______________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000
OR
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, IRS Employer
File Number Address of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 72-1229752
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
Telephone (504) 576-4000
1-10764 ENTERGY ARKANSAS, INC. 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-27031 ENTERGY GULF STATES, INC. 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 ENTERGY LOUISIANA, INC. 72-0245590
(a Louisiana corporation)
4809 Jefferson Highway
Jefferson, Louisiana 70121
Telephone (504) 840-2734
0-320 ENTERGY MISSISSIPPI, INC. 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 368-5000
0-5807 ENTERGY NEW ORLEANS, INC. 72-0273040
(a Louisiana corporation)
1600 Perdido Street, Building 505
New Orleans, Louisiana 70112
Telephone (504) 670-3674
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
______________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Class on Which Registered
Entergy Corporation Common Stock, $0.01 Par Value - 220,062,294 New York Stock Exchange, Inc.
shares outstanding at February 28, 2001 Chicago Stock Exchange Inc.
Pacific Exchange Inc.
Entergy Arkansas Capital I 8-1/2% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value:
$4.40 Dividend Series New York Stock Exchange, Inc.
$4.52 Dividend Series New York Stock Exchange, Inc.
$5.08 Dividend Series New York Stock Exchange, Inc.
Adjustable Rate Series B (Depository Receipts) New York Stock Exchange, Inc.
Entergy Gulf States Capital I 8.75% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Entergy Louisiana Capital I 9% Cumulative Quarterly Income Preferred New York Stock Exchange, Inc.
Securities, Series A
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Class
Entergy Arkansas, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $0.01 Par Value
Entergy Gulf States, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy Louisiana, Inc. Preferred Stock, Cumulative, $100 Par Value
Preferred Stock, Cumulative, $25 Par Value
Entergy Mississippi, Inc. Preferred Stock, Cumulative, $100 Par Value
Entergy New Orleans, Inc. Preferred Stock, Cumulative, $100 Par Value
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
No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants' knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of Entergy Corporation Common Stock, $0.01
Par Value, held by non-affiliates, was $8.5 billion based on the reported
last sale price of such stock on the New York Stock Exchange on February
28, 2001. Entergy Corporation is directly or indirectly the sole holder of
the common stock of Entergy Arkansas, Inc., Entergy Gulf States, Inc.,
Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy New Orleans,
Inc., and System Energy Resources, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of Entergy Corporation to be filed in
connection with its Annual Meeting of Stockholders, to be held May 11,
2001, are incorporated by reference into Parts I and III hereof.
TABLE OF CONTENTS
Page
Number
Definitions i
Part I
Item 1. Business 1
Item 2. Properties 36
Item 3. Legal Proceedings 36
Item 4. Submission of Matters to a Vote of Security Holders 36
Directors and Executive Officers of Entergy Corporation 37
Part II
Item 5. Market for Registrants' Common Equity and Related
Stockholder Matters 39
Item 6. Selected Financial Data 40
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 40
Item 7A.Quantitative and Qualitative Disclosures About Market
Risk 40
Item 8. Financial Statements and Supplementary Data 41
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 210
Part III
Item 10.Directors and Executive Officers of the Registrants 210
Item 11.Executive Compensation 214
Item 12.Security Ownership of Certain Beneficial Owners and
Management 228
Item 13.Certain Relationships and Related Transactions 230
Part IV
Item 14.Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 232
Signatures 233
Report of Independent Accountants on Financial Statement Schedules 241
Index to Financial Statement Schedules S-1
Exhibit Index E-1
This combined Form 10-K is separately filed by Entergy Corporation,
Entergy Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc.,
Entergy Mississippi, Inc., Entergy New Orleans, 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
representations only as to itself and makes no other representations
whatsoever as to any other company.
This report should be read in its entirety. No one section of the
report deals with all aspects of the subject matter.
FORWARD-LOOKING INFORMATION
The following constitutes a "Safe Harbor" statement under the Private
Securities Litigation Reform Act of 1995: Investors are cautioned that
forward-looking statements contained herein with respect to the revenues,
earnings, performance, strategies, prospects and other aspects of the
business of Entergy Corporation, Entergy Arkansas, Inc., Entergy Gulf
States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., Entergy
New Orleans, Inc., and System Energy Resources, Inc. and their affiliated
companies may involve risks and uncertainties. A number of factors could
cause actual results or outcomes to differ materially from those indicated
by such forward-looking statements. These factors include, but are not
limited to, risks and uncertainties relating to: the effects of weather,
the performance of generating units and transmission systems, the
possession of nuclear materials, fuel and purchased power prices and
availability, the effects of regulatory decisions and changes in law,
litigation, capital spending requirements, the onset of competition,
including the ability to recover net regulatory assets and other potential
stranded costs, the effects of recent developments in the California
electricity market on the utility industry nationally, advances in
technology, changes in accounting standards, corporate restructuring and
changes in capital structure, consummation of the business combination with
FPL Group, Inc., consummation of the Koch Industries joint venture, the
success of new business ventures, changes in the markets for electricity
and other energy-related commodities, changes in interest rates and in
financial and foreign currency markets generally, the economic climate and
growth in Entergy's service territories, changes in corporate strategies,
and other factors.
DEFINITIONS
Certain abbreviations or acronyms used in the text and notes are
defined below:
Abbreviation or Acronym Term
AFUDC Allowance for Funds Used During Construction
Algiers 15th Ward of the City of New Orleans, Louisiana
ALJ Administrative Law Judge
ANO 1 and 2 Units 1 and 2 of Arkansas Nuclear One Steam
Electric Generating Station (nuclear), owned by
Entergy Arkansas
APB Accounting Principles Board
APSC Arkansas Public Service Commission
Availability
Agreement Agreement, dated as of June 21, 1974, as amended,
among System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans,
and the assignments thereof
Board Board of Directors of Entergy Corporation
Boston Edison Boston Edison Company
BPS British pounds sterling
Cajun Cajun Electric Power Cooperative, Inc.
Capital Funds
Agreement Agreement, dated as of June 21, 1974, as amended,
between System Energy and Entergy Corporation, and the
assignments thereof
CitiPower CitiPower Pty., an electric distribution company
serving Melbourne, Australia and surrounding
suburbs, which was acquired by Entergy effective
January 5, 1996, and was sold by Entergy effective
December 31, 1998
Council Council of the City of New Orleans, Louisiana
D.C. Circuit United States Court of Appeals for the District of
Columbia Circuit
DOE United States Department of Energy
domestic utility
companies Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans,
collectively
EITF Emerging Issues Task Force
EMF Electromagnetic fields
ENHC Entergy Nuclear Holding Company #1
EPA United States Environmental Protection Agency
EPAct Energy Policy Act of 1992
EPDC Entergy Power Development Corporation
EPMC Entergy Power Marketing Corporation
ET&M Entergy Trading and Marketing, Ltd.
ETHC Entergy Technology Holding Company
EWG Exempt wholesale generator under PUHCA
Entergy Entergy Corporation and its various direct and
indirect subsidiaries
Entergy Arkansas Entergy Arkansas, Inc.
Entergy Corporation Entergy Corporation, a Delaware corporation
Entergy Gulf States Entergy Gulf States, Inc., including its wholly
owned subsidiaries - Varibus Corporation, GSG&T,
Inc., Prudential Oil & Gas, Inc., and Southern
Gulf Railway Company
Entergy London Entergy London Investments plc, formerly Entergy
Power UK plc (including its wholly owned
subsidiary, London Electricity plc), which was
sold by Entergy effective December 4, 1998
Entergy Louisiana Entergy Louisiana, Inc.
Entergy Mississippi Entergy Mississippi, Inc.
DEFINITIONS (Continued)
Abbreviation or Acronym Term
Entergy New Orleans Entergy New Orleans, Inc.
Entergy Nuclear Entergy Nuclear, Inc.
Entergy Nuclear
Operations Entergy Nuclear Operations, Inc.
Entergy Operations Entergy Operations, Inc.
Entergy Power Entergy Power, Inc.
Entergy Services Entergy Services, Inc.
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
FitzPatrick James A. FitzPatrick nuclear power plant, 825 MW
facility located near Oswego, New York, purchased
in November 2000 from New York Power Authority by
Entergy's domestic non-utility nuclear business
FPL Group FPL Group, Inc., a Florida corporation and parent
company of Florida Power & Light Company
FUCO Exempt foreign utility company under PUHCA
Grand Gulf 1 and 2 Units 1 and 2 of Grand Gulf Steam Electric
Generating Station (nuclear), 90% owned or leased
by System Energy
GWH one million kilowatt-hours
Independence Independence Steam Electric Station (coal), owned
16% by Entergy Arkansas, 25% by Entergy
Mississippi, and 7% by Entergy Power
Indian Point 3 Indian Point 3 nuclear power plant, 980 MW
facility located in Westchester County, New York,
purchased in November 2000 from New York Power
Authority by Entergy's domestic non-utility
nuclear business
IRS Internal Revenue Service
KV kilovolt
KW kilowatt
KWH kilowatt-hour(s)
London Electricity London Electricity plc - a regional electric
company serving London, England, which was
acquired by Entergy London effective February 1,
1997, and was sold by Entergy effective December
4, 1998
LDEQ Louisiana Department of Environmental Quality
LPSC Louisiana Public Service Commission
MCF 1,000 cubic feet of gas
Merger The business combination transaction pursuant to
which the outstanding shares of FPL Group and the
outstanding shares of Entergy Corporation will be
converted into 1.00 and 0.585 shares,
respectively, of a new company
Merger Agreement Agreement and Plan of Merger dated July 30, 2000
by and between FPL Group, Entergy Corporation, WCB
Holding Corporation, Ranger Acquisition
Corporation and Ring Acquisition Corporation
MPSC Mississippi Public Service Commission
MW Megawatt(s)
N/A Not applicable
Nelson Unit 6 Unit No. 6 (coal) of the Nelson Steam Electric
Generating Station, owned 70% by Entergy Gulf
States
NERC North American Electric Reliability Council
NISCO Nelson Industrial Steam Company
NRC Nuclear Regulatory Commission
NYPA New York Power Authority
DEFINITIONS (Concluded)
Abbreviation or Acronym Term
Pilgrim Pilgrim Nuclear Station, 670 MW facility located
in Plymouth, Massachusetts, purchased in July 1999
from Boston Edison by Entergy's domestic non-
utility nuclear business
PRP Potentially Responsible Party (a person or entity
that may be responsible for remediation of
environmental contamination)
PUCT Public Utility Commission of Texas
PUHCA Public Utility Holding Company Act of 1935, as
amended
PURPA Public Utility Regulatory Policies Act of 1978
Reallocation
Agreement 1981 Agreement, superseded in part by a June 13,
1985 decision of FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy relating to the sale of capacity and
energy from Grand Gulf
Ritchie 2 Unit 2 of the R. E. Ritchie Steam Electric
Generating Station (gas/oil)
River Bend River Bend Steam Electric Generating Station
(nuclear)
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards,
promulgated by the FASB
SMEPA South Mississippi Electric Power Agency, which
owns the remaining 10% interest in Grand Gulf 1
System Agreement Agreement, effective January 1, 1983, as modified,
among the domestic utility companies relating to
the sharing of generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
Tons/hr Tons per hour, used as a measure of steam
production
UK The United Kingdom of Great Britain and Northern
Ireland
Unit Power Sales
Agreement Agreement, dated as of June 10, 1982, as amended and
approved by FERC, among Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans,
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 (nuclear) of the Waterford Steam
Electric Generating Station, 100% owned or leased
by Entergy Louisiana
White Bluff White Bluff Steam Electric Generating Station, 57%
owned by Entergy Arkansas
PART I
Item 1. Business
BUSINESS OF ENTERGY
Entergy Corporation
Entergy Corporation is a Delaware corporation which, through its
subsidiaries, engages principally in the following businesses: domestic
utility, power marketing and trading, global power development, and
domestic non-utility nuclear. Power marketing and trading, global power
development, and domestic non-utility nuclear are sometimes referred to
as the competitive businesses. In 2000, Entergy placed the management of
the power marketing and trading business under the global power
development business, and the jointly-managed businesses are referred to
as Entergy Wholesale Operations. Entergy Corporation has no significant
assets other than the stock of its subsidiaries. Entergy Corporation is
a registered public utility holding company under PUHCA. As such,
Entergy Corporation and its subsidiaries generally are subject to the
broad regulatory provisions of PUHCA. PUHCA generally limits registered
public utility holding company activity to direct and indirect ownership
of domestic integrated utility businesses, domestic and foreign electric
generation ventures, foreign utility ownership, telecommunications and
information service businesses, and certain other domestic energy related
businesses. Financial information regarding Entergy Corporation's
operating segments is contained in Note 14 to the financial statements.
In December 2000, Entergy's shareholders approved a business combination
between Entergy Corporation and FPL Group, the objective of which is the
creation of a new company. See "Business Combination with FPL Group" for
further discussion of the terms and timing of this transaction.
Domestic Utility
The domestic utility is Entergy's predominant business segment,
providing 74% of its revenue and 87% of its net income in 2000, and
holding 81% of its assets as of December 31, 2000. Entergy Corporation
has five wholly-owned domestic retail electric utility subsidiaries:
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans. As of December 31, 2000, these
utility companies provided retail electric service to approximately 2.6
million customers primarily in portions of the states of Arkansas,
Louisiana, Mississippi, and Texas. In addition, Entergy Gulf States
furnishes natural gas utility service in and around Baton Rouge,
Louisiana, and Entergy New Orleans furnishes natural gas utility service
in New Orleans, Louisiana. The business of the domestic utility
companies is subject to seasonal fluctuations, with the peak sales period
normally occurring during the third quarter of each year. During 2000,
the domestic utility companies' combined retail electric sales volumes as
a percentage of total electric sales volumes were: residential - 28.3%;
commercial - 21.8%; and industrial - 38.8%. Retail electric revenues
from these sectors as a percentage of total electric revenues were:
residential - 35.0%; commercial - 23.5%; and industrial - 30.2%. Sales
to governmental and municipal sectors and to nonaffiliated utilities
accounted for the balances of energy sales and electric revenues. The
major industrial customers of the domestic utility companies are in the
chemical, petroleum refining, paper, and food products industries. State
or local regulatory authorities regulate the retail rates and services of
Entergy's domestic retail utility subsidiaries.
Entergy Corporation also owns 100% of the voting stock of System
Energy, an Arkansas corporation that owns and leases an aggregate 90%
undivided interest in Grand Gulf. System Energy sells all of the
capacity and energy from its interest in Grand Gulf 1 at wholesale to its
only customers, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans. Management discusses sales from Grand Gulf 1
more thoroughly in "CAPITAL REQUIREMENTS AND FUTURE FINANCING - Certain
Grand Gulf-related Financial and Support Agreements - Unit Power Sales
Agreement" below. System Energy's wholesale power sales are subject to
the jurisdiction of FERC.
Entergy Services, a Delaware corporation wholly-owned by Entergy
Corporation, provides management, administrative, accounting, legal,
engineering, and other services primarily to the domestic utility
subsidiaries of Entergy Corporation. Entergy Operations, a Delaware
corporation, is also wholly-owned by Entergy Corporation and provides
nuclear management, operations and maintenance services under contract
for ANO, River Bend, Waterford 3, and Grand Gulf 1, subject to the owner
oversight of Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
and System Energy, respectively. Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans own 35%, 33%, 19%, and 13%,
respectively, of the common stock of System Fuels, a Louisiana
corporation that implements and manages certain programs to procure,
deliver, and store fuel supplies for those companies. Entergy Services,
Entergy Operations, and System Fuels provide their services to the
domestic utility companies and System Energy on an "at cost" basis,
pursuant to service agreements approved by the SEC under PUHCA.
Information regarding affiliate transactions is contained in Note 13 to
the financial statements.
Entergy Gulf States has wholly-owned subsidiaries that (i) own and
operate intrastate gas pipelines in Louisiana used primarily to transport
fuel to two of Entergy Gulf States' generating stations; (ii) own the
Lewis Creek Station, a gas-fired generating plant, which is leased to and
operated by Entergy Gulf States; and (iii) own several miles of railroad
track constructed in Louisiana primarily for the purpose of transporting
coal for use as boiler fuel at Entergy Gulf States' Nelson Unit 6
generating facility.
Power Marketing and Trading
Prior to 2001, Entergy conducted its power marketing and trading
business primarily through three subsidiaries, Entergy Power, EPMC, and
ET&M. Entergy Power is a domestic power producer that owns 665 MW of
fossil-fueled generation assets located in Arkansas. Entergy Power's
capacity and energy is sold at wholesale principally to EPMC and Entergy
Arkansas. Entergy Power's wholesale power sales are subject to the
jurisdiction of FERC. EPMC engages in the marketing and trading of
physical and financial energy commodity products, industrial energy
management, and risk management services. It has authority from the SEC
to deal in a wide range of energy commodities and related financial
products. ET&M is engaged in the marketing and trading of physical and
financial energy commodity products in the UK.
On January 31, 2001, Entergy contributed its power marketing
and trading business to a new limited partnership, Entergy-Koch, L.P.
The joint venture is with Koch Industries, Inc., which contributed to the
venture its 9,000-mile Koch Gateway Pipeline (which has been renamed the
Gulf South Pipeline), gas storage facilities including the Bistineau
storage facility near Shreveport, Louisiana, and Koch Energy Trading,
which markets and trades electricity, gas, weather derivatives, and other
energy-related commodities and services (the joint venture's trading
activities are now conducted under the name Axia Energy). The parties
have equal ownership interests in Entergy-Koch, L.P., which is governed
by an eight-member board of directors. Entergy appointed four members of
the board. The partnership agreement allocates the substantial majority
of Entergy-Koch, L.P.'s earnings through 2003 to Entergy. Losses are
generally allocated equally. Entergy Power was not transferred to the
joint venture, and it was placed under the management of the global power
development business.
Global Power Development
Entergy's global power development business is focused on acquiring
or developing power generation projects in North America and Western
Europe. The Latin American projects owned by the global power
development business are not a core part of its strategy, and Entergy is
considering various strategies to maximize the value of these
investments, including possibly selling them. The global power
development business owns interests in the following electric generation
assets that are currently operating or are under construction:
Investment Percent Ownership Status
Argentina - Costanera, 1,260 MW 6% operational
Argentina - Costanera expansion, 220 MW 10% operational
Chile - San Isidro, 375 MW 25% operational
Pakistan - Hub River, 1,200 MW 5% operational
Peru - Edegel - 833 MW 24% operational
United Kingdom - Saltend, 1,200 MW 100% operational
United Kingdom - Damhead Creek, 800 MW 100% operational
U.S. (AR) - Ritchie Unit 2, 544 MW 100% operational
U.S. (AR) - Independence Unit 2, 840 MW 14% operational
U.S. (LA) - Riverside, 425 MW 50% under construction
U.S. (MS) - Warren Power, 300 MW 100% under construction
Damhead Creek commenced commercial operation in 2001. Entergy Power owns
Ritchie Unit 2 and the interest in Independence Unit 2. Entergy owns its
interest in Riverside through a 50% interest in RS Cogen, LLC, and the
remaining 50% interest is owned by PPG Industries, an industrial customer
of Entergy Gulf States. Entergy's global power development business has
several other development projects in the planning stages, including
announced projects in the United States, Spain, and Bulgaria.
In preparation for its global power development plans, Entergy has
obtained an option to acquire turbines from GE Power Systems. See
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL
RESOURCES" for further information on the turbines. Furthermore, the
global power development business entered into a 50/50 joint venture with
The Shaw Group Inc. that is named EntergyShaw, L.L.C. EntergyShaw
provides management, engineering, procurement, construction, and
commissioning services for electric power plants. EntergyShaw plans to
operate in the rapidly growing electric power generation market and
provide services for Entergy's global power development plans. In June
2000, Entergy also acquired a 75% interest in Highland Energy Company, an
energy aggregation, marketing, and producer services company.
In June 2000, the global power development business sold its
interest in Freestone, a planned 1,000 MW combined cycle gas turbine
merchant power plant to be constructed in Fairfield, Texas, adjacent to
Entergy Gulf States' service territory.
Domestic Non-Utility Nuclear
Entergy's domestic non-utility nuclear business is focused on
acquiring, owning, operating, and selling power from nuclear power plants
and providing operations and management services to nuclear power plants
owned by other utilities in the United States. Plant acquisitions are
made through Entergy's wholly owned subsidiary ENHC and its affiliates.
Operations and management services, including decommissioning services,
are provided through Entergy's wholly owned subsidiary, Entergy Nuclear.
Entergy's domestic non-utility nuclear business owns the following
nuclear power plants that it has acquired from other utilities:
Power Plant Capacity Percent Ownership Location
Pilgrim Nuclear Station 670 MW 100% Plymouth, MA
James A. FitzPatrick 825 MW 100% Oswego, NY
Indian Point 3 980 MW 100% Westchester County, NY
Pilgrim has firm power purchase agreements with Boston Edison and other
utilities that expire at the end of 2004. One hundred percent of the
plant's output is committed to those parties through 2001, and that
commitment decreases to 50% by 2003. Indian Point 3 has a firm power
purchase agreement with NYPA that expires at the end of 2004 for 100% of
the plant's output. FitzPatrick has firm power purchase agreements with
NYPA that expire at the end of 2004 for 100% of the plant's output
through 2003 and approximately 45% of the plant's output in 2004. See
Note 12 to the financial statements for a further discussion of these
acquisitions by Entergy's domestic non-utility nuclear business.
In November 2000, Entergy's domestic non-utility nuclear business
agreed to purchase Consolidated Edison's (Con Edison) 957 MW Indian Point
2 nuclear power plant (IP2) located in Westchester County, New York. In
the transaction, Entergy has agreed to acquire Indian Point 1 nuclear
power plant (IP1), which has been shut down and in safe storage since the
early 1970s. Entergy will pay $600 million in cash at the closing of the
purchase and will receive the plant, nuclear fuel, and other assets,
including a purchase power agreement (PPA). Under the PPA, Con Edison
will purchase 100% of IP2's output through 2004. Con Edison will also
transfer a $430 million decommissioning trust fund, along with the
liability to decommission IP2 and IP1, to Entergy's nuclear business.
Management expects to close the acquisition by mid-2001, pending the
approvals of the NRC, the New York Public Service Commission, and other
regulatory agencies.
In January 2001, Entergy's domestic non-utility nuclear business
submitted an offer to buy Vermont Yankee, a 540 MW boiling water reactor
plant, located in Vernon, Vermont, for $50 million. Entergy's offer is
firm through the end of 2001. In February 2001, the Vermont Public
Service Board rejected a competing offer and the plant is expected to be
auctioned during the second or third quarter of 2001.
Entergy Nuclear provides services to nuclear power plants owned by
other utilities, including engineering, operations and maintenance, fuel
procurement, management and supervision, technical support and training,
administrative support, and other managerial or technical services
required to operate, maintain, and decommission nuclear electric power
facilities. Currently Entergy is providing decommissioning services for
the Maine Yankee and Millstone Unit 1 nuclear power plants. The cost of
decommissioning and insuring the plants that Entergy provides
decommissioning services for is the responsibility of the plant owners.
In 2000, Entergy Nuclear entered into two business arrangements to
assist it in providing operation and management services. Entergy
Nuclear and Framatome Technologies intend to jointly offer operating
license renewal and life extension services to nuclear power plants in
the United States. Framatome has provided and continues to provide
license renewal services to several utilities owning nuclear power plants
in the United States. Entergy Nuclear also acquired TLG Services in
September 2000. TLG provides decommissioning, engineering, and related
services to nuclear power plant owners.
Domestic and Foreign Generation Investment Restrictions and Risks
Entergy's ability to invest in domestic and foreign generation
businesses is subject to the SEC's regulations under PUHCA. Absent SEC
approval, these regulations limit Entergy Corporation's aggregate
investment in domestic and foreign generation businesses at the time an
investment is made to an amount equal to 50% of average consolidated
retained earnings for the previous four quarters. In June 2000, the SEC
issued an order that allows Entergy's EWG and FUCO investments to
increase from 50% to 100% of Entergy's average consolidated retained
earnings. As of December 31, 2000 Entergy's investments under this rule
totaled $770 million constituting 25% of its average consolidated
retained earnings.
Entergy's ability to guarantee obligations of its non-utility
subsidiaries is also limited by SEC regulations under PUHCA. In August
2000, the SEC issued an order, effective through December 31, 2005, that
allows Entergy to issue up to $2 billion of guarantees to its non-utility
companies, excluding guarantees outstanding as of that date that were
issued under a previous order.
International operations are subject to the risks inherent in
conducting business abroad, including possible nationalization or
expropriation, price and currency exchange controls, inflation,
limitations on foreign participation in local enterprises, and other
restrictions. Changes in the relative value of currencies may favorably
or unfavorably affect the financial condition and results of operations
of Entergy's non-U.S. businesses. In addition, exchange control
restrictions in certain countries may limit or prevent the repatriation
of earnings.
Business Combination with FPL Group
On July 30, 2000, Entergy Corporation and FPL Group entered into a
Merger Agreement providing for a business combination that will result in
the creation of a new company. Each outstanding share of FPL Group
common stock will be converted into one share of the new company's common
stock, and each outstanding share of Entergy Corporation common stock
will be converted into 0.585 of a share of the new company's common
stock. It is expected that FPL Group's shareholders will own
approximately 57% of the common equity of the new company and Entergy's
shareholders will own approximately 43%. The initial board of directors
of the new company will consist of eight directors designated by FPL
Group and seven directors designated by Entergy. The new company will be
given a new name that will be agreed upon between the Boards of Directors
of FPL and Entergy prior to the consummation of the Merger. The new
company will maintain its principal corporate offices and headquarters in
Juno Beach, Florida, and will maintain its utility headquarters in New
Orleans, Louisiana. The Merger Agreement generally allows Entergy to
continue business in the ordinary course consistent with past practice
and contains certain restrictions on Entergy's capital activities,
including restrictions on the issuance of securities, capital
expenditures, dispositions, incurrence or guarantee of indebtedness, and
trading or marketing of energy. Entergy generally will be permitted to
take actions pursuant to restructuring legislation in the domestic
utility companies' jurisdictions of operation and to reorganize its
transmission business. Under certain circumstances, if the Merger
Agreement is terminated, a termination fee of $215 million may be payable
by one of the parties. The Merger Agreement may be terminated if the
Merger is not consummated by April 30, 2002, unless automatically
extended until October 30, 2002 under certain circumstances. Both the
FPL Group and Entergy Boards of Directors unanimously approved the
Merger, and the shareholders of Entergy Corporation and FPL Group have
approved the Merger. The Merger is conditioned upon, among other things,
the receipt of required regulatory approvals of various local, state, and
federal regulatory agencies and commissions, including the SEC and FERC.
Entergy has filed for approval of the Merger in all of its state and
local regulatory jurisdictions (Arkansas, Louisiana, Mississippi, Texas,
and New Orleans), and at FERC, the SEC, and the NRC. In their filing with
the SEC, Entergy and FPL Group requested to remain in existence as
intermediate holding companies after the Merger is consummated. The
objective of Entergy and FPL Group is to consummate the Merger by late
2001.
In September 2000, Entergy and FPL Group announced plans to form a
joint venture between FPL Energy and Entergy Wholesale Operations.
Entergy and FPL Group management subsequently decided not to form a
separate joint venture in advance of the Merger.
Selected Data
Selected domestic utility customers and sales data for 2000 are
summarized in the following tables:
Customers as of
December 31, 2000
Area Served Electric Gas
(In Thousands)
Entergy Arkansas Portions of Arkansas and Tennessee 643 -
Entergy Gulf States Portions of Texas and Louisiana 681 89
Entergy Louisiana Portions of Louisiana 641 -
Entergy Mississippi Portions of Mississippi 401 -
Entergy New Orleans City of New Orleans, except Algiers, which
is provided electric service by Entergy Louisiana 190 150
----- ---
Total customers 2,556 239
===== ===
2000 - Selected Domestic Utility Electric Energy Sales Data
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy Entergy (a)
(In GWH)
Electric Department:
Sales to retail
customers 19,333 35,475 29,680 12,847 5,880 - 103,216
Sales for resale:
Affiliates 6,513 1,381 228 1,276 570 9,621 -
Others 5,537 3,248 554 313 141 - 9,794
----------------------------------------------------------------------------------
Total 31,383 40,104 30,462 14,436 6,591 9,621 113,010
==================================================================================
Average use per
residential customer
(KWH) 12,449 15,861 15,436 14,629 12,784 - 14,484
==================================================================================
(a) Includes the effect of intercompany eliminations.
2000 - Selected Natural Gas Sales Data
Entergy New Orleans and Entergy Gulf States sold 16,058,022 and
6,472,529 MCF, respectively, of natural gas to retail customers in 2000.
For the years ended December 31, 2000, 1999, and 1998, revenues from
natural gas operations were not material for Entergy Gulf States.
Entergy New Orleans' products and services are discussed below in
"BUSINESS SEGMENTS".
Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY
CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES,
ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM
ENERGY" which follow each company's financial statements in this report,
for further information with respect to operating statistics.
Employees
As of December 31, 2000, Entergy had 14,100 employees as follows:
Full-time:
Entergy Corporation -
Entergy Arkansas 1,570
Entergy Gulf States 1,639
Entergy Louisiana 932
Entergy Mississippi 889
Entergy New Orleans 381
System Energy -
Entergy Operations 3,276
Entergy Services 2,475
Entergy Nuclear Operations 1,609
Other subsidiaries 1,113
------
Total Full-time 13,884
Part-time 216
------
Total Entergy 14,100
======
Approximately 4,560 employees are represented by the International
Brotherhood of Electrical Workers Union (IBEW), the Utility Workers Union
of America (UWUA), and the International Brotherhood of Teamsters Union
(IBT). In 2000, both Entergy Arkansas and Entergy Mississippi reached
new agreements with IBEW.
Industry Restructuring and Competition
As a result of the actions of federal legislative and regulatory
bodies over the period of approximately the past twenty years, wholesale
markets have developed in which electricity, gas, and other energy
related products and services are purchased and sold at market-based
(rather than traditional cost-based) rates. These wholesale markets are
continuing to grow and evolve. This evolution has changed the ways in
which public utilities conduct their business and has changed the nature
of the participants in these wholesale markets, which now include not
only public utilities but also power marketers and traders, other energy
commodity marketers and traders, wholesale generators of electricity, and
a wide range of wholesale customers.
Major changes in the retail utility business are now occurring in
some parts of the United States, including some states in which Entergy's
domestic utility companies operate. Both Texas and Arkansas adopted
legislation in 1999 aimed at separating ("unbundling") traditionally
integrated public utilities into distinct distribution, transmission,
generation, and various types of retail marketing businesses, and aimed
at introducing competition into the generation component of utility
service. The Texas legislation provides for retail open access by
January 1, 2002. In Arkansas, retail open access has been delayed by law
so that it begins no sooner than October 2003 and no later than October
2005. This delay is intended to allow further development of the
wholesale generation market, including the completion of several
independent generation projects within the state. Other jurisdictions in
which the domestic utility companies operate have not enacted retail
competition and utility unbundling legislation. Further changes in
restructuring in Entergy's service territories, including the timing of
implementation of restructuring and competition, may result from the
effects of the developments in the California power supply markets.
Changes in the wholesale and retail electricity markets in the
Entergy system will take place over a number of years, and regulators and
legislators in different jurisdictions have not coordinated these
changes. In some cases, actions by one jurisdiction may conflict with
actions by another, creating potentially incompatible obligations for
public utilities and holding companies, including the Entergy system.
Examples include:
o the LPSC's docket relating to the changes in corporate structure of
Entergy Gulf States as a result of complying with the Texas
restructuring law and its potential impact on Louisiana retail
ratepayers (described more fully in Note 2 to the financial
statements); and
o System Agreement restructuring issues (described more fully in
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT
FACTORS AND KNOWN TRENDS - Federal Regulatory and Legislative
Activity - Proposed System Agreement Amendments").
It is too early to accurately predict how incompatible obligations will
be resolved or the effects of the changes that are taking place in the
wholesale and retail energy markets. However, these changes will result
in fundamental alterations in the way traditional integrated utilities
and holding company systems, like Entergy and its domestic utility
companies, conduct their business. Some of these alterations will be
positive for Entergy and its affiliates, while others will not be.
These changes are resulting in increased costs associated with
utility unbundling and transitioning to new organizational structures and
ways of conducting business. It is possible that the new organizational
structures that will be required will result in lost economies of scale,
less beneficial cost sharing arrangements within utility holding company
systems, and, in some cases, greater difficulty and cost in accessing
capital. Furthermore, these changes could result in early refinancing of
debt, the reorganization of debt, or other obligations between newly-
formed companies. Ultimately, capital structures may result that
initially are more complex than the existing capital structures of the
domestic utility companies.
Utilities, including the domestic utility companies, may be required
or encouraged to sell generating plants or interests therein, or the
output from such plants. FERC set December 15, 2001 as the date by which
all owners and operators of transmission lines should sell or turn over
operating and management responsibility for their transmission systems to
independent parties. Entergy has responded to FERC by filing plans to
transfer control of its transmission assets to a non-affiliated
transmission company subject to control by a regional transmission
organization. These changes will alter the historical structure from the
operation of the domestic utility companies' electric generation and
transmission assets as an integrated system supporting utility service
throughout their combined service territories.
As a potential result of restructuring, Entergy's domestic utility
companies may no longer be able to apply regulated utility accounting
principles to some or all of their operations, and they may be required
to write off certain regulatory assets or recognize asset impairments.
There are a number of other changes that may result from electric
industry competition and unbundling, including but not limited to changes
in labor relations, management and staffing, structure of operations,
environmental compliance responsibility, and other aspects of the utility
business.
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT
FACTORS AND KNOWN TRENDS" and Note 2 to the financial statements contain
detailed discussions of the competitive challenges Entergy faces in the
utility industry, including the status of the transition to a more
competitive utility business environment for the domestic utility
companies.
CAPITAL REQUIREMENTS AND FUTURE FINANCING
For the years 2001 through 2003, Entergy plans to spend $8.2 billion
in a capital investment plan focused on improving service at the domestic
utility companies and growing the global power development and domestic
non-utility nuclear businesses. It is estimated that $2.6 billion will
be spent by the domestic utility companies, $3.6 billion by the global
power development business, and $2.0 billion by the domestic non-utility
nuclear business. The capital investment plan is subject to modification
based on the ongoing effects of transition to competition planning, the
ability to recover regulated utility costs in rates, and the proposed
business combination with FPL Group. Additionally, the plan is
contingent upon the ability to access the capital necessary to finance
the planned expenditures, and significant borrowings may be necessary to
implement these capital spending plans. Capital expenditures (including
nuclear fuel but excluding AFUDC) for Entergy are estimated at $3.2
billion in 2001, $2.5 billion in 2002, and $2.6 billion in 2003.
Included in these totals are estimated construction expenditures for the
domestic utility companies and System Energy as follows:
2001 2002 2003 Total
(In Millions)
Entergy Arkansas $297 $200 $205 $702
Entergy Gulf States $293 $216 $220 $729
Entergy Louisiana $222 $175 $168 $565
Entergy Mississippi $147 $128 $113 $388
Entergy New Orleans $53 $46 $48 $147
System Energy $41 $14 $12 $67
The domestic utility companies will mainly focus their planned
spending on distribution and transmission projects that will support
continued reliability improvements and transitioning to a more
competitive environment.
The global power development business will mainly focus its planned
spending on several merchant power plant projects either under
construction or in the planning stages in the U.S. and Europe, including
the purchase of gas turbines scheduled for delivery in 2001 through 2004
under an option to purchase obtained from GE Power Systems.
The domestic non-utility nuclear business will mainly focus its
planned spending on the acquisition of U.S. nuclear power plants from
other utilities, including the anticipated purchase in 2001, pending
regulatory approvals, of IP2.
Entergy Corporation's primary capital requirements are to invest
periodically in, or make loans to, its subsidiaries and to invest in new
enterprises. In February 2001, Entergy Corporation made a cash
contribution consisting of equity investment and loans of approximately
$414 million in the formation of Entergy-Koch, L.P. Entergy Corporation
also requires capital for its stock repurchase plans. In addition to
meeting capital expenditure requirements, Entergy must meet scheduled
long-term debt and preferred stock maturities and cash sinking fund
requirements. Actual capital expenditures may vary from the estimates
given for a number of reasons, including changes in load growth
estimates; environmental regulations; labor, equipment, materials, and
capital costs; modifications to generating units to meet regulatory
requirements; the transition to competition; and the proposed business
combination with FPL Group.
Management more thoroughly discusses Entergy's capital investment and
common stock repurchase plans, financing requirements, Entergy Corporation
credit support requirements, and its sources and uses of capital in
"MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL
RESOURCES" and Notes 4, 5, 6, 7, 9, and 10 to the financial statements.
Certain Grand Gulf-related Financial and Support Agreements
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Unit Power Sales Agreement allocates capacity, energy, and the
related costs from System Energy's 90% ownership and leasehold interests
in Grand Gulf 1 to Entergy Arkansas (36%), Entergy Louisiana (14%),
Entergy Mississippi (33%), and Entergy New Orleans (17%). Each of these
companies is obligated to make payments to System Energy for its
entitlement of capacity and energy on a full cost-of-service basis
regardless of the quantity of energy delivered, so long as Grand Gulf 1
remains in commercial operation. Payments under the Unit Power Sales
Agreement are System Energy's only source of operating revenues. The
financial condition of System Energy depends upon the continued
commercial operation of Grand Gulf 1 and the receipt of such payments.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans generally recover payments made under the Unit Power Sales
Agreement through the rates charged to their customers. In the case of
Entergy Arkansas and Entergy Louisiana, payments are also recovered
through sales of electricity from their respective retained shares of
Grand Gulf 1. The retained shares are discussed in Note 2 to the
financial statements under the heading "Grand Gulf 1 Deferrals and
Retained Shares."
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The Availability Agreement among System Energy and Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans was
entered into in 1974 in connection with the financing by System Energy of
Grand Gulf. The Availability Agreement provided that System Energy would
join in the System Agreement on or before the date on which Grand Gulf 1
was placed in commercial operation and would make available to Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans
all capacity and energy available from System Energy's share of Grand
Gulf.
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans also agreed severally to pay System Energy monthly
for the right to receive capacity and energy from Grand Gulf in amounts
that (when added to any amounts received by System Energy under the Unit
Power Sales Agreement, or otherwise) would at least equal System Energy's
total operating expenses for Grand Gulf (including depreciation at a
specified rate) and interest charges. The September 1989 write-off of
System Energy's investment in Grand Gulf 2, amounting to approximately
$900 million, is being amortized for Availability Agreement purposes over
27 years.
The allocation percentages under the Availability Agreement are
fixed as follows: Entergy Arkansas - 17.1%; Entergy Louisiana - 26.9%;
Entergy Mississippi - 31.3%; and Entergy New Orleans - 24.7%. The
allocation percentages under the Availability Agreement would remain in
effect and would govern payments made under such agreement in the event
of a shortfall of funds available to System Energy from other sources,
including payments under the Unit Power Sales Agreement.
System Energy has assigned its rights to payments and advances from
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans under the Availability Agreement as security for its first
mortgage bonds and reimbursement obligations to certain banks providing
the letters of credit in connection with the equity funding of the sale
and leaseback transactions described in Note 10 to the financial
statements under "Sale and Leaseback Transactions - Grand Gulf 1 Lease
Obligations." In these assignments, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans further agreed that, in the
event they were prohibited by governmental action from making payments
under the Availability Agreement (for example, if FERC reduced or
disallowed such payments as constituting excessive rates), they would
then make subordinated advances to System Energy in the same amounts and
at the same times as the prohibited payments. System Energy would not be
allowed to repay these subordinated advances so long as it remained in
default under the related indebtedness or in other similar circumstances.
Each of the assignment agreements relating to the Availability
Agreement provides that Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans will make payments directly to
System Energy. However, if there is an event of default, those payments
must be made directly to the holders of indebtedness that are the
beneficiaries of such assignment agreements. The payments must be made
pro rata according to the amount of the respective obligations secured.
The obligations of Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans to make payments under the
Availability Agreement are subject to the receipt and continued
effectiveness of all necessary regulatory approvals. Sales of capacity
and energy under the Availability Agreement would require that the
Availability Agreement be submitted to FERC for approval with respect to
the terms of such sale. No such filing with FERC has been made because
sales of capacity and energy from Grand Gulf are being made pursuant to
the Unit Power Sales Agreement. If, for any reason, sales of capacity
and energy are made in the future pursuant to the Availability Agreement,
the jurisdictional portions of the Availability Agreement would be
submitted to FERC for approval. Other aspects of the Availability
Agreement are subject to the jurisdiction of the SEC, whose approval has
been obtained, under PUHCA.
