudently and reasonably incurred, that they are
related to property used and useful in providing service, and
that inclusion of those costs in rate base is necessary to
preserve the utility's financial integrity. This test differs
from the test applied by the Appellate Court in its May, 1994
opinion, and GSU has asked the Appellate Court to reconsider its
opinion in light of these Texas Supreme Court cases.
GSU has also asked the Appellate Court to reconsider its
opinion as to the $1.4 billion in River Bend construction costs.
Barring further review by the Appellate Court, GSU will appeal
the Appellate Court's decision to the Texas Supreme Court on both
issues.
No assurance can be given as to the timing or outcome of the
remands or appeals described above. Pending further developments
in these cases, GSU has made no write-offs for the River Bend-
related costs. Management believes, based on advice from Clark,
Thomas & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the case will be remanded to the PUCT, and the PUCT will be
allowed to rule on the prudence of the abeyed River Bend plant
costs. At this time, management and legal counsel are unable to
predict the amount, if any, of the abeyed and previously
disallowed River Bend plant costs that ultimately may be
disallowed by the PUCT. A net of tax write-off as of June 30,
1994, of up to $309 million could be required based on an
ultimate adverse ruling by the PUCT on the abeyed and disallowed
costs.
Additionally, management believes, based on advice from
Clark, Thomas, & Winters, a Professional Corporation, legal
counsel of record in the Rate Appeal, that it is reasonably
possible that the Allowed Deferrals will continue to be recovered
in rates. Management also believes, based on advice from Clark,
Thomas, & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the deferred costs related to the $1.4 billion of abeyed River
Bend plant costs will be recovered in rates to the extent that
the $1.4 billion of abeyed River Bend plant is recovered.
However, a write-off of the $170 million of deferred costs
related to the $1.4 billion of abeyed River Bend plant costs
would be required if they are not allowed to be recovered in
rates.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies, including any River
Bend write-down.
LPSC Fuel Cost Review
GSU
As discussed on pages 23 and 165 of the Form 10-K, in
November 1993, the LPSC ordered a review of GSU's fuel costs.
The LPSC stated that fuel costs for the period October 1988
through September 1991 (Phase 1) would be reviewed based on the
number of outages at River Bend and the findings in the June 1993
PUCT fuel reconciliation case. In July 1994, the LPSC made a
decision in the Phase 1 fuel review case and ordered GSU to
refund approximately $27 million to its customers. Under the
order, $13.1 million, which was not contested under a recent
Louisiana Supreme Court decision as discussed below, is to be
refunded immediately through a billing credit on August bills.
The remaining portion of the LPSC ordered refund, which is being
contested by GSU, is suspended to allow GSU 30 days to review the
report of special counsel and request rehearing of this remaining
portion. GSU will then be given an opportunity to address this
remaining refund portion in the LPSC's August open session.
Unless the LPSC amends its order in the August session, GSU plans
to appeal the order.
PUCT Fuel Cost Review
GSU
As discussed on pages 22 and 164 of the Form 10-K, in June
1994, GSU filed a petition with the PUCT for the reconciliation
of over- and under-recovery of fuel and purchased power expenses
for the period October 1, 1991, through December 31, 1993, in
accordance with the Texas merger settlement agreement. GSU is
required to reconcile its fuel costs from the end of the period
of its last fuel reconciliation through the merger closing date
to reflect the fuel and purchased power costs GSU incurred as a
stand-alone company. GSU believes there was a net under-recovery
of approximately $4.6 million for the period but has indicated
that it does not propose to surcharge the under-recovery at this
time. A prehearing conference was held on July 18, 1994, and a
procedural schedule was adopted which provides for hearings to
begin on January 9, 1995.
Least Cost Planning
AP&L, GSU, LP&L, MP&L, and NOPSI
As discussed on pages 8-9, 19, 23, 25-27, 76, 122, 197, 232,
and 264 of the Form 10-K, and page 67 of the First Quarter Form
10-Q, AP&L, LP&L, MP&L, and NOPSI have each filed a Least Cost
Plan with their respective retail regulators, and GSU is
currently working with the PUCT regarding integrated resource
planning. SeveralHowever, in response to an increasingly competitive
electric utility environment, AP&L, LP&L, MP&L, and NOPSI
announced their intentions to revise their Least Cost Plan
activities. AP&L, GSU, LP&L, MP&L, and NOPSI intend to adopt the
ratepayer impact measure test as their primary economic criterion
for DSM programs, rather than the total resource cost test that
had been used in developing the initial Least Cost Plans.
Therefore, absent overriding customer, strategic, or public
interests, AP&L, GSU, LP&L, MP&L, and NOPSI will propose those
DSM programs that have the potential for lower rates to all
customers, rather than programs that, while providing direct
benefits to participants, may result in higher rates for
everyone, including non-participants. In addition, AP&L, GSU,
LP&L, (outside the city of New Orleans), and MP&L will no longer
seek a pre-approved cost recovery rider as a mechanism for
recovering program costs, lost contributions and incentives. In
light of this new direction, the following filings were made:
a) On July 1, 1994, AP&L filed a motion requesting
that the APSC public forum meetings were delayed into
1994. The public forum series is now expectedapprove the withdrawal of AP&L's Least Cost
Plan filed December 1, 1992, and July 1, 1993, and to
rescind its directive that AP&L file another Least Cost
Plan in March 1995. On July 25, 1994, the APSC staff and
other intervenors filed their responses to AP&L's motion.
AP&L has requested to be completed in
May 1994.allowed until August 15, 1994, to
reply to those responses.
b) On MarchJune 30, 1994, LP&L filed rebuttal testimony
with the LPSC explaining LP&L's new direction for least
cost planning. On July 18, 1994, LP&L filed a motion to
withdraw its Least Cost Plan and for approval of an
experimental time-of-use-rate. On July 25, 1994, the LPSC
extendedstayed the current overall
discovery, hearinghearings and briefing scheduleis expected to provide that such
schedule will concluderule on motions to
withdraw on August 19, 1994.
c) On June 30, 1994, MP&L filed a motion with the
report ofMPSC to lift a currently effective stay order and dismiss
without prejudice the LPSC special
counsel on September 16, 1994 rather than on June 14, 1994. The
LPSC could render a decision on the basis of this report.proposed Least Cost Plan. On April 7,July
28, 1994, the CouncilMPSC issued its resolution with
regard toan order that lifted the final phase (Phase III) ofstay and
dismissed, without prejudice, the Least Cost Plans
initially filed byPlan filing.