Since commercial operation of Grand Gulf 1 began, payments under the
Unit Power Sales Agreement to System Energy have exceeded the amounts
payable under the Availability Agreement. Therefore, no payments under
the Availability Agreement have ever been required. If Entergy Arkansas
or Entergy Mississippi fails to make its Unit Power Sales Agreement
payments, and System Energy is unable to obtain funds from other sources,
Entergy Louisiana and Entergy New Orleans could become subject to claims
or demands by System Energy or its creditors for payments or advances
under the Availability Agreement (or the assignments thereof) equal to
the difference between their required Unit Power Sales Agreement payments
and their required Availability Agreement payments.
The Availability Agreement may be terminated, amended, or modified
by mutual agreement of the parties thereto, without further consent of
any assignees or other creditors.
Capital Funds Agreement (Entergy Corporation and System Energy)
System Energy and Entergy Corporation have entered into the Capital
Funds Agreement, whereby Entergy Corporation has agreed to supply System
Energy with sufficient capital to (i) maintain System Energy's equity
capital at an amount equal to a minimum of 35% of its total
capitalization (excluding short-term debt) and (ii) permit the continued
commercial operation of Grand Gulf 1 and pay in full all indebtedness for
borrowed money of System Energy when due.
Entergy Corporation has entered into various supplements to the
Capital Funds Agreement. System Energy has assigned its rights under
such supplements as security for its first mortgage bonds and for
reimbursement obligations to certain banks providing letters of credit in
connection with the equity funding of the sale and leaseback transactions
described in Note 10 under "Sale and Leaseback Transactions - Grand Gulf
1 Lease Obligations." Each such supplement provides that permitted
indebtedness for borrowed money incurred by System Energy in connection
with the financing of Grand Gulf may be secured by System Energy's rights
under the Capital Funds Agreement on a pro rata basis (except for the
Specific Payments, as defined below). In addition, in the supplements to
the Capital Funds Agreement relating to the specific indebtedness being
secured, Entergy Corporation has agreed to make cash capital
contributions directly to System Energy sufficient to enable System
Energy to make payments when due on such indebtedness (Specific
Payments). However, if there is an event of default, Entergy Corporation
must make those payments directly to the holders of indebtedness
benefiting from the supplemental agreements. The payments (other than
the Specific Payments) must be made pro rata according to the amount of
the respective obligations benefiting from the supplemental agreements.
The Capital Funds Agreement may be terminated, amended, or modified
by mutual agreement of the parties thereto, upon obtaining the consent,
if required, of those holders of System Energy's indebtedness then
outstanding who have received the assignments of the Capital Funds
Agreement.
RATE MATTERS AND REGULATION
Rate Matters
The retail rates of Entergy's domestic utility companies are
regulated by state or local regulatory authorities, as described below.
FERC regulates their wholesale rates (including intrasystem sales
pursuant to the System Agreement) and interstate transmission of
electricity, as well as rates for System Energy's sales of capacity and
energy from Grand Gulf 1 to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans pursuant to the Unit Power Sales
Agreement.
Wholesale Rate Matters
System Energy
As described above under "CAPITAL REQUIREMENTS AND FUTURE FINANCING
- - Certain Grand Gulf-related Financial and Support Agreements," System
Energy recovers costs related to its interest in Grand Gulf 1 through
rates charged to Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans for capacity and energy under the
Unit Power Sales Agreement.
In December 1995, System Energy implemented a $65.5 million rate
increase, subject to refund. In 1998, FERC approved requests by Entergy
Arkansas and Entergy Mississippi to accelerate a portion of their Grand
Gulf purchased power obligations. The rate increase request filed by
System Energy with FERC and the Grand Gulf accelerated recovery tariffs
are discussed in Note 2 to the financial statements.
System Agreement (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
The domestic utility companies have historically engaged in the
coordinated planning, construction, and operation of generation and
transmission facilities pursuant to the terms of the System Agreement, as
described under "PROPERTY - Generating Stations," below. Restructuring
in the electric utility industry will affect these coordinated activities
in the future.
The LPSC and the Council commenced a proceeding at FERC in April
2000 that requests revisions to the System Agreement that the LPSC and
the Council allege are necessary to accommodate the introduction of
retail competition in Texas and Arkansas. In June 2000, Entergy's
domestic utility companies filed proposed amendments to the System
Agreement with FERC to facilitate the implementation of retail
competition in Arkansas and Texas and to provide for continued
equalization of costs among the domestic utilities in Louisiana and
Mississippi. The LPSC and the Council's complaint and Entergy's proposed
amendments are more thoroughly discussed in "MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS". These
proceedings have been consolidated with a previous complaint filed with
FERC by the LPSC in 1995. In that complaint, the LPSC requested, among
other things, modification of the System Agreement to exclude curtailable
load from the cost allocation determination. Hearings in these
proceedings have been scheduled for March 2001, with an initial ALJ
decision expected by June 2001. Entergy requested a final decision from
FERC by October 2001, however, neither the timing, nor the ultimate
outcome, of the proceeding can be predicted at this time.
Open Access Transmission (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
FERC issued Order 2000 in December 1999, which calls for owners and
operators of transmission lines in the United States to join regional
transmission organizations (RTOs) on a voluntary basis. Order 2000
requires that RTOs commence independent operations no later than December
15, 2001.
It appears that FERC will be flexible regarding the structure of
RTOs. For example, it appears that RTOs may be for-profit or not-for-
profit and may be organized as joint ventures or legal entities of
various other types. However, RTOs will be required, among other things,
to be independent of market participants, to have sufficient regional
scope to maintain reliability and efficiency, to be non-discriminatory in
granting service, and to maintain operational control over their regional
transmission systems.
In October 2000, in compliance with Order 2000, Entergy made a
filing with FERC that requested:
o authorization to establish an RTO referred to as Transco;
o authorization to transfer the domestic utility companies'
transmission assets to the Transco; and
o a determination that the partnership arrangement with the Southwest
Power Pool (SPP) that the Transco proposes to operate in would qualify
as an independent RTO. The partnership arrangement provides for
operations under the oversight of, and within, the SPP RTO.
The amounts of the domestic utility companies' net transmission utility
plant assets recorded in their financial statements are provided in Note
1 to the financial statements under the heading "Utility Plant."
The proposed Transco will be a limited liability company. The
managing member of the Transco will be a separate corporation with a
board of directors independent of Entergy. The Transco will be:
o regulated by FERC;
o composed of the transmission system transferred to it by the
domestic utility companies and other transmission owners in Entergy's
current service territory region;
o operated and maintained by employees who would work exclusively for
the Transco and would not be employed by Entergy or the domestic utility
companies; and
o passively owned by the domestic utility companies and other member
companies who will transfer assets but not control or otherwise direct
its operation and management.
Entergy filed in December 2000 for FERC approval of the rates for
transmission service across Transco's facilities. Included in this rate
filing is a request to cancel Service Schedule MSS-2, the portion of the
System Agreement related to equalization of certain transmission costs.
In March 2001, Entergy, Entergy Services, and the domestic utility
companies requested SEC approval under PUHCA of certain elements of the
Transco plan. The domestic utility companies have also made filings with
their local regulators for Transco approval. Under its planned timeline,
Entergy expects to have the necessary regulatory approvals by the third
quarter of 2001, with the transmission asset transfers occurring before
Transco commences independent operations in December 2001. In the event
that some or all of these transmission assets cannot be transferred to
the Transco by December 2001, operational control of these assets will
move to an intermediate entity as of that date.
Retail Rate Regulation
General (Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans)
Certain costs related to Grand Gulf 1, Waterford 3, and River Bend
were phased into retail rates over a period of years in order to avoid
the "rate shock" associated with increasing rates to reflect all such
costs at once. Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and the portion of Entergy Gulf States regulated by the LPSC have fully
recovered such deferred costs associated with one or more of the plants.
Entergy New Orleans' phase-in plan will be completed in 2001.
The retail regulatory philosophy has shifted in some jurisdictions
from traditional, exclusively cost-of-service regulation to include
performance-based rate elements. Performance-based formula rate plans
are designed to encourage efficiencies and productivity while permitting
utilities and their customers to share in the benefits. Entergy
Mississippi and Entergy Louisiana have implemented performance-based
formula rate plans.
The domestic utility companies have initiated proceedings with state
and local regulators regarding transition to a more competitive market
for electricity. In addition, retail open access laws have been enacted
in Arkansas and Texas. These matters are discussed more thoroughly in
Note 2 to the financial statements.
Entergy Arkansas
Retail Rate Proceedings
Entergy Arkansas' material retail rate proceedings that were
resolved during the past year, are currently pending, or affect current
year results are discussed in Note 2 to the financial statements.
Recovery of Grand Gulf 1 Costs
Under the settlement agreement entered into with the APSC in 1985
and amended in 1988, Entergy Arkansas retains 22% of its share of Grand
Gulf 1 costs and recovers the remaining 78% of its share through rates.
Under the Unit Power Sales Agreement, Entergy Arkansas' share of Grand
Gulf 1 costs is 36%. In the event Entergy Arkansas is not able to sell
its retained share to third parties, it may sell such energy to its
retail customers at a price equal to its avoided energy cost, which is
currently less than Entergy Arkansas' cost of energy from the retained
share.
Fuel Recovery
Entergy Arkansas' rate schedules include an energy cost recovery
rider to recover fuel and purchased energy costs in monthly bills. The
rider utilizes projected energy costs for the twelve month period
commencing on April 1 of each year to develop an energy cost rate, which
is redetermined annually and includes a true-up adjustment reflecting the
over-recovery or under-recovery, including carrying charges, of the
energy cost for the prior calendar year.
Rate Freeze
In December 1997, the APSC approved a settlement agreement resolving
Entergy Arkansas' transition to competition case. One provision in that
settlement was that base rates would remain at the level resulting from
that case until at least July 1, 2001. The terms of the settlement
agreement are discussed in Note 2 to the financial statements.
Entergy Gulf States
Retail Rate Proceedings
Entergy Gulf States' material retail rate proceedings that were
resolved during the past year, are currently pending, or affect current
year results are discussed in Note 2 to the financial statements. In
addition, the 1999 settlement agreement that resolved Entergy Gulf
States' 1996 and 1998 rate proceedings, which is currently under appeal,
and various other matters are discussed in Note 2 to the financial
statements.
Texas Jurisdiction - River Bend
In March 1998, the PUCT issued an order disallowing recovery of $1.4
billion of company-wide abeyed River Bend plant costs which have been
held in abeyance since 1988. Entergy Gulf States has appealed the PUCT's
decision on this matter to a Texas District Court. The 1999 settlement
agreement mentioned above addresses the treatment of abeyed plant costs,
and, as a result, Entergy Gulf States removed the reserve for these costs
and reduced the plant asset in 1999. Based on advice of counsel,
management believes that it is probable that the matter will be remanded
again to the PUCT for a further ruling on the prudence of the abeyed
plant costs and it is reasonably possible that some portion of these
costs will be added to the net book value of the River Bend plant for
regulatory purposes. The abeyed plant costs are discussed in more detail
in Note 2 to the financial statements.
Fuel Recovery
Entergy Gulf States' Texas rate schedules include a fixed fuel
factor to recover fuel and purchased power costs, including carrying
charges, not recovered in base rates. The 1999 settlement agreement
mentioned above established a methodology for semi-annual revisions of
the fixed fuel factor in March and September based on the market price of
natural gas. This agreement is effective through December 2001 or until
otherwise ordered by the PUCT. To the extent actual costs vary from the
fixed fuel factor, refunds or surcharges are required or permitted. Fuel
costs are also subject to reconciliation proceedings. In connection with
the implementation of restructuring in Texas, Entergy Gulf States
anticipates that it will file a final fuel reconciliation in March 2003
for the period ending December 31, 2001. Beginning in January 2002,
which is the scheduled start of retail open access in Texas, fuel and
purchased power cost recovery will be subject to the PUCT's rule
governing the price that Entergy Gulf States' affiliated retail electric
provider may charge residential and commercial customers, as discussed in
more detail in Note 2 to the financial statements.
Entergy Gulf States' Louisiana electric rate schedules include a
fuel adjustment clause designed to recover the cost of fuel and purchased
power costs in the second prior month, adjusted by a surcharge or credit
for deferred fuel expense and related carrying charges arising from the
monthly reconciliation of actual fuel costs incurred with fuel revenues
billed to customers. The LPSC and the PUCT fuel cost reviews that were
resolved during the past year or are currently pending are discussed in
Note 2 to the financial statements. In July 2000, the LPSC issued an
order requiring Entergy Gulf States to realign approximately $2.4 million
of certain Louisiana fuel costs from the fuel adjustment clause to base
rates.
Entergy Gulf States' Louisiana gas rates include a purchased gas
adjustment based on estimated gas costs for the billing month adjusted by
a surcharge or credit for deferred fuel expense arising from the monthly
reconciliation of actual fuel costs incurred with fuel cost revenues
billed to customers.
Entergy Louisiana
Retail Rate Proceedings
Entergy Louisiana's material retail rate proceedings that were
resolved during the past year, are currently pending, or affect current
year results are discussed in Note 2 to the financial statements.
Recovery of Grand Gulf 1 Costs
In a series of LPSC orders, court decisions, and agreements from
late 1985 to mid-1988, Entergy Louisiana was granted rate relief with
respect to costs associated with Entergy Louisiana's share of capacity
and energy from Grand Gulf 1, subject to certain terms and conditions.
In November 1988, Entergy Louisiana agreed to retain 18% of its share of
Grand Gulf 1 costs and recover the remaining 82% of its share through
rates. Under the Unit Power Sales Agreement, Entergy Louisiana's share
of Grand Gulf 1 costs is 14%. Non-fuel operation and maintenance costs
for Grand Gulf 1 are recovered through Entergy Louisiana's base rates.
Additionally, Entergy Louisiana is allowed to recover, through the fuel
adjustment clause, 4.6 cents per KWH for the energy related to its
retained portion of these costs. Alternatively, Entergy Louisiana may
sell such energy to nonaffiliated parties at prices above the fuel
adjustment clause recovery amount, subject to the LPSC's approval.
Performance-Based Formula Rate Plan
Entergy Louisiana files a performance-based formula rate plan by
April 15 of each year that compares the annual rate of return on common
equity (ROE) with a benchmark ROE. The benchmark ROE determined under
the formula rate plan includes the current approved ROE adjusted for a
customer satisfaction performance measure. The formula rate plan allows
for periodic adjustments in retail rates if the annually determined ROE
is outside an allowed range of the benchmark ROE. The performance-based
formula rate plan will end in 2001 after the filing for the 2000 test
year unless a continuance is ordered. Entergy Louisiana's performance-
based formula rate plan filings are discussed in Note 2 to the financial
statements.
Fuel Recovery
Entergy Louisiana's rate schedules include a fuel adjustment clause
designed to recover the cost of fuel in the second prior month, adjusted
by a surcharge or credit for deferred fuel expense and related carrying
charges arising from the monthly reconciliation of actual fuel costs
incurred with fuel cost revenues billed to customers.
Entergy Mississippi
Retail Rate Proceedings
Entergy Mississippi's material retail rate proceedings that were
resolved during the past year, are currently pending, or affect current
year results are discussed in Note 2 to the financial statements.
Performance-Based Formula Rate Plan
Entergy Mississippi files a performance-based formula rate plan
every 12 months that compares the annual earned rate of return to and
adjusts it against a benchmark rate of return. The benchmark is
calculated under a separate formula within the formula rate plan. The
formula rate plan allows for periodic small adjustments in rates based on
a comparison of actual earned returns to benchmark returns and upon
certain performance factors. The formula rate plan filing for the 1999
test year is discussed in Note 2 to the financial statements. The
formula rate plan filing for the 2000 test year will be submitted in
March 2001.
Fuel Recovery
Entergy Mississippi's rate schedules include an energy cost recovery
rider to recover fuel and purchased energy costs. In December 2000, the
MPSC approved the recovery of $136.7 million of under-recoveries, plus
carrying charges, over a 24-month period effective with the first billing
cycle of January 2001. Effective with January 2001 billings, the rider
utilizes projected energy costs filed quarterly by Entergy Mississippi to
develop an energy cost rate. The energy cost rate is redetermined each
calendar quarter and includes a true-up adjustment reflecting the over-
recovery or under-recovery of the energy cost as of the second quarter
preceding the redetermination.
Entergy New Orleans
Retail Rate Proceedings
Entergy New Orleans' material retail rate proceedings that were
resolved during the past year, are currently pending, or affect current
year results are discussed in Note 2 to the financial statements.
Recovery of Grand Gulf 1 Costs
Under Entergy New Orleans' various rate settlements with the Council
in 1986, 1988, and 1991, Entergy New Orleans agreed to absorb and not
recover from ratepayers a total of $96.2 million of its Grand Gulf 1
costs. Entergy New Orleans was permitted to implement annual rate
increases in decreasing amounts each year through 1995, and to defer
certain costs and related carrying charges for recovery on a schedule
extending from 1991 through 2001. As of December 31, 2000, the
uncollected balance of Entergy New Orleans' deferred costs was $11
million.
Fuel Recovery
Entergy New Orleans' electric rate schedules include a fuel
adjustment clause designed to recover the cost of fuel in the second
prior month, adjusted by a surcharge or credit for deferred fuel expense
arising from the monthly reconciliation of actual fuel costs incurred
with fuel cost revenues billed to customers. The adjustment also
includes the difference between non-fuel Grand Gulf 1 costs paid by
Entergy New Orleans and the estimate of such costs, which are included in
base rates, as provided in Entergy New Orleans' Grand Gulf 1 rate
settlements. Entergy New Orleans' gas rate schedules include an
adjustment to reflect estimated gas costs for the billing month, adjusted
by a surcharge or credit similar to that included in the electric fuel
adjustment clause, in addition to carrying charges. The Council is
currently studying Entergy New Orleans' fuel adjustment methodologies,
with the intention of considering means of mitigating the effect on
ratepayers of sudden increases in fuel costs. The resolution commencing
the study notes that the Council does not intend to deny Entergy New
Orleans full recovery of its prudently incurred fuel and purchased power
costs.
Regulation
Federal Regulation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy)
PUHCA
Entergy Corporation and its various direct and indirect subsidiaries
are subject to the broad regulatory provisions of PUHCA, with the
exception of its EWG and FUCO subsidiaries. Except with respect to
investments in EWGs and FUCOs, the principal regulatory provisions of
PUHCA:
o limit the operations of a registered holding company system to a
single, integrated public utility system, plus certain ancillary and
related systems and businesses;
o regulate certain transactions among affiliates within a holding
company system;
o govern the issuance, acquisition, and disposition of securities and
assets by registered holding companies and their subsidiaries;
o limit the entry by registered holding companies and their
subsidiaries into businesses other than electric and/or gas utility
businesses; and
o require SEC approval for certain utility mergers and acquisitions,
including Entergy's proposed merger with FPL Group.
Entergy Corporation and other electric utility holding companies
have supported legislation in the United States Congress to repeal PUHCA
and transfer certain aspects of the oversight of public utility holding
companies from the SEC to FERC. Entergy believes that PUHCA inhibits its
ability to compete in the evolving electric energy marketplace and
largely duplicates the oversight activities otherwise performed by FERC
and other federal regulators and by state and local regulators. In June
1995, the SEC adopted a report proposing options for the repeal or
significant modification of PUHCA, but the U.S. Congress has not passed
legislation pursuant to this report.
Federal Power Act
The domestic utility companies, System Energy, Entergy Power, and
EPMC are subject to the Federal Power Act as administered by FERC and the
DOE. The Federal Power Act provides for regulatory jurisdiction over the
transmission and wholesale sale of electric energy in interstate
commerce, licensing of certain hydroelectric projects and certain other
activities, including accounting policies and practices. Such regulation
includes jurisdiction over the rates charged by System Energy for Grand
Gulf 1 capacity and energy provided to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans.
Entergy Arkansas holds a FERC license for two hydroelectric projects
totaling 70 MW of capacity that was renewed on July 2, 1980 and expires
on February 28, 2003. In December 2000, Entergy Arkansas filed a license
extension application with FERC for these two facilities.
Regulation of the Nuclear Power Industry (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Regulation of Nuclear Power
Under the Atomic Energy Act of 1954 and the Energy Reorganization
Act of 1974, the operation of nuclear plants is heavily regulated by the
NRC, which has broad power to impose licensing and safety-related
requirements. In the event of non-compliance, the NRC has the authority
to impose fines or shut down a unit, or both, depending upon its
assessment of the severity of the situation, until compliance is
achieved. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy, as owners of all or portions of ANO, River Bend, Waterford
3, and Grand Gulf 1, respectively, and Entergy Operations, as the
licensee and operator of these units, are subject to the jurisdiction of
the NRC. Additionally, Entergy's domestic non-utility nuclear business
is subject to the NRC's jurisdiction as the owner and operator of
Pilgrim, Indian Point 3 and FitzPatrick. Revised safety requirements
promulgated by the NRC have, in the past, necessitated substantial
capital expenditures at these nuclear plants, and additional expenditures
could be required in the future.
The nuclear power industry faces uncertainties with respect to the
cost and long-term availability of sites for disposal of spent nuclear
fuel and other radioactive waste, nuclear plant operations, the
technological and financial aspects of decommissioning plants at the end
of their licensed lives, and requirements relating to nuclear insurance.
These matters are briefly discussed below.
Regulation of Spent Fuel and Other High-Level Radioactive Waste
Under the Nuclear Waste Policy Act of 1982, the DOE is required, for
a specified fee, to construct storage facilities for, and to dispose of,
all spent nuclear fuel and other high-level radioactive waste generated
by domestic nuclear power reactors. However, the DOE has not yet
identified a permanent storage repository and, as a result, future
expenditures may be required to increase spent fuel storage capacity at
Entergy's nuclear plant sites. Information concerning spent fuel
disposal contracts with the DOE, current on-site storage capacity, and
costs of providing additional on-site storage is presented in Note 9 to
the financial statements.
Regulation of Low-Level Radioactive Waste
The availability and cost of disposal facilities for low-level
radioactive waste resulting from normal nuclear plant operations are
subject to a number of uncertainties. Under the Low-Level Radioactive
Waste Policy Act of 1980, as amended, each state is responsible for
disposal of waste originating in that state, but states may participate
in regional compacts to fulfill their responsibilities jointly. Arkansas
and Louisiana participate in the Central Interstate Low-Level Radioactive
Waste Compact (Central States Compact), and Mississippi participates in
the Southeast Low-Level Radioactive Waste Compact (Southeast Compact).
Both the Central States Compact and the Southeast Compact waste facility
development projects are on hold and further development efforts are
unknown at this time. Neither Massachusetts, where Pilgrim is located,
nor New York, where Indian Point 3 and FitzPatrick are located,
participates in any regional compact and efforts to fulfill their
responsibilities have been minimal. Two licensed disposal sites are
currently operating in the United States, but only one site, the Barnwell
Disposal Facility (Barnwell) located in South Carolina, is open to out-of-
region generators. The availability of Barnwell provides only a
temporary solution for Entergy's low-level radioactive waste storage and
does not alleviate the need to develop new disposal capacity. In June
2000, the governor of South Carolina signed legislation forming a new low-
level waste compact with the states of Connecticut and New Jersey. The
compact will start restricting acceptance of out-of-region waste in 2002
and totally ban out-of-region waste by 2008.
The Southeast Compact has filed sanctions against the host state of
North Carolina and the process is currently on hold pending resolution of
the sanctions action by the compact. In December 1998, the host state
for the Central States Compact, Nebraska, denied the compact's license
application. In December 1998, Entergy and two other utilities in the
Central States Compact filed a lawsuit against the state of Nebraska
seeking damages resulting from delays and a faulty license review
process. Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States,
along with other waste generators, fund the development costs for new
disposal facilities relating to the Central States Compact. Development
costs to be incurred in the future are difficult to predict. The current
schedules for the site development in both the Central States Compact and
the Southeast Compact are undetermined at this time. Until long-term
disposal facilities are established, Entergy will seek continued access
to existing facilities. If such access is unavailable, Entergy will
store low-level waste at its nuclear plant sites.
Regulation of Nuclear Plant Decommissioning
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy are recovering through electric rates the estimated
decommissioning costs for ANO, River Bend, Waterford 3, and Grand Gulf 1,
respectively. These amounts are deposited in trust funds which, together
with the related earnings, can only be used for future decommissioning
costs. Estimated decommissioning costs are periodically reviewed and
updated to reflect inflation and changes in regulatory requirements and
technology. Applications are periodically made to appropriate regulatory
authorities to reflect, in rates, the changes in projected
decommissioning costs. In conjunction with the Pilgrim acquisition,
Entergy received Pilgrim's decommissioning trust fund. Based on cost
estimates provided by an outside consultant, Entergy believes that
Pilgrim's decommissioning fund will be adequate to cover future
decommissioning costs for the plant without any additional deposits to
the trust. Subject to decommissioning service agreements between Entergy
and NYPA, NYPA retains the decommissioning liability and trusts relating
to Indian Point 3 and FitzPatrick up to a specified amount. Entergy
believes that the amounts that will be available from the trusts will be
sufficient to cover the future decommissioning costs of Indian Point 3
and FitzPatrick without any additional contributions to the trusts.
Additional information with respect to decommissioning costs for ANO,
River Bend, Waterford 3, Grand Gulf 1, Pilgrim, Indian Point 3, and
FitzPatrick is found in Note 9 to the financial statements.
The EPAct requires all electric utilities (including Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy) that
purchased uranium enrichment services from the DOE to contribute up to a
total of $150 million annually over approximately 15 years (adjusted for
inflation, up to a total of $2.25 billion) for decontamination and
decommissioning of enrichment facilities. In accordance with the EPAct,
contributions to decontamination and decommissioning funds are recovered
through rates in the same manner as other fuel costs. The estimated
annual contributions by Entergy for decontamination and decommissioning
fees are discussed in Note 9 to the financial statements.
Nuclear Insurance
The Price-Anderson Act limits public liability for a single nuclear
incident to approximately $9.5 billion. Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, System Energy, and Entergy's domestic non-
utility nuclear business have protection with respect to this liability
through a combination of private insurance and an industry assessment
program, as well as insurance for property damage, costs of replacement
power, and other risks relating to nuclear generating units. Insurance
applicable to the nuclear programs of Entergy is discussed in Note 9 to
the financial statements.
Nuclear Operations
General (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy)
Entergy Operations operates ANO, River Bend, Waterford 3, and Grand
Gulf 1, subject to the owner oversight of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy, respectively. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy pay
directly or reimburse Entergy Operations at cost for its operation of the
nuclear units. Entergy's domestic non-utility nuclear business is the
operator of Pilgrim, Indian Point 3 and FitzPatrick.
ANO Matters (Entergy Corporation and Entergy Arkansas)
Cracks in steam generator tubes at ANO 2 were discovered and
repaired during an outage in March 1992. Further inspections and repairs
were conducted during subsequent refueling and mid-cycle outages and
turbine modifications were installed in May 1997 to restore most of the
output lost due to steam generator fouling and tube plugging. In October
1996, the Board authorized Entergy Arkansas and Entergy Operations to
fabricate and install replacement steam generators at ANO 2. Entergy
Operations thereafter entered into contracts for the design, fabrication,
and installation of replacement steam generators. In December 1998, the
APSC issued an order finding replacement of the ANO 2 steam generators to
be in the public interest. The steam generators were replaced during a
refueling outage in the second half of 2000. During the next scheduled
outage, an examination of both generators is planned to evaluate their
wear and to meet the requirements of industry guidelines for steam
generator program integrity.
In February 2000, Entergy Operations applied to the NRC for an
extension of ANO 1's operating license. The current license expires in
2014, and, if granted, the extension would provide the authority to
continue operating ANO 1 until 2034. Management expects the NRC
consideration process to take two years.
In December 2000, Entergy Operations applied to the NRC for an
amendment to ANO 2's operating license that would allow for an increase
in the reactor core power rating. If granted, this amendment will allow
ANO 2 to increase its gross electrical output by approximately 90 MW.
Entergy Operations has requested action by the NRC on the amendment by
March 2002, to permit implementation of the uprate following ANO 2's next
scheduled refueling outage.
State Regulation (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans)
General
Entergy Arkansas is subject to regulation by the APSC, which
includes the authority to:
o oversee utility service;
o set rates;
o determine reasonable and adequate service;
o require proper accounting;
o control leasing;
o control the acquisition or sale of any public utility plant or
property constituting an operating unit or system;
o set rates of depreciation;
o issue certificates of convenience and necessity and certificates of
environmental compatibility and public need; and
o regulate the issuance and sale of certain securities.
Entergy Gulf States is subject to the jurisdiction of the municipal
authorities of a number of incorporated cities in Texas as to retail
rates and service within their boundaries, with appellate jurisdiction
over such matters residing in the PUCT. Entergy Gulf States' Texas
business is also subject to regulation by the PUCT as to:
o retail rates and service in rural areas;
o certification of new transmission lines; and
o extensions of service into new areas.
Entergy Gulf States' Louisiana electric and gas business and Entergy
Louisiana are subject to regulation by the LPSC as to:
o utility service;
o rates and charges;
o certification of generating facilities;
o power or capacity purchase contracts; and
o depreciation, accounting, and other matters.
Entergy Louisiana is also subject to the jurisdiction of the Council
with respect to such matters within Algiers in Orleans Parish.
Entergy Mississippi is subject to regulation by the MPSC as to the
following:
o utility service;
o service areas;
o facilities; and
o retail rates.
Entergy Mississippi is also subject to regulation by the APSC as to
the certificate of environmental compatibility and public need for the
Independence Station, which is located in Arkansas.
Entergy New Orleans is subject to regulation by the Council as to
the following:
o utility service;
o rates and charges;
o standards of service;
o depreciation, accounting, and issuance and sale of certain
securities; and
o other matters.
Franchises
Entergy Arkansas holds exclusive franchises to provide electric
service in approximately 304 incorporated cities and towns in Arkansas.
These franchises are unlimited in duration and continue unless the
municipalities purchase the utility property. In Arkansas, franchises
are considered to be contracts and, therefore, are terminable upon breach
of the terms of the franchise.
Entergy Gulf States holds non-exclusive franchises, permits, or
certificates of convenience and necessity to provide electric and gas
service in approximately 55 incorporated municipalities in Louisiana and
to provide electric service in approximately 63 incorporated
municipalities in Texas. Entergy Gulf States typically is granted 50-
year franchises in Texas and 60-year franchises in Louisiana. Entergy
Gulf States' current electric franchises will expire during 2007 - 2036
in Texas and during 2015 - 2046 in Louisiana. The natural gas franchise
in the City of Baton Rouge will expire in 2015. In addition, Entergy
Gulf States holds a certificate of convenience and necessity from the
PUCT to provide electric service to areas within 21 counties in eastern
Texas. Retail open access is scheduled to begin in Entergy Gulf States'
Texas service territory on January 1, 2002. Refer to "MANAGEMENT'S
FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS"
and Note 2 to the financial statements for discussions of the transition
to competition in Texas.
Entergy Louisiana holds non-exclusive franchises to provide electric
service in approximately 116 incorporated Louisiana municipalities. Most
of these franchises have 25-year terms, although six of these
municipalities have granted 60-year franchises. Entergy Louisiana also
supplies electric service in approximately 353 unincorporated
communities, all of which are located in Louisiana parishes in which it
holds non-exclusive franchises.
Entergy Mississippi has received from the MPSC certificates of
public convenience and necessity to provide electric service to areas
within 45 counties, including a number of municipalities, in western
Mississippi. Under Mississippi statutory law, such certificates are
exclusive. Entergy Mississippi may continue to serve in such
municipalities upon payment of a statutory franchise fee, regardless of
whether an original municipal franchise is still in existence.
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to city ordinances (except for in Algiers, which is
served by Entergy Louisiana). These ordinances contain a continuing
option for the City of New Orleans to purchase Entergy New Orleans'
electric and gas utility properties. A resolution to study the
advantages for ratepayers that might result from an acquisition of these
properties has been filed in a committee of the Council. The committee
has deferred consideration of that resolution until May 2001. The full
Council must approve the resolution to commence such a study before it
can become effective.
The business of System Energy is limited to wholesale power sales.
It has no distribution franchises.
Environmental Regulation
General
Entergy's facilities and operations are subject to regulation by
various domestic and foreign governmental authorities having jurisdiction
over air quality, water quality, control of toxic substances and
hazardous and solid wastes, and other environmental matters. Management
believes that its affected subsidiaries are in substantial compliance
with environmental regulations currently applicable to their facilities
and operations. Because environmental regulations are subject to change,
future compliance costs cannot be precisely estimated.
Clean Air Legislation
The Clean Air Act Amendments of 1990 (the Act) established the
following three programs that currently or in the future may affect
Entergy's fossil-fueled generation:
o an acid rain program for control of sulfur dioxide (SO2) and
nitrogen oxides (NOx);
o an ozone nonattainment area program for control of NOx and volatile
organic compounds; and
o an operating permits program for administration and enforcement of
these and other Act programs.
Under the current acid rain program, Entergy's subsidiaries will not
require additional equipment to control SO2 or NOx. The Act provides SO2
allowances to most of the affected Entergy generating units for emissions
based upon past emission levels and operating characteristics. Each
allowance is an entitlement to emit one ton of SO2 per year. Under the
Act, utilities are or will be required to possess allowances for SO2
emissions from affected generating units. All Entergy fossil-fueled
generating units are classified as "Phase II" units under the Act and are
subject to SO2 allowance requirements.
Additional controls were recently implemented at certain Entergy
Gulf States generating units to achieve NOx reductions due to the ozone
non-attainment status of areas served in and around Beaumont and Houston,
Texas. Texas environmental authorities imposed NOx controls on power
plants that had to be in place by November 1999. To date, the cost of
additional control equipment necessary to maintain this compliance is
immaterial. In December 1999 and August 2000, Texas authorities proposed
future control strategies for public comment that would affect the
Beaumont and Houston areas, respectively. The Texas authorities
finalized regulations for the Beaumont area in April 2000. The analogous
Houston area regulations were finalized in December 2000. The final
strategies adopted by the state of Texas will cause Entergy Gulf States
to incur additional costs for NOx controls through 2007. Entergy Gulf
States has conducted studies to estimate the costs that would be incurred
based on the proposed strategies. Pursuant to these studies, Entergy
Gulf States' preliminary estimate is that compliance costs through 2003
in the Beaumont and Houston areas will be $37 million and $26 million
respectively, and that these expenditures will be sufficient for the
entire compliance period through 2007. Entergy commenced projects in
2000 to engineer, procure, and construct needed air pollution control
facilities. Cost estimates will be refined as engineering design
progresses based on the final adopted strategies approved by the EPA.
Entergy believes the future control strategies in the ozone non-
attainment regulations require emission limits that are more restrictive
than those discussed below related to utility restructuring in Texas.
As part of legislation passed in Texas in June 1999 to restructure
the electric power industry in the state, certain generating units of
Entergy Gulf States will be required to obtain operating permits and meet
new, lower emission limits for NOx. It is expected that Entergy Gulf
States will incur costs through 2003 to meet these new standards. The
Texas portion of these costs and the costs associated with ozone non-
attainment regulations are expected to be recoverable as stranded costs
of environmental cleanup.
Oil Pollution Prevention and Response
The EPA has issued a proposed rule on oil pollution prevention and
response. This rule could affect Entergy's operation of its
approximately 3,500 transmission and distribution electrical equipment
installations that are potentially subject to this proposed rule. If the
proposed rule is issued in the form expected by the industry, Entergy
will be substantially in compliance with the rule. However, there is a
possibility that the rule could be issued in a form that would require
Entergy to develop site-specific oil spill prevention and control
countermeasure plans for the facilities subject to this rule. In
addition, secondary containment could be required around the equipment in
these facilities. Entergy participates in industry groups involved with
the proposed rule and will be monitoring the development of the proposed
rule. It is expected that the final rule will be issued in the first
half of 2001.
Other Environmental Matters
The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (CERCLA), authorizes the EPA and,
indirectly, the states, to mandate cleanup, or reimbursement of clean-up
costs, by owners or operators of sites from which hazardous substances
may be or have been released. Parties that generated or transported
hazardous substances to these sites are also deemed liable by CERCLA.
CERCLA has been interpreted to impose joint and several liability on
responsible parties. The domestic utility companies have sent waste
materials to various disposal sites over the years. In addition,
environmental laws now regulate certain of the domestic utility
companies' operating procedures and maintenance practices, which
historically were not subject to regulation. Some of Entergy's disposal
sites have been the subject of governmental action under CERCLA,
resulting in site clean-up activities. The domestic utility companies
have participated to various degrees in accordance with their respective
potential liabilities in such site cleanups and have developed experience
with clean-up costs. The affected domestic utility companies have
established reserves for such environmental clean up and restoration
activities.
Entergy Arkansas
Entergy Arkansas entered into a Consent Administrative Order with
the Arkansas Department of Environmental Quality (ADEQ) in which it
agreed to conduct initial stabilization associated with contamination at
the Utilities Services, Inc. Superfund site located near Rison, Arkansas.
This site was never owned nor operated by any Entergy-affiliated company.
This site was found to have soil contaminated by polychlorinated
biphenyls (PCBs) and pentachlorophenol (a wood preservative). Containers
and drums that contained PCBs and other hazardous substances were found
at the site. Entergy Arkansas worked with the ADEQ to identify and
notify other PRPs with respect to this site. Approximately twenty PRPs
have been identified to date. In December 1999, Entergy Arkansas, along
with several other PRPs, met with ADEQ representatives to discuss the
cleanup of the site. The PRPs are being encouraged to undertake a
voluntary cleanup and have begun discussions regarding the sharing of
costs. Entergy Arkansas believes that its ultimate responsibility for
this site will not materially exceed its existing cleanup provision of $5
million. Entergy has sent a letter of intent to the ADEQ to participate
in the site characterization, and Entergy is waiting for a response from
the ADEQ. As of December 31, 2000, Entergy Arkansas had incurred
approximately $400,000 of these costs.
Entergy Gulf States
Several class action and other suits have been filed in state and
federal courts seeking relief from Entergy Gulf States and others for
damages caused by the disposal of hazardous waste and for asbestos-
related disease allegedly resulting from exposure on Entergy Gulf States'
premises (see "Other Regulation and Litigation" below).
In August 1999, Entergy Gulf States received notice from the Texas
Natural Resource Conservation Commission (TNRCC) that it is considered to
be a PRP for the Spector Salvage Yard in Orange, Texas. The Spector
Salvage site operated from approximately 1944 until 1971. In addition to
general salvage, the facility functioned as a repository for military
surplus equipment and supplies purchased from military, industrial, and
chemical facilities. Soil samples from the site indicate the presence of
heavy metals and various organics, including PCBs. The TNRCC requested
of all PRPs a submission of a good faith offer to fully fund or conduct a
remedial investigation. Entergy Gulf States believes that there is
insufficient basis for including the company as a PRP. If additional
evidence that the company is a PRP were discovered, Entergy Gulf States
would re-evaluate its position. Based on the size of the site, Entergy
Gulf States expects that its future expenditures for investigation and
clean-up should not exceed $250,000.
Entergy Gulf States is currently involved in a remedial
investigation of the Lake Charles Service Center site, located in Lake
Charles, Louisiana. A manufactured gas plant (MGP) is believed to have
operated at this site from approximately 1916 to 1931. Coal tar, a by-
product of the distillation process employed at MGPs, was apparently
routed to a portion of the property for disposal. The same area has also
been used as a landfill. In 1999, Entergy Gulf States signed a second
Administrative Consent Order with the EPA to perform removal action at
the site. Entergy Gulf States believes that its ultimate responsibility
for this site will not materially exceed its existing clean-up provision
of $16.8 million.
Entergy Gulf States is currently involved in the second phase of an
investigation of contamination of an MGP site, known as the Old Jennings
Ice Plant, located in Jennings, Louisiana. The MGP is believed to have
operated from approximately 1909 to 1926. The site is currently used for
an electrical substation and storage of transmission and distribution
equipment. In July 1996, a petroleum-like substance was discovered on
the surface soil, and notification was made to the LDEQ. The LDEQ was
aware of this site based upon a survey performed by an environmental
consultant for the EPA. Entergy Gulf States obtained the services of an
environmental consultant to collect core samples and to perform a search
of historical records to determine what activities occurred at Jennings.
Results of the core sampling, which found limited amounts of
contamination on-site, were submitted to the LDEQ. A plan to determine a
cost-effective remediation strategy will be developed and submitted to
the LDEQ for review in 2001. Entergy does not expect that its ultimate
financial responsibility with respect to this site will be material. The
amount of its existing provision for cleanup is $250,000.
In 1994, Entergy Gulf States performed a site assessment in
conjunction with a construction project at the Louisiana Station
Generating Plant (Louisiana Station). In 1995, a further assessment
confirmed subsurface soil and groundwater impact to three areas on the
plant site. After further evaluation, a notification was made to the
LDEQ. Remediation of Louisiana Station is expected to continue through
2001. The remediation cost incurred through December 31, 2000 for this
site was $6.2 million. Future costs are not expected to exceed the
existing provision of $1.3 million.
Entergy New Orleans
Entergy New Orleans is planning a new substation on a parcel of land
located adjacent to an existing substation, which is in close proximity
to the former Market Street power plant. During pre-construction
activities in January 2000, significant levels of lead were discovered in
the soil at this site. Entergy New Orleans notified the LDEQ of the
contamination. The contamination at this site was addressed using the
LDEQ Risk/Evaluation Corrective Action Plan. The work has been completed
and the final closure report is scheduled to be submitted in the first
quarter of 2001. The cost of this remediation was approximately $1
million.
Entergy Louisiana and Entergy New Orleans
The Southern Transformer shop located in New Orleans has served both
Entergy Louisiana and Entergy New Orleans. This transformer shop is now
being closed and an environmental assessment is being performed to
determine what remediation may be necessary. Based on preliminary
findings, Entergy Louisiana has reserved $150,000 for this project.
From 1992 to 1994, Entergy Louisiana performed a site assessment and
remedial activities at a retired power plant known as the Thibodaux
municipal site, previously owned and operated by a Louisiana
municipality. Entergy Louisiana purchased the power plant at this site
as part of the acquisition of municipal electric systems. The site
assessment indicated some subsurface contamination from fuel oil.
Remediation of the Thibodaux site is expected to continue through 2001.
The cost incurred through December 31, 2000 for the Thibodaux site was
approximately $580,000. Future costs are not expected to exceed the
existing provision of $240,000.
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of wastewater impoundments. Entergy Louisiana and
Entergy New Orleans have determined that certain of their power plant
wastewater impoundments were affected by these regulations and chose to
upgrade or close them. Completion of this work is pending LDEQ approval.
LDEQ has issued notices of deficiencies for certain of these sites. As a
result, a remaining recorded liability in the amount of $5.8 million for
Entergy Louisiana and $0.5 million for Entergy New Orleans existed at
December 31, 2000 for wastewater upgrades and closures. Management of
Entergy Louisiana and Entergy New Orleans believes these reserves are
adequate based on current estimates.
Other Regulation and Litigation
Entergy Corporation and Entergy Gulf States Merger
Several parties, including Entergy Services, appealed FERC's
approval of the merger between Entergy Corporation and Entergy Gulf
States to the D.C. Circuit. Entergy Services sought review of FERC's
deletion of a 40% cap on the amount of fuel savings Entergy Gulf States
may be required to transfer to other domestic utility companies under a
tracking mechanism designed to protect the other companies from certain
unexpected increases in fuel costs. The other parties sought to overturn
FERC's decisions on various grounds, including issues as to whether FERC
appropriately conditioned the merger to protect various interested
parties from alleged harm and FERC's reliance on Entergy's transmission
tariff to mitigate any potential anti-competitive impacts of the merger.
Management cannot predict the timing or outcome of this proceeding.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans)
Entergy Corporation and the domestic utility companies are
defendants in numerous lawsuits that have been filed by former employees
alleging that they were wrongfully terminated and/or discriminated
against on the basis of age, race, and/or sex. Entergy Corporation and
the domestic utility companies are vigorously defending these suits and
deny any liability to the plaintiffs. However, no assurance can be given
as to the outcome of these cases, and at this time management cannot
estimate the total amount of damages sought.
Asbestos and Hazardous Waste Suits (Entergy Gulf States)
Plaintiffs have filed numerous lawsuits in state and federal courts
in Texas and Louisiana seeking relief from Entergy Gulf States as well as
numerous other defendants for damages caused to the plaintiffs or others
by the alleged exposure to hazardous waste and asbestos on the
defendants' premises. The plaintiffs in some suits are also suing
Entergy Gulf States and all other defendants on a conspiracy claim. It
will not be known until discovery is complete how many of the plaintiffs
in any of the foregoing cases actually worked on Entergy Gulf States'
premises, nor can management, at this time, estimate the total amount of
damages sought. Entergy Gulf States believes that the ultimate
resolution of these matters will not be material, in the aggregate, to
its financial position or results of operations.
Ratepayer Lawsuits (Entergy Corporation, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans)
Entergy Louisiana Fuel Clause Lawsuit
In May 1998, a group of ratepayers filed a complaint against Entergy
Corporation, Entergy Power, and Entergy Louisiana in state court in
Orleans Parish purportedly on behalf of all Entergy Louisiana ratepayers.
The plaintiffs seek treble damages for alleged injuries arising from
alleged violations by the defendants of Louisiana's antitrust laws in
connection with the costs included in fuel filings with the LPSC and
passed through to ratepayers. Among other things, the plaintiffs allege
that Entergy Louisiana improperly introduced certain costs into the
calculation of the fuel charges, including high-cost electricity
imprudently purchased from its affiliates and high-cost gas imprudently
purchased from independent third party suppliers. In addition,
plaintiffs seek to recover interest and attorneys' fees. Plaintiffs also
requested that the LPSC initiate a review of Entergy Louisiana's monthly
fuel adjustment charge filings and force restitution to ratepayers of all
costs that the plaintiffs allege were improperly included in those fuel
adjustment filings. A few parties have intervened in the LPSC
proceeding. In direct testimony, plaintiffs purport to quantify many of
their claims for the period 1989 through 1998 in an amount totaling
$544 million, plus interest.
Entergy Louisiana has reached an agreement in principle with the
LPSC staff for the settlement of the matter before the LPSC and has
executed a definitive agreement with the plaintiffs for the settlement of
the matter before the LPSC and the state court. The LPSC approved the
settlement agreement following a fairness hearing before an ALJ in
November 2000. Plaintiffs have sought class certification and approval
of the settlement by the state court, and a hearing on those issues is
scheduled for April 2001.
Under the terms of the settlement agreement, Entergy Louisiana
agrees to refund to customers approximately $72 million to resolve all
claims arising out of or relating to Entergy Louisiana's fuel adjustment
clause filings from January 1, 1975 through December 31, 1999, except
with respect to purchased power and associated costs included in the fuel
adjustment clause filings for the period May 1 through September 30,
1999. Entergy Louisiana previously provided reserves for the refund.
Under the terms of the settlement, Entergy Louisiana also consents to
future fuel cost recovery under a long-term gas contract based on a
formula that would likely result in an under-recovery of actual costs
under that contract for the remainder of its term, which runs through
2013. The future under-recovery cannot be precisely estimated at this
time because it will depend upon factors that are not certain, such as
the price of gas and the amount of gas purchased under the long-term
contract. In recent years, Entergy Louisiana has made purchases under
that contract totaling from $91 million to $121 million annually. Had
the proposed settlement terms been applicable to such purchases, the
under-recoveries would have ranged from $4 million to $9 million per
year.
Vidalia Project Sub-Docket
Two of the intervenors in the proceeding discussed above, Marathon
Oil Company and Louisiana Energy Users Group, requested that the LPSC
review the prudence of a contract entered into by Entergy Louisiana to
purchase energy generated by a hydroelectric facility known as the
Vidalia project through the year 2031. Note 9 to the financial
statements contains further discussions of the obligations related to the
Vidalia project. By orders entered by the LPSC in 1985 and 1990, the
LPSC approved Entergy Louisiana's entry into the Vidalia contract and
Entergy Louisiana's right to recover, through the fuel adjustment clause,
the costs of power purchased thereunder. Additionally, the wholesale
electric rates under the Vidalia power purchase contract were filed at
FERC. In December 1999, the LPSC instituted a review of the following
issues relating to the Vidalia project: (i) the LPSC's jurisdiction over
the Vidalia project; (ii) Entergy Louisiana's management of the Vidalia
contract, including opportunities to restructure or otherwise reform the
contract; (iii) the appropriateness of Entergy Louisiana's recovery of
100% of the Vidalia contract costs from ratepayers; (iv) the
appropriateness of the fuel adjustment clause as the method for
recovering all or part of the Vidalia contract costs; (v) the appropriate
regulatory treatment of the Vidalia contract in the event the LPSC
approves implementation of retail competition; and (vi) Entergy
Louisiana's communication of pertinent information to the LPSC regarding
the Vidalia project and contract. Based on its review, the LPSC will
determine whether it should disallow any of the costs of the Vidalia
project included in the fuel adjustment clause.
In March 2000, Entergy Louisiana filed testimony in this sub-docket
asserting that the prudence of the Vidalia contract already has been
approved by final orders of the LPSC and that recovery of all amounts
paid by Entergy Louisiana related to the Vidalia project pursuant to the
FERC-filed rate is appropriate. Direct testimony was filed by intervenor
Marathon Oil Company in May 2000 and by the LPSC staff and intervenor
Louisiana Energy Users Group in July 2000. In its testimony the LPSC
staff alleges that Entergy Louisiana was imprudent for not declaring to
the LPSC that the Vidalia project had become uneconomic and not
threatening to block the Vidalia project's owners' July 30, 1990 request
that the LPSC clarify the LPSC's 1985 order (approving the Entergy
Louisiana/Vidalia project power purchase agreement), unless the Vidalia
project's owners' shared with Entergy Louisiana's ratepayers some portion
of what the LPSC staff quantifies as approximately $90 million of tax
consequences available to the project. The LPSC staff's testimony does
not quantify how much of the potential tax savings Entergy Louisiana
should have demanded in exchange for not attempting to block the Vidalia
project's owners' request for clarification; however, that testimony does
suggest various alternatives by which some portion of the $90 million,
perhaps $45 million plus interest since 1990, could be returned to the
ratepayers. The direct testimony of the intervenor Louisiana Energy
Users Group alleges that Entergy Louisiana was imprudent for not
attempting to block the Vidalia project's owners' July 30, 1990 request
that the LPSC clarify the LPSC's 1985 order approving the Entergy
Louisiana/Vidalia project power purchase agreement; however, that
intervenor does not quantify the amount of damage alleged to have been
caused by this alleged imprudence. The direct testimony of the intervenor
Marathon Oil Company alleges with respect to Entergy Louisiana that
imprudent Vidalia project costs should be disallowed and that Entergy
Louisiana's customers should not be charged 100% of the Vidalia costs.
It is anticipated that hearings in this sub-docket concerning the Vidalia
contract will begin in April 2001.
Entergy New Orleans Fuel Clause Lawsuit
In April 1999, a group of ratepayers filed a complaint against
Entergy New Orleans, Entergy Corporation, Entergy Services, and Entergy
Power in state court in Orleans Parish purportedly on behalf of all
Entergy New Orleans ratepayers. The plaintiffs seek treble damages for
alleged injuries arising from the defendants' alleged violations of
Louisiana's antitrust laws in connection with certain costs passed on to
ratepayers in Entergy New Orleans' fuel adjustment filings with the
Council. In particular, plaintiffs allege that Entergy New Orleans
improperly included certain costs in the calculation of fuel charges and
that Entergy New Orleans imprudently purchased high-cost fuel from other
Entergy affiliates. Plaintiffs allege that Entergy New Orleans and the
other defendant Entergy companies conspired to make these purchases to
the detriment of Entergy New Orleans' ratepayers and to the benefit of
Entergy's shareholders, in violation of Louisiana's antitrust laws.
Plaintiffs also seek to recover interest and attorney's fees. Exceptions
to the plaintiffs' allegations were filed by Entergy, asserting, among
other things, that jurisdiction over these issues rests with the Council
and FERC. If necessary, at the appropriate time, Entergy will also raise
its defenses to the antitrust claims. At present, the suit in state
court is stayed by stipulation of the parties.
Plaintiffs also filed this complaint with the Council in order to
initiate a review by the Council of the plantiffs' allegations and to
force restitution to ratepayers of all costs they allege were improperly
and imprudently included in the fuel adjustment filings. Discovery has
begun in the proceedings before the Council. In April 2000, testimony
was filed on behalf of the plaintiffs in this proceeding. The testimony
asserts, among other things, that Entergy New Orleans and other
defendants have engaged in fuel procurement and power purchasing
practices that could have resulted in New Orleans customers being
overcharged by more than $59 million over a period of years. The
testimony also challenges the implementation of the recovery methodology.
However, it is not clear precisely what periods and damages are being
alleged. Entergy intends to defend this matter vigorously, both in court
and before the Council. The ultimate outcome of the lawsuit and the
Council proceeding cannot be predicted at this time. Hearings are
expected to begin in October 2001.
Entergy New Orleans Rate of Return Lawsuit
In April 1998, a group of residential and business ratepayers filed
a complaint against Entergy New Orleans in state court in Orleans Parish
purportedly on behalf of all ratepayers in New Orleans. The plaintiffs
allege that Entergy New Orleans overcharged ratepayers by at least $300
million since 1975 in violation of limits on Entergy New Orleans' rate of
return that the plaintiffs allege were established by ordinances passed
by the Council in 1922. The plaintiffs seek, among other things, (i) a
declaratory judgment that such franchise ordinances have been violated;
and (ii) a remand to the Council for the establishment of the amount of
overcharges plus interest. Entergy New Orleans believes the lawsuit is
without merit. Entergy New Orleans has charged only those rates
authorized by the Council in accordance with applicable law. In May
2000, a court of appeal granted Entergy New Orleans' exception to
jurisdiction in the case and dismissed the proceeding. The Louisiana
Supreme Court denied the plaintiff's request for a writ of certiorari.
The plaintiffs then commenced a similar proceeding before the Council.
Management cannot predict the outcome of the proceeding before the
Council.
Entergy Louisiana Formula Ratemaking Plan Lawsuit
In May 1998, a group of ratepayers filed a complaint against Entergy
Louisiana in state court in East Baton Rouge Parish purportedly on behalf
of all Entergy Louisiana ratepayers. The plaintiffs allege that the
formula ratemaking plan authorized by the LPSC has allowed Entergy
Louisiana to earn amounts in excess of a fair return. The plaintiffs
seek, among other things, (i) a declaratory judgment that the formula
ratemaking plan is an improper ratemaking practice; and (ii) a refund of
the amounts allegedly charged in excess of proper ratemaking practices.
Entergy Louisiana believes the lawsuit is without merit and is vigorously
defending itself. At this time, management cannot determine the amount
of damages being sought.
July 1999 Power Outages Lawsuit
In February 2000, a lawsuit was commenced in state court in Orleans
Parish, Louisiana, against Entergy, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans relating to power outages that
occurred in July 1999. The plaintiff, who purports to represent a class
of similarly situated persons, claims unspecified damages as a result of
these outages, which the plaintiff claims were the result of negligence
on the part of the Entergy defendants. Plaintiffs have instituted a
similar proceeding before the LPSC. The defendants will vigorously
contest the plaintiff's allegations, which they believe do not support
any liability to the plaintiff for damages. At this time, management
cannot determine the amount of damages being sought.
Franchise Fee Litigation (Entergy Corporation and Entergy Gulf States)
In September 1998, the City of Nederland filed a petition against
Entergy Gulf States and Entergy Services in state court in Jefferson
County, Texas, purportedly on behalf of all Texas municipalities that
have ordinances or agreements with Entergy Gulf States. The lawsuit
alleges that Entergy Gulf States has been underpaying its franchise fees
due to failure to properly calculate its gross receipts. The plaintiff
seeks a judgment for the allegedly underpaid fees and punitive damages.
Entergy Gulf States believes the lawsuit is without merit and is
vigorously defending itself. The trial in this matter is scheduled to
begin in December 2001. At this time, management cannot determine the
amount of damages being sought.
Fiber Optic Cable Litigation (Entergy Corporation, Entergy Gulf
States)
In May 1998, a group of property owners filed a petition against
Entergy Corporation, Entergy Gulf States, Entergy Services, and ETHC in
state court in Jefferson County, Texas purportedly on behalf of all
property owners throughout the Entergy service area who have conveyed
easements to the defendants. The lawsuit alleged that Entergy installed
fiber optic cable across their property without obtaining appropriate
easements. The plaintiffs sought actual damages for the use of the land
and a share of the profits made through use of the fiber optic cables
and punitive damages. The state court petition was dismissed, and the
plaintiffs have commenced an identical lawsuit in the United States
District Court in Beaumont, Texas. Entergy is vigorously defending
itself in the lawsuit and believes that any damages suffered by the
plaintiff landowners are negligible and that there is no basis for the
claim seeking a share of profits. Recently both sides have filed
motions for summary judgment. At this time, management cannot determine
the amount of damages being sought.
Franchise Service Area Litigation (Entergy Gulf States)
In early 1998, Beaumont Power and Light Company (BP&L)
unsuccessfully sought a franchise to provide electric service in the City
of Beaumont, Texas, where Entergy Gulf States already holds a franchise.
In November 1998, BP&L filed a request before the PUCT to obtain a
certificate of convenience and necessity (CCN) for those portions of
Jefferson County outside the boundaries of any municipality for which
Entergy Gulf States provides retail electric service. BP&L's application
contemplates using Entergy Gulf States' facilities in their provision of
service. In Texas, utilities are required to obtain a CCN prior to
providing retail electric service. Jefferson County is currently singly
certificated to Entergy Gulf States. If BP&L's application is granted,
BP&L would be able to provide retail service to Entergy Gulf States'
customers in the area for which the certificate would apply. BP&L has
amended its application to add a request for a CCN to provide retail
electric service within the City of Beaumont. The amended application
acknowledges that the Texas electric utility restructuring law requires
BP&L to use its own facilities to connect to its customers if it is
granted a CCN. In April 2000, the ALJ recommended denial of BP&L's
application. In May 2000, the PUCT voted to remand the proceeding back
to the ALJ to allow BP&L to provide further evidence. A pre-hearing
conference has been scheduled for May 2001.
Hindusthan Development Corporation, Ltd. (Entergy Corporation)
In January 1999, Hindusthan Development Corporation (HDC) commenced
an arbitration proceeding in India against Entergy Power Asia Ltd.
(EPAL), an indirect, wholly-owned subsidiary of Entergy Corporation. The
arbitration is progressing under rules that have been adopted in both
India and the United States. HDC alleges that EPAL did not fulfill its
obligations under a Joint Development Agreement (JDA) to develop a 350 MW
cogeneration plant to be built in Bina, India. HDC also alleges that
EPAL wrongfully withdrew as lead developer. Entergy's management
believes that HDC's allegations are without merit, and that each party to
the JDA had an absolute right of withdrawal. HDC is seeking unspecified
damages of $1.1 billion. EPAL is vigorously defending itself in the
arbitration proceeding.
Ice Storm Litigation (Entergy Corporation and Entergy Gulf States)
In January 1997, a group of Entergy Gulf States customers in Texas
filed a lawsuit against Entergy Corporation, Entergy Gulf States, and
other Entergy subsidiaries in state court in Jefferson County, Texas
purportedly on behalf of all Entergy Gulf States customers in Texas who
sustained outages in a January 1997 ice storm. The lawsuit alleges that
Entergy failed to properly maintain its electrical distribution system
and respond to the ice storm. The district court certified the class in
April 1999. In March 2000, an appellate court affirmed the district
court's decision to certify the class. In response to Entergy's motion
for rehearing, the appellate court reversed the district court, denied
class certification, and remanded the case to the district court for
proceedings consistent with its ruling. This ruling reduces Entergy's
exposure in the lawsuit to an immaterial level. Entergy believes that
the lawsuit is without merit, and will vigorously defend itself against
the individual named plaintiffs.
Litigation Environment (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
The four states in which the domestic utility companies operate, in
particular Louisiana, Mississippi, and Texas, have proven to be unusually
litigious environments. Judges and juries in Louisiana, Mississippi, and
Texas have demonstrated a willingness to grant large verdicts, including
punitive damages, to plaintiffs in personal injury, property damage, and
business tort cases. Entergy uses legal and appropriate means to contest
litigation threatened or filed against it, but the litigation environment
in these states poses a significant business risk.
EARNINGS RATIOS OF DOMESTIC UTILITY COMPANIES AND SYSTEM ENERGY
The domestic utility companies' and System Energy's ratios of
earnings to fixed charges and ratios of earnings to combined fixed
charges and preferred dividends pursuant to Item 503 of SEC Regulation
S-K are as follows:
Ratios of Earnings to Fixed Charges
Years Ended December 31,
2000 1999 1998 1997 1996
Entergy Arkansas 3.01 2.08 2.63 2.54 2.93
Entergy Gulf States 2.60 2.18 1.40 1.42 1.47
Entergy Louisiana 3.33 3.48 3.18 2.74 3.16
Entergy Mississippi 2.33 2.44 3.12 2.98 3.40
Entergy New Orleans 2.66 3.00 2.65 2.70 3.51
System Energy 2.41 1.90 2.52 2.31 2.21
Ratios of Earnings to Combined Fixed
Charges and Preferred Dividends
Years Ended December 31,
2000 1999 1998 1997 1996
Entergy Arkansas 2.70 1.80 2.28 2.24 2.44
Entergy Gulf States(a) 2.39 1.86 1.20 1.23 1.19
Entergy Louisiana 2.93 3.09 2.75 2.36 2.64
Entergy Mississippi 2.09 2.18 2.80 2.69 2.95
Entergy New Orleans 2.43 2.74 2.41 2.44 3.22
(a) "Preferred Dividends" in the case of Entergy Gulf States also
include dividends on preference stock.
BUSINESS SEGMENTS
Entergy Corporation
Entergy's business segments are discussed in Note 14 to the
financial statements.
Entergy New Orleans
As of December 31, 2000, Entergy New Orleans operating revenues and
customer data were as follows:
Electric Operating Natural Gas
Revenue Revenue
Residential 41% 52%
Commercial 37% 22%
Industrial 6% 10%
Governmental/Municipal 16% 16%
Number of Customers 190,000 150,000
Entergy Gulf States
For the year ended December 31, 2000, 98% of Entergy Gulf States'
operating revenue was derived from the electric utility business and 2%
from the natural gas business.
Financial Information Relating to Products and Services
Financial information relating to Entergy New Orleans' and Entergy
Gulf States' products and services is presented in their respective
financial statements.
PROPERTY
Generating Stations
Domestic Utility Companies and System Energy
The total capability of the generating stations owned and leased by
the domestic utility companies and System Energy as of December 31, 2000,
by company and by fuel type, is indicated below:
Owned and Leased Capability MW(1)
Gas
Turbine
and
Internal
Company Total Fossil Nuclear Combustion Hydro
Entergy Arkansas 4,576 2,758 1,714 34 70
Entergy Gulf States 6,625 5,685 940 - -
Entergy Louisiana 5,365 4,260 1,093 12 -
Entergy Mississippi 2,926 2,919 - 7 -
Entergy New Orleans 978 967 - 11 -
System Energy 1,110 - 1,110 - -
------ ------ ----- -- --
Total 21,580 16,589 4,857 64 70
====== ====== ===== == ==
(1) "Owned and Leased Capability" is the dependable load carrying
capability as demonstrated under actual operating conditions based
on the primary fuel (assuming no curtailments) that each station was
designed to utilize.
Entergy's domestic utility business is subject to seasonal
fluctuations, with the peak period occurring in the summer months. The
2000 peak demand of 22,052 MW occurred on August 30, 2000, which was an
all-time high for the Entergy system. Entergy's load and capacity
projections are reviewed periodically to assess the need and timing for
additional generating capacity and interconnections in light of the
availability of power, the location of new loads, and maximum economy to
Entergy. Domestically, based on load and capability projections and bulk
power availability, Entergy's domestic utility companies expect to meet
the need for new generation resources by means other than construction of
new base load generating capacity. Entergy's domestic utility companies
expect to meet future capacity needs by, among other things, purchasing
in the wholesale power market, including plans to contract for up to
3,000 MW of purchased power to meet the expected needs of the domestic
utility companies in the summer of 2001. Entergy also reactivated
several units in 1999 and 2000 that were in extended reserve shutdown to
assist in serving customers during periods of peak demand.
Under the terms of the System Agreement, generating capacity and
other power resources are shared among the domestic utility companies.
The System Agreement provides, among other things, that parties having
generating reserves greater than their load requirements (long companies)
shall receive payments from those parties having deficiencies in
generating reserves (short companies). Such payments are at amounts
sufficient to cover certain of the long companies' costs, including
operating expenses, fixed charges on debt, dividend requirements on
preferred and preference stock, and a fair rate of return on common
equity investment. Under the System Agreement, these charges are based
on costs associated with the long companies' steam electric generating
units fueled by oil or gas. In addition, for all energy exchanged among
the domestic utility companies under the System Agreement, the short
companies are required to pay the cost of fuel consumed in generating
such energy plus a charge to cover other associated costs. FERC
proceedings relating to proposed amendments to the System Agreement are
discussed more thoroughly in "RATE MATTERS AND REGULATION - Rate Matters
- - Wholesale Rate Matters - System Agreement," above.
Global Power Development Business
Entergy Power owns 665 MW of fossil-fueled capacity at the Ritchie 2
and Independence plants. In addition, Entergy's global power development
business has completed construction of two combined cycle gas turbine
merchant power plants in the UK. Saltend, a 1,200 MW plant located in
northeast England, provides up to 120 tons/hr of steam and 100 MW of
power to BP Chemical's nearby complex with the remaining electricity sold
into the UK national power pool. Commercial operation commenced in
November 2000. The second plant, an 800 MW facility known as Damhead
Creek, is located in southeast England. Commercial operation commenced
in 2001.
Entergy's global power development business has begun construction
of the Warren Power Project, a 300 MW combined-cycle gas turbine merchant
power plant in Vicksburg, Mississippi. The construction costs are
expected to be approximately $150 million. Management expects that
commercial operation of the plant will begin in the summer of 2001.
Domestic Non-Utility Nuclear Business
In November 2000, Entergy's domestic non-utility nuclear business
purchased NYPA's 825 MW James A. FitzPatrick nuclear power plant located
near Oswego, New York and NYPA's 980 MW Indian Point 3 nuclear power
plant located in Westchester County, New York. Entergy's domestic non-
utility nuclear business also owns the 670 MW Pilgrim Nuclear Station in
Plymouth, Massachusetts.
Interconnections
The electric generating facilities of Entergy's domestic utility
companies consist principally of steam-electric production facilities.
These generating units are interconnected by a transmission system
operating at various voltages up to 500 KV. With the exception of a
small portion of Entergy Mississippi's capacity, operating facilities or
interests therein generally are owned or leased by the domestic utility
company serving the area in which the generating facilities are located.
All of these generating facilities are centrally dispatched and operated.
Entergy's domestic utility companies are interconnected with many
neighboring utilities. In addition, the domestic utility companies are
members of the Southeastern Electric Reliability Council (SERC). The
primary purpose of SERC is to ensure the reliability and adequacy of the
electric bulk power supply in the southeast region of the United States.
SERC is a member of the North American Electric Reliability Council.
The electric generating facilities of Entergy's domestic non-utility
nuclear business consist of the Pilgrim nuclear production facility, the
James A. FitzPatrick nuclear production facility, and the Indian Point 3
nuclear production facility. The Pilgrim nuclear production facility has
firm total output power purchase agreements with Boston Edison and other
utilities that expire at the end of 2004. The James A. FitzPatrick
nuclear production facility has two long-term power purchase agreements
with NYPA, one expiring at the end of 2003 and the other expiring at the
end of 2004. The Indian Point 3 nuclear production facility has a long-
term power purchase agreement with NYPA that expires at the end of 2004.
The Pilgrim plant is dispatched as a part of the New England Power
Pool (NEPOOL). The primary purpose of NEPOOL is to direct the operations
of the major generation and transmission facilities in the New England
region. The James A. FitzPatrick and Indian Point 3 plants are
dispatched by the New York Independent System Operator (NYISO). The
primary purpose of NYISO is to direct the operations of the major
generation and transmission facilities in New York State.
Gas Property
As of December 31, 2000, Entergy New Orleans distributed and
transported natural gas for distribution solely within the limits of the
City of New Orleans through a total of 1,459 miles of gas distribution
mains and 41 miles of gas transmission pipelines.
As of December 31, 2000, the gas properties of Entergy Gulf States,
which are located in and around Baton Rouge, Louisiana, were not material
to Entergy Gulf States' financial position.
Titles
The generating stations and major transmission substations of
Entergy's public utility companies are generally located on properties
owned in fee simple. The greater portion of the transmission and
distribution lines of the domestic utility companies have been
constructed on property of private owners pursuant to easements or on
public highways and streets pursuant to appropriate franchises. The
rights of each company in the property on which its utility facilities
are located are considered by such company to be adequate for use in the
conduct of its business. Minor defects and irregularities customarily
found in properties of like size and character may exist, but such
defects and irregularities do not, in the opinion of management,
materially impair the use of the properties affected thereby. The
domestic utility companies generally have the right of eminent domain,
whereby they may, if necessary, perfect or secure titles to, or easements
or servitudes on, privately held lands used in or reasonably necessary
for their utility operations.
Substantially all of the physical properties and assets owned by
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy are subject to the liens of mortgages securing the first mortgage
bonds of such company. The Lewis Creek generating station is owned by
GSG&T, Inc., a subsidiary of Entergy Gulf States, and is not subject to
the lien of the Entergy Gulf States mortgage securing the first mortgage
bonds of Entergy Gulf States, but is leased to and operated by Entergy
Gulf States. All of the debt outstanding under the original first
mortgages of Entergy Mississippi and Entergy New Orleans has been retired
and the original first mortgages were cancelled in 1999 and 1997,
respectively. As a result, the general and refunding mortgages of
Entergy Mississippi and Entergy New Orleans now each constitute a first
mortgage lien on substantially all of the respective physical properties
and assets of these two companies.
FUEL SUPPLY
The sources of generation and average fuel cost per KWH for the
domestic utility companies and System Energy for the years 1998-2000
were:
Natural Gas Fuel Oil Nuclear Fuel Coal
% Cents % Cents % Cents % Cents
of Per of Per of Per of Per
Year Gen KWH Gen KWH Gen KWH Gen KWH
2000 42 4.90 4 3.90 39 .56 15 1.51
1999 45 2.75 4 2.06 35 .54 16 1.59
1998 40 2.50 6 2.37 40 .53 14 1.67
Actual 2000 and projected 2001 sources of generation for the
domestic utility companies and System Energy are:
Natural Gas Fuel Oil Nuclear Coal
2000 2001 2000 2001 2000 2001 2000 2001
Entergy Arkansas (a) 11% 5% - - 53% 43% 35% 51%
Entergy Gulf States 61% 62% - - 24% 21% 15% 17%
Entergy Louisiana 56% 55% 2% - 42% 45% - -
Entergy Mississippi 42% 57% 31% 14% - - 27% 28%
Entergy New Orleans 94% 96% 6% 4% - - - -
System Energy - - - - 100%(b) 100%(b) - -
Total (a) 42% 37% 4% 1% 39% 37% 15% 24%
(a) Hydroelectric power provided an immaterial amount of generation at
Entergy Arkansas in 2000 and is expected to provide an immaterial
amount of generation in 2001.
(b) In addition to the nuclear capacity given above for the following
companies, the Unit Power Sales Agreement allocates capacity and
energy from System Energy's interest in Grand Gulf 1 as follows:
Entergy Arkansas - 36%; Entergy Louisiana - 14%; Entergy Mississippi
- 33%; and Entergy New Orleans - 17%.
Natural Gas
The domestic utility companies have long-term firm and short-term
interruptible gas contracts. Long-term firm contracts comprise less than
26% of the domestic utility companies' total requirements but can be
called upon, if necessary, to satisfy a significant percentage of the
domestic utility companies' needs. Short-term contracts and spot-market
purchases satisfy additional gas requirements. Entergy Gulf States has a
transportation service agreement with a gas supplier that provides
flexible natural gas service to certain generating stations by using such
supplier's pipeline and gas storage facility. Entergy's global power
development business has entered into 15-year gas supply contracts at the
project level to supply up to 100% of the gas requirements for the
Saltend and Damhead Creek power plants located in the UK.
Many factors, including wellhead deliverability, storage and
pipeline capacity, and demand requirements of end users, influence the
availability and price of natural gas supplies for power plants. Demand
is tied to weather conditions as well as to the prices of other energy
sources. Increased demand combined with decreased supply of natural gas
caused a significant increase in the price of natural gas throughout
2000. Entergy's supplies of natural gas are expected to be adequate in
2001. However, pursuant to federal and state regulations, gas supplies
to power plants may be interrupted during periods of shortage. To the
extent natural gas supplies are disrupted or natural gas prices
significantly increase, the domestic utility companies will use alternate
fuels, such as oil, or rely to a larger extent on coal and nuclear
generation.
Coal
Entergy Arkansas has long-term contracts for low-sulfur Wyoming coal
for White Bluff and Independence. These contracts, which expire in 2002
and 2011, respectively, provide for approximately 85% of Entergy
Arkansas' expected annual coal requirements. Additional requirements are
satisfied by spot market purchases. Entergy Gulf States has a contract
for the supply of low-sulfur Wyoming coal for Nelson Unit 6, which should
be sufficient to satisfy its fuel requirements for that unit through 2010
if all price re-openers are accepted. If both parties cannot agree upon
a price, then the contract terminates. Effective April 1, 2000,
Louisiana Generating LLC assumed Cajun's ownership interest in the Big
Cajun 2 generating facilities and operates the plant. The management of
Louisiana Generating LLC has advised Entergy Gulf States that it has
executed coal supply and transportation contracts that should provide an
adequate supply of coal for the operation of Big Cajun 2, Unit 3 for the
foreseeable future.
Entergy Arkansas has a long-term railroad transportation contract
for the delivery of coal to both White Bluff and Independence. This
contract will expire in the year 2011. Entergy Arkansas has settled its
lawsuit against the railroad that claimed breach of contract by the
railroad and requested termination of the contract.
Entergy Gulf States has transportation requirements contracts with
railroads to deliver coal to Nelson Unit 6 through December 31, 2004.
Each of the two contracts governs the movement of approximately one-half
of the plant's requirements and the base contract provides flexibility
for shipping up to all of the plant's requirements.
Nuclear Fuel
The nuclear fuel cycle involves the following:
o mining and milling of uranium ore to produce a concentrate;
o conversion of the concentrate to uranium hexafluoride gas;
o enrichment of the hexafluoride gas;
o fabrication of nuclear fuel assemblies for use in fueling nuclear
reactors; and
o disposal of spent fuel.
System Fuels is responsible for contracts to acquire nuclear
material to be used in fueling Entergy Arkansas', Entergy Louisiana's,
and System Energy's nuclear units. System Fuels also maintains
inventories of such materials during the various stages of processing.
Each of these companies purchases enriched uranium hexafluoride from
System Fuels, but contracts separately for the fabrication of its own
nuclear fuel. The requirements for River Bend are pursuant to contracts
made by Entergy Gulf States. The requirements for Pilgrim, FitzPatrick,
and Indian Point 3 are pursuant to contracts made by Entergy's domestic
non-utility nuclear business. Entergy Nuclear Fuels Company is
responsible for contracts to acquire nuclear materials, except for fuel
fabrication, for these non-utility nuclear plants.
Based upon currently planned fuel cycles, Entergy's nuclear units
currently have contracts and inventory that provide adequate materials
and services. Existing contracts for uranium concentrate, conversion of
the concentrate to uranium hexafluoride, and enrichment of the uranium
hexafluoride will provide a significant percentage of these materials and
services over the next several years. Additional materials and services
required beyond the coverage of these contracts are expected to be
available at a reasonable cost for the foreseeable future.
Current fabrication contracts will provide a significant percentage
of these materials and services over the next several years. The Nuclear
Waste Policy Act of 1982 provides for the disposal of spent nuclear fuel
or high level waste by the DOE. There is a discussion of spent nuclear
fuel disposal in Note 9 to the financial statements.
It will be necessary for Entergy to enter into additional
arrangements to acquire nuclear fuel in the future. It is not possible
to predict the ultimate cost of such arrangements.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and System
Energy each have made arrangements to lease nuclear fuel and related
equipment and services. The lessors finance the acquisition and
ownership of nuclear fuel through credit agreements and the issuance of
notes. These arrangements are subject to periodic renewal. There is a
discussion of nuclear fuel leases in Note 10 to the financial statements.
Natural Gas Purchased for Resale
Entergy New Orleans has several suppliers of natural gas. Its
system is interconnected with three interstate and three intrastate
pipelines. Entergy New Orleans' primary suppliers currently are Enron
North America, Inc., an interstate gas marketer, Bridgeline Gas
Distributors, and Pontchartrain Natural Gas via Louisiana Gas Services.
Entergy New Orleans has a "no-notice" service gas purchase contract with
Enron North America, Inc. which guarantees Entergy New Orleans gas
delivery at any point after the agreed gas volume has been met. The
Enron North America, Inc. gas supply is transported to Entergy New
Orleans pursuant to a transportation service agreement with Koch Gateway
Pipeline Company (now known as Gulf South Pipeline). This service is
subject to FERC-approved rates. Entergy New Orleans has firm contracts
with its two intrastate suppliers and also makes interruptible spot
market purchases. In recent years, natural gas deliveries to Entergy New
Orleans have been subject primarily to weather-related curtailments.
However, Entergy New Orleans experienced no such curtailments in 2000.
As a result of the implementation of FERC-mandated interstate
pipeline restructuring in 1993, curtailments of interstate gas supply
could occur if Entergy New Orleans' suppliers failed to perform their
obligations to deliver gas under their supply agreements. Gulf South
Pipeline could curtail transportation capacity only in the event of
pipeline system constraints. Based on the current supply of natural gas,
and absent extreme weather-related curtailments, Entergy New Orleans does
not anticipate any interruptions in natural gas deliveries to its
customers.
Entergy Gulf States purchases natural gas for resale under an
agreement with Mid Louisiana Gas Company. Mid Louisiana Gas Company is
not allowed to discontinue providing gas to Entergy Gulf States without
obtaining FERC approval.
Research
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans are members of the Electric Power
Research Institute (EPRI). EPRI conducts a broad range of research in
major technical fields related to the electric utility industry. Entergy
participates in various EPRI projects based on Entergy's needs and
available resources. Entergy and its subsidiaries contributed
approximately $5 million in 2000, $6 million in 1999, and $8 million in
1998 to EPRI and other research programs.
Item 2. Properties
Information regarding the properties of the registrants is included
in Item 1. "Business - PROPERTY," in this report.
Item 3. Legal Proceedings
Details of the registrants' material rate proceedings, environmental
regulation and proceedings, and other regulatory proceedings and
litigation that are pending or those terminated in the fourth quarter of
2000 are discussed in Item 1. "Business - RATE MATTERS AND REGULATION,"
in this report.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of stockholders of Entergy Corporation was held on
December 15, 2000. The following matter was voted on and received the
specified number of votes for, abstentions, votes withheld (against), and
broker non-votes:
Approval and adoption of the Agreement and Plan of Merger dated as
of July 30, 2000, among FPL Group, Inc., Entergy, WCB Holding
Corporation, Ranger Acquisition Corporation, a wholly owned
subsidiary of WCB Holding that will merge into FPL Group, and Ring
Acquisition Corporation, a wholly owned subsidiary of WCB Holding
that will merge into Entergy: 171,904,096 votes for; 2,024,569
votes against; 910,276 abstentions; and broker non-votes are not
applicable.
During the fourth quarter of 2000, no matters were submitted to a
vote of the security holders of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, or System
Energy.
DIRECTORS AND EXECUTIVE OFFICERS OF ENTERGY CORPORATION
Directors
Information required by this item concerning directors of Entergy
Corporation is set forth under the heading "Proposal 1--Election of
Directors" contained in the Proxy Statement of Entergy Corporation, (the
"Proxy Statement"), to be filed in connection with its Annual Meeting of
Stockholders to be held May 11, 2001, ("Annual Meeting"), and is
incorporated herein by reference. Information required by this item
concerning officers and directors of the remaining registrants is
reported in Part III of this document.