Notwithstanding the changes noted above, LP&L and NOPSI
withintend to implement within the Council in December
1992. The Council stated that it believescity of New Orleans the Least Cost Plans
will result in benefits to the community and that the framework
followed in the plans is consistent with that contemplated in an
ordinance adoptedfive DSM
programs already approved by the Council in 1991 mandating implementation
of least cost planning. The Council rejected the 20-year Least
Cost Plan ofCouncil. However, LP&L and
NOPSI because itintend to pursue appropriate changes in the Council
ordinance establishing the Least Cost Plan framework and planning
criteria.
Alternative Rate Design
LP&L and NOPSI
On June 6, 1994, NOPSI and LP&L filed an Alternative Rate
Design Proposal with the Council under a separate docket from
Least Cost Planning. The proposal includes an experimental time
of use rate and an interruptible/curtailable rate for NOPSI and
LP&L industrial customers that voluntarily participate in the
pilot program. NOPSI and LP&L are proposing that these rates be
implemented on a pilot basis over a twelve month period.
Testimony related to this proposal was filed before the Merger and directed the next Least Cost Plan filing (scheduled
for December 1994) to include the effectsCouncil
on June 30, 1994.
Customer-Controlled Load Management (CCLM)
As discussed on page 67 of the Merger. (LP&L
and NOPSI believe the Merger will have little, if any, impact on
the Least Cost Plan.) Further, the resolution directedFirst Quarter Form 10-Q, LP&L
and NOPSI to correct in the next Least Cost Planfiled their CCLM filing whatwith the Council regarded as deficiencies, and to address certain issues
with regard to certain load-building and supply-side matters.
The Council also approved, with certain refinements, LP&L's and
NOPSI's demand-side implementation plans. The Council also
recognized, but did not rule upon, the separate settlement among
Entergy and a contractors' association of certain competition
issues raised by contractors, approved the concept of (1) a rider
mechanism for recovery of lost contributions and incentives and
(2) the commencement of such recovery on January 1, 1996, and
directed the opening of a separate docket "to consider
alternative industrial rates."
LP&L and NOPSI plan to make, in early or mid-May, a CCLM
filing in the new docket established by the Council to address
the Entergy-proposed pilot CCLM and Council authorization of a
fiber optics/coaxial cable network.June 3,
1994.
System Agreement
Entergy Corporation, AP&L, LP&L, MP&L, and NOPSI
a) As discussed on page 17pages 67-68 of the First Quarter Form 10-K, on August 20,
1990, the City filed a complaint against Entergy Corporation,
AP&L, LP&L, MP&L, NOPSI, and System Energy requesting that FERC
investigate AP&L's transfer of generating capacity to Entergy
Power and the effect of the transfer on AP&L, LP&L, MP&L, and
NOPSI and their ratepayers. On December 15, 1993, FERC issued an
opinion declining to address the issue of whether the transfer
was prudent until a future time when replacement capacity has
been added or planned and finding that, until such time, billings
under the System Agreement as affected by the transfer are
reasonable. The Entergy parties and the City each filed a
request for rehearing of this order, which was denied by FERC on
February 28, 1994. The Entergy parties and the City each filed
an appeal of the FERC's orders with the D. C. Circuit.
b) In10-Q,
in the December 15, 1993, order approving the Merger, the
FERC also
initiated a new proceeding to consider whether the System
Agreement permits certain out-of-service generating units to be
included in reserve equalization calculations under Service
Schedule MSS-1 of that agreement. FERC established March 8,
1994, as the refund effective date. On February 16,June 17, 1994, FERC
issued an order that clarified the scope of the proceeding to
include a review of whether refunds are due for periods prior to
the refund effective date.
The LPSC, MPSC, and the Mississippi Attorney General (MAG)
have taken the position that Entergy Corporation filed an Offer of
Settlement to amendviolated the System
Agreement prospectively to make it
explicit that certain out-of-service generatingby including extended reserve shutdown (ERS) units may be
included in reserve equalization calculations under Service
Schedule MSS-1. The LPSC and MPSC contested certain provisions in
the proposal, and also argued that LP&L and MP&L were entitled
to refunds for MSS-1 payments made in the past. Subsequently,
thecalculations. The LPSC and MPSC submitted testimony,
based on estimates, seeking refunds for periods from 1987 through
1993 estimated at $22.6 million and $13.2 million, respectively.
OnThe FERC staff submitted testimony concluding that Entergy's
treatment was reasonable, and recommended that no refunds be
ordered prospectively from March 14, 1994,8, 1994. Entergy, Corporationthe FERC
staff, and other intervenors supporting Entergy's actions have
not yet submitted testimony responding to the LPSC, MPSC, and MAG
position. A procedural schedule has been established which
provides for discovery, direct, responsive, and rebuttal
testimony, and a motionhearing to begin on October 24, 1994. According
to the schedule, initial and reply briefs to the presiding ALJ
seeking to limit the scope of the proceeding to
prospective issueswill be submitted in November and to exclude the issue of past refunds. On
March 31, 1994, the ALJ limited the scope of the hearing to
exclude any claims for retroactive refunds. Thereafter, it was
agreed by the parties that the procedural schedule in the case
would be stayed until at least May 10,December 1994. The LPSC and MPSC
stated that they would file complaints with FERC asserting their
claims for retroactive refunds, and Entergy Corporation agreed to
answer those complaints within three weeks.
On April 5, 1994, the LPSC, Mississippi Attorney General
(MAG), and MPSC filed a complaint with FERC claiming that
Entergy's past reserve equalization charges under System
Agreement Schedule MSS-1 violated the System Agreement, sought
refunds and requested FERC to hold a hearing to consider this
claim. They also asked FERC to expedite its consideration of
their complaints and to consolidate any hearings it deems
appropriate with these proceedings. Responses by Entergy
Corporation and other parties were filed on April 26, 1994. No
date has been set for a FERC determination as to whether to set
the LPSC, MAG and MPSC complaint for hearing. FERC estimates
that it will not be able to render a decision finally concluding
all of the issues in these proceedings until November 30, 1995.
The amounts potentially subject to refund will continue to accrue
at least until FERC issues a final order in the proceedings.
Entergy's position is that its MSS-1 charges have been, and
will continue to be, in compliance with the System Agreement.
Therefore,Even if FERC finds that there was a technical violation of the
System Agreement, it is Entergy's position that no refunds are
warranted. However, ifwarranted for any periods. In certain pleadings, the APSC and
the City also have opposed the position of the LPSC, MPSC, and
MAG that refunds are orderedwarranted. To date, no other intervenor has
expressed a position on these issues.
If FERC orders refunds for one or more
System operating companies
on the grounds that their MSS-1 payments were too high, it has not yet been determined whether
theis
Entergy's position that revenues for such refunds could or wouldshould be
obtained through corresponding revised chargesbills to the System operating
companies whose MSS-1 chargespayments were too low. Any such revised charges would
be subject to FERC approval.