Executive Officers
Name Age Position Period
J. Wayne Leonard 50 Chief Executive Officer and Director 1999-Present
(a) of Entergy Corporation
Director of Entergy Arkansas, Entergy 1998-1999
Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New
Orleans, and System Energy
President and Chief Operating Officer 1998
of Entergy Corporation
Chief Operating Officer of Entergy 1998
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Vice Chairman of Entergy New Orleans 1998
President of Energy Commodities 1996-1998
Strategic Business Unit
President of Cinergy Capital & 1996-1998
Trading
Group Vice President and Chief 1994-1996
Financial Officer of Cinergy
Corporation
Donald C. Hintz 58 President of Entergy Corporation 1999-Present
(a) Executive Vice President and Chief 1998
Nuclear Officer of Entergy Arkansas,
Entergy Gulf States, and Entergy
Louisiana
Group President and Chief Nuclear 1997-1998
Operating Officer of Entergy
Corporation, Entergy Arkansas,
Entergy Gulf States, and Entergy
Louisiana
Executive Vice President and Chief 1994-1997
Nuclear Officer of Entergy
Corporation
Executive Vice President - Nuclear of 1994-1997
Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana
Chief Executive Officer and President 1992-1998
of System Energy
Director of Entergy Gulf States 1993-Present
Director of Entergy Arkansas, Entergy 1992-Present
Louisiana, Entergy Mississippi, and
System Energy
Director of Entergy New Orleans 1999-Present
Jerry D. Jackson 56 Executive Vice President of Entergy 1999-Present
(a) Corporation
Group President - Utility Operations 2000-Present
of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
President and Chief Executive Officer 1999-2000
- Louisiana of Entergy Gulf States
President and Chief Executive Officer 1999-2000
of Entergy Louisiana
Chief Administrative Officer of 1997-1998
Entergy Corporation, Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Executive Vice President - External 1995-1998
Affairs of Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana,
Entergy Mississippi, and Entergy New
Orleans
Executive Vice President - External 1994-1998
Affairs of Entergy Corporation
Director of Entergy Gulf States 1994-Present
Director of Entergy Louisiana 1992-Present
Director of Entergy Arkansas, Entergy 2000-Present
Mississippi, and Entergy New Orleans 1992-1999
C. John Wilder 42 Executive Vice President and Chief 1998-Present
(a) Financial Officer of Entergy
Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi,
Entergy New Orleans, and System
Energy
Director of Entergy Arkansas, Entergy 1999-Present
Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New
Orleans, and System Energy
Chief Executive Officer of Shell 1998
Capital Company
Assistant Treasurer of the Royal 1996-1998
Dutch/Shell Group
Director of Economics and Finance of 1995-1996
Shell Exploration and Production
Frank F. Gallaher 55 Senior Vice President, Generation, 1999-Present
(a) Transmission and Energy Management
of Entergy Corporation
President, Fossil Operations and 2000-Present
Transmission of Entergy Arkansas,
Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and
Entergy New Orleans
Senior Vice President, Generation, 1999-2000
Transmission and Energy Management
of Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Executive Vice President and Chief 1998-1999
Utility Operating Officer for
Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Group President and Chief Utility 1997-1999
Operating Officer of Entergy
Corporation
Group President and Chief Utility 1997-1998
Operating Officer of Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Director of Entergy Arkansas, Entergy 1997-1999
Louisiana, and Entergy Mississippi
Executive Vice President of 1996-1997
Operations of Entergy Corporation
President of Entergy Gulf States 1994-1996
Director of Entergy Gulf States 1993-1999
Executive Vice President of 1993-1997
Operations of Entergy Arkansas,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Richard J. Smith 49 Senior Vice President, Transition 2000-Present
(a) Management of Entergy Corporation
President of Cinergy Resources, Inc. 1999
Vice President Energy Services 1999
Vice President of Finance Services 1996-1999
Business Unit
Executive Director, Budgets and 1989-1996
Forecasts of PSI Energy
General Manager, Budgets and 1989-1996
Forecasts of Cinergy
Michael G. Thompson 60 Senior Vice President and General 1992-Present
(a) Counsel of Entergy Corporation
Senior Vice President, General 1995-Present
Counsel, and Secretary of Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Secretary of Entergy Corporation 1994-Present
Horace S. Webb 60 Senior Vice President, External 2000-Present
(a) Affairs of Entergy Corporation
Senior Vice President, External 1999-Present
Affairs of Entergy Services
Senior Vice President, Public Affairs 1992-1999
of Consolidated Edison Company
Joseph T. Henderson 43 Vice President and General Tax 1999-Present
(a) Counsel of Entergy Corporation,
Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
and System Energy
Associate General Tax Counsel of 1998-1999
Shell Oil Company
Senior Tax Counsel of Shell Oil 1995-1998
Company
Nathan E. Langston 52 Vice President and Chief Accounting 1998-Present
(a) Officer of Entergy Corporation,
Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
and System Energy
Director of Tax Services of Entergy 1993-1998
Services
Steven C. McNeal 44 Vice President and Treasurer of 1998-Present
(a) Entergy Corporation, Entergy
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
and System Energy
Assistant Treasurer of Entergy 1994-1998
Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans,
and System Energy
Director of Corporate Finance of 1994-1998
Entergy Services
(a) In addition, this officer is an executive officer and/or director of
various other wholly owned subsidiaries of Entergy Corporation and its
operating companies.
Each officer of Entergy Corporation is elected yearly by the Board
of Directors.
PART II
Item 5. Market for Registrants' Common Equity and Related Stockholder
Matters
Entergy Corporation
The shares of Entergy Corporation's common stock are listed on the
New York Stock, Chicago Stock, and Pacific Exchanges under the ticker
symbol ETR.
Entergy Corporation's stock price as of February 28, 2001 was
$38.83. The high and low prices of Entergy Corporation's common stock
for each quarterly period in 2000 and 1999 were as follows:
2000 1999
High Low High Low
(In Dollars)
First 26.75 15.94 31.13 27.50
Second 31.25 19.94 33.13 27.75
Third 38.13 26.94 31.56 28.19
Fourth 43.88 33.50 30.00 23.88
Consecutive quarterly cash dividends on common stock were paid to
stockholders of Entergy Corporation in 2000 and 1999. In 2000, dividends
of $0.30 per share were paid in the first three quarters, and dividends
of $0.315 per share were paid in the fourth quarter. Quarterly dividends
of $0.30 per share were paid in 1999.
As of February 28, 2001, there were 67,226 stockholders of record of
Entergy Corporation.
Entergy Corporation's future ability to pay dividends is discussed
in Note 8 to the financial statements. In addition to the restrictions
described in Note 8, PUHCA provides that, without approval of the SEC,
the unrestricted, undistributed retained earnings of any Entergy
Corporation subsidiary are not available for distribution to Entergy
Corporation's common stockholders until such earnings are made available
to Entergy Corporation through the declaration of dividends by such
subsidiaries.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
There is no market for the common stock of Entergy Corporation's
wholly owned subsidiaries. Cash dividends on common stock paid by the
domestic utility companies and System Energy to Entergy Corporation
during 2000 and 1999, were as follows:
2000 1999
(In Millions)
Entergy Arkansas $44.6 $ 82.7
Entergy Gulf States $88.0 $107.0
Entergy Louisiana $62.4 $197.0
Entergy Mississippi $18.0 $ 34.1
Entergy New Orleans $ 9.5 $ 26.5
System Energy $91.8 $ 75.0
Information with respect to restrictions that limit the ability of
System Energy and the domestic utility companies to pay dividends is
presented in Note 8 to the financial statements.
Item 6. Selected Financial Data
Refer to "SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON OF ENTERGY
CORPORATION AND SUBSIDIARIES, ENTERGY ARKANSAS, ENTERGY GULF STATES,
ENTERGY LOUISIANA, ENTERGY MISSISSIPPI, ENTERGY NEW ORLEANS, and SYSTEM
ENERGY" which follow each company's financial statements in this report,
for information with respect to operating statistics.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Refer to "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - LIQUIDITY
AND CAPITAL RESOURCES," " - SIGNIFICANT FACTORS AND KNOWN TRENDS," and "-
RESULTS OF OPERATIONS OF ENTERGY CORPORATION AND SUBSIDIARIES, ENTERGY
ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY MISSISSIPPI,
ENTERGY NEW ORLEANS, and SYSTEM ENERGY."
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Entergy Corporation and Subsidiaries. Refer to information under
the heading "ENTERGY CORPORATION AND SUBSIDIARIES MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - SIGNIFICANT FACTORS AND KNOWN TRENDS."
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
Entergy Corporation and Subsidiaries:
Report of Management 43
Management's Financial Discussion and Analysis 44
Report of Independent Accountants 64
Management's Financial Discussion and Analysis 65
Consolidated Statements of Income For the Years Ended December 31, 74
2000, 1999, and 1998
Consolidated Statements of Cash Flows For the Years Ended December 75
31, 2000, 1999, and 1998
Consolidated Balance Sheets, December 31, 2000 and 1999 77
Consolidated Statements of Retained Earnings, Comprehensive Income, 79
and Paid-In Capital for the Years Ended December 31, 2000, 1999,
and 1998
Selected Financial Data - Five-Year Comparison 80
Entergy Arkansas, Inc.:
Report of Independent Accountants 81
Management's Financial Discussion and Analysis 82
Income Statements For the Years Ended December 31, 2000, 1999, and 86
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 88
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 89
Statements of Retained Earnings for the Years Ended December 31, 91
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 92
Entergy Gulf States, Inc.:
Report of Independent Accountants 93
Management's Financial Discussion and Analysis 94
Income Statements For the Years Ended December 31, 2000, 1999, and 99
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 100
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 101
Statements of Retained Earnings for the Years Ended December 31, 103
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 104
Entergy Louisiana, Inc.:
Report of Independent Accountants 105
Management's Financial Discussion and Analysis 106
Income Statements For the Years Ended December 31, 2000, 1999, and 109
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 110
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 111
Statements of Retained Earnings for the Years Ended December 31, 113
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 114
Entergy Mississippi, Inc.:
Report of Independent Accountants 115
Management's Financial Discussion and Analysis 116
Income Statements For the Years Ended December 31, 2000, 1999, and 120
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 122
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 123
Statements of Retained Earnings for the Years Ended December 31, 125
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 126
Entergy New Orleans, Inc.:
Report of Independent Accountants 127
Management's Financial Discussion and Analysis 128
Income Statements For the Years Ended December 31, 2000, 1999, and 131
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 132
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 133
Statements of Retained Earnings for the Years Ended December 31, 135
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 136
System Energy Resources, Inc.:
Report of Independent Accountants 137
Management's Financial Discussion and Analysis 138
Income Statements For the Years Ended December 31, 2000, 1999, and 140
1998
Statements of Cash Flows For the Years Ended December 31, 2000, 142
1999, and 1998
Balance Sheets, December 31, 2000 and 1999 143
Statements of Retained Earnings for the Years Ended December 31, 145
2000, 1999, and 1998
Selected Financial Data - Five-Year Comparison 146
Notes to Financial Statements for Entergy Corporation and 147
Subsidiaries
ENTERGY CORPORATION AND SUBSIDIARIES
REPORT OF MANAGEMENT
Management of Entergy Corporation and its subsidiaries has prepared
and is responsible for the financial statements and related financial
information included herein. The financial statements are based on
generally accepted accounting principles in the United States. Financial
information included elsewhere in this report is consistent with the
financial statements.
To meet their responsibilities with respect to financial
information, management maintains and enforces a system of internal
accounting controls designed to provide reasonable assurance, on a
cost-effective basis, as to the integrity, objectivity, and reliability
of the financial records, and as to the protection of assets. This
system includes communication through written policies and procedures, an
employee Code of Entegrity, and an organizational structure that provides
for appropriate division of responsibility and the training of personnel.
This system is also tested by a comprehensive internal audit program.
The Audit Committee of our Board of Directors, composed solely of
Directors who are not employees of our company, meets with the
independent auditors, management, and internal accountants periodically
to discuss internal accounting controls and auditing and financial
reporting matters. Upon recommendation from the Audit Committee, the
Board of Directors appoints the independent accountants. The Committee
reviews with the independent auditors the scope and results of the
audit effort. The Committee also meets periodically with the independent
auditors and the chief internal auditor without management, providing
free access to the Committee.
Independent public accountants provide an objective assessment of
the degree to which management meets its responsibility for fairness of
financial reporting. They regularly evaluate the system of internal
accounting controls and perform such tests and other procedures as they
deem necessary to reach and express an opinion on the fairness of the
financial statements.
Management believes that these policies and procedures provide
reasonable assurance that its operations are carried out with a high
standard of business conduct.
J. WAYNE LEONARD C. JOHN WILDER
Chief Executive Officer of Executive Vice President and Chief
Entergy Corporation Financial Officer
HUGH T. MCDONALD JOSEPH F. DOMINO
Chairman, President, and Chief Chairman of Entergy Gulf States, Inc.
Executive Officer of Entergy President and Chief Executive Officer -
Arkansas, Inc. Texas of Entergy Gulf States, Inc.
E. RENAE CONLEY CAROLYN C. SHANKS
Chairman of Entergy Louisiana, Inc., Chairman, President, and Chief
President and Chief Executive Officer Executive Officer of Entergy
- - Louisiana of Entergy Gulf States, Mississippi, Inc.
Inc. and Entergy Louisiana, Inc.
DANIEL F. PACKER JERRY W. YELVERTON
Chairman, President, and Chief Chairman, President, and Chief
Executive Officer of Entergy Executive Officer of System Energy
New Orleans, Inc. Resources, Inc.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Business Combination with FPL Group
On July 30, 2000, Entergy Corporation and FPL Group entered into a
Merger Agreement providing for a business combination that will result in
the creation of a new company. Each outstanding share of FPL Group common
stock will be converted into one share of the new company's common stock,
and each outstanding share of Entergy Corporation common stock will be
converted into 0.585 of a share of the new company's common stock. It is
expected that FPL Group's shareholders will own approximately 57% of the
common equity of the new company and Entergy's shareholders will own
approximately 43%. The initial board of directors of the new company will
consist of eight directors designated by FPL Group and seven directors
designated by Entergy. The new company will be given a new name that will
be agreed upon between the Boards of Directors of FPL Group and Entergy
prior to the consummation of the Merger. The new company will maintain its
principal corporate offices and headquarters in Juno Beach, Florida, and
will maintain its utility headquarters in New Orleans, Louisiana. The
Merger Agreement generally allows Entergy to continue business in the
ordinary course consistent with past practice and contains certain
restrictions on Entergy's capital activities, including restrictions on the
issuance of securities, capital expenditures, dispositions, incurrence or
guarantee of indebtedness, and trading or marketing of energy. Entergy
generally will be permitted to take actions pursuant to restructuring
legislation in the domestic utility companies' jurisdictions of operation
and to reorganize its transmission business. Under certain circumstances,
if the Merger Agreement is terminated, a termination fee of $215 million
may be payable by one of the parties. The Merger Agreement may be
terminated if the Merger is not consummated by April 30, 2002, unless
automatically extended until October 30, 2002 under certain circumstances.
Both the FPL Group and Entergy Boards of Directors unanimously approved the
Merger, and the shareholders of Entergy Corporation and FPL Group have
approved the Merger. The Merger is conditioned upon, among other things,
the receipt of required regulatory approvals of various local, state, and
federal regulatory agencies and commissions, including the SEC and FERC.
Entergy has filed for approval of the Merger in all of its state and local
regulatory jurisdictions (Arkansas, Louisiana, Mississippi, Texas, and New
Orleans), and at FERC, the SEC, and the NRC. In their filing with the SEC,
Entergy and FPL Group requested to remain in existence as intermediate
holding companies after the Merger is consummated. The objective of
Entergy and FPL Group is to consummate the Merger by late 2001.
Domestic Transition to Competition
The electric utility industry for years has been preparing for the
advent of competition in its business. For most electric utilities, the
transition from a regulated monopoly to a competitive business is
challenging and complex. The new electric utility environment presents
opportunities to compete for new customers and creates the risk of loss of
existing customers. It presents risks along with opportunities to enter
into new businesses and to restructure existing businesses.
For Entergy, the domestic transition to competition is a formidable
undertaking, made uniquely difficult because the domestic utility companies
operate in five retail regulatory jurisdictions and are subject to the
System Agreement, which contemplates the integrated operation of Entergy's
electric generation and transmission assets throughout the retail service
territories. Entergy is striving to achieve consistent paths to competition
in all five retail regulatory jurisdictions. In some cases, however,
actions by one jurisdiction may conflict with actions by another. The
Arkansas and Texas legislatures have enacted laws to bring about electric
utility competition. Entergy is continuing to work with regulatory and
legislative officials in all jurisdictions in designing the rules
surrounding a competitive electricity industry. There can be no assurance
given as to the timing or results of the transition to competition in
Entergy's service territories. Following is a summary of the status of the
transition to competition in the five retail jurisdictions:
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Jurisdiction Status of Retail Open Access % of Entergy's 2000
Revenues Derived from
Retail Electric Utility
Operations in the
Jurisdiction
Arkansas Commencement delayed by amended 12.3%
law until at least October 2003.
Texas Scheduled to commence January 1, 9.4%
2002.
Louisiana LPSC Staff report due in April 31.4%
2001. The LPSC deferred pursuing
open access in 1999.
Mississippi MPSC has recommended not pursuing 8.0%
open access at this time.
New Orleans City Council has taken no action 4.6%
on Entergy's proposal filed in
1997.
State Regulatory and Legislative Activity
Arkansas
In April 1999, the Arkansas legislature enacted a law providing for
competition in the electric utility industry through retail open access.
With retail open access, generation operations would become a competitive
business, but transmission and distribution operations will continue to be
regulated either by federal or state regulatory commissions. In compliance
with the provisions of the deregulation law, Entergy Arkansas has:
o filed separate generation, transmission, distribution, and customer
service rates with the APSC and also filed notice of its intent to
recover stranded costs. In December 2000, the APSC approved the
unbundled rates as filed. These rates will become effective six months
prior to retail open access; and
o filed a functional, but not corporate, unbundling plan with the APSC.
The functional unbundling plan initially established separate business
units for distribution, generation, and a new retail energy service
provider. The plan contemplates the transfer of transmission assets
to the Transco discussed herein.
See Note 2 to the financial statements for additional details
concerning provisions of the retail open access law.
Texas
In June 1999, the Texas legislature enacted a law providing for
competition in the electric utility industry through retail open access.
With retail open access, generation and a new retail electric provider
operation will be competitive businesses, but transmission and distribution
operations will continue to be regulated. The new retail electric provider
will be the primary point of contact with customers. The provisions of the
new law, among other things:
o require a rate freeze through December 31, 2001 with rates reduced by
6% beyond that for residential and small commercial customers of most
incumbent utilities except Entergy Gulf States, whose rates are exempt
from the 6% reduction requirement. These rates to residential and
small commercial customers are known as the "Price to Beat", and they
may be adjusted periodically after January 1, 2002 for fuel and
purchased power costs according to PUCT rules; and
o require utilities to charge the Price to Beat rates through 2004, or
until 40% of customers in the jurisdiction have chosen an alternative
supplier, whichever comes first. However, the Price to Beat rates must
continue to be made available through 2006.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Pursuant to the provisions of the retail open access law, Entergy Gulf
States filed a business separation plan with the PUCT in January 2000, and
amended that plan in June and December 2000. The plan provides that, by
January 2002, Entergy Gulf States will be divided into:
o a Texas distribution company;
o a Texas transmission company;
o a Texas generation company;
o at least two Texas retail electricity providers; and
o a Louisiana company that will encompass distribution, generation,
transmission, and retail operations.
The plan also provides that the Louisiana company would retain the
liability for all debt obligations of Entergy Gulf States and that the
property of the Texas companies would be released from the lien of Entergy
Gulf States' mortgage. Except for the Texas retail electric providers, each
of the Texas companies would assume a portion of Entergy Gulf States' debt
obligations, which assumptions would not act to release the Louisiana
company's obligations. Except for the Texas retail electric providers,
each of the Texas companies would also grant a lien on its properties in
favor of the Louisiana company to secure its obligations to the Louisiana
company in respect of the assumed obligations. In addition, under the
plan, Entergy Gulf States will refinance or retire the Texas companies'
portion of existing debt by the end of 2004. In July 2000, the PUCT issued
an interim order to approve the amended business separation plan.
Regulatory approvals from FERC, the SEC, and the LPSC, and final approval
from the PUCT will be required before the business separation plan can be
implemented. Remaining business separation issues in Texas subsequent to
the July 2000 interim order will be addressed in the cost unbundling
proceeding before the PUCT.
The LPSC has opened a docket to identify the changes in corporate
structure of Entergy Gulf States, and their potential impact on Louisiana
retail ratepayers, resulting from restructuring in Texas and Arkansas.
Entergy Gulf States filed testimony in that proceeding in August 2000. The
LPSC staff filed testimony in that proceeding in October 2000 criticizing
Entergy Gulf States' proposal, particularly the part related to the Texas
portion of generation assets being transferred to an unregulated entity.
Entergy Gulf States filed rebuttal testimony in December 2000. A
procedural schedule has not been set. Management cannot predict the
timing or outcome of this proceeding.
Pursuant to the Texas restructuring legislation, Entergy Gulf States
filed its separated business cost data and proposed transmission,
distribution, and competition tariffs with the PUCT on March 31, 2000. On
March 6, 2001, Entergy Gulf States filed with the PUCT a non-unanimous
settlement agreement in that case that establishes the distribution
revenue requirement. The settlement agreement is between Entergy Gulf
States, the PUCT Staff, and other parties. Pursuant to a generic rule
prescribed by the PUCT, Entergy Gulf States' allowed return on equity will
be 11.25%. The generic capital structure prescribed by the PUCT is 60%
debt and 40% equity. Hearings before the PUCT on approval of the settlement
are scheduled to begin in April 2001. Management cannot predict the timing
or outcome of this proceeding.
Beginning January 1, 2002, the market power measures in the open
access law will prohibit Entergy Gulf States from owning and controlling
more than 20% of the installed generation capacity located in, or capable
of delivering electricity to, a "power region", which is defined as a
distinct region of NERC. In seeking PUCT approval of the Merger, Entergy
and FPL Group are required to demonstrate that the merged company will not
exceed this threshold. However, all the implications of this limit are
uncertain for Entergy Gulf States and Entergy. It is possible that Entergy
Gulf States could decide to divest some of its generation assets or seek to
reduce transmission constraints if Entergy Gulf States is found to have
generation market power in excess of this limit. The legislation also
requires affected utilities to sell at auction entitlements to at least 15%
of their installed generation capacity in Texas at least 60 days before
January 1, 2002. The obligation to auction capacity entitlements continues
for up to 60 months after January 1, 2002, or until 40% of current
customers have chosen an alternative supplier, whichever comes first.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
The PUCT and various participants in the industry are currently in the
process of implementing the legislation through various rulemaking and
other proceedings. The Provider of Last Resort (POLR) rule was approved
by the PUCT in October 2000, requiring that such a provider exist in every
area of the state and setting up the process by which such a provider will
be selected and its services priced. The PUCT received bids from retail
electric providers seeking to become the POLR in each area in January 2001.
The PUCT has stated its preference that the POLR not be the retail electric
provider that is affiliated with the incumbent utility in the area.
However, depending on the outcome of the bidding process, Entergy Gulf
States' affiliate retail electric provider may be required to provide POLR
service in Entergy Gulf States' service territory. This may have a material
financial impact on the Entergy Gulf States retail electric provider
depending on the terms and prices eventually approved by the PUCT for POLR
service.
See Note 2 to the financial statements for additional details concerning
provisions of the Texas retail open access law and the proceedings
occurring in Texas pursuant to that law.
Louisiana
In March 1999, the LPSC deferred making a decision on whether
competition in the electric industry is in the public interest. However,
the LPSC staff, outside consultants, and counsel were directed to work
together to analyze and resolve issues related to competition and then
recommend a plan for its implementation to be considered by the LPSC. In
January 2001, a draft response was circulated among interested parties. It
is expected that, after a comment period, a final staff response will be
presented to the LPSC in April 2001.
See above under "Texas" for discussion of the LPSC proceeding
considering Entergy Gulf States' business separation plan.
Mississippi
In May 2000, after two years of studies and hearings, the MPSC
announced that it was suspending its docket studying the opening of the
state's retail electricity markets to competition. The MPSC based its
decision on its finding that competition could raise the electric rates
paid by residential and small commercial customers. The final decision
regarding the introduction of retail competition ultimately lies with the
Mississippi Legislature, which is holding its 2001 session from January
through March. Management cannot predict when, or if, Mississippi will
deregulate its retail electricity market, but does not expect it to occur
before 2003.
New Orleans
In 1997, Entergy New Orleans filed an electric business restructuring
plan with the Council. The Council has not established a procedural
schedule to consider electricity restructuring or Entergy's plan.
After studying retail gas open access, advisors to the Council issued
a final report that proposed various pilot programs and found that retail
gas open access is not in the public interest at this time. The Council
accepted an offer of settlement from Entergy New Orleans in this matter
that allows for a voluntary pilot program for a limited number of large
industrial non-jurisdictional gas customers.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Federal Regulatory and Legislative Activity
Proposed System Agreement Amendments
In June 2000, Entergy's domestic utility companies filed with FERC
proposed amendments to the System Agreement to facilitate the
implementation of retail competition in Arkansas and Texas and to provide
for continued equalization of costs among the domestic utilities in
Louisiana and Mississippi. The amendments provide the following:
o cessation of participation in all aspects of the System Agreement,
other than those related to transmission equalization, for any
jurisdictional division of a domestic utility operating in a
jurisdiction that initiates retail open access;
o certain sections of the System Agreement will no longer apply to the
sales of generating capacity, whether through the sale of the asset
or the output thereof, by a domestic utility operating in a jurisdiction
that has established a date by which it will implement retail open
access; and
o modification of the service schedule developed to track changes in
energy costs resulting from the Entergy-Gulf States Utilities merger
to include one final true-up of fuel costs upon cessation of one
company's participation in the System Agreement, after which the
service schedule will no longer be applicable for any purpose.
Previously, in April 2000, the LPSC and the Council filed a complaint
with FERC seeking revisions to the System Agreement. The LPSC and the
Council allege that the revisions are necessary to accommodate the
introduction of retail competition in Texas and Arkansas and to protect
Entergy's Louisiana customers from any adverse impact that may occur due to
the introduction of retail competition in some jurisdictions but not
others. The LPSC and the Council requested that FERC cap certain of the
System Agreement obligations of Entergy Gulf States, Entergy Louisiana, and
Entergy New Orleans and fix these companies' access to pool energy at the
average level existing for the three years prior to the date that retail
competition is initiated in Texas and Arkansas. Alternatively, the LPSC
and the Council requested that FERC require Entergy to provide wholesale
power contracts to these companies to satisfy their energy requirements at
costs no higher than would have been incurred if retail competition were
not implemented. The LPSC and the Council requested that the relief be
made available for at least eight years after implementation of retail
competition or the withdrawal of Entergy Arkansas and Entergy Gulf States
from the System Agreement, or until retail competition is implemented in
Louisiana and New Orleans. In addition, among other things, the LPSC and
the Council asserted in their complaint that:
o unless the requested relief is granted, the restructuring legislation
adopted in Texas and Arkansas, to the extent such legislation requires,
or has the effect of, altering the rights of parties under the System
Agreement, will violate provisions of the U.S. Constitution; and
o the failure of the domestic utility companies to honor a right of
first refusal at cost with respect to any sale of generating capacity
and associated energy under the System Agreement, and any attempt to
eliminate a right of first refusal from the System Agreement, would
violate the Federal Power Act and constitute a breach of the System
Agreement.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
The proceedings relating to Entergy's proposed amendments have been
consolidated with the complaint by the LPSC and the Council. Several other
parties have also intervened in the proceedings. If FERC considers
Entergy's proposed amendments, the LPSC and the Council have asserted that
FERC also needs to reconsider the charges to the domestic utility companies
under the Unit Power Sales Agreement. Entergy has requested a final
decision from FERC by October 2001. A procedural schedule has been
established, with the hearing beginning in March 2001 and an initial ALJ
decision scheduled in June 2001. These proceedings have been consolidated
with a previous complaint filed with FERC by the LPSC in 1995. In that
complaint, the LPSC requests, among other things, modification of the
System Agreement to exclude curtailable load from the cost allocation
determination. Neither the timing, nor the ultimate outcome of these
proceedings at FERC, can be predicted at this time.
Open Access Transmission and Entergy's Transco Proposal
FERC issued Order 2000 in December 1999, which calls for owners and
operators of transmission lines in the United States to join regional
transmission organizations (RTOs) on a voluntary basis. Order 2000
requires that RTOs commence independent operations no later than December
15, 2001.
It appears that FERC will be flexible regarding the structure of RTOs.
For example, it appears that RTOs may be for-profit or not-for-profit and
may be organized as joint ventures or legal entities of various other
types. However, RTOs will be required, among other things, to be
independent market participants, to have sufficient regional scope to
maintain reliability and efficiency, to be non-discriminatory in granting
service, and to maintain operational control over their regional
transmission systems.
In October 2000, in compliance with Order 2000, Entergy made a filing
with FERC that requested:
o authorization to establish an RTO referred to as Transco;
o authorization to transfer the domestic utility companies' transmission
assets to the Transco; and
o a determination that the partnership arrangement with the Southwest
Power Pool (SPP) that the Transco proposes to operate in would qualify
as an independent RTO. The partnership arrangement provides for
operations under the oversight of, and within, the SPP RTO.
The amounts of the domestic utility companies' net transmission utility
plant assets recorded in their financial statements are provided in Note 1
to the financial statements under the heading "Utility Plant."
The proposed Transco will be a limited liability company. The
managing member of the Transco will be a separate corporation with a board
of directors independent of Entergy. The Transco will be:
o regulated by FERC;
o composed of the transmission system transferred to it by the domestic
utility companies and other transmission owners in Entergy's current
service territory region;
o operated and maintained by employees who would work exclusively for
the Transco and would not be employed by Entergy or the domestic
utility companies; and
o passively owned by the domestic utility companies and other member
companies who will transfer assets but not control or otherwise direct
its operation and management.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy filed in December 2000 for FERC approval of the rates for
transmission service across the Transco's facilities. Included in this
rate filing is a request to cancel the service schedule in the System
Agreement related to equalization of certain transmission costs. In March
2001, Entergy, Entergy Services, and the domestic utility companies
requested SEC approval under PUHCA of certain elements of the Transco plan.
The domestic utility companies have also made filings with their local
regulators seeking authorization to implement the Transco plan. Under its
planned timeline, Entergy expects to have the necessary regulatory
approvals by the third quarter of 2001, with the transmission asset
transfers occurring before Transco commences independent operations in
December 2001.
Deregulation legislation
Over the past several years, a number of bills have been introduced in
the United States Congress to deregulate the generation function of the
electric power industry. The bills generally have provisions that would
give retail consumers the ability to choose their own electric service
provider. Entergy Corporation has supported some deregulation legislation
in Congress that would lead to an orderly transition to competition and
would also repeal PUHCA and PURPA. Congressional sentiment appears to be
against mandating retail competition by a certain date and in favor of
clarifying state authority to order retail choice for consumers. Congress
adjourned in 2000 without final action on a deregulation bill by a
committee of the House or Senate, and has not taken final action on such a
bill in its 2001 session thus far.
Industrial and Commercial Customers
The domestic utility companies face the risk of losing customers due
to competition. Some of their large industrial and commercial customers
are exploring ways to reduce their energy costs. In particular,
cogeneration is an option available to a significant portion of the
domestic utility companies' industrial customer base. The domestic utility
companies have responded by working with some industrial and commercial
customers and negotiating electric service contracts that provide service
at rates lower than would otherwise be charged. Despite these actions,
Entergy Gulf States and Entergy Louisiana have lost an immaterial amount of
operating income in recent years from large industrial customers who have
completed cogeneration projects. Material losses to cogeneration are not
expected in 2001.
State and Local Rate Regulation
The retail regulatory basis for setting rates for electric service is
shifting in some jurisdictions from traditional, exclusively cost-of-
service regulation to include performance-based elements. Performance-
based formula rate plans are designed to reward increased efficiency and
productivity, with utility shareholders and customers sharing in the
benefits. Entergy Mississippi and Entergy Louisiana have implemented
performance-based rate plans. Entergy Mississippi's 2000 filing indicated
that no change in rate levels was warranted. Entergy Louisiana and Entergy
Gulf States had the following rate activity in 2000:
Filing Rate Activity Implementation Date
Entergy Louisiana 4th annual $6.4 million refund July 2000
performance-based rate plan
Entergy Louisiana 5th annual $24.8 million base August 2000
performance-based rate plan rate reduction*
Entergy Gulf States 2nd, 3rd, $83 million refund, July to September 2000
4th, and 5th annual earnings including interest
reviews
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
* Entergy Louisiana is proposing to increase prospectively the allowed
rate of return on common equity from 10.5% to 11.6%, which, if approved by
the LPSC, would reduce the amount of the rate reduction.
The domestic utility companies' retail and wholesale rate matters and
proceedings are discussed more thoroughly in Note 2 to the financial
statements.
Other Electric Utility Trends
In some areas of the country, utilities have either sold or are
attempting to sell all or a substantial portion of their generation assets
in order to focus their businesses on transmission and/or distribution
services. Entergy, through its global power development and domestic non-
utility nuclear businesses, intends to expand its generation business.
While the global power development business is focused on building new
power plants or modifying existing plants, the nuclear business expansion
plan focuses on acquiring generation assets of other utilities.
In 1998, California implemented electricity deregulation legislation.
The law required the major investor-owned utilities in the state to
effectively divest their generation assets by requiring them to sell their
output to the Power Exchange. The Power Exchange is an independent spot
market power pool in which electricity is bought and sold at wholesale
prices. The deregulation law requires the investor-owned utilities to buy
power from the Power Exchange at market set rates, but freezes the amount
that those utilities can recover from their customers. Therefore, the
investor-owned utilities' short positions were not covered by generation
assets and were exposed to increases in the Power Exchange prices. The
jurisdictions in which Entergy's domestic utility companies operate
currently allow recovery of all prudently incurred fuel and purchased power
costs through various recovery mechanisms. In addition, the deregulation
legislation enacted in Arkansas and Texas allows for adjustments to the
prices that the distribution businesses will be allowed to recover based on
changes in fuel and purchased power costs.
In 2000, the California Power Exchange prices that the California
investor-owned utilities have to pay for their electricity supplies soared
above the amounts that they are allowed to recover from their customers.
The California utilities therefore have accumulated billions of dollars of
under-recovered purchased power expenses. These under-recovered costs have
caused the California utilities to default on certain of their credit
obligations and have spawned several lawsuits and legislative and
regulatory activity. The ultimate effect of these events on the investor-
owned utilities in California and the electric energy industry nationwide
is uncertain.
Continued Application of SFAS 71 and Stranded Cost Exposure
The domestic utility companies' and System Energy's financial
statements primarily reflect assets and costs based on existing cost-based
ratemaking regulation in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Under traditional ratemaking
practice, regulated electric utilities are granted exclusive geographic
franchises to sell electricity. In return, the utilities must make
investments and incur obligations to serve customers. Prudently incurred
costs are recovered from customers along with a return on investment.
Regulators may require utilities to defer collecting from customers some
operating costs until a future date. These deferred costs are recorded as
regulatory assets in the financial statements. In order to continue
applying SFAS 71 to its financial statements, a utility's rates must be set
by an independent regulator on a cost-of-service basis and the rates must
be charged to and collected from customers.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
As the generation portion of the utility industry moves toward
competition, it is likely that generation rates will no longer be set on a
cost-of-service basis. When that occurs, the generation portion of the
business could be required to discontinue application of SFAS 71. The
result of discontinuing application of SFAS 71 could be the recording of
asset impairments and the removal of regulatory assets and liabilities from
the balance sheet. This result is because some of the costs or commitments
incurred under a regulated pricing system might be impaired or not
recovered in a competitive market. These costs are referred to as stranded
costs.
Nearly all of Entergy's exposure to potential stranded costs involves
commitments that were approved by regulators. These exposures include the
following:
o the allowed cost of constructing its nuclear generating plants (the
domestic utility companies' net investment in nuclear generation is
provided in Note 1 to the financial statements);
o long-term contracts to purchase power under the Unit Power Sales
Agreement and associated with the Vidalia project, which may require
paying above-market prices in a competitive environment (detail
concerning these obligations is provided in Note 9 to the financial
statements);
o nuclear power plant decommissioning costs (detail concerning these
costs is provided in Note 9 to the financial statements);
o the construction cost of some fossil-fueled generating plants and
related contracts to buy fuel that may be above-market price in a
competitive market (detail concerning the domestic utility companies'
net investment in generation other than nuclear, which is primarily
fossil fueled, is provided in Note 1 to the financial statements,
and detail concerning certain fuel contracts is provided in Note 9
to the financial statements); and
o regulatory assets reflected in the balance sheets.
As of December 31, 2000, the amount of these potentially strandable
costs for Entergy reflected in the financial statements is approximately
$1.8 billion at Entergy Arkansas, $3.2 billion at Entergy Gulf States,
$2.4 billion at Entergy Louisiana, and $0.3 billion at Entergy Mississippi.
The estimated net present value of the obligations described above that are
not reflected in the financial statements for Entergy is approximately $1.0
billion at Entergy Arkansas, $0.3 billion at Entergy Gulf States, $1.5
billion at Entergy Louisiana, $0.6 billion at Entergy Mississippi, and
$0.3 billion at Entergy New Orleans. These amounts can increase due to
increased capital spending; however, in the normal course of business,
depreciation, amortization, and payments under the contractual obligations
should reduce these amounts. The actual amount of these costs and
obligations that will be identified as stranded will be determined in
regulatory proceedings. The outcome of the proceedings cannot be predicted
and will depend upon a number of variables, including the timing of
stranded cost determination, the values attributable to certain strandable
assets, assumptions concerning future market prices for electricity, and
other factors. In addition, because transition legislation or regulation
is not in place in Louisiana, Mississippi, or New Orleans, Entergy cannot
predict how those jurisdictions will treat stranded costs and whether
Entergy will be able to recover all or a part of the costs in those
jurisdictions.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
In June 2000, Entergy Arkansas filed an application to continue the
stranded cost mitigation efforts agreed upon in the 1997 settlement
agreement approved by the APSC. The filing included a stranded cost
estimate intended to support Entergy Arkansas' recommendation that the
mitigation efforts continue. The filing presents an estimated range of
stranded costs based upon the comparison of possible generation asset
market values to the generation assets' book values and contractual
obligations. The range of possible generation asset market values used in
the estimate was determined using generation asset sales from other
jurisdictions. Rebuttal testimony filed by Entergy Arkansas in November
2000 estimates that stranded costs in Arkansas could be from $227.8
million to $1.58 billion. The wide range in the estimate is because of
the wide range in the comparable asset sales used in the estimate.
In the non-unanimous settlement agreement filed with the PUCT by
Entergy Gulf States in March 2001, the parties agree that Entergy Gulf
States will not implement a charge to recover stranded costs in Texas. A
rider to recover nuclear decommissioning costs will be implemented.
Hearings before the PUCT for approval of the settlement are scheduled to
begin in April 2001.
Management believes that definitive outcomes have not yet been
determined regarding the transition to competition in each of Entergy's
jurisdictions. Arkansas and Texas have enacted retail open access laws as
described above, but Entergy believes that significant issues remain to be
addressed by Arkansas and Texas regulators, and the enacted laws do not
provide sufficient detail to determine definitively the impact on Entergy
Arkansas' and Entergy Gulf States' regulated operations. Until the
regulatory proceedings in Arkansas and Texas provide a greater level of
certainty, both Entergy Arkansas and Entergy Gulf States will continue to
apply SFAS 71 to their regulated operations. Final approval of the
settlement agreement in Texas will likely result in Entergy Gulf States
discontinuing application of SFAS 71 to its Texas generation operations.
SFAS 71 will continue to be applied in the Louisiana, Mississippi, and New
Orleans jurisdictions pending legislative or regulatory developments
relating to transition to competition. If SFAS 71 is no longer applied by
the respective domestic utility companies and System Energy, and regulation
or legislation does not allow for recovery of all or a portion of its
stranded costs, there could be a material adverse impact on the respective
domestic utility companies' and Entergy's financial statements. The impact
of approval of the Texas settlement agreement will depend upon a final
determination of the market value of generation assets in Texas. Entergy
believes that the amount of costs that will be stranded without a means of
recovery or mitigation for the domestic utility companies will be
significantly less than the strandable cost amounts given above. The
specifics of the accounting application of SFAS 71 are discussed more
thoroughly in Note 1 to the financial statements.
Market Risks Disclosure
Entergy is exposed to the following market risks:
o the commodity price risk associated with its power marketing and
trading business;
o the interest rate risk associated with certain of its variable rate
credit facilities;
o the foreign currency exchange rate risk associated with certain of its
contractual obligations; and
o the interest rate and equity price risk associated with its
investments in decommissioning trust funds.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy's power marketing and trading business enters into sales and
purchases of electricity and natural gas for delivery in the future.
Because the market prices of electricity and natural gas can be volatile,
Entergy's power marketing and trading business is exposed to risk arising
from differences between the fixed prices in its commitments and
fluctuating market prices. To mitigate its exposure, Entergy's power
marketing and trading business enters into electricity and natural gas
futures, swaps, option contracts, and electricity forward agreements. The
business also manages its exposure with policies limiting its exposure to
market risk and daily monitoring of its potential financial exposure.
Entergy's power marketing and trading business uses a value-at-risk
model (VAR) as one measure of the market risk of a loss in fair value for
the traded portfolio. VAR acts in conjunction with stress testing,
position reporting, and profit and loss reporting in order to measure and
control the risk inherent in the traded portfolio. The primary use of VAR
is to provide a benchmark for market risk contained in the trading
portfolio. VAR does not function as a comprehensive measure of all risks
in a portfolio. Furthermore, VAR is only an appropriate risk measure for
products traded in relatively liquid markets.
Management's VAR methodology uses a variance/covariance approach to
the measurement of market risk. The variance/covariance approach assumes
that prices follow a "random-walk" process in which prices are lognormally
distributed. This approach requires the following inputs:
o a one-tailed test with a 95% confidence interval that measures the
probability of loss;
o a 20-day window for measuring volatility;
o a cross-product correlation matrix that measures the tendency of
different basis products to move together; and
o an inter-temporal correlation matrix that measures the tendency of
commodities with different delivery periods to move together.
Power marketing and trading's VAR was approximately $2.9 million as of
December 31, 2000 and $3.3 million as of December 31, 1999. During 2000,
the average month-end VAR was $4.2 million, with a high month-end VAR of
$8.5 million and a low month-end VAR of $2.5 million.