Nonregulated Investments
Entergy Corporation
In April 1994, theThe APSC the Council, and the
MPSC filedCity have expressed their opposition to this position. They
believe shareholders and not ratepayers should be liable for any
refunds.
On July 15, 1994, Entergy provided regulators with a petition withdata
response showing the SEC alleging that Entergy Corporation has
failed to comply withimpacts on Service Schedule MSS-1 billings
if the terms of a 1992 settlement agreement
with such parties executed in conjunction with the resolution of
various matters pending before the SEC. Specifically, the
petitioners contend that Entergy Corporation has failed to
provide them with financial statements and other documentation
relating to its non-regulated businesses, to submit to an audit
of all transactions among Entergy Corporation, its regulated
utilities and its non-regulated businesses, and to use its best
efforts to obtain SEC approval of specified pricing methods for
certain transactions between its regulated and non-regulated
businesses. The petitioners assert that, because the SEC's
orders approving Entergy Corporation's investments in Entergy
SASI and in certain generating and distribution facilities in
Argentina (see pages 3-4 of the Form 10-K)ERS units were issued in
reliance on Entergy Corporation's undertakingsnot included in the settlement
agreement,MSS-1 calculations
during the SEC should order Entergy Corporation to comply
with the agreement or, alternatively, withdraw its prior
approvals of these investments until Entergy Corporation so
complies. On May 3, 1994, Entergy Corporation filed with the SEC
a response to the petition asserting that it has substantially
complied,period 1987 through 1993. LP&L and is in the process of complying, with the 1992
settlement agreementMP&L would have
been overbilled by $7.7 million and requesting the SEC to dismiss the
petition. The matter is pending.
Merger Related$12 million, respectively,
and AP&L and NOPSI would have been underbilled by $6 million and
$13.8 million, respectively.
Merger-Related Proceedings
Entergy Corporation and GSU
a) As discussed on pages 42 and 43 of the Form 10-K,
purported class action complaints were filed against GSU and its
directors relating to the then proposed merger with Entergy
Corporation. GSU executed a Memorandum of Understanding with the
counsel for the plaintiffs in theseThese suits agreeing in principle
to settle such actions subject to execution of an appropriate
stipulation of settlement, approval by the court,were settled and certain
other conditions. On March 9, 1994, GSU executed a Stipulation
of Settlement Agreement agreeing to settle such actions. The
Stipulation was approved by the court on March 23, 1994. The
Settlement is subject to certain conditions and entry of a final court order
byapproving the court after notice and hearing presently scheduled
forsettlement was entered on May 31, 1994.
b) As discussed on pages 19, 83, and 163 of the Form 10-K,
the settlement agreement that led to the 1993 approval of the
Merger by the PUCT required that GSU file a cost-of-service study
for informational purposes with the PUCT as soon as possible
following closing.closing and GSU is preparing to make that filingfiled a cost-of-service study in June
1994. The settlement agreement also provided that if an action
to reduce GSU's rates werewas initiated between December 31, 1993 and
the time GSU files its first post-closing rate case (as provided
in the settlement agreement), the effect of any order actually
reducing rates would relate back to the date the action was
filed. Pursuant to that provision, the Texas Office of Public
Utility Counsel and certain cities served by GSU have instituted
actions at the PUCT and at the city level to investigate further
the reasonableness of GSU's rates. The PUCT proceeding has been
abatedabeyed pending resolution of the proceedings before the cities.
The current schedule for the cases before the cities contemplates
final city action on or about August 18, 1994. GSU intends to
vigorously oppose any reduction of its rates in these cases.
On July 1, 1994, the PUCT gave final approval of the Merger,
which had the effect of denying all motions for rehearing.
c) As discussed on page 38 of the Form 10-K on December
28, 1993, Houston Industries Incorporated and Houston Lighting &
Power Company filed a petition for reconsideration of the SEC
order approving the Merger. By order dated April 28, 1994, the
SEC denied the petition, stating that the petition raises no
legal or factual issues that would alter the conclusions reached
in the order approving the Merger.
As also discussed on page 3869 of
the Form 10-K,10-Q, 14 parties requested rehearing of certain aspects
of FERC's December 1993 order approving the Merger. On May 11,17,
1994, FERC reaffirmedissued an order which denied nearly all requests for
rehearing. Petitions for review of FERC's December 15, 1993 and
May 17, 1994 orders have been filed in the United States Court of
Appeals for the District of Columbia Circuit by Entergy Services,
the City, Arkansas Electric Energy Consumers (AEEC), the APSC,
Cajun Electric Power Cooperative, Inc., MPSC, the American Forest
and Paper Association, State of Mississippi, Cities of Benton
and others, and Occidental Chemical Corporation. Five petitions
have been consolidated, and it is anticipated that all remaining
petitions will also be consolidated. It is also expected that
the issues before the court will be similar to those raised on
rehearing to FERC. The status of these petitions may be affected
by the D. C. Circuit opinion discussed under the "Open Access
Transmission" heading, below.
On February 4, 1994, the APSC and AEEC filed with FERC a
joint protest to the December 30, 1993 compliance filing. They
reiterated an allegation, presented in AEEC's request for
rehearing, that Entergy must insulate the ratepayers of the pre-
merger Entergy operating companies from all litigation
liabilities related to GSU's River Bend nuclear facility. In its
May 17, 1994 order on rehearing, FERC addressed Entergy's
commitment to insulate the customers of the pre-merger operating
companies against any liability resulting from certain litigation
involving River Bend. In response to FERC's clarification of
Entergy's commitment, Entergy Services filed a compliance filing
on June 16, 1994, which amended certain System Agreement language
submitted with the December 30, 1993, compliance filing. On July
14, 1994, and July 15, 1994, APSC and AEEC, respectively, filed
protests questioning the adequacy of Entergy's June 16, 1994,
compliance filing. Entergy filed an answer to AEEC's protest on
August 1, 1994, reiterating its full compliance with the
requirements of the Commission's May 17, 1994 order on rehearing.
FERC has not yet acted on the compliance filings.
FERC Audit - Proposed Settlement
Entergy Corporation and System Energy
As discussed on pages 16, 84-85, and 296-297 of the Form 10-
K, FERC Division of Audits issued an audit report for System
Energy. In June 1994, System Energy, AP&L, LP&L, MP&L, and NOPSI
reached a tentative settlement with the FERC staff and other
parties. The proposed settlement, which is subject to approval
by the FERC, would require System Energy to refund or credit
approximately $60 million to AP&L, LP&L, MP&L, and NOPSI, which
would in turn make refunds to their customers (subject to certain
exceptions). Additionally, System Energy would refund or credit
a total of approximately $62 million, plus interest, to AP&L,
LP&L, MP&L, and NOPSI over the period through July 2004. The
proposed settlement would also require the write-off of certain
related unamortized balances of deferred investment tax credits
by AP&L, LP&L, MP&L, and NOPSI. Had the proposed settlement been
effective in the second quarter of 1994, it would have reduced
Entergy Corporation's consolidated net income for the quarter and
six months ended June 30, 1994, by approximately $71.5 million,
partially offset by the write-off of the unamortized balances of
related deferred investment tax credits of approximately $66.5
million ($27.3 million for AP&L; $31.5 million for LP&L; $6
million for MP&L; and $1.7 million for NOPSI). Pursuant to the
proposed settlement, System Energy would also reclassify from
utility plant to other deferred debits approximately $81 million
of other Grand Gulf 1 costs. Although excluded from rate base,
System Energy would be permitted to recover such costs over a 10
year period. System Energy currently plans to file with FERC for
approval of the Merger, denied,proposed settlement in August 1994. However,
there can be no assurance that FERC will ultimately approve the
settlement in its current form.
As a result of the charges associated with the refunds,
System Energy requires the consent of certain banks (parties to
the reimbursement agreements) to temporarily waive the fixed
charge coverage and equity ratio covenants in the letters of
credit and reimbursement agreement related to the Grand Gulf 1
sale and leaseback transaction. System Energy has obtained the
consent of the banks to waive these covenants, for the most part,12-month
period beginning with the requests
for rehearing,earlier of a write-off or the first
refund, if such refund occurs prior to December 31, 1994. System
Energy believes the conditions included in the proposed
settlement are covered by the waiver. The waiver is conditioned
upon System Energy not paying any common stock dividends to
Entergy Corporation until the equity ratio covenant is once again
met. Absent a waiver, System Energy's failure to perform these
covenants could cause a draw under the letters of credit and/or
early termination of the letters of credit. If the letters of
credit were not replaced in a timely manner, a default or early
termination of System Energy's leases could result.
Open Access Transmission
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and confirmed its findings that the Merger would
result in significant benefits. FERC's orders on the Merger may
be subject to appeal to the courts.
d)NOPSI
As discussed on page 3817 of the Form 10-K, appeals
seeking to set asidevarious parties
filed petitions with the LPSC orderUnited States Court of Appeals for the
District of Columbia Circuit related to FERC's 1992 orders
regarding open access transmission and the Merger were
filed in the 19th Judicial District Court for the Parishsale of East
Baton Rouge, Louisiana, by Houston Lighting & Power Company on
August 13, 1993, and by the Alliance for Affordable Energy, Inc.
on August 20, 1993.wholesale
power at market-based rates. On February 9, 1994, Houston Lighting &
Power Company filed a motion voluntarily dismissing its appeal,
which motion was granted on February 27, 1994.
NRC Fines
Entergy Corporation and GSU
a) The NRC staff informed Entergy Operations on April 11,
1994 that it proposes to fine GSU $100,000 for apparent fire-
protection program violations at River Bend. During a 1993
reassessment of the plant's ability to safely shut down the
facility in the event of a fire, GSU found five fire-protection
deficiencies that were reported to the NRC. The NRC acknowledged
that operator action in most cases could have overcome the fire
protection deficiencies and shut down the reactor, and that the
probability of these accidents was low. The NRC further
recognized that each of the deficiencies was promptly resolved,
bringing the program into compliance.
b) On April 20, 1994, the NRC fined Entergy Operations
$112,500 for security violations at River Bend. The fine was
based on security violations identified as a result of
inspections conducted by the NRC between April 1992 and August
1993. The NRC acknowledged that Entergy Operations had taken
remedial steps and plans other corrective measures to prevent
similar violations in the future. Entergy Operations does not
plan to contest the fine.
Cajun
Entergy Corporation and GSU
a) As discussed on pages 40-42, 94-95, and 172-173 of the
Form 10-K, Cajun filed a civil action against GSU in the U. S.
District Court, Middle District of Louisiana, which suit began on
AprilJuly 12, 1994, and is continuing. Cajun alleges fraud and error
by GSU, breach of its fiduciary duties owed to Cajun, and/or
GSU's repudiation, renunciation, abandonment or dissolution of
its core obligations under the operating agreement for the unit,
as well as the lack or failure of cause and/or consideration for
Cajun's performance under the operating agreement. The suit
seeks to recover Cajun's alleged $1.6 billion investment in the
unit as damages, plus attorneys' fees, interest, and costs. GSU
believes the suits are without merit and is contesting them
vigorously. No assurance can be given as to the outcome of this
litigation. If GSU were ultimately unsuccessful in this
litigation and were required to make substantial payments, GSU
would probably be unable to make such payments and would probably
have to seek relief from its creditors under the Bankruptcy Code.
b) As discussed on page 31 of the Form 10-K, GSU filed two
applications with the NRC to amend the River Bend operating
license, and these amendments were issued in December 1993. On
February 16, 1994, Cajun filed with the D. C. Circuit petitions
for review of the two license amendments issued by the NRC. On
March 14, 1994, Entergy Corporation, Entergy Operations, and GSU
filed motions to intervene in the D.C. Circuit
proceedings. On
March 21, 1994, Cajun indicatedissued an opinion finding that it will contendFERC's failure to conduct an
evidentiary hearing with respect to the proposed transmission
tariffs and related matters was arbitrary and capricious, and
that FERC failed to adequately explain its approval of certain
provisions in the NRC
erred by deciding that evidentiary hearings were not warranted on
antitrust issues, on various issues concerningtariffs, including a provision allowing Entergy
to seek recovery in transmission rates of "stranded investment"
costs resulting from the Atomic Energy
Act, and on certain ongoing litigation between Cajun and GSU
regarding River Bend. Cajun will also argue that the NRC erred
in failing to find adverse effects on certain alleged Cajun
contract rights.
NISCO
Entergy Corporation and GSU
In 1988, GSU entered into a joint venture with Conoco, Inc.,
Citgo Petroleum Corporation, and Vista Chemical Company
(Industrial Participants) whereby GSU's Nelson Units 1 and 2 were
sold to a partnership (NISCO) consisting of the Industrial
Participants and GSU. The sale of the units by GSU to NISCO was
for an amount in excess of the units' depreciated cost. The
Industrial Participants are supplying the fuel for the units,
while GSU operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
NISCO, representing the excess of NISCO's purchase price of the
units over GSU's depreciated cost of the units. GSU appealed the
1990 order. In March 1994, the Louisiana Supreme Court ruled in
favor of the LPSC, and GSU recorded a estimated refund provision of approximately $10.1 million, before related income taxestransmission service. The
case was remanded to FERC for further proceedings. To date,
Entergy has not sought recovery of $4.1 million.stranded investment costs in
rates under the transmission tarriffs and the remand to FERC is
not expected to result in refunds of any amounts that have been
collected pursuant to transmission tarriffs.