Management's calculation of VAR exposure represents an estimate of
reasonably possible net losses that would be recognized on its portfolio of
derivative financial instruments, assuming hypothetical movements in
prices. It does not represent the maximum possible loss or an expected
loss that may occur, because actual future gains and losses will differ
from those estimated based upon actual fluctuations in market rates,
operating exposures, and the timing thereof, and changes in the portfolio
of derivative financial instruments during the year.
In November 2000, System Fuels and Entergy's domestic non-utility
nuclear business entered into foreign currency forward contracts to hedge
the Euro denominated payments due under certain purchase contracts. The
notional amounts of the foreign currency forward contracts were 82.8
million Euro ($73.2 million) and the forward currency rates range from
.8690 to .8981. The maturities of these forward contracts depend on the
contractual payment dates and range in time from August 2001 to February
2004. The mark-to-market valuation of the forward contracts at December
31, 2000 was a net asset of $5.9 million. The counterparty banks obligated
on these agreements are rated by Standard and Poor's Rating Services at A-1
or above on their short-term obligations and AA- on their long-term
obligations.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy uses interest rate swaps to reduce the impact of interest rate
changes on certain variable-rate credit facilities associated with its
global power development business. Under the interest rate swap
agreements, Entergy receives floating-rate interest payments and pays fixed-
rate interest rate payments over the life of the agreements. The floating-
rate interest that Entergy receives is approximately equal to the interest
it must pay on the variable-rate credit facilities. Therefore, through the
use of the swap agreements, Entergy effectively achieves a fixed rate of
interest on the credit facilities. The following details information about
the interest rate swaps as of December 31, 2000:
Average
Notional Fixed Maturity Fair value
Amount Pay Rate
Saltend $443.3 million 6.44% 2013 ($16.6 million)
Damhead Creek $414.5 million 6.52% 2010 ($18.4 million)
Entergy is exposed to fluctuations in equity prices and interest rates
through its nuclear decommissioning trust funds. The NRC requires Entergy
to maintain trusts to fund the costs of decommissioning ANO 1, ANO 2, River
Bend, Waterford 3, Grand Gulf, and Pilgrim. The funds are invested
primarily in equity securities; fixed-rate, fixed-income securities; and
cash and cash equivalents. Management believes that its exposure to market
fluctuations will not affect results of operations for the ANO, River Bend,
Grand Gulf, and Waterford 3 trust funds because of the application of
regulatory accounting principles. The Pilgrim trust fund holds
approximately $314 million of fixed-rate, fixed-income securities as of
December 31, 2000. These securities have an average coupon rate of 6.7%,
an average duration of 5.8 years, and an average maturity of 8.8 years.
The Pilgrim trust fund also holds equity securities worth approximately
$116 million as of December 31, 2000. These securities are held in a fund
that is designed to approximate the Standard & Poor's 500 Index. The
decommissioning trust funds are discussed more thoroughly in Notes 1 and 9
to the financial statements.
New Accounting Pronouncement
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," which will be implemented by Entergy
in 2001. See Note 1 to the financial statements for a discussion of the
expected effect of this pronouncement on Entergy.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Operations
Net cash flow from operations for Entergy, the domestic utility
companies, and System Energy for the years ended December 31, 2000, 1999,
and 1998 was:
2000 1999 1998
(In Millions)
Entergy $1,967.8 $1,389.0 $1,835.7
Entergy Arkansas $ 421.6 $ 352.6 $ 448.7
Entergy Gulf States $ 403.9 $ 387.6 $ 491.3
Entergy Louisiana $ 270.4 $ 410.4 $ 342.4
Entergy Mississippi $ 182.3 $ 142.4 $ 125.0
Entergy New Orleans $ 30.5 $ 60.2 $ 40.3
System Energy $ 395.6 $ 102.8 $ 298.8
Entergy's consolidated cash flow from operations increased in 2000
primarily due to the domestic utility companies and System Energy providing
an additional $277.5 million and the competitive businesses providing an
additional $223.7 million to operating cash flows for the year ended
December 31, 2000.
Fuel cost recovery activity in 2000 significantly affected the
operating cash flows for the domestic utility companies. Historically high
natural gas and purchased power costs in 2000 caused the domestic utility
companies' fuel payments to increase significantly during the year. In the
case of Entergy Arkansas, the Texas portion of Entergy Gulf States, and
Entergy Mississippi, the 2000 under-recoveries have been treated as
regulatory investments in the cash flow statements because those companies
are allowed by their regulatory jurisdictions to recover the fuel costs
accumulated in 2000 over longer than a twelve month period, and the
companies will earn a return on the under-recovered balances.
Entergy Arkansas' and Entergy Gulf States' operating cash flows were
also affected by increases in their net income for the year ended December
31, 2000. The increase in operating cash flow for Entergy Gulf States was
partially offset by the increased use of cash for fuel costs related to the
Louisiana jurisdiction and refunds of $83 million paid to Louisiana
customers during the third quarter of 2000 as a result of earnings reviews
settled with the LPSC, as discussed further in Note 2 to the financial
statements. The decrease in operating cash flow for Entergy Louisiana and
Entergy New Orleans was partially caused by the increased use of cash
related to fuel costs in 2000.
The operating cash flows of the domestic utility companies and System
Energy were affected by money pool activity for 2000 as a result of the use
of a portion of the proceeds from debt issuances in 2000 to pay down
payables to the money pool in the following amounts:
Entergy Arkansas $ 9.9 million
Entergy Gulf States $36.1 million
Entergy Louisiana $91.5 million
Entergy Mississippi $16.7 million
Entergy New Orleans $ 3.9 million
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
System Energy's operating cash flow increased in part due to payments of
$78.9 million received on its money pool receivables from affiliated
companies.
The money pool is an inter-company funding arrangement designed to
reduce the domestic utility companies' and System Energy's dependence on
external short-term borrowings. The money pool provides a means by which,
on a daily basis, the excess funds of Entergy Corporation, the domestic
utility companies, and System Energy may be used by the domestic utility
companies or System Energy to fulfill short-term cash requirements. See
"Capital Resources - Sources of Capital" below for a discussion of the
limitations on these borrowings.
The increase in operating cash flow for the competitive businesses is
attributable to the following:
o the operations of Pilgrim, Indian Point 3, and FitzPatrick that
primarily caused an increase of $73.9 million in operating cash flow
from the domestic non-utility nuclear business; and
o net income generated by and improved operations in the power
marketing and trading and global power development businesses in
2000, which resulted in an additional $40.2 million and $91.0 million
of operating cash flow, respectively, compared with net losses from
their operations in 1999.
Pilgrim was purchased in July 1999 and provided operating cash flow for all
of 2000 compared with only six months in 1999. Indian Point 3 and
FitzPatrick were purchased in November 2000 and provided operating cash
flow for two months in 2000.
Entergy's consolidated cash flow from operations for 1999 decreased as
compared to 1998 primarily due to less cash provided by competitive
businesses. The decrease was also due to the completion of rate phase-in
plans for some of the domestic utility companies during 1998. Entergy Gulf
States' Louisiana retail phase-in plan for River Bend was completed in
February 1998, Entergy Mississippi's phase-in plan for Grand Gulf 1 was
completed in September 1998, and Entergy Arkansas' phase-in plan for Grand
Gulf 1 was completed in November 1998. Therefore, these phase-in plans did
not contribute to operating cash flow in 1999 or 2000. Entergy New
Orleans' phase-in plan for Grand Gulf 1 will be completed in 2001. System
Energy's operating cash flow decreased in 1999 primarily due to an increase
in its money pool receivables from affiliated companies.
In 1999, competitive businesses used $9.3 million of operating cash
flow from operations compared with providing $151.7 million of operating
cash flow for 1998. This change was primarily due to the sales of London
Electricity and CitiPower in December 1998. Both businesses contributed
operating cash flow in 1998 but did not contribute at all in 1999.
Offsetting the decrease in operating cash flow in 1999 were the sales of
Efficient Solutions, Inc. in September 1998 and Entergy Security, Inc. in
January 1999. These businesses used operating cash flow in 1998 and used
none in 1999. Also, the power marketing and trading business used less
operating cash flow in 1999 than in 1998.
Investing Activities
Net cash used in investing activities increased for 2000 due to
increased construction expenditures, decreased proceeds from sales of
businesses, decreased net proceeds from maturities of notes receivable, and
higher fuel costs.
The increased construction expenditures were primarily due to:
o spending on customer service and reliability improvements by the
domestic utility companies;
o costs incurred related to the December 2000 ice storms, primarily at
Entergy Arkansas; and
o costs incurred for replacement of the steam generators at ANO 2.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
The following items also contributed to the overall increase in cash
used in 2000:
o the maturity of notes receivable in August 1999 when only a portion of
the proceeds were reinvested in other temporary investments;
o payments made by Entergy's global power development business in 2000
for turbines; and
o the under-recovery of deferred fuel costs incurred in 2000 at certain
of the domestic utility companies due to significantly higher market
prices of fuel and purchased power expenses. Entergy Arkansas, the
Texas portion of Entergy Gulf States, and Entergy Mississippi have
treated these costs as regulatory investments because those companies
are allowed by their regulatory jurisdictions to recover the fuel
cost regulatory asset accumulated in 2000 over longer than a twelve
month period, and the companies will earn a return on the
under-recovered balances.
Partially offsetting the overall increase in cash used is the maturity of
other temporary investments and proceeds from the sale of the Freestone
power project in 2000.
Investing activities used cash in 1999 compared to 1998 due to the
sales in 1998 of London Electricity and CitiPower, and higher construction
expenditures in 1999 compared with 1998. The increased construction
expenditures were primarily due to construction of the Saltend and Damhead
Creek power plants by Entergy's global power development business, spending
on customer service and reliability improvements by the domestic utility
companies, and the return to service of generation plants at Entergy
Arkansas, Entergy Louisiana, and Entergy New Orleans. The maturity and
reinvestment of a portion of the proceeds of notes receivable in August
1999, and the sales in 1999 of Entergy Security, Entergy Power Edesur
Holding, LTD and several other telecommunications businesses partially
offset the overall decrease in 1999.
Financing Activities
Financing activities provided cash for 2000 primarily due to:
o new long-term debt issuances by Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans; and
o increased borrowings under the Entergy Corporation credit facility.
Partially offsetting the overall cash provided were the following in
2000:
o increased repurchases of Entergy Corporation common stock;
o redemption of Entergy Gulf States' preference stock; and
o decreased borrowings under the credit facilities for the construction
of the Saltend and Damhead Creek power projects by Entergy's global
power development business.
Net cash used in financing activities decreased in 1999 compared to
1998 primarily due to:
o the retirement in 1998 of debt associated with the acquisition of
London Electricity and CitiPower;
o increased borrowings in 1999 under the credit facilities for the
construction of the Saltend and Damhead Creek power plants by Entergy's
global power development business; and
o a reduction in dividend payments made by Entergy Corporation in 1999
compared to 1998.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Partially offsetting the 1999 overall decrease were the following
uses:
o the 1999 repayment of bank borrowings by Entergy Corporation and ETHC
with a portion of the proceeds from the sale of Entergy Security, Inc.;
o the redemption of preferred stock in 1999 at Entergy Arkansas, Entergy
Gulf States, and Entergy Louisiana; and
o the repurchase of Entergy Corporation common stock.
Capital Resources
Entergy's sources to meet its capital requirements include:
o internally generated funds;
o cash on hand;
o debt or preferred stock issuances;
o common stock issuances;
o bank financing under new or existing facilities;
o short-term borrowings; and
o sales of assets.
Entergy requires capital resources for:
o working capital purposes, including the financing of fuel and
purchased power costs;
o construction and other capital expenditures;
o debt and preferred stock maturities;
o common stock repurchases;
o capital investments;
o funding of subsidiaries; and
o dividend and interest payments.
Sources of Capital
All of the domestic utility companies issued new debt in 2000. The
net proceeds of these issuances have been or will be used for general
corporate purposes including capital expenditures, the retirement of short-
term indebtedness incurred for working capital or other purposes, and, in
the case of Entergy Gulf States, the mandatory redemption of preference
stock. The domestic utility companies and System Energy expect to continue
refinancing or redeeming higher cost debt and preferred stock prior to
maturity, to the extent market conditions and interest and dividend rates
are favorable. The domestic utility companies plan to issue debt in 2001
for similar purposes as in 2000. In addition, rising fuel prices in 2000
and the resulting increases in the domestic utility companies' fuel costs
have increased these companies' needs for working capital financing in
2001. Entergy Arkansas' liquidity was also affected by incurring
approximately $195 million of restoration costs associated with ice storms
in December 2000. See Note 2 to the financial statements for more
information regarding the December 2000 ice storms.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
All debt and common and preferred stock issuances by the domestic
utility companies and System Energy require prior regulatory approval.
Preferred stock and debt issuances are subject to issuance tests set forth
in corporate charters, bond indentures, and other agreements. The domestic
utility companies have sufficient capacity under these issuance tests to
consummate the financings planned for 2001. The domestic utility companies
may also establish special purpose trusts or limited partnerships as
financing subsidiaries for the purpose of issuing preferred securities.
On January 31, 2001, Entergy Mississippi issued $70 million of 6.25%
Series First Mortgage Bonds due February 1, 2003. Proceeds of the issuance
will be used for general corporate purposes, including the retirement of
short-term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
On February 23, 2001, Entergy New Orleans issued $30 million of 6.65%
Series First Mortgage Bonds due March 1, 2004. Proceeds of the issuance
will be used for general corporate purposes, including the retirement of
short-term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each
obtained 364-day credit facilities in 2001, and the lines have been fully
drawn. Entergy Arkansas will primarily use the proceeds to pay for costs
incurred in the December 2000 ice storms. Entergy Louisiana and Entergy
Mississippi will use the proceeds for general corporate purposes and
working capital needs. The facilities have variable interest rates and the
average commitment fee is 0.13%. The amounts and dates obtained for the
facilities follow:
Amount of
Company Facility Date Obtained
Entergy Arkansas $ 63 million January 31, 2001
Entergy Louisiana $ 30 million January 31, 2001
Entergy Mississippi $ 25 million February 2, 2001
In 2001, Entergy, Entergy Mississippi, and Entergy New Orleans
requested an increase from the SEC in their current authorized short-term
borrowing limits, which includes borrowings under the money pool. The
increases requested are as follows:
Company Current Limit Requested Limit
Entergy Mississippi $ 103 million $ 160 million
Entergy New Orleans $ 35 million $ 100 million
Other Entergy subsidiaries $ 265 million $ 420 million
SEC approval of the request will increase the current SEC authorized short-
term borrowing limits for the domestic utility companies and System Energy,
which are effective through November 30, 2001, from $1.078 billion to
$1.2 billion. Note 4 to the financial statements contains details of the
amount of short-term indebtedness outstanding for Entergy, the domestic
utility companies, and System Energy as of December 31, 2000.
In 2000, long-term debt on Entergy's balance sheet were increased by
approximately $750 million by the issuance of notes payable to NYPA in the
Indian Point 3 and FitzPatrick acquisition. Also in 2000, the global power
development business increased its borrowings under the Damhead Creek
credit facility by approximately $164 million to finance construction of
the plant. Damhead Creek commenced commercial operation in 2001. Note 7
to the financial statements more thoroughly discusses these long-term debts.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Uses of Capital
For the years 2001 through 2003, Entergy plans to spend $8.2 billion
in a capital investment plan focused on improving service at the domestic
utility companies and growing its global power development and domestic non-
utility nuclear businesses. The estimated allocation in the plan is $2.6
billion to the domestic utility companies, $3.6 billion to the global power
development business, and $2.0 billion to the domestic non-utility nuclear
business. Management provides more information on construction expenditures
and long-term debt and preferred stock maturities in Notes 5, 6, 7, and 9
to the financial statements.
The capital investment plan discussed above is subject to modification
based on the ongoing effects of transition to competition planning, the
ability to recover the regulated utility costs in rates, and the proposed
business combination with FPL Group. The Merger Agreement generally allows
Entergy to continue business in the ordinary course consistent with past
practice and contains certain restrictions on Entergy's activities,
including restrictions on the issuance of securities, capital expenditures,
dispositions, incurrence or guarantee of indebtedness, and trading or
marketing of energy. Entergy does not believe that these covenants will
constrain its capital investment plan. Under certain circumstances, if the
Merger Agreement is terminated, a termination fee of $215 million may be
payable by one of the parties. Additionally, the plan is contingent upon
the ability to access the capital necessary to finance the planned
expenditures, and significant borrowings may be necessary to implement
these capital spending plans.
PUHCA Restrictions on Uses of Capital
Entergy's ability to invest in domestic and foreign generation
businesses is subject to the SEC's regulations under PUHCA. Absent SEC
approval, these regulations limit Entergy Corporation's aggregate
investment in domestic and foreign generation businesses at the time an
investment is made to an amount equal to 50% of average consolidated
retained earnings for the previous four quarters. In June 2000, the SEC
issued an order that allows Entergy's EWG and FUCO investments to increase
from 50% to 100% of Entergy's average consolidated retained earnings. As
of December 31, 2000 Entergy's investments subject to this rule totaled
$770 million constituting 25% of its average consolidated retained
earnings.
Entergy's ability to guarantee obligations of its non-utility
subsidiaries is also limited by SEC regulations under PUHCA. In August
2000, the SEC issued an order, effective through December 31, 2005, that
allows Entergy to issue up to $2 billion of guarantees to its non-utility
companies, excluding guarantees outstanding as of that date that were
issued under a previous order.
Under PUHCA, the SEC imposes a limit equal to 15% of consolidated
capitalization on the amount that may be invested in "energy-related"
businesses without specific SEC approval. Entergy has made investments in
energy-related businesses, including power marketing and trading.
Entergy's available capacity to make additional investments at December 31,
2000 was approximately $1.8 billion.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Other Uses of Capital by Entergy Corporation
Under the terms of the Merger Agreement, Entergy will use its
commercially reasonable efforts to purchase in open market transactions
$430 million of its common stock prior to the close of the Merger. As of
December 31, 2000, Entergy has repurchased 4.2 million shares for an
aggregate amount of $145.6 million after the signing of the Merger
Agreement. Prior to the date of the Merger Agreement, Entergy had been
repurchasing shares under two Board authorizations. In October 1998, the
Board approved a plan for the repurchase of Entergy common stock through
December 31, 2001 to fulfill the requirements of various compensation and
benefit plans. This stock repurchase plan provided for open market
purchases of up to 5 million shares for an aggregate consideration of up to
$250 million. In July 1999, the Board approved the commitment of up to an
additional $750 million for the repurchase of Entergy common stock through
December 31, 2001. Shares were repurchased on a discretionary basis.
Prior to the date of the Merger Agreement, Entergy had repurchased 25.3
million shares for an aggregate amount of $652.5 million under these two
Board authorizations.
In 2000, Entergy Corporation paid $271.0 million in cash dividends on
its common stock and received dividend payments and returns of capital
totaling $918.3 million from subsidiaries. Declarations of dividends on
Entergy's common stock are made at the discretion of the Board. The Board
evaluates the level of Entergy common stock dividends based upon Entergy's
earnings and financial strength. Dividend restrictions are discussed in
Note 8 to the financial statements. Under the Merger Agreement, Entergy
can continue to pay dividends at existing levels with increases permitted
up to 5% over the amount of the previous twelve-month period. In October
2000 and January 2001, the Board declared quarterly dividends of $0.315 per
share on Entergy's common stock. This dividend level is an increase of 5%
over the dividend level for the twelve-month period prior to the Merger
Agreement.
Global Power Development Business
Included in the capital investment plan for Entergy's global power
development business are payments under an option it obtained in October
1999 to acquire twenty-four GE7FA advanced technology gas turbines, four
steam turbines, and eight GE7EA advanced technology gas turbines. In the
sale of the Freestone power project in June 2000, Entergy sold the rights
to acquire four of the GE7EA turbines and two of the steam turbines.
Deliveries of the remaining turbines are scheduled for 2001 through 2004.
Management plans to use the turbines in future generation projects of the
global power development business, and anticipates that the acquisition of
the turbines will be funded by a combination of cash on hand, project
financing, and other external financing. In addition, management expects
that up to $225 million of the turbine acquisitions will be supported by
Entergy Corporation guarantees.
In 2000, Entergy's global power development business began
construction of the Warren Power Project, a 300 MW combined-cycle gas
turbine merchant power plant in Vicksburg, Mississippi. The construction
costs are expected to be approximately $150 million. Management expects
that commercial operation of the plant will begin in the summer of 2001.
Domestic Non-Utility Nuclear Business
In November 2000, Entergy's domestic non-utility nuclear business
purchased NYPA's 825 MW James A. FitzPatrick nuclear power plant located
near Oswego, New York and NYPA's 980 MW Indian Point 3 nuclear power plant
located in Westchester County, New York. Entergy paid NYPA $50 million in
cash at the closing of the purchase, and will pay seven annual installments
of approximately $108 million commencing one year from the date of the
closing, and eight annual installments of $20 million commencing eight
years from the date of the closing. Entergy currently projects that these
installments will be paid primarily from the proceeds of the sale of power
from the plants and that Entergy will provide an additional $100 million of
funding.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to the terms of the agreement with NYPA, the installment
payments due by Entergy to NYPA must be secured by a letter of credit from
an eligible financial institution. On November 21, 2000, upon closing of
the acquisition of the NYPA plants, Entergy delivered a $577 million letter
of credit, with NYPA as beneficiary, in accordance with the terms of such
agreement. The letter of credit was backed by cash collateral, and this
cash is reflected in the balance sheet as "Special deposits." In February
2001, Entergy replaced $440 million of the cash collateral with an Entergy
Corporation guarantee. Most of the cash released by this guarantee was used
to fund Entergy's cash contribution made for its interest in the
Entergy/Koch Industries joint venture discussed below under "Joint
Ventures."
Included in the domestic non-utility nuclear business' capital
investment plan is the acquisition of Consolidated Edison's (Con Edison)
957 MW Indian Point 2 nuclear power plant (IP2) located in Westchester
County, New York. In November 2000, Entergy's domestic non-utility nuclear
business signed an agreement with Con Edison to purchase the plant.
Entergy will pay $600 million in cash at the closing of the purchase and
will receive the plant, nuclear fuel, and other assets, including a
purchase power agreement (PPA). The financing of the purchase may require
the support of an Entergy Corporation guarantee. On the second anniversary
of the IP2 acquisition, Entergy's domestic non-utility nuclear business
will also begin to pay NYPA $10 million per year for up to 10 years in
accordance with the Indian Point 3 purchase agreement. Under the PPA, Con
Edison will purchase 100% of IP2's output through 2004. Con Edison will
also transfer a $430 million decommissioning trust fund, along with the
liability to decommission IP2 and Indian Point 1, to Entergy's domestic non-
utility nuclear business. Management expects to close the acquisition by
mid-2001, pending the approvals of the NRC, the New York Public Service
Commission, and other regulatory agencies.
Joint Ventures
On January 31, 2001, subsidiaries of Entergy and Koch Industries, Inc.
formed a new limited partnership called Entergy-Koch, L.P. Entergy
contributed its power marketing and trading business in the United States
and the United Kingdom and made other contributions, including equity and
loans, totaling $414 million. Koch Energy, Inc. contributed to the venture
its 9,000-mile Koch Gateway Pipeline, gas storage facilities including the
Bistineau storage facility near Shreveport, Louisiana, and Koch Energy
Trading, which markets and trades electricity, gas, weather derivatives and
other energy-related commodities and services.
Entergy's global power development business has a 50% interest in RS
Cogen LLC, a joint venture with PPG Industries. In August 2000, RS Cogen
LLC completed a $242 million non-recourse financing for a 425 MW natural
gas-fired, combined-cycle power plant, known as the Riverside project. In
September 2000, construction of the plant began at estimated construction
costs approximately equal to the amount of the financing arrangement.
Management expects that commercial operation of the plant will begin in
2002.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy Corporation and System Energy
Pursuant to an agreement with certain creditors, Entergy Corporation
has agreed to supply System Energy with sufficient capital to:
o maintain System Energy's equity capital at a minimum of 35% of its
total capitalization (excluding short-term debt);
o permit the continued commercial operation of Grand Gulf 1;
o pay in full all System Energy indebtedness for borrowed money when
due; and
o enable System Energy to make payments on specific System Energy debt,
under supplements to the agreement assigning System Energy's rights in
the agreement as security for the specific debt.
The Capital Funds Agreement and other Grand Gulf 1-related agreements
are more thoroughly discussed in Note 9 to the financial statements.
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy Corporation:
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, of retained earnings,
comprehensive income and paid-in-capital and of cash flows (pages 74
through 79 and pages 147 through 209) present fairly, in all material
respects, the financial position of Entergy Corporation and its
subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Entergy's consolidated earnings applicable to common stock were $679.3
million for the year ended December 31, 2000 resulting in increases in
basic and diluted earnings per share of 33% and 32%, respectively. The
increase in earnings per share was also affected by Entergy's share
repurchase program. Entergy's consolidated earnings applicable to common
stock were $552.5 million for the year ended December 31, 1999 resulting in
a decrease in basic and diluted earnings per share of 25% compared with
1998.
The changes in earnings applicable to common stock by operating
segments for 2000 and 1999 as compared to the prior year are as follows:
Increase/(Decrease)
Operating Segments 2000 1999
(In Thousands)
Domestic Utility and System Energy $ 75,684 $ 29,020
Power Marketing & Trading 20,133 15,049
Domestic Non-Utility Nuclear 33,453 16,768
Global Power Development 46,246 (23,550)
Entergy London and CitiPower - (120,852)
Other, including parent company (48,681) (103,045)
-------- ---------
Total $126,835 $(186,610)
======== =========
Other for 1998 included the results of operations for Efficient
Solutions, Inc., Entergy Security, Inc., Entergy Power Edesur
Holdings, and several telecommunications businesses that were sold
between late 1998 and mid-1999. It also included the gains on the
1998 sales of Entergy London and CitiPower. See Note 14 to the
financial statements for additional business segment information.
The increase in 2000 earnings at the domestic utility companies and
System Energy was primarily due to:
o an increase in energy usage by customers;
o an increase in revenues as a result of a warmer than normal spring and
summer and a colder than normal winter;
o a decrease of $21.4 million in interest and other charges;
o a decrease of $45.5 million in reserves recorded in 2000 for potential
rate actions; and
o a $10.9 million decrease in preferred dividend requirements primarily
due to the retirement of Entergy Gulf States' preference stock.
The increases were partially offset by:
o an increase of $95.8 million in operation and maintenance expense;
o an increase of $44.5 million in depreciation and amortization expense;
o an increase of $23.5 million in taxes other than income taxes; and
o an increase in the effective income tax rate.
The increase at the power marketing and trading business in 2000 was
primarily due to:
o improved trading performance in electricity;
o increased long-term marketing of electricity; and
o trading gains in natural gas in the current year due to natural gas
prices reaching record high levels compared to trading losses in the
prior year.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The increase at the domestic non-utility nuclear business in 2000 was
primarily due to the ownership of Pilgrim for the entire year compared to
only six months in 1999, and the increase for 1999 was due to the purchase
of Pilgrim in July 1999.
The increase at the global power development business in 2000 was
primarily due to $55.1 million of liquidated damages received from the
Saltend contractor as compensation for lost operating margin from the plant
due to construction delays.
Other decreased in 2000 primarily due to the write-down of Entergy's
investments in Latin America to their fair market values. Other decreased
in 1999 primarily due to the non-recurring gains recorded on business sales
in 1998.
Entergy's income before taxes is discussed in two business categories,
"Domestic Utility Companies and System Energy" and "Competitive
Businesses". Competitive Businesses primarily includes power marketing and
trading, domestic non-utility nuclear, global power development, and
several businesses that were sold in 1998 and 1999.
Domestic Utility Companies and System Energy
The changes in electric operating revenues for Entergy's domestic
utility companies for 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues ($94.2) $81.2
Rate riders (17.1) (164.1)
Fuel cost recovery 792.5 188.7
Sales volume/weather 107.1 5.3
Other revenue (including unbilled) 135.8 74.3
Sales for resale 24.2 (50.3)
------ ------
Total $948.3 $135.1
====== ======
Base revenues
Base revenues decreased in 2000 primarily due to the non-recurring
effect on 1999 revenues of the reversal of regulatory reserves associated
with the accelerated amortization of accounting order deferrals discussed
below.
In 1999, base revenues increased primarily due to:
o a $93.6 million reversal in June 1999 of regulatory reserves
associated with the accelerated amortization of accounting order
deferrals in conjunction with the settlement agreement in Entergy
Gulf States' Texas 1996 and 1998 rate filings. The settlement
agreement was approved by the PUCT in June 1999. The net income
effect of this reversal is largely offset by the amortization of
rate deferrals discussed below; and
o a reduction in the amount of reserves recorded in 1999 at Entergy
Gulf States compared to 1998 for the anticipated effects of rate
proceedings in Texas.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Partially offsetting these increases were:
o annual base rate reductions implemented for Entergy Gulf States'
Louisiana and Texas retail customers in 1998 and 1999 and Entergy
Mississippi customers in 1999; and
o reserves recorded by Entergy Gulf States related to the Louisiana
jurisdiction, Entergy Louisiana, and Entergy New Orleans in 1999 for
potential rate actions or rate refunds.
Rate riders
Rate rider revenues do not impact earnings since specific incurred
expenses offset them. In 1999, rate rider revenues decreased $164.1
million due to a revised Grand Gulf rider implemented at Entergy Arkansas
and Entergy Mississippi, resulting in a corresponding decrease in the
amortization of rate deferrals. The revised rider eliminated revenues
attributable to the Grand Gulf phase-in plans, which were completed in
1998, and implemented the Grand Gulf Accelerated Recovery Tariff (GGART),
allowing accelerated recovery and payment of a portion of the two
companies' Grand Gulf purchased power obligations. The tariffs became
effective in January 1999 and October 1998, respectively.
Fuel cost recovery
The domestic utility companies are allowed to recover certain fuel and
purchased power costs through fuel mechanisms included in electric rates
that are recorded as fuel cost recovery revenues. The difference between
revenues collected and current fuel and purchased power costs is recorded
as deferred fuel costs on Entergy's financial statements such that these
costs generally have no net effect on earnings.
Fuel cost recovery revenues increased in 2000 primarily due to:
o increased fuel recovery factors at Entergy Arkansas, Entergy Gulf
States in the Texas jurisdiction, and Entergy Mississippi; and
o higher fuel and purchased power costs at Entergy Louisiana and Entergy
New Orleans due to the increased market price of natural gas.
Along with the increase in fuel cost recovery revenue, fuel and
purchased power expenses increased by $794.2 million in 2000 primarily due
to:
o an increase in the market prices of purchased power, natural gas, and
fuel oil; and
o an increase in volume due to an increase in demand.
The increase in fuel and purchased power expenses was partially offset by a
$23.5 million adjustment to the Entergy Arkansas deferred fuel balance to
record deferred fuel costs that Entergy Arkansas expects to recover in the
future through its fuel adjustment clause.
In 1999, fuel cost recovery revenues increased primarily due to:
o an increased fuel factor and a new fuel surcharge implemented by
Entergy Gulf States in the Texas jurisdiction in 1999;
o recovery of higher-priced fuel and purchased power costs at Entergy
Louisiana due to nuclear outages at Waterford 3 in 1999; and
o an increase in the energy cost recovery rate effective April 1999 and
the completion of a customer refund obligation in 1998 which lowered
1998 fuel cost recovery at Entergy Arkansas.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, fuel and purchased power expenses increased due to:
o higher natural gas and purchased power prices as well as increased gas
usage at Entergy Arkansas and Entergy Louisiana;
o higher fuel recovery due to an increased fuel factor and fuel
surcharge in Entergy Gulf States' Texas jurisdiction; and
o an increased energy cost recovery rate in 1999 and the completion of a
customer refund obligation in 1998 which lowered 1998 fuel cost
recovery at Entergy Arkansas.
These increases were partially offset by decreased fuel expenses at Entergy
Mississippi as a result of lower total generation.
Other effects on revenue
Electric operating revenues also increased in 2000 due to:
o increased sales volume due to increased usage by industrial,
commercial, and residential customers;
o increased sales due to weather conditions in 2000;
o increased generation and subsequent sales from River Bend in 2000 as a
result of a refueling outage in 1999; and
o higher fuel prices included in unbilled revenues.
Electric sales vary seasonally in response to weather, and usually
peak in the summer. The effect of colder than normal winter weather
conditions in 2000 contributed to the increase in electric sales. In 2000,
electricity sales volume in the domestic utility companies' service
territories increased 1,522.7 GWH due to the impact of weather conditions.
Electric sales volume also increased 1,173.9 GWH due to higher demand by
industrial, commercial, and residential customers. The number of customers
in the domestic utility companies' service territories remained constant
during these periods.
Electric operating revenues also increased in 1999 primarily due to a
change in estimated unbilled revenues, which more closely aligned the fuel
component of unbilled revenues with regulatory treatment. This increase
was partially offset by a decline in sales for resale due to the loss of
certain municipal and co-op customer contracts at Entergy Arkansas.
Other operation and maintenance expenses
Other operation and maintenance expenses increased $95.8 million in
2000 primarily due to:
o increased property insurance expenses of $22.8 million primarily due
to storm damage accruals related to the December 2000 ice storms at
Entergy Arkansas and due to changes in storm damage reserve
amortization at Entergy Arkansas, Entergy Louisiana, and Entergy
Mississippi in accordance with regulatory treatment;
o increased customer service expenses of $11.4 million primarily related
to spending on vegetation management at Entergy Arkansas;
o increased nuclear expenses of $17.2 million primarily from Entergy
Arkansas and Entergy Gulf States;
o an increase of $28.4 million primarily due to an increase in legal and
contract expenses for the transition to retail open access at Entergy
Arkansas and Entergy Gulf States and for legal services employed for
rate-related proceedings at Entergy Louisiana; and
o an increase of $21.9 million in plant maintenance expense primarily at
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and Entergy
Mississippi.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The increase in other operation and maintenance expenses in 2000 was
partially offset by the following:
o a $9.5 million larger nuclear insurance refund in 2000 compared to
1999; and
o a decrease in injury and damages claims of $12.3 million.
In 1999, other operation and maintenance expenses increased $68.3
million primarily due to:
o increased customer service and reliability improvements throughout the
system;
o increases in storm damage accruals, employee pension and benefits, and
environmental expenses; and
o increases in maintenance work at Entergy Arkansas and Entergy
Mississippi.
Depreciation and amortization
Depreciation and amortization expenses increased $44.5 million in 2000
primarily due to:
o the review of plant-in-service dates for consistency with regulatory
treatment that reduced depreciation expense by $17.7 million in August
1999;
o increased depreciation of $14.0 million associated with the principal
payment on the sale and leaseback of Grand Gulf 1; and
o net capital additions primarily at Entergy Louisiana and Entergy
Mississippi.
In 1999, depreciation and amortization expenses decreased $32.8
million due to:
o lower depreciation at Entergy Gulf States as a result of the write-
down of the River Bend abeyed plant as required by the Texas rate
settlement and a review of plant in-service dates; and
o reduction in principal payments associated with the sale and leaseback
in 1989 of a portion of Grand Gulf 1 at System Energy.
Other regulatory charges
In 1999, other regulatory charges decreased due to:
o lower accruals for transition costs in 1999 at Entergy Arkansas;
o a change in the amortization period for deferred River Bend finance
charges in the Entergy Gulf States' Texas retail jurisdiction; and
o deferral of Year 2000 costs at Entergy Gulf States and Entergy
Louisiana in accordance with an LPSC order.
These decreases were partially offset by increased charges at System
Energy as a result of the implementation of the GGART at Entergy Arkansas
and Entergy Mississippi.
Interest charges
Interest charges decreased $21.4 million in 2000 primarily due to an
adjustment in 1999 at System Energy to the interest recorded for the
potential refund to customers of its proposed rate increase pending at
FERC. System Energy's proposed rate increase is discussed in Note 2 to the
financial statements.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, interest charges decreased due to the retirement and
refinancing of long-term debt, partially offset by the interest recorded on
the potential refund of System Energy's proposed rate increase.
Competitive Businesses
The changes in operating revenues for the competitive businesses by
operating segments in 2000 and 1999 are as follows:
Increase/(Decrease)
2000 1999
(In Millions)
Power Marketing & Trading $(117.9) $(605.7)
Domestic Non-Utility Nuclear 188.4 104.6
Global Power Development 201.4 0.1
Entergy London and CitiPower - (2,215.1)
Other (16.9) (108.2)
------ ---------
Total $255.0 $(2,824.3)
====== =========
The decrease in 2000 for the power marketing and trading business
results from decreased electricity and gas trading volumes. Although
revenues decreased, the power marketing and trading business had an
increase in operating income for the year ended December 31, 2000,
primarily due to:
o decreased purchased power expenses as discussed below;
o improved trading performance in electricity;
o increased long-term marketing of electricity; and
o trading gains in natural gas in the current year due to natural gas
prices reaching record high levels compared to trading losses in the
prior year.
The decrease in 1999 for the power marketing and trading business
resulted primarily from decreased electricity trading volume due to
significantly warmer weather in 1998 than in 1999. However, the impact on
net income from these decreased revenues was more than offset by decreased
fuel and purchased power expenses as discussed below, resulting in a
smaller operating loss for this business for the year ended December 31,
1999 as compared to 1998.
The increase in 2000 for the domestic non-utility nuclear business was
primarily from the operation of the Pilgrim, Indian Point 3, and
FitzPatrick plants. Pilgrim was purchased in July 1999 and Indian Point 3
and FitzPatrick were purchased in November 2000. The increase in 1999 for
the domestic non-utility nuclear business was primarily from the operation
of Pilgrim.
The increase in 2000 for the global power development business was
primarily due to the results from its interest in Highland Energy, which
was acquired in June 2000, and the results from the Saltend plant, which
began commercial operation in late November 2000. However, the impact on
net income from increased revenues from the global power development
business is offset by increased fuel and purchased power as discussed
below.
The decrease in 1999 for Entergy London and CitiPower was due to the
sale of these businesses in 1998.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fuel and purchased power expenses
Fuel costs constitute the largest expense for the competitive
businesses. Fuel and purchased power expenses increased $20.4 million in
2000, primarily due to Highland Energy's operations and increased expenses
for the domestic non-utility nuclear business from Pilgrim contributing for
all of 2000 compared with only six months in 1999, along with the
acquisition of Indian Point 3 and FitzPatrick in November 2000.
Partially offsetting the overall increase in 2000 in fuel and
purchased power expenses is the decrease of $206.9 million from the power
marketing and trading business attributable to decreased electricity and
gas trading volumes.
Fuel and purchased power expenses decreased in 1999 primarily due to:
o the sales of London Electricity and CitiPower;
o decreased electricity trading volume in the power marketing and
trading business; and
o a $44 million ($27 million net of tax) counterparty default incurred
in 1998 by the power marketing and trading business.
These decreases were partially offset by increased gas trading volume in
the power marketing and trading business.
Other operation and maintenance expenses
Other operation and maintenance expenses increased $98.6 million in
2000 primarily from the operation of Pilgrim for all of 2000 compared with
only six months in 1999, partially offset by a decrease in the elimination
of mark-to-market profits on intercompany power transactions.
Other operation and maintenance expenses decreased $349.7 million in
1999 primarily due to the sales of London Electricity and CitiPower. The
decrease was partially offset by:
o an increase for the power marketing and trading business resulting
primarily from increased risk management and back-office support; and
o an increase for the domestic non-utility nuclear business resulting
primarily from the operation of Pilgrim for six months in 1999.
Other income
Other income decreased $38.5 million for the year ended December 31,
2000 primarily due to a $42.5 million ($27.6 million net of tax) write-down
in 2000 to their estimated fair values of investments in Latin American
projects. The decrease is also due to the absence of the following items
that occurred in 1999:
o a $26.7 million ($17 million net of tax) gain on the sale of Entergy
Power Edesur Holdings in June 1999;
o a $12.9 million ($8 million net of tax) gain on the sale of Entergy
Hyperion Telecommunications in June 1999;
o a $22.0 million ($6.4 million net of tax) gain on the sale of Entergy
Security, Inc. in January 1999, including a true-up recognized in
December 1999;
o a $7.6 million ($4.9 million net of tax) favorable adjustment to the
final sale price of CitiPower in January 1999; and
o a more favorable experience on warranty reserves in 1999 for the
businesses sold during 1998.
ENTERGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Partially offsetting the overall decrease was the following in 2000:
o liquidated damages of $55.1 million ($38.6 million net of tax)
received from the Saltend contractor as compensation for lost operating
margin from the Saltend plant due to construction delays;
o an increase of $16.2 million in interest and dividend income; and
o a $20.5 million ($13.3 million net of tax) gain in June 2000 on the
sale of the global power development business' investment in the
Freestone project located in Fairfield, Texas.