GSU Asbestos Suits
Entergy Corporation and GSU
As discussed on pages 39-40 of the Form 10-K in October
1989, an amended lawsuit petition was filed on behalf of 985
plaintiffs in the District Court of Jefferson County, Texas, 60th
Judicial District in Beaumont, Texas, naming 55 defendants
including GSU. In February 1990, another amended lawsuit
petition was filed in a different state District Court in
Jefferson County, Texas, on behalf of over 200 plaintiffs
(subsequently amended to include a total of 674) naming 127
defendants including GSU. Possibly 300 to 400 or moreand page 71 of
the plaintiffs in Texas may have worked at GSU's premises. At least
nine other individual suits have been filed in Beaumont against
GSU and others, seeking damages for alleged asbestos exposure.
All of the plaintiffs in such suitsFirst Quarter Form 10-Q, there are also suing GSU and all
other defendants on a conspiracy count. Two similar suits have
also been filed in Texas on behalf of approximately 220
plaintiffs. There are 39 asbestos-related law suits
filedpending in the 14th Judicial District Court of Calcasieu Parish
in Lake Charles, Louisiana, on behalfand in various state district courts
in Jefferson County Texas. Settlement of an aggregatethe two largest of 91 plaintiffs naming from
16 to 24 defendants including GSU, and GSU is aware of as many as
61 additional cases that may be filed. Thethe
Jefferson County suits allege that
each plaintiff contracted an asbestos-related disease from
exposure to asbestos insulation products on the premises of such
defendants. Management believes that GSU has meritorious
defenses, but there can be no assurance as to the outcome of
these cases or that additional claims may not be asserted. In
asbestos-related suits against the manufacturers, very
substantial recoveries have been achieved by large(involving about 1660 groups of claimants.claimants)
and all of the suits in Calcasieu Parish are being consummated in
the second and third quarters of 1994. GSU doeswas named as one of a
number of defendants in nearly all of the suits. GSU's share of
the settlements was not presently believe that the ultimate
resolution of these cases will materially adversely affectmaterial to its financial position or
results of operations.
LPSC Investigation
Entergy Corporation and LP&L
As discussed on pages 75, 84, and 199 of the Form 10-K
the
LPSCdiscovery is currently underway in the LPSC's investigation of
LP&L's rates and hearings are scheduled to begin on December 5,
1994. On August 17, 1994, LP&L will file a cost of service
analysis with the LPSC, which LP&L believes will support its
current rate level. LP&L is presently allowed to review LP&L's rates and
rate structure in May 1994.
February 1994 Ice Stormearn a 12.76%
return on common equity.
Incentive Rate Plan
Entergy Corporation and MP&L
As discussed on pages 104 and 245 of the Form 10-K and Note
2, a February 1994 ice storm left more than 80,000 customers
without electric power in MP&L's service area. Current estimates
of repair costs are $70.8 million, of which $57.5 million is
expected to be capitalized as plant related costs. The remaining
balance has been recorded by MP&L as a deferred debit. On April
15, 1994, MP&L filed a Notice of Intent to Change Rates with the
MPSC under which MP&L proposed to recover certain expenditures
associated with the ice storm. MP&L proposes to recover its ice
storm costs through a rider schedule ("Storm Damage Rider").
Under the proposed Storm Damage Rider, the initial rate
adjustment would occur on August 15, 1994, and would recover ice
storm costs incurred by MP&L through May 31, 1994. On or before
February 15, 1995, revised rate adjustments reflecting the total
ice storm costs would be submitted to the MPSC for review and
verification. The revised rate adjustments are proposed to
become effective March 15, 1995, and remain in effect until
August 15, 1999, at which time MP&L would file revised base rates
reflecting the annual revenue requirement associated with the
then remaining capital related costs.
The MPSC is expected to hold a hearing on the filing and
could order a method or level of recovery of ice storm costs
different from that proposed by MP&L.
The Ice Storm Rider is proposed to operate independently and
separately from MP&L's formulary incentive rate plan. See pages 25-26, 83-84, and 235-236 of the Form
10-K, the MPSC approved an incentive rate plan for additional
information.MP&L. The
final order was appealed to the Mississippi Supreme Court on May
17, 1994, by Mississippi Valley Gas Co. on the grounds that the
MPSC issued the final order without having reviewed the cost of
MP&L's promotional practices, some of which Mississippi Valley
Gas alleges to be improper. The matter is pending.
February 1994 Ice Storm
Entergy Corporation, AP&L, and MP&L
In early February 1994, an ice storm left more than 221,000
Entergy customers without electric power across the System's four-
state service area. The storm was the most severe natural
disaster ever to affect the System, causing damage to
transmission and distribution lines, equipment, poles, and
facilities in certain areas, primarily in Mississippi. Repair
costs are currently estimated to be $114.6 million, $27.5
million, and $78.7 million for the System, AP&L, and MP&L,
respectively with $83.8 million, $16.6 million, and $65.3 million
of these amounts estimated to be capitalized as plant-related
costs. The remaining balances have been charged against the
respective companies' regulatory storm damage reserves, except
for MP&L which recorded a deferred debit. On April 16, 1994,
MP&L filed for rate recovery of costs related to the ice storm.
MP&L's filing, as subsequently amended, requested recovery of the
revenue requirement associated with MP&L's ice storm costs
recorded through April 30, 1994. MP&L intends to make another
ice storm rate filing with the MPSC by early 1995 to recover ice
storm costs recorded by MP&L after April 30, 1994. In early
August 1994, MP&L and the MPSC's Public Utilities Staff (MPUS)
entered into a stipulation with respect to the recovery of ice
storm costs recorded through April 30, 1994. Under the
stipulation, which must be approved by the MPSC, MP&L will
implement for five years, beginning in October 1994, an ice storm
rider schedule that will increase rates approximately $8 million
annually. At the end of the Five year period, the revenue
requirement associated with the undepreciated ice storm
capitalized costs will be included in MP&L's base rates to the
extent that this revenue requirement does not result in MP&L's
rate of return on rate base being above the benchmark rate of
return under MP&L's formula rate plan. Estimated construction
expenditures (see Note 1) reflect the above amounts.