Other income decreased in 1999 primarily due to the gains recorded in
1998 on the sales of Entergy London of $327.3 million ($246.8 million net
of tax) and CitiPower of $29.8 million ($19.3 million net of tax). The
decrease in 1999 was partially offset by the following:
o interest income of $58.5 million in 1999 on the proceeds of the sales
of Entergy London and CitiPower;
o gains on sales of businesses in 1999, as listed above;
o a $68.6 million ($35.9 million net of tax) loss on the sale of
Efficient Solutions, Inc. (formerly Entergy Integrated Solutions,
Inc.) in September 1998;
o $32.8 million ($21.3 million net of tax) of write-downs of Entergy's
investments in two Asian projects in 1998; and
o favorable experience on warranty reserves for the businesses sold
during 1998.
Interest charges
Other interest charges increased $29.0 million in 2000 primarily due
to:
o the accretion of the decommissioning liability associated with
Pilgrim; and
o increased interest expense of $16.0 million related to borrowings on
Entergy Corporation's short-term credit facility.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 were 40.3%,
37.5%, and 25.3%, respectively. The increase in 2000 was primarily due to
the recognition in 1999 of deferred tax benefits related to the expected
utilization of foreign tax credits resulting in lower income taxes.
The effective income tax rate increased in 1999, partially offset by
the recognition of foreign tax credits discussed above, primarily due to
the following in 1998:
o the recognition of $44 million of deferred tax benefits in 1998
related to expected utilization of Entergy's capital loss
carryforwards; and
o a $31.7 million reduction in taxes because of reductions in the UK
corporation tax rate from 31% to 30% in the third quarter of 1998.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
2000 1999 1998
(In Thousands, Except Share Data)
OPERATING REVENUES
Domestic electric $7,219,686 $6,271,414 $6,136,322
Natural gas 165,872 110,355 115,355
Steam products - 15,852 43,167
Competitive businesses 2,630,590 2,375,607 5,199,928
----------- ---------- -----------
TOTAL 10,016,148 8,773,228 11,494,772
----------- ---------- -----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 2,645,835 2,082,875 1,706,028
Purchased power 2,662,881 2,442,484 4,585,444
Nuclear refueling outage expenses 70,511 76,057 83,885
Other operation and maintenance 1,901,314 1,705,545 1,988,040
Decommissioning 39,484 45,988 46,750
Taxes other than income taxes 370,344 339,284 362,153
Depreciation and amortization 746,125 698,881 938,179
Other regulatory charges - net 3,681 14,833 35,136
Amortization of rate deferrals 30,392 115,627 237,302
----------- ---------- -----------
TOTAL 8,470,567 7,521,574 9,982,917
----------- ---------- -----------
OPERATING INCOME 1,545,581 1,251,654 1,511,855
----------- ---------- -----------
OTHER INCOME
Allowance for equity funds used during construction 32,022 29,291 12,465
Gain (loss) on sale of assets - net (20,466) 71,926 274,941
Miscellaneous - net 190,129 154,423 85,618
----------- ---------- -----------
TOTAL 201,685 255,640 373,024
----------- ---------- -----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 477,071 476,877 735,601
Other interest - net 85,635 82,471 65,047
Distributions on preferred securities of subsidiaries 18,838 18,838 42,628
Allowance for borrowed funds used during construction (24,114) (22,585) (10,761)
----------- ---------- -----------
TOTAL 557,430 555,601 832,515
----------- ---------- -----------
INCOME BEFORE INCOME TAXES 1,189,836 951,693 1,052,364
Income taxes 478,921 356,667 266,735
----------- ---------- -----------
CONSOLIDATED NET INCOME 710,915 595,026 785,629
Preferred dividend requirements and other 31,621 42,567 46,560
----------- ---------- -----------
EARNINGS APPLICABLE TO
COMMON STOCK $679,294 $552,459 $739,069
=========== ========== ===========
Earnings per average common share:
Basic $3.00 $2.25 $3.00
Diluted $2.97 $2.25 $3.00
Dividends declared per common share $1.22 $1.20 $1.50
Average number of common shares outstanding:
Basic 226,580,449 245,127,460 246,396,469
Diluted 228,541,307 245,326,883 246,572,328
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Consolidated net income $710,915 $595,026 $785,629
Noncash items included in net income:
Amortization of rate deferrals 30,392 115,627 237,302
Reserve for regulatory adjustments 18,482 10,531 130,603
Other regulatory charges - net 3,681 14,833 35,136
Depreciation, amortization, and decommissioning 785,609 744,869 984,929
Deferred income taxes and investment tax credits 124,457 (189,465) (64,563)
Allowance for equity funds used during construction (32,022) (29,291) (12,465)
(Gain) loss on sale of assets - net 20,466 (71,926) (274,941)
Changes in working capital (net of effects from acquisitions and dispositions):
Receivables (437,146) 9,246 24,176
Fuel inventory (20,447) (1,359) 28,439
Accounts payable 543,606 35,233 31,229
Taxes accrued 20,871 158,733 58,505
Interest accrued 45,789 (56,552) (37,937)
Deferred fuel (38,001) 10,583 63,991
Other working capital accounts 102,336 45,285 43,209
Provision for estimated losses and reserves 6,019 (59,464) (133,880)
Changes in other regulatory assets (66,903) (36,379) (13,684)
Other 149,743 93,494 (49,996)
---------- ---------- ----------
Net cash flow provided by operating activities 1,967,847 1,389,024 1,835,682
---------- ---------- ----------
INVESTING ACTIVITIES
Construction/capital expenditures (1,493,717) (1,195,750) (1,143,612)
Allowance for equity funds used during construction 32,022 29,291 12,465
Nuclear fuel purchases (121,127) (137,649) (102,747)
Proceeds from sale/leaseback of nuclear fuel 117,154 137,093 128,210
Proceeds from sale of businesses 61,519 351,082 2,275,014
Investment in other nonregulated/nonutility properties (238,062) (81,273) (85,014)
Proceeds from other temporary investments 321,351 956,356 -
Purchase of other temporary investments - (321,351) (947,444)
Decommissioning trust contributions and realized change in trust assets (63,805) (61,766) (73,641)
Other regulatory investments (385,331) (81,655) (82,984)
Other (44,016) (42,258) -
---------- ---------- ----------
Net cash flow used in investing activities (1,814,012) (447,880) (19,753)
---------- ---------- ----------
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
FINANCING ACTIVITIES
Proceeds from the issuance of:
Long-term debt 904,522 1,113,370 1,904,074
Common stock 41,908 15,320 19,341
Retirement of:
Long-term debt (181,329) (1,195,451) (3,151,680)
Repurchase of common stock (550,206) (245,004) (2,964)
Redemption of preferred stock (157,658) (98,597) (17,481)
Changes in short-term borrowings - net 267,000 (165,506) 205,412
Dividends paid:
Common stock (271,019) (291,483) (373,441)
Preferred stock (32,400) (43,621) (46,809)
---------- ---------- ----------
Net cash flow provided by (used in) financing activities 20,818 (910,972) (1,463,548)
---------- ---------- ----------
Effect of exchange rates on cash and cash equivalents (5,948) (948) 1,567
---------- ---------- ----------
Net increase in cash and cash equivalents 168,705 29,224 353,948
Cash and cash equivalents at beginning of period 1,213,719 1,184,495 830,547
---------- ---------- ----------
Cash and cash equivalents at end of period $1,382,424 $1,213,719 $1,184,495
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $505,414 $601,739 $833,728
Income taxes $345,361 $373,537 $273,935
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets ($11,577) $41,582 $46,325
Decommissioning trust fund acquired in Pilgrim acquisition - $428,284 -
Acquisition of Indian Point 3 and FitzPatrick
Fair value of assets acquired $917,667 - -
Initial cash paid at closing $50,000 - -
Liabilities assumed and notes issued to seller $867,667 - -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $157,550 $108,198
Temporary cash investments - at cost,
which approximates market 640,038 1,105,521
Special deposits 584,836 -
----------- -----------
Total cash and cash equivalents 1,382,424 1,213,719
----------- -----------
Other temporary investments - at cost,
which approximates market - 321,351
Notes receivable 3,608 2,161
Accounts receivable:
Customer 497,821 290,331
Allowance for doubtful accounts (9,947) (9,507)
Other 395,518 213,939
Accrued unbilled revenues 415,409 298,616
----------- -----------
Total receivables 1,298,801 793,379
----------- -----------
Deferred fuel costs 568,331 240,661
Fuel inventory - at average cost 93,679 73,231
Materials and supplies - at average cost 425,357 392,403
Rate deferrals 16,581 30,394
Deferred nuclear refueling outage costs 46,544 58,119
Prepayments and other 122,690 78,567
----------- -----------
TOTAL 3,958,015 3,203,985
----------- -----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 214 214
Decommissioning trust funds 1,315,857 1,246,023
Non-utility property - at cost (less accumulated depreciation) 334,270 317,165
Non-regulated investments 331,604 198,003
Other - at cost (less accumulated depreciation) 22,298 16,714
----------- -----------
TOTAL 2,004,243 1,778,119
----------- -----------
UTILITY PLANT
Electric 25,137,562 23,163,161
Plant acquisition adjustment 390,664 406,929
Property under capital lease 769,370 768,500
Natural gas 190,989 186,041
Construction work in progress 936,785 1,500,617
Nuclear fuel under capital lease 277,673 286,476
Nuclear fuel 157,603 87,693
----------- -----------
TOTAL UTILITY PLANT 27,860,646 26,399,417
Less - accumulated depreciation and amortization 11,364,021 10,898,661
----------- -----------
UTILITY PLANT - NET 16,496,625 15,500,756
----------- -----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals - 16,581
SFAS 109 regulatory asset - net 980,266 1,068,006
Unamortized loss on reacquired debt 183,627 198,631
Deferred fuel costs 95,661 -
Other regulatory assets 792,515 637,870
Long-term receivables 29,575 32,260
Other 1,024,700 533,732
----------- -----------
TOTAL 3,106,344 2,487,080
----------- -----------
TOTAL ASSETS $25,565,227 $22,969,940
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $464,215 $194,555
Notes payable 388,023 120,715
Accounts payable 1,204,227 707,678
Customer deposits 172,169 161,909
Taxes accrued 451,811 445,677
Accumulated deferred income taxes 225,649 72,640
Nuclear refueling outage costs 10,209 11,216
Interest accrued 172,033 129,028
Obligations under capital leases 156,907 178,247
Other 192,908 125,749
----------- -----------
TOTAL 3,438,151 2,147,414
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 3,249,083 3,310,340
Accumulated deferred investment tax credits 494,315 519,910
Obligations under capital leases 201,873 205,464
FERC settlement - refund obligation 30,745 37,337
Other regulatory liabilities 218,172 199,139
Decommissioning 749,708 703,453
Transition to competition 191,934 157,034
Regulatory reserves 396,789 378,307
Accumulated provisions 390,116 279,425
Other 853,137 527,027
----------- -----------
TOTAL 6,775,872 6,317,436
----------- -----------
Long-term debt 7,732,093 6,612,583
Preferred stock with sinking fund 65,758 69,650
Preference stock - 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 215,000 215,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 334,688 338,455
Common stock, $.01 par value, authorized 500,000,000
shares; issued 248,094,614 shares in 2000 and
247,082,345 shares in 1999 2,481 2,471
Paid-in capital 4,660,483 4,636,163
Retained earnings 3,190,639 2,786,467
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustment (73,998) (68,782)
Net unrealized investment losses (1,035) (5,023)
Less - treasury stock, at cost (28,490,031 shares in 2000 and
8,045,434 shares in 1999) 774,905 231,894
----------- -----------
TOTAL 7,338,353 7,457,857
----------- -----------
Commitments and Contingencies (Notes 2, 9, 10, and 11)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $25,565,227 $22,969,940
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
RETAINED EARNINGS
Retained Earnings - Beginning of period $2,786,467 $2,526,888 $2,157,912
Add - Earnings applicable to common stock 679,294 $679,294 552,459 $552,459 739,069 $739,069
Deduct:
Dividends declared on common stock 275,929 294,352 369,498
Capital stock and other expenses (807) (1,472) 595
---------- ---------- ----------
Total 275,122 292,880 370,093
---------- ---------- ----------
Retained Earnings - End of period $3,190,639 $2,786,467 $2,526,888
========== ========== ==========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance at beginning of period ($73,805) ($46,739) ($69,817)
Foreign currency translation adjustments (5,216) (5,216) (22,043) (22,043) 23,078 23,078
Net unrealized investment gains (losses) 3,988 3,988 (5,023) (5,023) - -
-------- -------- --------
Balance at end of period ($75,033) ($73,805) ($46,739)
======== -------- ======== -------- ======== --------
Comprehensive Income $678,066 $525,393 $762,147
======== ======== ========
PAID-IN CAPITAL
Paid-in Capital - Beginning of period $4,636,163 $4,630,609 $4,613,572
Add:
Common stock issuances related to stock plans 24,320 5,554 17,037
---------- ---------- ----------
Paid-in Capital - End of period $4,660,483 $4,636,163 $4,630,609
========== ========== ==========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 (1) 1997 (2) 1996 (3)
(In Thousands, Except Percentages and Per Share Amounts)
Operating revenues $10,016,148 $ 8,773,228 $11,494,772 $ 9,538,926 $ 7,163,526
Consolidated net income $ 710,915 $ 595,026 $ 785,629 $ 300,899 $ 490,563
Earnings per share
Basic $ 3.00 $ 2.25 $ 3.00 $ 1.03 $ 1.83
Diluted $ 2.97 $ 2.25 $ 3.00 $ 1.03 $ 1.83
Dividends declared per share $ 1.22 $ 1.20 $ 1.50 $ 1.80 $ 1.80
Return on average common equity 9.62% 7.77% 10.71% 3.71% 6.41%
Book value per share, year-end $ 31.89 $ 29.78 $ 28.82 $ 27.23 $ 28.51
Total assets $25,565,227 $22,969,940 $22,836,694 $27,000,700 $22,956,025
Long-term obligations (4) $ 8,214,724 $ 7,252,697 $ 7,349,349 $10,154,330 $ 8,335,150
(1) Includes the effects of the sales of London Electricity and
CitiPower in December 1998.
(2) Includes the effects of the London Electricity acquisition in
February 1997.
(3) Includes the effects of the CitiPower acquisition in January 1996.
(4) Includes long-term debt (excluding currently maturing debt),
preferred stock with sinking fund, preference stock, preferred
securities of subsidiary trusts and partnership, and noncurrent
capital lease obligations.
2000 1999 1998 1997 1996
(Dollars In Thousands)
Domestic Electric Operating Revenues:
Residential $2,524,529 $2,231,091 $2,299,317 $2,271,363 $2,277,647
Commercial 1,699,699 1,502,267 1,513,050 1,581,878 1,573,251
Industrial 2,177,236 1,878,363 1,829,085 2,018,625 1,987,640
Governmental 185,286 163,403 172,368 171,773 169,287
---------------------------------------------------------------
Total retail 6,586,750 5,775,124 5,813,820 6,043,639 6,007,825
Sales for resale 423,519 397,844 448,842 359,881 376,011
Other (1) 209,417 98,446 (126,340) 135,311 67,104
---------------------------------------------------------------
Total $7,219,686 $6,271,414 $6,136,322 $6,538,831 $6,450,940
===============================================================
Billed Electric Energy
Sales (GWH):
Residential 31,998 30,631 30,935 28,286 28,303
Commercial 24,657 23,775 23,177 21,671 21,234
Industrial 43,956 43,549 43,453 44,649 44,340
Governmental 2,605 2,564 2,659 2,507 2,449
---------------------------------------------------------------
Total retail 103,216 100,519 100,224 97,113 96,326
Sales for resale 9,794 9,714 11,187 9,707 10,583
---------------------------------------------------------------
Total 113,010 110,233 111,411 106,820 106,909
===============================================================
(1) 1998 includes the effect of a reserve for rate refund at Entergy
Gulf States.
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy Arkansas, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 86 through 91
and pages 147 through 209) present fairly, in all material respects, the
financial position of Entergy Arkansas, Inc. at December 31, 2000 and 1999,
and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 2000 primarily due to increased electric
operating revenues and lower regulatory charges, partially offset by
increased operation and maintenance expenses.
Net income decreased in 1999 primarily due to decreased electric
operating revenues and increased operation and maintenance expenses,
partially offset by lower regulatory charges.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues ($6.5) $4.5
Rate riders (21.8) (68.2)
Fuel cost recovery 61.8 36.4
Sales volume/weather 30.8 3.8
Other revenue (including unbilled) 47.6 (25.2)
Sales for resale 108.8 (18.1)
------ ------
Total $220.7 ($66.8)
====== ======
Rate riders
Rate rider revenues have no material effect on net income because
specific incurred expenses offset them.
In 2000, rate rider revenues decreased as a result of the decreased
ANO Decommissioning and Grand Gulf rate riders, both of which became
effective in January 2000. The ANO Decommissioning rider allows Entergy
Arkansas to recover the decommissioning costs associated with ANO 1 and 2.
The Grand Gulf rate rider allows Entergy Arkansas to recover its
recoverable share of operating costs for Grand Gulf 1.
In 1999, rate rider revenues decreased as a result of a revised Grand
Gulf rider, which includes the completion of the Grand Gulf 1 phase-in plan
in November 1998, partially offset by the Grand Gulf Accelerated Recovery
Tariff (GGART). The GGART is designed to allow Entergy Arkansas to pay
down a portion of its Grand Gulf purchased power obligation in advance of
the implementation of retail access in Arkansas. The rider and GGART
became effective with the first billing cycle in January 1999. The GGART
is discussed further in Note 2 to the financial statements.
Fuel cost recovery
Entergy Arkansas is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Arkansas' financial statements such that
these costs generally have no net effect on earnings.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fuel cost recovery revenues increased in 2000 primarily due to an
increase in the energy cost rate in April 2000, which is determined
annually by a formula in the energy cost recovery rider (Rider ECR) in
April 2000. The increase in the energy cost rate allows Entergy Arkansas
to recover previously deferred fuel expenses. Rider ECR is discussed
further in Note 2 to the financial statements.
Fuel cost recovery revenues increased in 1999 due to an increase in
the energy cost recovery rider, effective in April 1999, and the completion
of a customer refund obligation in 1998, which lowered 1998 fuel cost
recovery.
Sales volume/weather
Sales volume increased in 2000 primarily due to increased usage by
industrial, commercial, and residential customers, as well as the effect of
more favorable weather on the residential and commercial sectors.
Other revenue (including unbilled)
In 2000, other revenue increased primarily as a result of a change in
estimated unbilled revenues and a $13.4 million adjustment to third quarter
1999 unbilled revenues that excluded fuel recovery and rate rider revenues
from the unbilled balance in accordance with regulatory treatment. The
change in estimate is discussed below. Unbilled revenues also increased
due to greater unbilled volume and the addition of unbilled revenue for
wholesale customers to the unbilled balance.
In 1999, other revenue decreased primarily as a result of a change in
estimated unbilled revenues in the second quarter and, to a lesser extent,
less favorable weather for the unbilled period of 1999. The changed
estimate more closely aligns the fuel component of unbilled revenue with
its regulatory treatment. Comparative impacts are also affected by
seasonal impacts on demand.
Sales for resale
In 2000, sales for resale increased primarily due to an increase in
the market price of electricity.
In 1999, sales for resale decreased due to the loss of certain
municipal and co-op customer contracts.
Expenses
Fuel and purchased power expenses
In 2000, fuel and purchased power expenses increased primarily due to:
o an increase in the market price of natural gas;
o an increase in the market price of purchased power; and
o increased purchased power volume due to increased demand for
electricity and to offset decreased nuclear generation due to
maintenance, inspection, and refueling outages during the year.
The increased fuel and purchased power expenses were partially offset by a
$23.5 million adjustment to the deferred fuel balance as a result of the
1999 and 2000 ECR filings. This adjustment reflects deferred costs that
Entergy Arkansas expects to recover in the future.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, fuel and purchased power expenses increased primarily due to:
o higher-priced gas generation as a result of refueling outages at ANO 1
and ANO 2, a mid-cycle maintenance outage at ANO 2, limited coal
capability at White Bluff during parts of the year, and displacement
of higher priced purchased power;
o increased purchased power costs due to higher market prices in July
and August 1999; and
o an increase in the energy cost recovery rate in April 1999 and the
completion of a customer refund obligation in 1998 which lowered 1998
fuel cost recovery.
The increase in the energy cost recovery rate allows Entergy Arkansas to
recover previously under-recovered fuel expenses.
Other operation and maintenance
Other operation and maintenance expenses increased for 2000 primarily
due to:
o an increase in property damage expense of $14.5 million due to
December 2000 ice storms;
o an increase in nuclear expenses of $7.9 million related to maintenance
and inspection outages and the steam generator replacement project at
ANO 2;
o an increase in spending of $7.1 million on vegetation management;
o an increase in plant maintenance expense of $5.0 million; and
o an increase in spending of $4.5 million for outside services employed
related primarily to legal and contract services for transition work.
Other operation and maintenance expenses increased for 1999 primarily
due to:
o an increase in customer service costs of $12.9 million related to tree
trimming around power lines;
o an increase in plant maintenance costs of $7.9 million;
o an increase in employee pension and benefits costs of $5.0 million;
and
o an increase in administrative and general salaries expense of $4.5
million.
Decommissioning
Decommissioning expense decreased primarily due to a true-up of the
decommissioning liability in June 2000 for previous over-accruals.
Other regulatory charges (credits)
In 2000, other regulatory credits increased primarily due to:
o a $16.6 million under-recovery of Grand Gulf 1 costs as a result of a
decreased rate rider that became effective in January 2000 as ordered
by the APSC;
o the recording of a regulatory asset for certain transition costs
expected to be recovered in a customer transition tariff; and
o accruals in 1999 of excess earnings in the transition cost account.
Accruals previously made in 2000 for estimated excess earnings were
reversed in order to offset expenses related to the December ice storms.
ENTERGY ARKANSAS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, other regulatory charges decreased primarily as a result of
lower accruals for transition costs in 1999, partially offset by the 1998
reversal of the 1997 reserve recorded for the low-level radioactive waste
facility.
The transition cost account and the December 2000 ice storms are
discussed in more detail in Note 2 to the financial statements.
Amortization of rate deferrals
In 1999, amortization of rate deferrals decreased due to the November
1998 completion of the Grand Gulf 1 rate phase-in plan. These phase-ins
had no material effect on net income.
Other
Interest charges
Interest charges increased in 2000 due to the issuance of $100 million
of long-term debt in March 2000.
Interest charges decreased in 1999 due to the retirement of certain
long-term debt and decreased borrowings for funds used during construction.
These decreases were partially offset by an adjustment for interest expense
on an income tax settlement from prior years.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 were 42.3%,
43.8%, and 39.1%, respectively.
The effective income tax rate increased in 1999 primarily due to
accelerated tax depreciation deductions for which deferred taxes have not
been previously normalized, reflecting a shorter tax life on certain
assets.
ENTERGY ARKANSAS, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $1,762,635 $1,541,894 $1,608,698
---------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 258,294 257,946 204,318
Purchased power 560,793 455,425 419,947
Nuclear refueling outage expenses 25,884 29,857 32,046
Other operation and maintenance 427,409 389,462 358,006
Decommissioning 3,845 10,670 15,583
Taxes other than income taxes 39,662 36,669 37,223
Depreciation and amortization 169,806 161,234 165,853
Other regulatory charges (credits) - net (33,078) 5,230 45,658
Amortization of rate deferrals - - 75,249
---------- ---------- ----------
TOTAL 1,452,615 1,346,493 1,353,883
---------- ---------- ----------
OPERATING INCOME 310,020 195,401 254,815
---------- ---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 15,020 12,866 5,921
Gain (loss) on sale of assets (8) - 1,777
Miscellaneous - net 4,339 3,622 12,292
---------- ---------- ----------
TOTAL 19,351 16,488 19,990
---------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 88,140 80,800 86,772
Other interest - net 8,360 11,123 4,813
Distributions on preferred securities of subsidiary 5,100 5,100 5,100
Allowance for borrowed funds used during construction (9,788) (8,459) (4,205)
---------- ---------- ----------
TOTAL 91,812 88,564 92,480
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 237,559 123,325 182,325
Income taxes 100,512 54,012 71,374
---------- ---------- ----------
NET INCOME 137,047 69,313 110,951
Preferred dividend requirements and other 7,776 10,854 10,201
---------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $129,271 $58,459 $100,750
========== ========== ==========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $137,047 $69,313 $110,951
Noncash items included in net income:
Amortization of rate deferrals - - 75,249
Other regulatory charges (credits) - net (33,078) 5,230 45,658
Depreciation, amortization, and decommissioning 173,651 171,904 181,436
Deferred income taxes and investment tax credits 39,776 22,421 (12,293)
Allowance for equity funds used during construction (15,020) (12,866) (5,921)
(Gain) loss on sale of assets 8 - (1,777)
Changes in working capital:
Receivables (47,647) 40,375 61,143
Fuel inventory (6,512) (4,633) 8,317
Accounts payable 141,172 56,985 (7,911)
Taxes accrued 1,731 (30,054) (8,742)
Interest accrued 5,246 (2,908) (3,541)
Deferred fuel costs 35,993 38,814 (17,575)
Other working capital accounts 17,162 2,444 (6,845)
Provision for estimated losses and reserves (895) (8,116) 2,032
Changes in other regulatory assets (85,452) 45,898 (13,029)
Other 58,378 (42,249) 41,499
--------- --------- ---------
Net cash flow provided by operating activities 421,560 352,558 448,651
--------- --------- ---------
INVESTING ACTIVITIES
Construction expenditures (369,370) (238,009) (190,459)
Allowance for equity funds used during construction 15,020 12,866 5,921
Nuclear fuel purchases (44,722) (32,517) (45,845)
Proceeds from sale/leaseback of nuclear fuel 44,722 32,517 42,055
Decommissioning trust contributions and realized
change in trust assets (15,761) (17,746) (25,929)
Other regulatory investments (97,343) (39,243) (39,860)
--------- --------- ---------
Net cash flow used in investing activities (467,454) (282,132) (254,117)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt 99,381 - -
Retirement of:
Long-term debt (220) (39,607) (151,424)
Redemption of preferred stock - (22,666) (9,000)
Dividends paid:
Common stock (44,600) (82,700) (92,600)
Preferred stock (7,691) (11,696) (10,407)
--------- --------- ---------
Net cash flow provided by (used in) financing activities 46,870 (156,669) (263,431)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 976 (86,243) (68,897)
Cash and cash equivalents at beginning of period 6,862 93,105 162,002
--------- --------- ---------
Cash and cash equivalents at end of period $7,838 $6,862 $93,105
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $91,291 $94,872 $95,050
Income taxes $60,291 $61,273 $91,407
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets ($3,920) $22,980 $26,782
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents $7,838 $6,862
Accounts receivable:
Customer 98,550 73,357
Allowance for doubtful accounts (1,667) (1,768)
Associated companies 22,286 26,816
Other 26,221 11,625
Accrued unbilled revenues 65,887 53,600
---------- ----------
Total receivables 211,277 163,630
---------- ----------
Deferred fuel costs 102,970 41,620
Fuel inventory - at average cost 9,809 3,297
Materials and supplies - at average cost 80,682 85,612
Deferred nuclear refueling outage costs 23,541 28,119
Prepayments and other 5,540 6,480
---------- ----------
TOTAL 441,657 335,620
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 11,217 11,215
Decommissioning trust funds 355,852 344,011
Non-utility property - at cost (less accumulated depreciation) 1,469 1,463
Other - at cost (less accumulated depreciation) 3,032 3,033
---------- ----------
TOTAL 371,570 359,722
---------- ----------
UTILITY PLANT
Electric 5,274,066 4,854,433
Property under capital lease 40,289 44,471
Construction work in progress 87,389 267,091
Nuclear fuel under capital lease 107,023 85,725
Nuclear fuel 6,720 9,449
---------- ----------
TOTAL UTILITY PLANT 5,515,487 5,261,169
Less - accumulated depreciation and amortization 2,449,821 2,401,021
---------- ----------
UTILITY PLANT - NET 3,065,666 2,860,148
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 162,952 192,344
Unamortized loss on reacquired debt 44,428 48,193
Other regulatory assets 221,805 106,959
Other 4,775 14,125
---------- ----------
TOTAL 433,960 361,621
---------- ----------
TOTAL ASSETS $4,312,853 $3,917,111
========== ==========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $100 $220
Notes payable 667 667
Accounts payable:
Associated companies 94,776 81,958
Other 231,313 102,959
Customer deposits 29,775 26,320
Taxes accrued 40,263 38,532
Accumulated deferred income taxes 55,127 38,649
Interest accrued 27,624 22,378
Obligations under capital leases 45,962 55,150
Other 14,942 11,598
---------- ----------
TOTAL 540,549 378,431
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 715,891 713,622
Accumulated deferred investment tax credits 88,264 94,852
Obligations under capital leases 101,350 75,045
Other regulatory liabilities 84,642 88,563
Transition to competition 119,553 109,933
Accumulated provisions 42,393 43,288
Other 64,267 51,015
---------- ----------
TOTAL 1,216,360 1,176,318
---------- ----------
Long-term debt 1,239,712 1,130,801
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 60,000 60,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 116,350 116,350
Common stock, $0.01 par value, authorized 325,000,000
shares; issued and outstanding 46,980,196 shares in 2000
and 1999 470 470
Paid-in capital 591,127 591,127
Retained earnings 548,285 463,614
---------- ----------
TOTAL 1,256,232 1,171,561
---------- ----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,312,853 $3,917,111
========== ==========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $463,614 $487,855 $479,705
Add:
Net income 137,047 69,313 110,951
Deduct:
Dividends declared:
Preferred stock 7,776 9,223 10,201
Common stock 44,600 82,700 92,600
Capital stock expenses and other - 1,631 -
-------- -------- --------
Total 52,376 93,554 102,801
-------- -------- --------
Retained Earnings, December 31 (Note 8) $548,285 $463,614 $487,855
======== ======== ========
See Notes to Financial Statements.
ENTERGY ARKANSAS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(In Thousands)
Operating revenues $1,762,635 $1,541,894 $1,608,698 $1,715,714 $1,743,433
Net income $ 137,047 $ 69,313 $ 110,951 $ 127,977 $ 157,798
Total assets $4,312,853 $3,917,111 $4,006,651 $4,106,877 $4,153,817
Long-term obligations (1) $1,401,062 $1,265,846 $1,335,248 $1,419,728 $1,439,355
(1) Includes long-term debt (excluding currently maturing debt),
preferred securities of subsidiary trust, and noncurrent capital
lease obligations.
2000 1999 1998 1997 1996
(Dollars In Thousands)
Electric Operating Revenues:
Residential $561,363 $533,245 $562,325 $551,821 $546,100
Commercial 307,320 288,677 288,816 332,715 323,328
Industrial 353,046 335,824 330,016 372,083 364,943
Governmental 14,935 14,606 14,640 18,200 16,989
-----------------------------------------------------------
Total retail 1,236,664 1,172,352 1,195,797 1,274,819 1,251,360
Sales for resale:
Associated companies 245,541 178,150 149,603 213,845 248,211
Non-associated companies 234,873 193,449 240,090 215,249 207,887
Other 45,557 (2,057) 23,208 11,801 35,975
-----------------------------------------------------------
Total $1,762,635 $1,541,894 $1,608,698 $1,715,714 $1,743,433
===========================================================
Billed Electric Energy
Sales (GWH):
Residential 6,791 6,493 6,613 5,988 6,023
Commercial 5,063 4,880 4,773 4,445 4,390
Industrial 7,240 7,054 6,837 6,647 6,487
Governmental 239 237 233 239 234
-----------------------------------------------------------
Total retail 19,333 18,664 18,456 17,319 17,134
Sales for resale:
Associated companies 6,513 7,592 6,500 9,557 10,471
Non-associated companies 5,537 4,868 5,948 6,828 6,720
-----------------------------------------------------------
Total 31,383 31,124 30,904 33,704 34,325
===========================================================
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy Gulf States, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 99 through 103
and pages 147 through 209) present fairly, in all material respects, the
financial position of Entergy Gulf States, Inc. at December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 2000 primarily due to increased sales volume,
increased unbilled revenue, increased wholesale revenue, and decreased
regulatory reserves.
Net income increased in 1999 primarily due to increased unbilled
revenues, decreased provisions for rate refunds in 1999, decreased
depreciation and amortization expenses, and decreased interest expense,
partially offset by increased operation and maintenance expenses.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months ended
December 31, 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues ($83.2) $146.4
Fuel cost recovery 342.5 104.9
Sales volume/weather 40.7 1.0
Other revenue (including unbilled) 29.8 31.3
Sales for resale 58.7 21.2
------ ------
Total $388.5 $304.8
====== ======
Base revenues
In 2000, base revenues decreased primarily due to the reversal in 1999
of regulatory reserves discussed below associated with the accelerated
amortization of accounting order deferrals and rate refunds in conjunction
with the Texas rate settlement.
In 1999, base revenues increased due to:
o a $93.6 million reversal in June 1999 of regulatory reserves
associated with the accelerated amortization of accounting order
deferrals in conjunction with the settlement agreement in Entergy
Gulf States' Texas November 1996 and 1998 rate filings. The settlement
agreement was approved by the PUCT in June 1999. The net income effect
of this reversal is largely offset by the amortization of rate deferrals
discussed below; and
o a reduction in the amount of reserves recorded in 1999 compared to
1998 for the anticipated effects of rate proceedings in Texas.
Partially offsetting these increases in 1999 were:
o annual base rate reductions of $87 million and $18 million that were
implemented for Louisiana retail customers in February and August 1998,
respectively;
o annual base rate reductions of $69 million and $4.2 million that were
implemented for Texas retail customers in December 1998 and March 1999,
respectively; and
o reserves recorded in the Louisiana jurisdiction in 1999 for the
estimated outcomes of earnings reviews.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The LPSC and PUCT rate issues are discussed in Note 2 to the financial
statements.
Fuel cost recovery
Entergy Gulf States is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Gulf States' financial statements such that
these costs generally have no net effect on earnings.
In 2000, fuel cost recovery revenues increased primarily due to
increased market prices for fuel and purchased power, resulting in an
increased recovery of $226.7 million in the Louisiana jurisdiction. Fuel
cost recovery revenues increased in the Texas jurisdiction by $82.4 million
due to a higher fuel recovery factor that became effective in September
1999 and by $33.4 million due to a fuel surcharge implemented in January
2000.
In 1999, fuel cost recovery revenues increased due to a higher fuel
factor in 1999 and a fuel surcharge implemented in February 1999 in the
Texas jurisdiction. This increase was partially offset by reduced fuel
recovery in the Louisiana jurisdiction primarily due to lower fuel and
purchased power costs in 1999.
Sales volume/weather
In 2000, sales volume increased due to more favorable weather
affecting residential and commercial customers, as well as an increase in
the number of residential and commercial customers.
Other revenue
In 2000, other revenue increased primarily due to increased unbilled
revenues due to the effect of a change in estimate on unbilled revenue,
more favorable weather, and increased sales volume.
In 1999, other revenue increased primarily due to a change in
estimated unbilled revenues. The estimate more closely aligns the fuel
component of unbilled revenues with regulatory treatment.
Sales for resale
In 2000, sales for resale increased primarily due to increased sales
volume including sales of energy from the non-regulated piece of River Bend
to affiliated companies. Sales for resale also increased due to increased
generation, particularly nuclear generation, resulting in more energy
available for resale. Nuclear generation was down in 1999 as a result of a
nuclear refueling outage.
In 1999, sales for resale increased primarily due to increased sales
to associated companies due to higher market prices and outages at
affiliate plants in 1999.
Gas and steam operating revenues
Gas operating revenues increased in 2000 due to an increase in the
market price for natural gas as well as increased sales volume in the
residential and commercial sectors.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, gas operating revenues decreased primarily due to lower
prices of gas purchased for resale as well as decreased usage as a result
of warmer winter weather, particularly in the residential and commercial
sectors.
In 2000 and in 1999, steam operating revenues decreased primarily due
to a new lease arrangement that began in June 1999 for the Louisiana
Station generating facility. Under the terms of this new lease, revenues
and expenses are now classified as other income. The previous
classifications were steam operating revenues and other operation and
maintenance expenses.
Expenses
Fuel and purchased power
In 2000, fuel and purchased power expenses increased primarily due to:
o higher market prices for gas and purchased power;
o increased nuclear generation; and
o an adjustment in March 2000 of $11.5 million to the Texas jurisdiction
deferred fuel balance as a result of a fuel reconciliation settlement
with the PUCT.
In 1999, fuel and purchased power expenses increased due to:
o increased gas expenses resulting from a shift to gas generation during
the first six months of 1999 because of the reduced availability of
Nelson 6 and an extended refueling outage at River Bend;
o increased purchased power expenses due to higher market prices; and
o a higher fuel factor and fuel surcharge in the Texas jurisdiction in
1999.
Other operation and maintenance expenses
In 2000, other operation and maintenance expenses increased primarily
due to increased expenses of $12.6 million on outside services employed
related to legal and contract services for transition work and increased
nuclear plant operations costs of $5.8 million. These increases were
largely offset by decreases in pension and benefits costs of $7.3 million
and decreased environmental reserves of $5.7 million.
In 1999, other operation and maintenance expenses increased primarily
due to increased spending of $8.4 million for vegetation management,
increased miscellaneous customer expenses of $2.5 million, and due to
increased property and environmental reserves of $4.9 million. These
increases were offset primarily by decreases of $8.8 million for pension
and benefits expenses.
Depreciation and amortization
In 2000, depreciation and amortization increased primarily due to a
review of plant-in-service dates for consistency with regulatory treatment
reducing depreciation expense by $6.7 million in 1999, as well as
additional depreciation expense related to net capital additions in 2000.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, depreciation and amortization decreased due to:
o lower depreciation as a result of the write-down of the River Bend
abeyed plant as required by the Texas rate settlement;
o reduced amortization of the River Bend Unit 2 cancellation loss as a
result of the completion of amortization for the Louisiana portion of
the loss and the reduction in amortization of the Texas portion in
accordance with a PUCT rate order; and
o lower depreciation due to a review of plant in-service dates for
consistency with regulatory treatment.
Other regulatory credits
In 2000, other regulatory credits decreased due to:
o the amortization of the Year 2000 regulatory asset deferred in 1999;
and
o the completion of the amortization of the deferred financing costs in
accordance with the December 1998 rate order settlement with the PUCT.
In 1999, other regulatory credits increased due to:
o change in the amortization period for deferred River Bend finance
charges for the Texas retail jurisdiction in accordance with the Texas
settlement agreement; and
o deferral of Year 2000 costs in accordance with an LPSC order. These
costs are to be amortized over a five-year period.
Amortization of rate deferrals
In 2000, the amortization of rate deferrals decreased primarily due to
the large reduction in the rate deferral balance upon the PUCT's approval
in June 1999 of the Texas rate settlement. This settlement increased
amortization expense in 1999 but was offset by increased revenues.
In 1999, the amortization of rate deferrals increased due to the
reduction of accounting order deferrals in accordance with the June 1999
Texas settlement agreement. This settlement substantially reduced the
unamortized balance of rate deferrals, while decreasing the amortization
period for the remaining deferrals from a ten-year period to a three-year
period.
Other
Other income
In 2000, other income decreased primarily due to decreased non-utility
operating income from Louisiana Station as well as the 1999 adjustment to
the depreciation balance of River Bend abeyed plant.
ENTERGY GULF STATES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Interest charges
In 2000, interest charges increased as a result of the issuance of
$300 million of long term debt in 2000.
In 1999, interest charges decreased as a result of the retirement,
redemption, and refinancing of certain long-term debt in 1998 and 1999, as
well as lower accruals of interest on certain Louisiana fuel and earnings
reviews in 1998.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 are 36.5%,
37.6%, and 40.6%, respectively.
The decrease in the effective income tax rate in 1999 is due to
accelerated tax depreciation deductions for which deferred taxes have not
been previously normalized, reflecting a shorter tax life on certain
assets.
ENTERGY GULF STATES, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $2,470,884 $2,082,358 $1,777,584
Natural gas 40,356 28,998 33,058
Steam products - 15,852 43,167
---------- ---------- ----------
TOTAL 2,511,240 2,127,208 1,853,809
---------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 895,361 634,726 538,388
Purchased power 455,300 365,245 317,684
Nuclear refueling outage expenses 16,663 16,307 14,293
Other operation and maintenance 423,031 419,713 411,372
Decommissioning 6,273 7,588 3,437
Taxes other than income taxes 120,428 111,872 120,782
Depreciation and amortization 189,149 185,254 195,935
Other regulatory credits - net (13,860) (24,092) (5,485)
Amortization of rate deferrals 5,606 89,597 21,749
---------- ---------- ----------
TOTAL 2,097,951 1,806,210 1,618,155
---------- ---------- ----------
OPERATING INCOME 413,289 320,998 235,654
---------- ---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 7,617 6,306 2,143
Gain on sale of assets 2,327 2,046 1,816
Miscellaneous - net 12,736 18,073 14,903
---------- ---------- ----------
TOTAL 22,680 26,425 18,862
---------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 143,053 138,602 149,767
Other interest - net 8,458 6,994 21,016
Distributions on preferred securities of subsidiary 7,438 7,438 7,437
Allowance for borrowed funds used during construction (6,926) (5,776) (1,870)
---------- ---------- ----------
TOTAL 152,023 147,258 176,350
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 283,946 200,165 78,166
Income taxes 103,603 75,165 31,773
---------- ---------- ----------
NET INCOME 180,343 125,000 46,393
Preferred dividend requirements and other 9,998 17,423 19,011
---------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $170,345 $107,577 $27,382
========== ========== ==========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $180,343 $125,000 $46,393
Noncash items included in net income:
Amortization of rate deferrals 5,606 89,597 21,749
Reserve for regulatory adjustments (49,571) (97,953) 130,603
Other regulatory credits - net (13,860) (24,092) (5,485)
Depreciation, amortization, and decommissioning 195,422 192,842 199,372
Deferred income taxes and investment tax credits 54,279 (1,495) (29,174)
Allowance for equity funds used during construction (7,617) (6,306) (2,143)
Gain on sale of assets (2,327) (2,046) (1,816)
Changes in working capital:
Receivables (131,643) 9,791 65,527
Fuel inventory 1,013 (8,070) 7,426
Accounts payable 130,435 42,370 (6,135)
Taxes accrued 30,570 46,018 7,462
Interest accrued 14,969 (14,061) (2,523)
Deferred fuel costs (26,291) 40,851 55,985
Other working capital accounts 20,896 (10,954) 11,006
Provision for estimated losses and reserves (1,991) 8,496 (4,207)
Changes in other regulatory assets (47,777) (59,242) (3,226)
Other 51,424 56,817 458
-------- -------- --------
Net cash flow provided by operating activities 403,880 387,563 491,272
-------- -------- --------
INVESTING ACTIVITIES
Construction expenditures (277,635) (199,076) (136,960)
Allowance for equity funds used during construction 7,617 6,306 2,143
Nuclear fuel purchases (34,735) (53,293) (1,977)
Proceeds from sale/leaseback of nuclear fuel 34,154 53,293 15,932
Decommissioning trust contributions and realized
change in trust assets (12,051) (10,853) (11,899)
Other regulatory investments (127,377) (42,412) (43,124)
-------- -------- --------
Net cash flow used in investing activities (410,027) (246,035) (175,885)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt 298,819 122,906 21,600
Retirement of:
Long-term debt (185) (197,960) (212,090)
Redemption of preferred stock (157,658) (25,931) (8,481)
Dividends paid:
Common stock (88,000) (107,000) (109,400)
Preferred stock (10,862) (16,967) (19,055)
-------- -------- --------
Net cash flow provided by (used in) financing activities 42,114 (224,952) (327,426)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 35,967 (83,424) (12,039)
Cash and cash equivalents at beginning of period 32,312 115,736 127,775
-------- -------- --------
Cash and cash equivalents at end of period $68,279 $32,312 $115,736
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $136,154 $161,326 $173,599
Income taxes $23,259 $28,410 $46,620
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets ($3,172) $14,054 $10,410
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $10,726 $8,607
Temporary cash investments - at cost,
which approximates market 57,553 23,705
---------- ----------
Total cash and cash equivalents 68,279 32,312
---------- ----------
Accounts receivable:
Customer 125,412 73,215
Allowance for doubtful accounts (2,131) (1,828)
Associated companies 27,660 1,706
Other 22,837 15,030
Accrued unbilled revenues 136,384 90,396
---------- ----------
Total receivables 310,162 178,519
---------- ----------
Deferred fuel costs 288,126 134,458
Fuel inventory - at average cost 37,258 38,271
Materials and supplies - at average cost 100,018 112,585
Rate deferrals 5,606 5,606
Prepayments and other 22,332 21,750
---------- ----------
TOTAL 831,781 523,501
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 243,555 234,677
Non-utility property - at cost (less accumulated depreciation) 194,422 187,759
Other - at cost (less accumulated depreciation) 14,826 13,681
---------- ----------
TOTAL 452,803 436,117
---------- ----------
UTILITY PLANT
Electric 7,574,905 7,365,407
Property under capital lease 38,564 46,210
Natural gas 56,163 52,473
Construction work in progress 144,814 145,492
Nuclear fuel under capital lease 57,472 70,801
---------- ----------
TOTAL UTILITY PLANT 7,871,918 7,680,383
Less - accumulated depreciation and amortization 3,664,415 3,534,473
---------- ----------
UTILITY PLANT - NET 4,207,503 4,145,910
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals - 5,606
SFAS 109 regulatory asset - net 403,934 385,405
Unamortized loss on reacquired debt 37,903 40,576
Other regulatory assets 169,405 140,157
Long-term receivables 29,586 32,260
Other 17,349 23,490
---------- ----------
TOTAL 658,177 627,494
---------- ----------
TOTAL ASSETS $6,150,264 $5,733,022
========== ==========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $122,750 $ -
Accounts payable:
Associated companies 66,312 79,962
Other 258,529 114,444
Customer deposits 37,489 33,360
Taxes accrued 132,368 101,798
Accumulated deferred income taxes 94,032 27,960
Nuclear refueling outage costs 10,209 11,216
Interest accrued 43,539 28,570
Obligations under capital leases 42,524 51,973
Other 19,418 14,557
---------- ----------
TOTAL 827,170 463,840
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 1,115,119 1,098,882
Accumulated deferred investment tax credits 171,000 178,500
Obligations under capital leases 53,512 65,038
Other regulatory liabilities 16,916 20,089
Decommissioning 142,604 139,194
Transition to competition 72,381 47,101
Regulatory reserves 60,965 110,536
Accumulated provisions 67,404 69,395
Other 98,501 117,804
---------- ----------
TOTAL 1,798,402 1,846,539
---------- ----------
Long-term debt 1,808,879 1,631,581
Preferred stock with sinking fund 30,758 34,650
Preference stock - 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 85,000 85,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 47,677 51,444
Common stock, no par value, authorized 200,000,000
shares; issued and outstanding 100 shares in 2000 and 1999 114,055 114,055
Paid-in capital 1,153,195 1,153,131
Retained earnings 285,128 202,782
---------- ----------
TOTAL 1,600,055 1,521,412
---------- ----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,150,264 $5,733,022
========== ==========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $202,782 $202,205 $284,165
Add:
Net income
180,343 125,000 46,393
Deduct:
Dividends declared:
Preferred and preference stock 9,933 16,784 19,011
Common stock 88,000 107,000 109,400
Preferred and preference stock
redemption and other 64 639 (58)
-------- -------- --------
Total 97,997 124,423 128,353
-------- -------- --------
Retained Earnings, December 31 (Note 8) $285,128 $202,782 $202,205
======== ======== ========
See Notes to Financial Statements.
ENTERGY GULF STATES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(In Thousands)
Operating revenues $2,511,240 $2,127,208 $1,853,809 $2,147,829 $2,019,181
Net income (loss) $ 180,343 $ 125,000 $ 46,393 $ 59,976 $ (3,887)
Total assets $6,150,264 $5,733,022 $6,293,744 $6,488,637 $6,421,179
Long-term obligations (1) $1,978,149 $1,966,269 $1,993,811 $2,098,752 $2,226,329
(1) Includes long-term debt (excluding currently maturing debt),
preferred and preference stock with sinking fund, preferred
securities of subsidiary trust, and noncurrent capital lease
obligations.
2000 1999 1998 1997 1996
(Dollars In Thousands)
Electric Operating Revenues:
Residential $717,453 $607,875 $605,759 $624,862 $612,398
Commercial 505,346 430,291 422,944 452,724 444,133
Industrial 870,594 718,779 704,393 740,418 685,178
Governmental 32,939 28,475 35,930 33,774 31,023
-----------------------------------------------------------
Total retail 2,126,332 1,785,420 1,769,026 1,851,778 1,772,732
Sales for resale:
Associated companies 93,675 38,416 14,172 14,260 20,783
Non-associated companies 112,522 109,132 112,182 59,015 76,173
Other (1) 138,355 149,390 (117,796) 136,458 56,300
-----------------------------------------------------------
Total $2,470,884 $2,082,358 $1,777,584 $2,061,511 $1,925,988
===========================================================
Billed Electric Energy
Sales (GWH):
Residential 9,405 8,929 8,903 8,178 8,035
Commercial 7,660 7,310 6,975 6,575 6,417
Industrial 17,960 17,684 18,158 18,038 16,661
Governmental 450 425 560 481 438
-----------------------------------------------------------
Total retail 35,475 34,348 34,596 33,272 31,551
Sales for resale:
Associated companies 1,381 677 380 414 656
Non-associated companies 3,248 3,408 3,701 1,503 2,148
-----------------------------------------------------------
Total Electric Department 40,104 38,433 38,677 35,189 34,355
===========================================================
(1) 1998 includes the effects of an Entergy Gulf States reserve for
rate refund.
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy Louisiana, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 109 through 113
and pages 147 through 209) present fairly, in all material respects, the
financial position of Entergy Louisiana, Inc. at December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 2000 primarily due to increased depreciation
and amortization costs, increased other operation and maintenance expenses,
and decreased unbilled revenue and other regulatory credits, partially
offset by decreased provisions for rate refunds.
Net income increased in 1999 primarily due to increased unbilled
revenue and other regulatory credits, and decreased nuclear refueling
outage expenses and interest charges, partially offset by increased
provisions for rate refunds.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues ($4.7) ($48.7)
Fuel cost recovery 270.8 63.6
Sales volume/weather 23.9 (5.3)
Other revenue (including unbilled) (13.5) 74.5
Sales for resale (20.7) 11.6
------ -----
Total $255.8 $95.7
====== =====
Base revenues
In 2000, base revenues decreased primarily due to additional formula
rate plan reductions in the residential, commercial, and industrial
sectors, partially offset by lower accruals for potential rate refunds.
In 1999, base revenues decreased primarily due to accruals for
potential rate refunds.
Fuel cost recovery revenues
Entergy Louisiana is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates that are
recorded as fuel cost recovery revenues. The difference between revenues
collected and current fuel and purchased power costs is recorded as
deferred fuel costs on Entergy Louisiana's financial statements such that
these costs generally have no net effect on earnings.
In 2000, fuel cost recovery revenues increased as a result of higher
fuel and purchased power expenses primarily due to the increased market
price of natural gas.
In 1999, fuel cost recovery revenues increased due to a shift from
lower priced nuclear fuel to higher priced gas and purchased power due to
nuclear outages at Waterford 3 in 1999.
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales volume/weather
In 2000, sales volume increased primarily due to more favorable
weather in the residential and commercial sectors, and increased usage by
industrial customers.
In 1999, sales volume decreased primarily due to less favorable
weather, partially offset by increased usage by residential and industrial
customers.
Other revenue (including unbilled)
In 2000, other revenue decreased primarily due to the effect of a
change in estimate on 1999 unbilled revenues, in addition to rent received
for electric property in 1999.
In 1999, other revenue increased primarily due to a change in
estimated unbilled revenues. The changed estimate more closely aligns the
fuel component of unbilled revenues with regulatory treatment.
Sales for resale
In 2000, sales for resale decreased as a result of increased sales to
retail customers resulting in less electricity available for resale.
In 1999, sales for resale increased as a result of increased sales to
affiliates due to outages at affiliate plants, in addition to favorable
unit prices.
Expenses
Fuel and purchased power expenses
In 2000, fuel and purchased power expenses increased due to an
increase in the market price of natural gas.
In 1999, fuel and purchased power expenses increased due to:
o higher natural gas prices;
o higher purchased power market prices; and
o a shift in generation from lower priced nuclear fuel to higher priced
gas as a result of refueling and other outages at Waterford 3.
Other operation and maintenance expenses
Other operation and maintenance expenses increased in 2000 primarily
due to:
o an increase in expenses from maintenance and planned maintenance
outages at Waterford 3 and certain fossil plants of $17.9 million;
o an increase of $11 million in outside services employed for legal
services for potential rate actions; and
o an increase in property insurance reserves of $5 million primarily
due to changes in storm damage reserves effective August 1999.
ENTERGY LOUISIANA, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The overall increase in other operation and maintenance expenses in
2000 was partially offset by the following:
o a decrease in injury and damages claims of $3.5 million;
o a decrease of $3 million in benefits expense; and
o higher nuclear insurance refunds of $1.8 million.
Nuclear refueling outage expenses
In 1999, nuclear refueling outage expenses decreased as a result of
the amortization of higher outage expenses in 1998 due to the extended
nuclear refueling outage in 1997.
Depreciation and amortization
In 2000, depreciation and amortization expenses increased primarily
due to a review of plant-in-service dates for consistency with regulatory
treatment reducing depreciation expense by $3.4 million in August 1999, as
well as depreciation expense related to net capital additions in 2000.
Other regulatory charges (credits)
In 2000, other regulatory credits decreased due to the LPSC-required
deferral in 1999 of Year 2000 costs and the amortization of these costs in
2000. The deferred costs are being recovered over a five-year period.
Other
Other income
In 2000, other income increased primarily due to interest recorded on
deferred fuel costs.
Interest charges
In 2000 and 1999, interest on long-term debt decreased primarily due
to the refinancing and net redemption of $77 million of long-term debt in
1999. The decrease in 2000 is partially offset by interest expense
incurred on the issuance of $150 million of long-term debt in May 2000.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 were 40.9%,
38.9%, and 37.8%, respectively.
ENTERGY LOUISIANA, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $2,062,437 $1,806,594 $1,710,908
---------- ---------- ----------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 560,329 421,763 383,413
Purchased power 537,589 418,878 372,763
Nuclear refueling outage expenses 13,542 15,756 21,740
Other operation and maintenance 318,841 289,348 289,522
Decommissioning 10,422 8,786 8,786
Taxes other than income taxes 77,190 75,447 70,621
Depreciation and amortization 171,204 161,754 162,937
Other regulatory charges (credits) - net 960 (5,280) (1,755)
---------- ---------- ----------
TOTAL 1,690,077 1,386,452 1,308,027
---------- ---------- ----------
OPERATING INCOME 372,360 420,142 402,881
---------- ---------- ----------
OTHER INCOME
Allowance for equity funds used during construction 4,328 4,925 1,887
Gain on sale of assets - - 2,340
Miscellaneous - net 6,604 2,206 2,644
---------- ---------- ----------
TOTAL 10,932 7,131 6,871
---------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest on long-term debt 98,655 103,937 109,463
Other interest - net 6,788 7,010 7,127
Distributions on preferred securities of subsidiary 6,300 6,300 6,300
Allowance for borrowed funds used during construction (3,775) (4,112) (1,729)
---------- ---------- ----------
TOTAL 107,968 113,135 121,161
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 275,324 314,138 288,591
Income taxes 112,645 122,368 109,104
---------- ---------- ----------
NET INCOME 162,679 191,770 179,487
Preferred dividend requirements and other 9,514 9,955 13,014
---------- ---------- ----------
EARNINGS APPLICABLE TO
COMMON STOCK $153,165 $181,815 $166,473
========== ========== ==========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $162,679 $191,770 $179,487
Noncash items included in net income:
Reserve for regulatory adjustments 11,456 - -
Other regulatory charges (credits) - net 960 (5,280) (1,754)
Depreciation, amortization, and decommissioning 181,626 170,540 171,723
Deferred income taxes and investment tax credits 16,350 (15,487) 26,910
Allowance for equity funds used during construction (4,328) (4,925) (1,887)
Gain on sale of assets - - (2,340)
Changes in working capital:
Receivables (97,154) (41,565) (7,972)
Accounts payable (11,848) 95,120 (5,878)
Taxes accrued (2,555) 7,659 (7,040)
Interest accrued 15,300 (33,066) 18,731
Deferred fuel costs (81,890) (9,959) 4,530
Other working capital accounts 38,064 56,714 16,983
Provision for estimated losses and reserves 6,114 5,442 6,410
Changes in other regulatory assets 25,400 38,577 (11,443)
Other 10,249 (45,146) (44,099)
-------- -------- --------
Net cash flow provided by operating activities 270,423 410,394 342,361
-------- -------- --------
INVESTING ACTIVITIES
Construction expenditures (203,049) (130,933) (105,306)
Allowance for equity funds used during construction 4,328 4,925 1,887
Nuclear fuel purchases (38,270) (11,308) (38,141)
Proceeds from sale/leaseback of nuclear fuel 38,270 11,308 39,701
Decommissioning trust contributions and realized
change in trust assets (12,299) (13,678) (11,648)
-------- -------- --------
Net cash flow used in investing activities (211,020) (139,686) (113,507)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt 148,736 298,092 112,556
Retirement of:
Long-term debt (100,000) (386,707) (150,786)
Redemption of preferred stock - (50,000) -
Dividends paid:
Common stock (62,400) (197,000) (138,500)
Preferred stock (9,514) (10,389) (13,014)
-------- -------- --------
Net cash flow used in financing activities (23,178) (346,004) (189,744)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 36,225 (75,296) 39,110
Cash and cash equivalents at beginning of period 7,734 83,030 43,920
-------- -------- --------
Cash and cash equivalents at end of period $43,959 $7,734 $83,030
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $89,627 $144,731 $98,801
Income taxes $105,354 $132,924 $86,830
Noncash investing and financing activities:
Change in unrealized appreciation/(depreciation) of
decommissioning trust assets ($2,979) $4,585 $5,928
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $14,138 $7,734
Temporary cash investments - at cost,
which approximates market 29,821 -
---------- ----------
Total cash and cash equivalents 43,959 7,734
---------- ----------
Notes Receivable 1,510 3
Accounts receivable:
Customer 111,292 79,335
Allowance for doubtful accounts (1,771) (1,615)
Associated companies 30,518 14,601
Other 13,698 10,762
Accrued unbilled revenues 152,700 106,200
---------- ----------
Total receivables 306,437 209,283
---------- ----------
Deferred fuel costs 84,051 2,161
Accumulated deferred income taxes - 12,520
Materials and supplies - at average cost 77,389 84,027
Deferred nuclear refueling outage costs 16,425 11,336
Prepayments and other 9,996 6,011
---------- ----------
TOTAL 539,767 333,075
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 14,230 14,230
Decommissioning trust funds 110,263 100,943
Non-utility property - at cost (less accumulated depreciation) 21,700 21,433
---------- ----------
TOTAL 146,193 136,606
---------- ----------
UTILITY PLANT
Electric 5,357,920 5,178,808
Property under capital lease 238,427 236,271
Construction work in progress 85,299 108,106
Nuclear fuel under capital lease 63,923 51,930
---------- ----------
TOTAL UTILITY PLANT 5,745,569 5,575,115
Less - accumulated depreciation and amortization 2,429,495 2,294,394
---------- ----------
UTILITY PLANT - NET 3,316,074 3,280,721
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 204,810 230,899
Unamortized loss on reacquired debt 33,244 35,856
Other regulatory assets 50,881 50,191
Other 10,882 17,302
---------- ----------
TOTAL 299,817 334,248
---------- ----------
TOTAL ASSETS $4,301,851 $4,084,650
========== ==========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $35,088 $116,388
Accounts payable:
Associated companies 71,948 137,869
Other 144,841 90,768
Customer deposits 60,227 61,096
Taxes accrued 23,307 25,863
Accumulated deferred income taxes 20,545 -
Interest accrued 35,536 20,236
Obligations under capital leases 34,274 28,387
Other 102,614 59,737
---------- ----------
TOTAL 528,380 540,344
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 757,362 792,290
Accumulated deferred investment tax credits 117,393 123,155
Obligations under capital leases 29,649 23,543
Other regulatory liabilities 12,442 15,421
Regulatory reserves 11,456 -
Accumulated provisions 64,201 58,087
Other 61,724 34,564
---------- ----------
TOTAL 1,054,227 1,047,060
---------- ----------
Long-term debt 1,276,696 1,145,463
Preferred stock with sinking fund 35,000 35,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 70,000 70,000
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 100,500 100,500
Common stock, no par value, authorized 250,000,000
shares; issued and outstanding 165,173,180 shares in 2000
and 1999 1,088,900 1,088,900
Capital stock expense and other (2,171) (2,171)
Retained earnings 150,319 59,554
---------- ----------
TOTAL 1,337,548 1,246,783
---------- ----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,301,851 $4,084,650
========== ==========
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $59,554 $74,739 $46,766
Add:
Net income 162,679 191,770 179,487
Deduct:
Dividends declared:
Preferred stock 9,514 9,805 13,014
Common stock 62,400 197,000 138,500
Capital stock expenses - 150 -
-------- ------- -------
Total 71,914 206,955 151,514
-------- ------- -------
Retained Earnings, December 31 (Note 8) $150,319 $59,554 $74,739
======== ======= =======
See Notes to Financial Statements.
ENTERGY LOUISIANA, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(In Thousands)
Operating revenues $2,062,437 $1,806,594 $1,710,908 $1,803,272 $1,828,867
Net income $ 162,679 $ 191,770 $ 179,487 $ 141,757 $ 190,762
Total assets $4,301,851 $4,084,650 $4,181,041 $4,175,400 $4,279,278
Long-term obligations (1) $1,411,345 $1,274,006 $1,530,590 $1,522,043 $1,545,889
(1) Includes long-term debt (excluding currently maturing debt),
preferred stock with sinking fund, preferred securities of
subsidiary trust, and noncurrent capital lease obligations.
2000 1999 1998 1997 1996
(Dollars In Thousands)
Electric Operating Revenues:
Residential $716,708 $620,146 $598,573 $606,173 $609,308
Commercial 441,338 386,042 367,151 379,131 374,515
Industrial 767,052 646,517 597,536 708,356 727,505
Governmental 38,772 33,738 32,795 34,171 33,621
-----------------------------------------------------------
Total retail 1,963,870 1,686,443 1,596,055 1,727,831 1,744,949
Sales for resale:
Associated companies 20,763 27,253 16,002 3,817 5,065
Non-associated companies 39,704 53,923 53,538 55,345 58,685
Other 38,100 38,975 45,313 16,279 20,168
-----------------------------------------------------------
Total $2,062,437 $1,806,594 $1,710,908 $1,803,272 $1,828,867
===========================================================
Billed Electric Energy
Sales (GWH):
Residential 8,648 8,354 8,477 7,826 7,893
Commercial 5,367 5,221 5,265 4,906 4,846
Industrial 15,184 15,052 14,781 16,390 17,647
Governmental 481 468 481 460 457
-----------------------------------------------------------
Total retail 29,680 29,095 29,004 29,582 30,843
Sales for resale:
Associated companies 228 415 386 104 143
Non-associated companies 554 831 855 805 982
-----------------------------------------------------------
Total 30,462 30,341 30,245 30,491 31,968
===========================================================
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy Mississippi, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 120 through 125
and pages 147 through 209) present fairly, in all material respects, the
financial position of Entergy Mississippi, Inc. at December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased in 2000 primarily due to increases in other
operation and maintenance expenses, interest expense, depreciation expense,
and an increase in the effective income tax rate. These decreases were
partially offset by increases in unbilled revenues and sales volume.
Net income decreased in 1999 primarily due to a decrease in unbilled
revenues and an increase in other operation and maintenance expenses.
Revenues and Sales
The changes in electric operating revenues for the twelve months ended
December 31, 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues ($3.8) ($9.7)
Grand Gulf rate rider 4.7 (95.9)
Fuel cost recovery 54.8 (11.6)
Sales volume/weather 9.6 4.1
Other revenue (including unbilled) 23.9 (12.1)
Sales for resale 15.4 (18.3)
------ -------
Total $104.6 ($143.5)
====== =======
Base revenues
Base revenues decreased in 2000 primarily due to an annual rate
reduction of $13.3 million under the formula rate plan, which was effective
May 1999.
Base revenues decreased in 1999 primarily due to the May 1999 rate
reduction and an annual rate reduction of $6.6 million under the formula
rate plan, which was effective May 1998. The formula rate plan reduction
is discussed in more detail in Note 2 to the financial statements.
Grand Gulf rate rider
Rate rider revenues have no material effect on net income because
specific incurred expenses offset them.
In 1999, Grand Gulf rate rider revenue decreased as a result of a new
rider which became effective October 1, 1998. This new rider eliminated
revenues attributable to the Grand Gulf phase-in plan, which was completed
in September 1998. However, this decrease was partially offset by the
Grand Gulf Accelerated Recovery Tariff (GGART), which also became effective
October 1, 1998. This tariff provides for accelerated recovery of a
portion of Entergy Mississippi's Grand Gulf purchased power obligation.
The GGART is discussed in more detail in Note 2 to the financial
statements.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Fuel cost recovery
Entergy Mississippi is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates, recorded as
fuel cost recovery revenues. The difference between revenues collected and
current fuel and purchased power costs is recorded as deferred fuel costs
on Entergy Mississippi's financial statements such that these costs
generally have no net effect on earnings.
In 2000, fuel cost recovery revenues increased primarily due to the
MPSC's review and subsequent increase of Entergy Mississippi's energy cost
recovery rider effective in January 2000.
In 1999, fuel cost recovery revenues decreased primarily due to the
MPSC's review and subsequent decrease of Entergy Mississippi's energy cost
recovery rider effective in January 1999.
Sales volume/weather
In 2000, sales volume increased as a result of increased usage in the
residential and commercial sectors, as well as the effect of more favorable
weather in the residential sector.
In 1999, sales volume increased as a result of sales growth in the
residential and commercial sectors, partially offset by unfavorable
weather.
Other revenue (including unbilled)
In 2000, other revenue increased primarily due to the effect of
favorable weather in 2000 and the effect of a change in estimate on 1999
unbilled revenues.
In 1999, other revenue decreased primarily due to the effect of a
change in estimate on unbilled revenues. The changed estimate more closely
aligned the fuel component of unbilled revenues with regulatory treatment.
Sales for resale
In 2000, sales for resale increased primarily due to an increase in
the average price of energy supplied for resale sales. The increase was
partially offset by less energy available for resale sales due to plant
outages early in 2000, which resulted in lower sales volume.
In 1999, sales for resale decreased as a result of decreased oil
generation due to plant outages. The decrease is also due to higher sales
to associated companies in 1998 as a result of an outage at Entergy
Arkansas.
Expenses
Fuel and purchased power expenses
In 2000, fuel and purchased power expenses increased primarily due to
an increase in the market prices of oil and natural gas.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
In 1999, fuel and purchased power expenses decreased primarily due to:
o a decrease in total energy consumption requirements; and
o planned and unplanned plant outages during the year.
The decrease in fuel and purchased power expenses in 1999 was
partially offset by:
o a shift from lower priced oil generation to higher priced gas
generation as a result of plant outages in 1999;
o an increase in the market price of purchased power; and
o the GGART implemented by System Energy in October 1998 resulting in an
increase in the price of System Energy purchased power.
Other operation and maintenance
In 2000, other operation and maintenance expenses increased primarily
due to:
o an increase in property insurance expense of $9.3 million primarily
due to a change in storm damage reserve amortization in accordance
with regulatory treatment; and
o an increase in maintenance of electric plant of $7.0 million.
In 1999, other operation and maintenance expenses increased primarily
due to:
o planned and unplanned plant outages in 1999 of $9.1 million;
o an increase in customer service and reliability improvement spending
of $4.0 million;
o an increase in employee benefit expense of $3.8 million; and
o an increase in casualty reserves of $4.2 million.
Depreciation and Amortization
In 2000, depreciation and amortization expenses increased due to a
review of plant-in-service dates for consistency with regulatory treatment
reducing depreciation expense by $2.6 million in August 1999. Capital
additions in 1999 and 2000 also contributed to the increase.
Other regulatory credits
In 2000, other regulatory credits decreased due to a decrease in the
deferral of Grand Gulf 1 expenses associated with the System Energy rate
increase.
In 1999, other regulatory credits increased due to greater under-
recovery of Grand Gulf 1 related costs as a result of the new rider
implemented in October 1998.
Amortization of rate deferrals
In 1999, amortization of rate deferrals decreased due to the
completion of the Grand Gulf 1 rate phase-in plan in September 1998. These
phase-ins had no material effect on net income.
ENTERGY MISSISSIPPI, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other
Interest and other charges
Interest on long-term debt increased in 2000 primarily due to the
issuance of $120 million of long-term debt in February 2000.
Interest on long-term debt decreased in 1999 primarily due to the
refinancing of certain long-term debt.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 were 37.0%,
29.7%, and 30.9%, respectively.
The increase in the effective income tax rate in 2000 is due to the
effect that the distribution of the Entergy Corporation income tax benefit
had on the 1999 effective income tax rate. In 1999, a tax benefit was
booked related to the 1998 tax return.
ENTERGY MISSISSIPPI, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $937,371 $832,819 $976,300
-------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 221,075 185,063 241,415
Purchased power 366,491 332,015 286,769
Other operation and maintenance 168,432 152,817 131,752
Taxes other than income taxes 45,436 44,013 44,888
Depreciation and amortization 49,046 42,870 45,133
Other regulatory credits - net (6,872) (12,044) (3,186)
Amortization of rate deferrals - - 104,969
-------- -------- --------
TOTAL 843,608 744,734 851,740
-------- -------- --------
OPERATING INCOME 93,763 88,085 124,560
-------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction 2,385 1,569 188
Gain on sale of assets 19 - 1,025
Miscellaneous - net 8,680 6,781 4,891
-------- -------- --------
TOTAL 11,084 8,350 6,104
-------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 41,583 35,265 37,756
Other interest - net 3,294 3,574 3,171
Allowance for borrowed funds used during construction (1,871) (1,529) (932)
-------- -------- --------
TOTAL 43,006 37,310 39,995
-------- -------- --------
INCOME BEFORE INCOME TAXES 61,841 59,125 90,669
Income taxes 22,868 17,537 28,031
-------- -------- --------
NET INCOME 38,973 41,588 62,638
Preferred dividend requirements and other 3,370 3,370 3,370
-------- -------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $35,603 $38,218 $59,268
======== ======== ========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $38,973 $41,588 $62,638
Noncash items included in net income:
Amortization of rate deferrals - - 104,969
Other regulatory credits - net (6,872) (12,044) (3,186)
Depreciation and amortization 49,046 42,870 45,133
Deferred income taxes and investment tax credits 51,081 18,066 (12,494)
Allowance for equity funds used during construction (2,385) (1,569) (188)
Gain (loss) on sale of assets (19) - (1,025)
Changes in working capital:
Receivables (30,628) 24,208 6,253
Fuel inventory 338 (771) 384
Accounts payable 3,064 54,317 (31,967)
Taxes accrued (4,106) 29,955 (26,301)
Interest accrued 3,062 (4,595) 323
Deferred fuel costs 47,939 (45,830) 12,858
Other working capital accounts 6,160 10,072 8,652
Provision for estimated losses and reserves (568) 4,173 (6,915)
Changes in other regulatory assets (9,929) (30,179) (38,295)
Other 37,105 12,152 4,202
-------- -------- --------
Net cash flow provided by operating activities 182,261 142,413 125,041
-------- -------- --------
INVESTING ACTIVITIES
Construction expenditures (121,252) (94,717) (58,705)
Allowance for equity funds used during construction 2,385 1,569 188
Other regulatory investments (160,611) - -
-------- -------- --------
Net cash flow used in investing activities (279,478) (93,148) (58,517)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt 118,913 153,629 78,703
Retirement of:
Long-term debt - (163,278) (80,020)
Changes in short-term borrowing, net - (6) (13)
Dividends paid:
Common stock (18,000) (34,100) (66,000)
Preferred stock (3,370) (3,363) (3,370)
-------- -------- --------
Net cash flow provided by (used in) financing activities 97,543 (47,118) (70,700)
-------- -------- --------
Net increase in cash and cash equivalents 326 2,147 (4,176)
Cash and cash equivalents at beginning of period 4,787 2,640 6,816
-------- -------- --------
Cash and cash equivalents at end of period $5,113 $4,787 $2,640
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid/(received) during the period for:
Interest - net of amount capitalized $39,569 $41,567 $39,291
Income taxes ($23,763) ($29,850) $64,204
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents $5,113 $4,787
Accounts receivable:
Customer 44,517 35,675
Allowance for doubtful accounts (1,044) (886)
Associated companies 10,741 1,370
Other 9,964 2,391
Accrued unbilled revenues 33,600 28,600
---------- ----------
Total receivables 97,778 67,150
---------- ----------
Deferred fuel costs 64,950 47,939
Fuel inventory - at average cost 3,436 3,774
Materials and supplies - at average cost 18,485 17,068
Prepayments and other 3,004 7,114
---------- ----------
TOTAL 192,766 147,832
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 5,531 5,531
Non-utility property - at cost (less accumulated depreciation) 6,851 6,965
---------- ----------
TOTAL 12,382 12,496
---------- ----------
UTILITY PLANT
Electric 1,885,501 1,763,636
Property under capital lease 290 384
Construction work in progress 44,085 66,789
---------- ----------
TOTAL UTILITY PLANT 1,929,876 1,830,809
Less - accumulated depreciation and amortization 733,977 709,543
---------- ----------
UTILITY PLANT - NET 1,195,899 1,121,266
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 25,544 24,051
Unamortized loss on reacquired debt 15,122 16,345
Deferred fuel costs 95,661 -
Other regulatory assets 140,679 132,243
Other 5,886 5,784
---------- ----------
TOTAL 282,892 178,423
---------- ----------
TOTAL ASSETS $1,683,939 $1,460,017
========== ==========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Accounts payable
Associated companies $92,980 $84,382
Other 26,933 32,470
Customer deposits 26,368 23,303
Taxes accrued 31,862 35,968
Accumulated deferred income taxes 47,734 526
Interest accrued 13,099 10,038
Obligations under capital leases 79 95
Other 2,540 2,137
---------- ----------
TOTAL 241,595 188,919
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 306,295 298,477
Accumulated deferred investment tax credits 19,408 20,908
Obligations under capital leases 211 290
Accumulated provisions 6,806 7,374
Other 31,339 3,368
---------- ----------
TOTAL 364,059 330,417
---------- ----------
Long-term debt 584,467 464,466
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 50,381 50,381
Common stock, no par value, authorized 15,000,000
shares; issued and outstanding 8,666,357 shares in 2000
and 1999 199,326 199,326
Capital stock expense and other (59) (59)
Retained earnings 244,170 226,567
---------- ----------
TOTAL 493,818 476,215
---------- ----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,683,939 $1,460,017
========== ==========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $226,567 $222,449 $229,181
Add:
Net income 38,973 41,588 62,638
Deduct:
Dividends declared:
Preferred stock 3,370 3,370 3,370
Common stock 18,000 34,100 66,000
-------- -------- --------
Total 21,370 37,470 69,370
-------- -------- --------
Retained Earnings, December 31 (Note 8) $244,170 $226,567 $222,449
======== ======== ========
See Notes to Financial Statements.
ENTERGY MISSISSIPPI, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(In Thousands)
Operating revenues $ 937,371 $ 832,819 $ 976,300 $ 937,395 $ 958,430
Net Income $ 38,973 $ 41,588 $ 62,638 $ 66,661 $ 79,211
Total assets $1,683,939 $1,460,017 $1,350,929 $1,439,561 $1,521,466
Long-term obligations (1) $ 584,678 $ 464,756 $ 464,000 $ 464,156 $ 406,054
(1) Includes long-term debt (excluding currently maturing debt) and
noncurrent capital lease obligations.
2000 1999 1998 1997 1996
(Dollars In Thousands)
Electric Operating Revenues:
Residential $340,691 $311,003 $367,895 $342,818 $358,264
Commercial 275,010 250,929 284,787 274,195 281,626
Industrial 161,065 151,659 170,910 173,152 185,351
Governmental 25,612 23,528 26,670 26,882 29,093
-------------------------------------------------
Total retail 802,378 737,119 850,262 817,047 854,334
Sales for resale:
Associated companies 82,844 63,004 80,357 78,233 58,749
Non-associated companies 27,058 31,546 32,442 21,276 22,814
Other 25,091 1,150 13,239 20,839 22,533
-------------------------------------------------
Total $937,371 $832,819 $976,300 $937,395 $958,430
=================================================
Billed Electric Energy
Sales (GWH):
Residential 4,976 4,753 4,800 4,323 4,355
Commercial 4,307 4,156 4,015 3,673 3,508
Industrial 3,188 3,246 3,163 3,089 3,063
Governmental 376 363 347 333 346
-------------------------------------------------
Total retail 12,847 12,518 12,325 11,418 11,272
Sales for resale:
Associated companies 1,276 1,774 2,424 1,918 1,368
Non-associated companies 313 426 484 412 521
-------------------------------------------------
Total 14,436 14,718 15,233 13,748 13,161
=================================================
Report of Independent Accountants
To the Board of Directors and Shareholders of
Entergy New Orleans, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 131 through 135
and pages 147 through 209) present fairly, in all material respects, the
financial position of Entergy New Orleans, Inc. at December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income decreased slightly in 2000 primarily due to increased other
operation and maintenance expenses.
Net income increased slightly in 1999 primarily due to an increase in
unbilled revenues and sales volume, partially offset by an increase in
other operation and maintenance expenses.
Revenues and Sales
Electric operating revenues
The changes in electric operating revenues for the twelve months
ended December 31, 2000 and 1999 are as follows:
Increase/(Decrease)
Description 2000 1999
(In Millions)
Base revenues $4.0 ($11.3)
Fuel cost recovery 62.6 (4.6)
Sales volume/weather 2.1 1.7
Other revenue (including unbilled) 4.2 5.5
Sales for resale 15.4 3.7
----- -----
Total $88.3 ($5.0)
===== =====
Base revenues
In 2000, base revenues increased primarily due to a decrease in
provision for rate refunds accrued for potential rate matters.
In 1999, base revenues decreased primarily due to base rate reductions
effective January 1999 and rate refund provisions accrued for potential
rate matters.
Fuel cost recovery
Entergy New Orleans is allowed to recover certain fuel and purchased
power costs through fuel mechanisms included in electric rates, recorded as
fuel cost recovery revenues. The difference between revenues collected and
current fuel and purchased power costs is recorded as deferred fuel costs
on Entergy New Orleans' financial statements such that these costs
generally have no effect on earnings.
In 2000, fuel cost recovery increased primarily due to the increased
market price of natural gas.
In 1999, fuel cost recovery revenues decreased due to an under-
recovery of fuel expenses resulting from higher market prices in 1999
compared to the prior year.
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other revenue (including unbilled)
In 2000 and 1999, other revenue increased primarily due to the effect
of favorable weather and higher fuel and purchased power costs on unbilled
revenues.
Sales for resale
In 2000, sales for resale increased due to an increase in the average
price of electricity supplied for resale sales, coupled with an increase in
affiliated sales volume.
In 1999, sales for resale increased due to favorable unit prices
resulting from increased purchased power and gas market prices, coupled
with an increase in affiliated sales volume.
Gas operating revenues
In 2000, gas operating revenues increased primarily due to the
increased market price of natural gas.
Expenses
Fuel and purchased power expenses
In 2000, fuel and purchased power expenses increased primarily due to
the increased market price of natural gas.
Other operation and maintenance expenses
In 2000, other operation and maintenance expenses increased primarily
due to:
o an increase in uncollectible accounts expense for miscellaneous accounts
receivable of $1.3 million;
o an increase in maintenance of fossil plants of $1.1 million; and
o an increase in advertising expenses of $1.3 million.
In 1999, other operation and maintenance expenses increased primarily
due to:
o an increase in spending for customer service and reliability
improvements of $3.0 million; and
o an increase in customer collection expenses of $2.2 million.
Taxes other than income taxes
In 2000, taxes other than income taxes increased primarily due to
increased local franchise taxes as a result of higher revenue.
ENTERGY NEW ORLEANS, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other regulatory credits
In 2000, other regulatory credits decreased due to an over-recovery of
Grand Gulf 1 related costs in 2000 compared to an under-recovery in 1999
and the deferral of Year 2000 costs in 1999.
In 1999, other regulatory credits increased due to a greater under-
recovery of Grand Gulf 1 costs in 1999.
Amortization of rate deferrals
In 2000 and 1999, amortization of rate deferrals decreased due to a
scheduled rate change in the amortization of Grand Gulf 1 phase-in
expenses. The Grand Gulf 1 phase-in plan will be completed in 2001.
Other
Other income
Other income increased in 1999 primarily due to:
o an increase in AFUDC resulting from increased capital charges on
projects in 1999; and
o increased interest related to the Grand Gulf 1 rate deferral plan.
The Grand Gulf 1 rate deferral plan is discussed in more detail in
Note 2 to the financial statements.
Interest and other charges
In 2000, interest on long-term debt increased primarily due to the
issuance of $30 million of long-term debt in July 2000.
Income taxes
The effective income tax rates for 2000, 1999, and 1998 were 41.2%,
40.7%, and 38.4% respectively.
The increase in the effective income tax rate for 1999 was primarily
due to the increase in pre-tax income reducing the impact of permanent
differences and flow through items.