Livingston Parish Hazardous Waste Suits
GSU and LP&L
As discussed on pages 39 and 43 of the Form 10-K and page
72 of the First Quarter Form 10-Q, various suits have been filed
concerning a hazardous waste disposal site in Livingston Parish,
Louisiana. At an April 28,On June 23, 1994, status
conference, the United States District Courtfederal district court entered
into the record its first case management and scheduling order,
which order, among other things, set the trial in this matter for
September 3, 1996. Such order also stated the Middle
Districtintention of Louisiana (Federal District Court) judge stated that
he intendedthe
federal district court to adopt the Federal magistrate's recommendation that
the class action not be remandedfacilitate, prior to the Livingston Parish,
Louisiana District Court (State District Court). Further, the
judge will review, among other matters, the State District Court
class certification to determine whether such certification
should be maintained in Federal District Court. The April 11,
1994 State District Courtscheduled
trial date, was not met.appellate review of any significant decisions. The
matter is pending.
Decommissioning Costs
Entergy Corporation, AP&L, andSt. Charles Parish Suits
LP&L
As discussed on pages 29 and 134page 43 of the Form 10-K, estimated
decommissioning costs are regularly reviewedLP&L and updated. In
March 1994, APthe tax
authorities of St. Charles Parish, Louisiana, have been involved
in litigation as to use taxes on nuclear fuel paid by LP&L filedunder
protest. With regard to additional interest LP&L claimed was due
on the taxes it recovered, LP&L's writs of certiorari to the
Louisiana Supreme Court were denied. LP&L is reviewing other
procedures with the APSC an interim updateregard to recovery of the ANO
cost study, which reflected significant increases in costs of low-
level radioactive waste disposal. AP&L expects to include the
updated costs in the annual decommissioning cost rate rider
filing with the APSC during the fourth quarter of 1994. See Note
1 for additional information on updated decommissioning cost
estimates.
Reserve for Revenue Reductionsuch interest. The matter
is pending.
NOPSI Rate Reduction/Credit
Entergy Corporation and NOPSI
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
A review byOn July 7, 1994, NOPSI and the Council's advisors of NOPSI's returnCouncil agreed that, based on
equity for the twelve month periodtest year ended September 30, 1993, indicates thatNOPSI's earnings exceeded
its revenue requirement by $24.95 million and in accordance with
the terms of the 1991 NOPSI maySettlement and a 1992 gas rate
settlement, there would be required to credit $21.5 million to
its customers. In early Maya prospective base rate reduction for
twelve months commencing July 14, 1994, NOPSI determined it was likely
thatwhich reduction, because
of the rate freeze, would be accomplished by means of a credit
(to be expressed on a per kwh basis) to customers would be required, however, NOPSI
estimates that the actual amount of the revenue reductioncustomers' bills. The
per kilowatt hour credit will be approximately $14.3 million.calculated by dividing test year
overearnings by test year kwh consumption and applied to kilowatt
hour usage during the period ended July 13, 1995. In the first
quarter of 1994, NOPSI recorded a $14.3 million reserve for thisthe
anticipated revenue reduction which reduced net income by $8.8
million (net of taxes)tax). The Council is expected
to order a hearing in the second quarter of 1994 to render a
final decision onreserve will be offset against the
actual amount, method, and timingcredits prospectively applied to customers bills in
accordance with the terms of the credit.
Item 4. SubmissionJuly 7, 1994 agreement.
Settlement of MattersIRS Grand Gulf 2 Abandonment Issue
Entergy and System Energy
As discussed on page 300 of the Form 10-K, the Internal
Revenue Service audited Entergy Corporation's 1988, 1989, and
1990 consolidated federal income tax returns and proposed that
adjustments be made to a Vote of Security Holdersthe Grand Gulf 2 abandonment loss
deduction claimed on Entergy's 1989 consolidated federal income
tax return. The final agreement with the IRS required Entergy
Corporation The annual meeting of stockholders of Entergy Corporation was
held on May 6, 1994. The following matters were voted on and
receivedto pay $4.35 million in connection with the
specified number of votes for, abstentions, votes
withheld (against), and broker non-votes:
1. Election of Directors:
Votes Broker
Name of Nominee Votes For Abstentions Withheld Non-Votes
W. Frank Blount 205,283,455 N/A 1,021,762 N/A
John A. Cooper, Jr. 205,371,312 N/A 933,905 N/A
Lucie J. Fjeldstad 205,274,082 N/A 1,031,135 N/A
Norman C. Francis 205,136,089 N/A 1,169,128 N/A
Kaneaster Hodges, Jr. 205,267,089 N/A 1,038,128 N/A
Robert v. d. Luft 205,251,205 N/A 1,054,012 N/A
Edwin Lupberger 205,155,974 N/A 1,149,243 N/A
Kinnaird R. McKee 205,296,006 N/A 1,009,211 N/A
Paul W. Murrill 205,090,093 N/A 1,215,124 N/A
James R. Nichols 205,371,894 N/A 933,323 N/A
Eugene H. Owen 205,209,580 N/A 1,095,637 N/A
John N. Palmer, Sr. 205,388,740 N/A 916,477 N/A
Robert D. Pugh 205,336,833 N/A 968,384 N/A
H. Duke Shackelford 205,338,305 N/A 966,912 N/A
Wm. Clifford Smith 205,351,721 N/A 953,496 N/A
Bismark A. Steinhagen 205,317,947 N/A 987,270 N/A
2. Appointment of independent public accountants, Coopers &
Lybrand, for the year 1994: 204,765,999 votes for; 600,386 votes
against; 938,832 abstentions; and broker non-votes are not
applicable.
AP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to an Arkansas statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and R. Drake Keith.
GSU
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Texas statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and Frank F. Gallaher.
LP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Louisiana statute that
permits such a procedure. The consent was signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and John J. Cordaro.
MP&L
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Mississippi statute
that permits such a procedure. The consent was signed on behalf
of Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, and Donald E. Meiners.
NOPSI
A consent in lieu of the annual meeting of common stockholders
was executed on May 5, 1994, pursuant to a Louisiana statute that
permits such a procedure. The consents were signed on behalf of
Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Jerry D. Jackson, Edwin Lupberger, Jerry L. Maulden, and John J.
Cordaro.
System Energy
A consent in lieu of the annual meeting of common stockholders
was executed on April 29, 1994, pursuant to an Arkansas statute
that permits such a procedure. The consent was signed on behalf
of Entergy Corporation, which owns all of the outstanding common
stock.
The Board of Directors elected by the common stockholder in and
by such consent is as follows:
Donald C. Hintz, Jerry D. Jackson, Edwin Lupberger, and Jerry L.
Maulden.abandonment loss issue.
Item 5. Other Information
ANO Matters
Entergy CorporationLow-Level Radioactive Waste
AP&L, GSU, LP&L, and AP&LSystem Energy
As discussed on pages 30, 77, and 123page 29 of the Form 10-K, leaksthe Barnwell
Disposal Facility (Barnwell) had been open to out-of-region
generators (including generators in certain steam generator tubesArkansas and Louisiana) in
the past. However, on June 3, 1994, the South Carolina
legislature failed to take action that would permit further
access to out-of-region generators. Beginning in July 1994, low-
level radioactive waste generators in the Central States Compact,
including AP&L, GSU, and LP&L, will be required to store such
waste on-site until a Central States Compact facility becomes
operational or another site becomes accessible. The estimated
construction costs for storage sufficient for approximately five
years at ANO 2 were discoveredGrand Gulf 1, Waterford 3, and repaired during an outageRiver Bend are in March 1992. During a refueling
outage in September 1992, a comprehensive inspectionthe
range of all steam
generator tubing was conducted and necessary repairs were made.
During a mid-cycle outage in May 1993, a scheduled special
inspection of certain steam generator tubing was conducted by
Entergy Operations and additional repairs were made. Entergy
Operations operated ANO 2 with no further steam generator
inspections until the refueling outage that was completed on
April 23, 1994. Inspections during the outage revealed numerous
cracks, however most were smaller than those seen in earlier
inspections except for one relatively large crack. Based upon
results of these inspections and an inconclusive pressure test,
Entergy Operations plans to inspect the steam generator tubes
during a mid-cycle outage tentatively scheduled for January 1995.
The operations and power output of the unit have not been
materially adversely affected.
Nonregulated Investments
Entergy Corporation
As discussed on page 3 of the Form 10-K, Entergy continues
to consider opportunities to expand its business, including
opportunities in overseas power development. On April 28,
1994, Entergy Power Asia Ltd., an Entergy Corporation subsidiary,
filed an application with the FERC requesting exempt wholesale
generation status under the Public Utility Holding Company Act of
1935 for one existing 1200-megawatt generating plant and four
planned generating plants in China.
Wholesale Contract
AP&L
On March 31, 1994, North Little Rock, Arkansas awarded AP&L
a wholesale electric contract which will provide estimated
revenues of $347$1.0 million to AP&L over its 11-year life. AP&L
which has been serving North Little Rock$2.0 million for over 40 years, was
awarded the contract after intense bidding with three
competitors. The price per KWH was reduced 18%, retroactive to
March 1, 1994, with increases in price through the year 2004.
On April 29, 1994, Power Systems Ltd. (PSL), one of AP&L's
competitors, filed a motion with FERC to intervene in the
approval process for AP&L's contract with North Little Rock. PSL
alleges that the rates in the contract fail to meet FERC's
criteria for below-market prices and unlawfully prohibit other
power suppliers from participating in the North Little Rock power
market. FERC has until June 1, 1994, to decide whether it will
hold hearings on the matter or approve the power supply contract.each site.
Common Stock Price Range and Dividends
Entergy Corporation
The shares of Entergy Corporation's common stock are listed
on the New York, Chicago, and Pacific Stock Exchanges. The high
and low sales prices of Entergy Corporation's common stock for
the firstsecond quarter of 1994, as reported by The Wall Street
Journal as composite transactions, were $37 3/$32 1/8 and $31 1/$24 5/8,
respectively, per share.
For the twelve months ended March 31,June 30, 1994, Entergy
Corporation paid common stock dividends in an aggregate amount of
$1.70$1.75 per share. As of March 31,June 30, 1994, the consolidated book
value of a share of Entergy Corporation's common stock was $28.24$28.26
and the last reported sale price of Entergy Corporation's common
stock on March 31,June 30, 1994, was $31$24 3/4 per share.
Earnings Ratios
AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
The System operating companies and System Energy have
calculated ratios of earnings to fixed charges and ratios of
earnings to combined fixed charges and preferred dividends
pursuant to Item 503 of Regulation S-K of the SEC as follows:
Twelve Months Ended
December 31, March 31,June 30,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Fixed Charges
(a)
AP&L 2.31 2.16 2.25 2.28 3.11(h) 2.682.80
GSU 1.16 .80(i) 1.56 1.72 1.54 1.541.59
LP&L 1.79 2.32 2.40 2.79 3.06 3.163.15
MP&L 1.04(e) 2.42 2.36 2.37 3.79(h) 2.842.71
NOPSI 1.89 2.73 5.66(g) 2.66 4.68(h) 3.844.07
System Energy -(f) 2.10 1.74 2.04 1.87 1.84
Twelve Months Ended
December 31, March 31,June 30,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Combined Fixed
Charges and
Preferred
Dividends
(a)(b)(c)
AP&L 1.88 1.81 1.87 1.86 2.54(h) 2.222.32
GSU (d) .66(i) .59(i) 1.19 1.37 1.21 1.211.26
LP&L 1.39 1.87 1.95 2.18 2.39 2.512.52
MP&L 1.00(e) 1.93 1.94 1.97 3.08(h) 2.282.20
NOPSI 1.62 2.36 4.97(g) 2.36 4.12(h) 3.383.56
(a) "Earnings," as defined by SEC Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3)
investment tax credit adjustments - net, and (4) fixed
charges. "Fixed Charges" include interest (whether expensed
or capitalized), related amortization, and interest
applicable to rentals charged to operating expenses.
(b) "Preferred Dividends," as defined by SEC Regulation S-K, are
computed by dividing the preferred dividend requirement by
one hundred percent (100%) minus the effective income tax
rate.
(c) System Energy's Amended and Restated Articles of
Incorporation do not currently provide for the issuance of
preferred stock.
(d) "Preferred Dividends" in the case of GSU also include
dividends on preference stock.
(e) Earnings for the twelve months ended December 31, 1989
include the impact of the write-off of $60 million of
deferred Grand Gulf 1-related costs pursuant to an agreement
between MP&L and the MPSC.
(f) Earnings for the year ended December 31, 1989 were
inadequate to cover fixed charges due to System Energy's
cancellation and write-off of its investment in Grand Gulf 2
in September 1989. The amount of the coverage deficiency
for fixed charges was $745.2 million.
(g) Earnings for the year ended December 31, 1991 include the
$90 million effect of the 1991 NOPSI Settlement.
(h) Earnings for the year ended December 31, 1993 include the
$81
million, $52 million, and $18 million for AP&L, MP&L, and
NOPSI, respectively, related to the change in accounting
principle to provide for the accrual of estimated unbilled
revenues.
(i) Earnings for the year ended December 31, 1990 for GSU were
not adequate to cover fixed charges by $60.6 million.
Earnings for the years ended December 31, 1990 and 1989,
were not adequate to cover fixed charges and preferred
dividends by $165.1 million and $190.8 million,
respectively. Earnings in 1990 include a $205 million
charge for the settlement of a purchase power dispute.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
**3(a) - Articles of Amendment to Restated Articles of
Incorporation, as amended, of LP&L, as executed
July 21, 1994.
3(b) - Articles of Amendment to Restated Articles of
Incorporation, as amended, of MP&L, as executed March
17, 1994.
3(c) - Articles of Amendment to Restated Articles of
Incorporation, as amended, of NOPSI, as executed
July 21, 1994.
3(d) - By-laws of AP&L, as amended and currently in effect.
3(e) - By-laws of GSU, as amended and currently in effect.
3(f) - By-laws of MP&L, as amended and currently in effect.
3(g) - By-laws of NOPSI, as amended and currently in effect.
4(a) - NineteenthFifty-second Supplemental Indenture, dated as of June
15, 1994, to System Energy'sAP&L's Mortgage and Deed of Trust.
** 4(b) - Ninth Supplemental Indenture, dated as of
July 1, 1994, to MP&L's Mortgage and Deed of Trust
(filed as Exhibit A-2(g)A-2(j) to Rule 24 Certificate dated
May 6,July 22, 1994 in File No. 70-7946 and incorporated herein by reference)70-7914).
**10(a) 4(c) - Twenty-ninth Assignment of Availability Agreement,
Consent and Agreement,Forty-ninth Supplemental Indenture, dated
as of AprilJuly 1, 1994, among AP&L,to LP&L, MP&L, NOPSI, System Energy,&L's Mortgage and United StatesDeed of
Trust Company of New York and Gerard F.
Ganey, as Trustees (filed as Exhibit B-2(f)A-3(e) to Rule 24 Certificate
dated May 6,August 1, 1994 in File No. 70-7946
and incorporated herein by reference).
**10(b) - Twenty-ninth Supplementary Capital Funds Agreement,
dated as of April 1, 1994, among Entergy Corporation,
System Energy and United States Trust Company of New
York and Gerard F. Ganey, as Trustees (filed as
Exhibit B-3 (f) to Rule 24 Certificate dated May 6,
1994 in File No. 70-7946 and incorporated herein by
reference)70-7822).
23(a) - Consent of Friday, Eldredge & Clark.
23(b) - Consent of Monroe & Lemann (A Professional
Corporation).
23(c) - Consent of Wise Carter Child & Caraway, Professional
Association.
23(d) - Consent of Clark, Thomas & Winters.
23(e) - Consent of Sandlin Associates.
99(a) - AP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(b) - GSU's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(c) - LP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(d) - MP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(e) - NOPSI's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Pre
ferredPreferred Dividends, as defined.
99(f) - System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
**99(g) - Annual Reports on Form 10-K of Entergy
Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy for the fiscal year ended December 31, 1993,
portions of which are incorporated herein by
reference as described elsewhere in this document
(filed with the SEC in File Nos. 1-11299, 1-10764, 1-
2703, 1-8474, 0-320, 0-5807, and 1-9067,
respectively).
**99(h) - Quarterly Report on Form 10-Q of Entergy
Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy for the quarter ended March 31, 1994, portions
of which are incorporated herein by reference as
described elsewhere in this document (filed with the
SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-
320, 0-5807, and 1-9067, respectively).
99(h)**99(i) - Earnings statementOpinion of AP&L forClark, Thomas & Winters, a
professional corporation, dated September 30, 1992
regarding the twelve month
period ended March 31,effect of the October 1, 1991 judgment
in GSU v. PUCT in the District Court of Travis
County, Texas (99-1 in Registration No. 33-48889).
99(j) - Opinion of Clark, Thomas & Winters, a professional
corporation, dated August 8, 1994 made generally available
to security holdersregarding recovery
of costs deferred pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(i) - Earnings statement of LP&L for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(j) - Earnings statement of MP&L for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(k) - Earnings statement of NOPSI for the twelve month
period ended March 31, 1994, made generally available
to security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(l) - Earnings statement of System Energy for the twelve
month period ended March 31, 1994, made generally
available to security holders pursuant to Section
11(a) of the Securities Act of 1933, as amended.PUCT order in Docket
6525.
___________________________
* Reference is made to a duplicate list of exhibits being
filed as a part of Form 10-Q for the quarter ended March 31,June 30,
1994, which list, prepared in accordance with Item 102 of
Regulation S-T of the Securities and Exchange Commission,
immediately precedes the exhibits being filed with Form 10-Q
for the quarter ended March 31,June 30, 1994.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
GSUEntergy
A current report on Form 8-K, dated March 31,May 25, 1994, was
filed with the SEC on April 6,June 1, 1994, reporting information
under Item 5. "Other Materially Important Events".
Entergy Corporation, AP&L, LP&L, MP&L, NOPSI and System EnergyGSU
A current report on Form 8-K, dated March 16,May 25, 1994, was
filed with the SEC on March 21,June 1, 1994, reporting information
under Item 4. "Changes in Registrant's
Certifying Accountant"5. "Other Materially Important Events".
EXPERTS
All statements in Part II of this Quarterly Report on Form
10-Q as to matters of law and legal conclusions, based on the
belief or opinion of AP&L, LP&L, MP&L, NOPSI, and System Energy
or otherwise, pertaining to the titles to properties, franchises
and other operating rights of certain of the registrants filing
this Quarterly Report on Form 10-Q, and their subsidiaries, the
regulations to which they are subject and any legal proceedings
to which they are parties are made on the authority of Friday,
Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol, Little Rock, Arkansas, as to AP&L; Monroe & Lemann (A
Professional Corporation), 201 St. Charles Avenue, Suite 3300,
New Orleans, Louisiana, as to LP&L and NOPSI; and Wise Carter
Child & Caraway, Professional Association, Heritage Building,
Jackson, Mississippi, as to MP&L and System Energy.
The statements attributed to Clark, Thomas & Winters, a
professional corporation, as to legal conclusions with respect to
GSU's rate regulation in Texas in Note 2 to Entergy Corporation
and Subsidiaries Consolidated Financial Statements, "Rate and
Regulatory Matters," have been reviewed by such firm and are
included herein upon the authority of such firm as experts.
The statements attributed to Sandlin Associates regarding
the analysis of River Bend construction costs of GSU in Note 2 to
Entergy Corporation and Subsidiaries Consolidated Financial
Statements, "Rate and Regulatory Matters," have been reviewed by
such firm and are included herein upon the authority of such firm
as experts.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, each registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized. The
signature for each undersigned company shall be deemed to relate
only to matters having reference to such company or its
subsidiaries.
ENTERGY CORPORATION
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
/s/Lee W. Randall
Lee W. Randall
Vice President and
Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)
Date: May 16,August 8, 1994