ENTERGY NEW ORLEANS, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $514,774 $426,431 $431,453
Natural gas 125,516 81,357 82,297
-------- -------- --------
TOTAL 640,290 507,788 513,750
-------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 253,869 135,242 138,142
Purchased power 173,371 166,579 164,435
Other operation and maintenance 87,254 83,197 79,023
Taxes other than income taxes 45,132 39,621 40,417
Depreciation and amortization 23,550 21,219 21,878
Other regulatory credits - net (7,058) (9,036) (4,540)
Amortization of rate deferrals 24,786 28,430 35,336
-------- -------- --------
TOTAL 600,904 465,252 474,691
-------- -------- --------
OPERATING INCOME 39,386 42,536 39,059
-------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction 1,190 1,084 284
Gain on sale of assets - - 458
Miscellaneous - net 2,530 2,263 951
-------- -------- --------
TOTAL 3,720 3,347 1,693
-------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 14,429 13,277 13,717
Other interest - net 1,462 1,403 1,075
Allowance for borrowed funds used during construction (900) (788) (219)
-------- -------- --------
TOTAL 14,991 13,892 14,573
-------- -------- --------
INCOME BEFORE INCOME TAXES 28,115 31,991 26,179
Income taxes 11,597 13,030 10,042
-------- -------- --------
NET INCOME 16,518 18,961 16,137
Preferred dividend requirements and other 965 965 965
-------- -------- --------
EARNINGS APPLICABLE TO
COMMON STOCK $15,553 $17,996 $15,172
======== ======== ========
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $16,518 $18,961 $16,137
Noncash items included in net income:
Amortization of rate deferrals 24,786 28,430 35,336
Other regulatory credits - net (7,058) (9,036) (4,540)
Depreciation and amortization 23,550 21,219 21,878
Deferred income taxes and investment tax credits (639) (3,131) (7,498)
Allowance for equity funds used during construction (1,190) (1,084) (284)
Gain on sale of assets - - (458)
Changes in working capital:
Receivables (45,580) (7,258) 3,148
Fuel inventory (911) 179 (861)
Accounts payable 29,592 23,319 (4,136)
Taxes accrued 5,394 429 (5,270)
Interest accrued 1,163 37 (130)
Deferred fuel costs (13,751) (13,293) 8,193
Other working capital accounts (223) 6,607 (5,122)
Provision for estimated losses and reserves (365) (531) (6,295)
Changes in other regulatory assets (11,637) (11,482) (6,964)
Other 10,812 6,796 (2,805)
-------- -------- --------
Net cash flow provided by operating activities 30,461 60,162 40,329
-------- -------- --------
INVESTING ACTIVITIES
Construction expenditures (48,902) (46,239) (21,691)
Allowance for equity funds used during construction 1,190 1,084 284
-------- -------- --------
Net cash flow used in investing activities (47,712) (45,155) (21,407)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt 29,564 - 29,438
Retirement of:
Long-term debt - - (30,000)
Dividends paid:
Common stock (9,500) (26,500) (9,700)
Preferred stock (965) (1,206) (965)
-------- -------- --------
Net cash flow provided by (used in) financing activities 19,099 (27,706) (11,227)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,848 (12,699) 7,695
Cash and cash equivalents at beginning of period 4,454 17,153 9,458
-------- -------- --------
Cash and cash equivalents at end of period $6,302 $4,454 $17,153
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $14,331 $14,281 $14,592
Income taxes - net $9,207 $12,476 $26,197
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $6,302 $4,454
Accounts receivable:
Customer 67,264 28,658
Allowance for doubtful accounts (770) (846)
Associated companies 2,800 404
Other 3,709 6,225
Accrued unbilled revenues 26,838 19,820
-------- --------
Total receivables 99,841 54,261
-------- --------
Deferred fuel costs 28,234 14,483
Fuel inventory - at average cost 4,204 3,293
Materials and supplies - at average cost 9,630 10,127
Rate deferrals 10,974 24,788
Prepayments and other 1,416 2,528
-------- --------
TOTAL 160,601 113,934
-------- --------
OTHER PROPERTY AND INVESTMENTS
Investment in subsidiary companies - at equity 3,259 3,259
-------- --------
UTILITY PLANT
Electric 572,061 541,525
Natural gas 134,826 133,568
Construction work in progress 36,489 29,780
-------- --------
TOTAL UTILITY PLANT 743,376 704,873
Less - accumulated depreciation and amortization 394,271 382,797
-------- --------
UTILITY PLANT - NET 349,105 322,076
-------- --------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
Rate deferrals - 10,974
Unamortized loss on reacquired debt 974 1,187
Other regulatory assets 44,676 33,039
Other 616 1,277
-------- --------
TOTAL 46,266 46,477
-------- --------
TOTAL ASSETS $559,231 $485,746
======== ========
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Accounts payable:
Associated companies $24,637 $24,350
Other 57,566 28,261
Customer deposits 18,311 17,830
Taxes accrued 5,823 429
Accumulated deferred income taxes 6,543 10,863
Interest accrued 6,119 4,956
Other 3,211 5,524
-------- --------
TOTAL 122,210 92,213
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 43,754 43,878
Accumulated deferred investment tax credits 5,868 6,378
SFAS 109 regulatory liability - net 12,607 7,528
Other regulatory liabilities 537 1,753
Accumulated provisions 8,471 8,836
Other 12,356 7,733
-------- --------
TOTAL 83,593 76,106
-------- --------
Long-term debt 199,031 169,083
SHAREHOLDERS' EQUITY
Preferred stock without sinking fund 19,780 19,780
Common stock, $4 par value, authorized 10,000,000
shares; issued and outstanding 8,435,900 shares in 2000
and 1999 33,744 33,744
Paid-in capital 36,294 36,294
Retained earnings 64,579 58,526
-------- --------
TOTAL 154,397 148,344
-------- --------
Commitments and Contingencies (Notes 2 and 9)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $559,231 $485,746
======== ========
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $58,526 $67,030 $61,558
Add:
Net income 16,518 18,961 16,137
Deduct:
Dividends declared:
Preferred stock 965 965 965
Common stock 9,500 26,500 9,700
------- ------- -------
Total 10,465 27,465 10,665
------- ------- -------
Retained Earnings, December 31 (Note 8) $64,579 $58,526 $67,030
======= ======= =======
See Notes to Financial Statements.
ENTERGY NEW ORLEANS, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(In Thousands)
Operating revenues $640,290 $507,788 $513,750 $504,822 $504,277
Net Income $ 16,518 $ 18,961 $ 16,137 $ 15,451 $ 26,776
Total assets $559,231 $485,746 $471,904 $498,150 $549,996
Long-term obligations (1) $199,031 $169,083 $169,018 $168,953 $168,888
(1) Includes long-term debt (excluding currently maturing debt).
2000 1999 1998 1997 1996
(Dollars In Thousands)
Electric Operating Revenues:
Residential $188,314 $158,822 $164,765 $145,688 $151,577
Commercial 170,684 146,328 149,353 143,113 149,649
Industrial 25,479 25,584 26,229 24,616 24,663
Governmental 73,028 63,056 62,332 58,746 58,561
-------------------------------------------------
Total retail 457,505 393,790 402,679 372,163 384,450
Sales for resale:
Associated companies 31,629 14,207 10,451 10,342 2,649
Non-associated companies 8,504 10,545 10,590 8,996 9,882
Other 17,136 7,889 7,733 18,630 6,273
-------------------------------------------------
Total $514,774 $426,431 $431,453 $410,131 $403,254
=================================================
Billed Electric Energy
Sales (GWH):
Residential 2,178 2,102 2,141 1,971 1,998
Commercial 2,260 2,208 2,149 2,072 2,073
Industrial 384 514 514 484 481
Governmental 1,058 1,071 1,037 994 974
-------------------------------------------------
Total retail 5,880 5,895 5,841 5,521 5,526
Sales for resale:
Associated companies 570 441 370 316 66
Non-associated companies 141 180 199 160 212
-------------------------------------------------
Total 6,591 6,516 6,410 5,997 5,804
=================================================
Report of Independent Accountants
To the Board of Directors and Shareholder of
System Energy Resources, Inc.:
In our opinion, the accompanying balance sheets and the related statements
of income, of retained earnings and of cash flows (pages 140 through 145
and pages 147 through 209) present fairly, in all material respects, the
financial position of System Energy Resources, Inc. at December 31, 2000
and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Income
Net income increased in 2000 due to increased interest earnings from
the money pool, an inter-company funding arrangement, and decreased
interest expense associated with the potential refund of System Energy's
proposed rate increase. This increase in net income was partially offset
by a higher effective income tax rate in 2000.
Net income decreased in 1999 due to the additional reserves and
interest recorded for the potential refund of System Energy's proposed rate
increase, as well as downtime for unplanned outages.
Revenues
Operating revenues recover operating expenses, depreciation, and
capital costs attributable to Grand Gulf 1. Capital costs are computed by
allowing a return on System Energy's common equity funds allocable to its
net investment in Grand Gulf 1 and adding to such amount System Energy's
effective interest cost for its debt.
Operating revenues increased in 2000 primarily due to an increase in
recoverable expenses.
Operating revenues increased in 1999 primarily due to the
implementation of the Grand Gulf Accelerated Recovery Tariff (GGART) at
Entergy Arkansas and Entergy Mississippi. This increase in revenues is
offset by related regulatory charges and does not affect net income. The
tariff was designed to allow Entergy Arkansas and Entergy Mississippi to
accelerate the payment of a portion of their Grand Gulf purchased power
obligation in advance of the implementation of retail access. It became
effective on January 1, 1999 and October 1, 1998 for Entergy Arkansas and
Entergy Mississippi, respectively. The GGART and System Energy's proposed
rate increase, which is subject to refund, are discussed in Note 2 to the
financial statements.
Expenses
Fuel expenses
In 2000, fuel expenses increased primarily due to increased nuclear
fuel burn as a result of Grand Gulf 1 being operational 358 days, as
compared to 295 days in 1999.
In 1999, fuel expenses decreased primarily due to an extended nuclear
refueling outage at Grand Gulf 1 in addition to unplanned outages. Grand
Gulf 1 was on-line for 17 fewer days in 1999 compared to 1998.
Depreciation and amortization
In 2000, depreciation expense increased due to higher depreciation
associated with the principal payment on the sale and leaseback of a
portion of Grand Gulf 1. The depreciation schedule matches the collection
of lease principal and revenues with the depreciation of the asset.
In 1999, depreciation and amortization expenses decreased as a result
of the reduction in principal payment associated with the sale and
leaseback of a portion of Grand Gulf 1.
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Other regulatory charges
In both 2000 and 1999, other regulatory charges increased due to the
implementation of the GGART at Entergy Arkansas and Entergy Mississippi, as
discussed above.
Other
Other income
Other income increased in 2000 and 1999 as a result of the interest
earned on System Energy's advances to the money pool, an inter-company
funding arrangement. The money pool is discussed in Note 4 to the
financial statements.
Interest charges
Interest on long-term debt decreased in 2000 and 1999 as a result of
the retirement and refinancing of higher-cost long-term debt. In 2000,
System Energy retired $75 million of debenture bonds. In 1999, System
Energy retired $160 million of first mortgage bonds and refinanced $102
million of governmental bonds at an annual interest rate of 5.9%.
Other interest decreased in 2000 primarily due to decreased interest
expense recorded on the potential refund of System Energy's proposed rate
increase. Other interest increased in 1999 due to interest on the
potential refund of System Energy's proposed rate increase.
Income taxes
The effective income tax rates in 2000, 1999, and 1998 were 46.4%,
39.5%, and 42.1%, respectively.
The effective income tax rate for 2000, increased primarily due to
increased pre-tax income and the amortization of investment tax credits
related to Grand Gulf 2 in 1999.
SYSTEM ENERGY RESOURCES, INC.
INCOME STATEMENTS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING REVENUES
Domestic electric $656,749 $620,032 $602,373
-------- -------- --------
OPERATING EXPENSES
Operating and Maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 42,369 37,336 41,740
Nuclear refueling outage expenses 14,423 14,136 15,737
Other operation and maintenance 88,257 87,450 86,696
Decommissioning 18,944 18,944 18,944
Taxes other than income taxes 30,517 27,212 26,839
Depreciation and amortization 127,904 113,862 125,331
Other regulatory charges - net 63,590 57,656 4,443
-------- -------- --------
TOTAL 386,004 356,596 319,730
-------- -------- --------
OPERATING INCOME 270,745 263,436 282,643
-------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction 1,482 2,540 2,042
Miscellaneous - net 20,446 16,309 13,309
-------- -------- --------
TOTAL 21,928 18,849 15,351
-------- -------- --------
INTEREST AND OTHER CHARGES
Interest on long-term debt 87,689 102,764 109,735
Other interest - net 30,830 45,218 6,325
Allowance for borrowed funds used during construction (854) (1,920) (1,805)
-------- -------- --------
TOTAL 117,665 146,062 114,255
-------- -------- --------
INCOME BEFORE INCOME TAXES 175,008 136,223 183,739
Income taxes 81,263 53,851 77,263
-------- -------- --------
NET INCOME $93,745 $82,372 $106,476
======== ======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
OPERATING ACTIVITIES
Net income $93,745 $82,372 $106,476
Noncash items included in net income:
Reserve for regulatory adjustments 54,598 108,484 68,236
Other regulatory charges - net 63,590 57,656 4,443
Depreciation, amortization, and decommissioning 146,848 132,806 144,275
Deferred income taxes and investment tax credits (71,212) (86,860) (28,222)
Allowance for equity funds used during construction (1,482) (2,540) (2,042)
Changes in working capital:
Receivables 87,212 (172,354) 9,690
Accounts payable (7,401) (11,688) (2,859)
Taxes accrued 13,147 (21,424) 1,131
Interest accrued 4,008 (2,022) (300)
Other working capital accounts 20,754 (4,425) (2,228)
Provision for estimated losses and reserves (1,328) 45 (1,704)
Changes in other regulatory assets 58,592 (18,492) 25,066
Other (65,491) 41,250 (23,159)
-------- -------- --------
Net cash flow provided by operating activities 395,580 102,808 298,803
-------- -------- --------
INVESTING ACTIVITIES
Construction expenditures (36,555) (28,848) (30,692)
Allowance for equity funds used during construction 1,482 2,540 2,042
Nuclear fuel purchases - (39,975) (30,523)
Proceeds from sale/leaseback of nuclear fuel - 39,975 30,523
Decommissioning trust contributions and realized
change in trust assets (23,694) (22,139) (24,166)
-------- -------- --------
Net cash flow used in investing activities (58,767) (48,447) (52,816)
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuance of:
Long-term debt - 101,835 212,976
Retirement of:
Long-term debt (77,947) (282,885) (300,341)
Dividends paid:
Common stock (91,800) (75,000) (72,300)
-------- -------- --------
Net cash flow used in financing activities (169,747) (256,050) (159,665)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 167,066 (201,689) 86,322
Cash and cash equivalents at beginning of period 35,152 236,841 150,519
-------- -------- --------
Cash and cash equivalents at end of period $202,218 $35,152 $236,841
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $109,046 $141,731 $107,923
Income taxes $143,040 $154,336 $104,987
Noncash investing and financing activities:
Change in unrealized appreciation (depreciation) of
decommissioning trust assets ($1,506) ($37) $3,205
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
ASSETS
December 31,
2000 1999
(In Thousands)
CURRENT ASSETS
Cash and cash equivalents:
Cash $44 $136
Temporary cash investments - at cost,
which approximates market 202,174 35,016
---------- ----------
Total cash and cash equivalents 202,218 35,152
---------- ----------
Accounts receivable:
Associated companies 212,551 301,287
Other 2,194 670
---------- ----------
Total receivables 214,745 301,957
---------- ----------
Materials and supplies - at average cost 52,235 61,264
Deferred nuclear refueling outage costs 6,577 18,665
Prepayments and other 2,639 2,251
---------- ----------
TOTAL 478,414 419,289
---------- ----------
OTHER PROPERTY AND INVESTMENTS
Decommissioning trust funds 157,572 135,384
---------- ----------
UTILITY PLANT
Electric 3,093,033 3,060,324
Property under capital lease 449,851 434,993
Construction work in progress 24,029 58,510
Nuclear fuel under capital lease 49,256 78,020
---------- ----------
TOTAL UTILITY PLANT 3,616,169 3,631,847
Less - accumulated depreciation and amortization 1,407,885 1,312,559
---------- ----------
UTILITY PLANT - NET 2,208,284 2,319,288
---------- ----------
DEFERRED DEBITS AND OTHER ASSETS
Regulatory assets:
SFAS 109 regulatory asset - net 195,634 242,834
Unamortized loss on reacquired debt 51,957 56,474
Other regulatory assets 174,517 185,910
Other 8,172 9,869
---------- ----------
TOTAL 430,280 495,087
---------- ----------
TOTAL ASSETS $3,274,550 $3,369,048
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
2000 1999
(In Thousands)
CURRENT LIABILITIES
Currently maturing long-term debt $151,800 $77,947
Accounts payable:
Associated companies 2,722 15,237
Other 23,585 18,470
Taxes accrued 68,530 55,383
Accumulated deferred income taxes 1,648 7,162
Interest accrued 44,007 40,000
Obligations under capital leases 32,119 38,421
Other 1,674 1,651
---------- ----------
TOTAL 326,085 254,271
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Accumulated deferred income taxes 391,505 481,945
Accumulated deferred investment tax credits 89,516 93,219
Obligations under capital leases 17,137 39,599
FERC settlement - refund obligation 30,745 37,337
Other regulatory liabilities 103,634 73,313
Decommissioning 153,197 129,503
Regulatory reserves 322,368 267,771
Accumulated provisions 689 2,016
Other 15,394 16,014
---------- ----------
TOTAL 1,124,185 1,140,717
---------- ----------
Long-term debt 930,854 1,082,579
SHAREHOLDER'S EQUITY
Common stock, no par value, authorized 1,000,000
shares; issued and outstanding 789,350 shares in 2000 and
1999 789,350 789,350
Retained earnings 104,076 102,131
---------- ----------
TOTAL 893,426 891,481
---------- ----------
Commitments and Contingencies (Notes 2, 9, and 10)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,274,550 $3,369,048
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Retained Earnings, January 1 $102,131 $94,759 $60,583
Add:
Net income 93,745 82,372 106,476
Deduct:
Dividends declared 91,800 75,000 72,300
-------- -------- -------
Retained Earnings, December 31 (Note 8) $104,076 $102,131 $94,759
======== ======== =======
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
SELECTED FINANCIAL DATA - FIVE-YEAR COMPARISON
2000 1999 1998 1997 1996
(Dollars In Thousands)
Operating revenues $ 656,749 $ 620,032 $ 602,373 $ 633,698 $ 623,620
Net income $ 93,745 $ 82,372 $ 106,476 $ 102,295 $ 98,668
Total assets $3,274,550 $3,369,048 $3,431,205 $3,432,031 $3,461,293
Long-term obligations (1) $ 947,991 $1,122,178 $1,182,616 $1,364,161 $1,474,427
Electric energy sales (GWH) 9,621 7,567 8,259 9,735 8,302
(1) Includes long-term debt (excluding current maturities) and
noncurrent capital lease obligations.
ENTERGY CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The accompanying consolidated financial statements include the
accounts of Entergy Corporation and its direct and indirect subsidiaries,
including the domestic utility companies and System Energy, whose separate
financial statements are included in this document. The financial
statements presented herein result from these companies having registered
securities with the SEC.
As required by generally accepted accounting principles, all
significant intercompany transactions have been eliminated in the
consolidated financial statements. The domestic utility companies and
System Energy maintain accounts in accordance with FERC and other
regulatory guidelines. Certain previously reported amounts have been
reclassified to conform to current classifications, with no effect on net
income or shareholders' equity.
Entergy Corporation sold its investments in Entergy London and
CitiPower in December 1998. Accordingly, the consolidated statements of
income and cash flows for 1998 include amounts for Entergy London and
CitiPower through the dates of their respective sales.
Use of Estimates in the Preparation of Financial Statements
The preparation of Entergy Corporation's and its subsidiaries'
financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities and the reported amounts of revenues and
expenses. Adjustments to the reported amounts of assets and liabilities
may be necessary in the future to the extent that future estimates or
actual results are different from the estimates used.
Revenues and Fuel Costs
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi generate,
transmit, and distribute electricity primarily to retail customers in
Arkansas, Louisiana, and Mississippi, respectively. Entergy Gulf States
generates, transmits, and distributes electricity primarily to retail
customers in Texas and Louisiana. Entergy Gulf States also distributes gas
to retail customers in and around Baton Rouge, Louisiana. Entergy New
Orleans sells both electricity and gas to retail customers in the City of
New Orleans, except for Algiers, where Entergy Louisiana is the electricity
supplier.
System Energy's operating revenues are intended to recover operating
expenses and capital costs attributable to Grand Gulf 1 from Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
Capital costs are computed by allowing a return on System Energy's common
equity funds allocable to its net investment in Grand Gulf 1, plus System
Energy's effective interest cost for its debt allocable to its investment
in Grand Gulf 1. System Energy's proposed rate increase is discussed in
Note 2 to the financial statements.
Entergy recognizes revenue from electricity and gas sales when the
consumers are billed. The domestic utility companies also accrue estimated
revenues for energy delivered since the latest billings on a monthly basis.
The monthly estimated unbilled revenue amounts are recorded as revenue and
a receivable and are reversed the following month.
The domestic utility companies' rate schedules include either fuel
adjustment clauses or fixed fuel factors, both of which allow either
current recovery or deferral of fuel costs until such costs are reflected
in the related revenues. Because the fuel adjustment clause mechanism
allows monthly adjustments to recover fuel costs, Entergy Louisiana,
Entergy New Orleans, and the Louisiana portion of Entergy Gulf States
include fuel cost recovery in their unbilled revenue calculations. Fixed
fuel factors remain in effect until changed as part of a general rate case,
fuel reconciliation, or fixed fuel factor filing. In the case of Entergy
Arkansas, the Texas portion of Entergy Gulf States, and Entergy
Mississippi, their fuel under-recoveries are treated as regulatory
investments in the cash flow statements because those companies are allowed
by their regulatory jurisdictions to recover the fuel cost regulatory asset
over longer than a twelve month period, and the companies will earn a
return on the under-recovered balances.
Utility Plant
Utility plant is stated at original cost. The original cost of
utility plant retired or removed, plus the applicable removal costs, less
salvage, is charged to accumulated depreciation. Maintenance, repairs, and
minor replacement costs are charged to operating expenses. Substantially
all of the utility plant is subject to liens from mortgage bond indentures.
With regard to nuclear refueling outage costs, Entergy records the
costs in accordance with regulatory treatment and the matching principle.
These refueling outage expenses are incurred to prepare the units to
operate for the next 18 months without having to be taken off line. Except
with respect to the River Bend plant, the costs are deferred during the
outage and amortized over the period to the next outage. For the River
Bend plant, the costs are accrued in advance and included in the cost of
service used to establish retail rates, and are then amortized over the
period between outages, which is in accordance with their regulatory
treatment.
Utility plant includes the portions of Grand Gulf 1 and Waterford 3
that have been sold and leased back. For financial reporting purposes,
these sale and leaseback arrangements are reflected as financing
transactions.
Net utility plant by company and functional category, as of December
31, 2000, is shown below (in millions):
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Production
Nuclear $7,126 $1,092 $1,817 $1,779 $- $- $2,103
Other 2,021 329 595 195 204 12 -
Transmission 1,693 504 517 323 316 24 9
Distribution 3,532 1,074 963 796 517 182 -
Other 725 149 164 172 115 27 23
Plant acquisition adjustment -
Entergy Gulf States 391 - - - - - -
Other 91 - 23 - - 68 -
Construction work in progress 937 87 145 85 44 36 24
Nuclear fuel 435 114 57 64 - - 49
(leased and owned)
Accumulated provision for
decommissioning (1) (454) (283) (73) (98) - - -
-------------------------------------------------------------------------
Utility plant - net $16,497 $3,066 $4,208 $3,316 $1,196 $349 $2,208
=========================================================================
(1) The decommissioning liabilities related to Grand Gulf 1, Pilgrim, and
the 30% of River Bend previously owned by Cajun are recorded in the
applicable Balance Sheets in "Deferred Credits and Other Liabilities -
Decommissioning."
Depreciation is computed on the straight-line basis at rates based on
the estimated service lives and costs of removal of the various classes of
property. Depreciation rates on average depreciable property are shown
below:
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
2000 2.9% 3.2% 2.4% 3.0% 2.5% 3.1% 3.3%
1999 2.9% 3.2% 2.4% 2.9% 2.4% 3.0% 3.3%
1998 3.0% 3.3% 2.6% 3.0% 2.5% 3.1% 3.3%
AFUDC represents the approximate net composite interest cost of
borrowed funds and a reasonable return on the equity funds used for
construction. Although AFUDC increases both utility plant and earnings, it
is realized in cash through depreciation provisions included in rates.
Jointly-Owned Generating Stations
Certain Entergy subsidiaries jointly own electric generating
facilities with third parties. The investments and expenses associated
with these generating stations are recorded by the Entergy subsidiaries to
the extent of their respective undivided ownership interests. As of
December 31, 2000, the subsidiaries' investment and accumulated
depreciation in each of these generating stations were as follows:
Total
Megawatt Accumulated
Generating Stations Fuel-Type Capability Ownership Investment Depreciation
(In Millions)
Entergy Arkansas
Independence Unit 1 Coal 836 31.50% $117 $58
Common Facilities Coal 15.75% 30 14
White Bluff Units 1 and 2 Coal 1,659 57.00% 405 219
Entergy Gulf States
Roy S. Nelson Unit 6 Coal 550 70.00% 403 208
Big Cajun 2 Unit 3 Coal 575 42.00% 228 111
Entergy Mississippi -
Independence Units 1 and 2 and Coal 1,678 25.00% 227 99
Common Facilities
System Energy -
Grand Gulf Unit 1 Nuclear 1,210 90.00%(1) 3,531 1,408
Entergy Power -
Independence Unit 2 Coal 842 14.37% 76 31
Common Facilities Coal 7.18% 5 3
(1)Includes an 11.5% leasehold interest held by System Energy. System
Energy's Grand Gulf 1 lease obligations are discussed in Note 10 to the
financial statements.
Project Development Costs
Entergy capitalizes costs incurred in developing projects after
achieving certain milestones that indicate that completion of the project
is probable. These costs include salaries, incremental indirect costs and
amounts paid to outside parties for such expenses as legal, engineering,
accounting, and other incremental direct costs. Capitalized project
development costs are transferred to construction in progress during the
construction phase and to electric plant after commencement of operations.
Capitalized costs are amortized over the life of operational projects or
charged to expense if management determines that the costs are not
recoverable through operations of the project.
Income Taxes
Entergy Corporation and its subsidiaries file a U.S. consolidated
federal income tax return. Income taxes are allocated to the subsidiaries
in proportion to their contribution to consolidated taxable income. SEC
regulations require that no Entergy subsidiary pay more taxes than it would
have paid if a separate income tax return had been filed. In accordance
with SFAS 109, "Accounting for Income Taxes," deferred income taxes are
recorded for all temporary differences between the book and tax basis of
assets and liabilities, and for certain credits available for carryforward.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Investment tax credits are deferred and amortized based upon the
average useful life of the related property, in accordance with ratemaking
treatment.
Reacquired Debt
The premiums and costs associated with reacquired debt of the domestic
utility companies and System Energy (except that portion allocable to the
deregulated operations of Entergy Gulf States) are being amortized over the
life of the related new issuances, in accordance with ratemaking treatment.
Cash and Cash Equivalents
Entergy considers all unrestricted highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Investments
Entergy applies the provisions of SFAS 115, "Accounting for
Investments for Certain Debt and Equity Securities," in accounting for
investments in decommissioning trust funds. As a result, Entergy has
recorded on the consolidated balance sheet $128 million of additional value
in its decommissioning trust funds. This increase represents the amount by
which the fair value of the securities held in such funds exceeds the
amounts deposited plus the earnings on the deposits. In accordance with
the regulatory treatment for decommissioning trust funds, the domestic
utility companies and System Energy have recorded an offsetting amount in
unrealized gains on investment securities as a regulatory liability in
other deferred credits.
Decommissioning trust funds for Pilgrim do not receive regulatory
treatment. Accordingly, unrealized gains recorded on the assets in
Pilgrim's trust funds are recognized as a separate component of
shareholders' equity because these assets are classified as available for
sale.
Foreign Currency Translation
All assets and liabilities of Entergy's foreign subsidiaries are
translated into U.S. dollars at the exchange rate in effect at the end of
the period. Revenues and expenses are translated at average exchange rates
prevailing during the period. The resulting translation adjustments are
reflected in a separate component of shareholders' equity. Current
exchange rates are used for U.S. dollar disclosures of future obligations
denominated in foreign currencies.
Earnings per Share
The average number of common shares outstanding for the presentation
of diluted earnings per share was greater by approximately 1,960,858 shares
in 2000, 199,000 shares in 1999, and 176,000 shares in 1998, than the
number of such shares for the presentation of basic earnings per share due
to Entergy's stock option and other stock compensation plans discussed more
thoroughly in Note 5 to the financial statements.
Options to purchase approximately 5,205,000 and 149,000 shares of
common stock at various prices were outstanding at the end of 1999 and
1998, respectively, but were not included in the computation of diluted
earnings per share because the exercise prices were greater than the
average market price of the common shares at the end of each of the years
presented. At the end of 2000, all outstanding options, totaling
11,468,316, were included in the computation of diluted earnings per share
as a result of the average market price of the common shares being greater
than the exercise prices.
Application of SFAS 71
The domestic utility companies and System Energy currently account for
the effects of regulation pursuant to SFAS 71, "Accounting for the Effects
of Certain Types of Regulation." This statement applies to the financial
statements of a rate-regulated enterprise that meet three criteria. The
enterprise must have rates that (i) are approved by the regulator; (ii) are
cost-based; and (iii) can be charged to and collected from customers.
These criteria may also be applied to separable portions of a utility's
business, such as the generation or transmission functions, or to specific
classes of customers. If an enterprise meets these criteria, it may
capitalize costs that would otherwise be charged to expense if the rate
actions of its regulator make it probable that those costs will be
recovered in future revenue. Such capitalized costs are reflected as
regulatory assets in the accompanying financial statements. A significant
majority of Entergy's regulatory assets, net of related regulatory and
deferred tax liabilities, earn a return on investment during their recovery
periods. SFAS 71 requires that rate-regulated enterprises assess the
probability of recovering their regulatory assets at each balance sheet
date. When an enterprise concludes that recovery of a regulatory asset is
no longer probable, the regulatory asset must be removed from the entity's
balance sheet.
SFAS 101, "Accounting for the Discontinuation of Application of FASB
Statement No. 71," specifies how an enterprise that ceases to meet the
criteria for application of SFAS 71 for all or part of its operations
should report that event in its financial statements. In general, SFAS 101
requires that the enterprise report the discontinuation of the application
of SFAS 71 by eliminating from its balance sheet all regulatory assets and
liabilities related to the applicable segment. Additionally, if it is
determined that a regulated enterprise is no longer recovering all of its
costs and therefore no longer qualifies for SFAS 71 accounting, it is
possible that an impairment may exist that could require further write-offs
of plant assets.
EITF 97-4: "Deregulation of the Pricing of Electricity - Issues
Related to the Application of FASB Statements No. 71 and 101" specifies
that SFAS 71 should be discontinued at a date no later than when the
effects of a transition to competition plan for all or a portion of the
entity subject to such plan are reasonably determinable. Additionally, EITF
97-4 promulgates that regulatory assets to be recovered through cash flows
derived from another portion of the entity that continues to apply SFAS 71
should not be written off; rather, they should be considered regulatory
assets of the segment that will continue to apply SFAS 71.
As described in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS -
SIGNIFICANT FACTORS AND KNOWN TRENDS," management believes that definitive
outcomes have not yet been determined regarding transition to competition
in any of Entergy's jurisdictions. Therefore, the regulated operations of
the domestic utility companies and System Energy continue to apply SFAS 71.
Arkansas and Texas have enacted retail open access laws, but Entergy
believes that significant issues remain to be addressed by Arkansas and
Texas regulators, and the enacted laws do not provide sufficient detail to
reasonably determine the impact on Entergy Arkansas' and Entergy Gulf
States' regulated operations.
Transition to Competition Liabilities
In conjunction with the transition to competition of the electric
utility industry in certain jurisdictions in which the domestic utility
companies operate, regulatory mechanisms have been established to mitigate
potential stranded costs. These mechanisms include the transition cost
account at Entergy Arkansas, which is discussed further in Note 2 to the
financial statements. Also included is a provision in the Texas transition
legislation that allows depreciation on transmission and distribution
assets to be directed toward generation assets. The liabilities recorded
as a result of these mechanisms are classified as "transition to
competition" deferred credits.
Domestic Operating Company Deregulated Operations
Entergy Gulf States does not apply regulatory accounting principles to
its wholesale jurisdiction, steam department, Louisiana retail deregulated
portion of River Bend, and the 30% interest in River Bend formerly owned by
Cajun. The Louisiana retail deregulated portion of River Bend is operated
under a deregulated asset plan representing a portion (approximately 24%)
of River Bend plant costs, generation, revenues, and expenses established
under a 1992 LPSC order. The plan allows Entergy Gulf States to sell the
electricity from the deregulated assets to Louisiana retail customers at
4.6 cents per KWH or off-system at higher prices, with certain provisions
for sharing such incremental revenue above 4.6 cents per KWH between
ratepayers and shareholders.
The results of these deregulated operations before interest charges for
the years ended December 31, 2000, 1999, and 1998 are as follows (in
thousands):
2000 1999 1998
Operating revenues $200,023 $166,509 $178,303
Operating expenses
Fuel, operating, and maintenance 141,822 126,917 137,579
Depreciation 36,158 35,141 39,497
-------- -------- --------
Total operating expense 177,980 162,058 177,076
Income tax expense 8,278 628 1,154
-------- -------- --------
Net income from deregulated utility operations $13,765 $3,823 $73
======== ======== ========
The net investment associated with these deregulated operations as of
December 31, 2000 and 1999 was approximately $822 million and $835 million,
respectively.
Impairment of Long-Lived Assets
Entergy periodically reviews long-lived assets whenever events or
changes in circumstances indicate that recoverability of these assets is
uncertain. Generally, the determination of recoverability is based on the
net cash flows expected to result from such operations and assets.
Projected net cash flows depend on the future operating costs associated
with the assets, the efficiency and availability of the assets and
generating units, and the future market and price for energy over the
remaining life of the assets.
Assets regulated under traditional cost-of-service ratemaking, and
thereby subject to SFAS 71 accounting, are generally not subject to
impairment because this form of regulation assures that all allowed costs
are subject to recovery. However, certain deregulated assets and other
operations of the domestic utility companies totaling approximately $1.5
billion (pre-tax) could be affected in the future. Those assets include
Entergy Arkansas' and Entergy Louisiana's retained shares of Grand Gulf 1,
Entergy Gulf States' Louisiana deregulated asset plan, the Texas
jurisdictional abeyed portion of the River Bend plant and the portion of
River Bend transferred from Cajun, and wholesale operations. Additionally,
as noted above, the discontinuation of SFAS 71 regulatory accounting
principles would require that Entergy review the affected assets for
impairment.
Derivative Financial Instruments and Commodity Derivatives
As a part of its overall risk management strategy, Entergy uses a
variety of derivative financial instruments and commodity derivatives,
including interest rate swaps and natural gas and electricity futures,
forwards, and options.
Entergy accounts for derivative financial instruments used to mitigate
interest rate risk in accordance with hedge accounting. Gains or losses
from rate swaps used for such purposes that are sold or terminated are
deferred and amortized over the remaining life of the debt instrument being
hedged by the interest rate swap. If the debt instrument being hedged by
the interest rate swaps is extinguished, any gain or loss attributable to
the swap would be recognized in the period of the transaction. Additional
information concerning Entergy's interest rate swaps outstanding as of
December 31, 2000 is included in Note 7 to the financial statements.
Entergy's power marketing and trading business engages in price risk
management activities for trading purposes. To conduct these activities,
the business uses futures, forwards, swaps, and options, and uses the mark-
to-market method of accounting. Under the mark-to-market method of
accounting, forwards, futures, swaps, options, and other financial
instruments with third parties are reflected at market value in the balance
sheets. Changes in the assets and liabilities from these instruments
(resulting primarily from newly originated transactions and the impact of
price movements) are recognized currently in the statements of income. The
market prices used to value these transactions reflect management's best
estimate considering various factors including closing exchange and over-
the-counter quotations, time value, and volatility factors underlying the
commitments.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," which was implemented effective
January 1, 2001. This statement requires that all derivatives be
recognized in the balance sheet, either as assets or liabilities, measured
at fair value. The changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if
it is, the type of hedge transaction. For fair-value hedge transactions in
which Entergy is hedging changes in an asset's, liability's, or firm
commitment's fair value, changes in the fair value of the derivative
instrument will generally be offset in the income statement by changes in
the hedged item's fair value. For cash-flow hedge transactions in which
Entergy is hedging the variability of cash flows related to a variable-rate
asset, liability, or a forecasted transaction, changes in the fair value of
the derivative instrument will be reported in other comprehensive income.
The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods
in which earnings are impacted by the variability of the cash flows of the
hedged item. The ineffective portion of all hedges will be recognized in
current-period earnings.
Entergy utilizes derivative financial instruments primarily for the
following purposes:
o trading activity in its power marketing and trading business;
o to ensure adequate power supplies and to mitigate certain risks in the
domestic utility business; and
o to hedge cash flows for various transactions in its competitive
businesses.
The implementation of SFAS 133 did not materially impact the power
marketing and trading business, as its derivative portfolio is already
marked-to-market under the provisions of EITF 98-10, "Measuring the Value
of Energy-Related Contracts". Effective January 1, 2001, Entergy recorded
a net-of-tax cumulative-effect-type adjustment of approximately $18.0
million reducing accumulated other comprehensive income to recognize at fair
value all derivative instruments that are designated as cash-flow
hedging instruments, primarily for interest rate swaps and foreign currency
forward contracts related to Entergy's competitive businesses.
The FASB's Derivatives Implementation Group (DIG) is considering a
number of issues affecting the power industry. Entergy's interpretation of
these issues in its initial implementation of SFAS 133 is based on
management's application of existing accounting literature. To the extent
that the DIG ultimately interprets these issues differently than Entergy,
Entergy's financial statements could be materially affected, although the
amount of the possible effect cannot be quantified at this time.
NOTE 2. RATE AND REGULATORY MATTERS
Electric Industry Restructuring
Arkansas
(Entergy Corporation and Entergy Arkansas)
In April 1999, the Arkansas legislature enacted a law providing for
competition in the electric utility industry through retail open access as
of January 1, 2002. With retail open access, generation operations would
become a competitive business, but transmission and distribution operations
will continue to be regulated either by federal or state regulatory
commissions. In November 2000, the APSC issued a report to the General
Assembly on the status of deregulation implementation and recommended that
the deregulation statute remain as passed in 1999 except that the target
date for retail open access be delayed until no sooner than October 1, 2003
and no later than October 1, 2005. The investor-owned utilities in
Arkansas signed a settlement agreement that supported the recommendation.
During the 2001 legislative session, the General Assembly passed an
amendment to the deregulation statute to adopt the APSC recommendation to
amend the target date for retail open access. The amendment was signed
into law by the governor in February 2001. Besides delaying the target
date, the amendment includes two new criteria that will allow the APSC to
delay the retail open access date beyond the October 1, 2003 target. The
additional criteria that could cause further delay include:
o most customers would not have a reasonable opportunity to realize net
benefits, specifically including relative price benefits for residential
and small business customers; or
o demonstrably effective market structures are not in place,
particularly a regional transmission organization or insufficient
generation and transmission capacity.
Other provisions of the currently enacted law:
o require utilities to separate (unbundle) their costs into generation,
transmission, distribution, and customer service functions;
o require customer service functions to be further unbundled into
competitive and regulated services based on the APSC's determination that
billing services be competitive as of retail open access;
o require operation of transmission facilities by an organization
independent from the generation, distribution, and retail operations;
o provide for the determination of and mitigation measures for
generation market power,which could require generation asset divestitures
or other mitigation measures;
o allow for recovery of stranded and transition costs if the costs are
approved by the APSC;
o allow for the securitization of approved stranded costs; and
o freeze residential and small business customer rates for three years
by utilities that will recover stranded costs and one year for other
utilities.
Entergy Arkansas filed separate generation, transmission,
distribution, and customer service rates with the APSC in December 1999 and
also filed notice of its intent to recover stranded costs. Should
utilities that have filed notice of stranded cost recovery determine that,
due to the delay in retail open access, stranded cost recovery is not
required, notice of intent to withdraw from seeking stranded cost recovery
must be filed by December 31, 2001. Entergy Arkansas' unbundled rates were
based on the cost-of-service study that formed the basis of the rates
included in the 1997 settlement agreement. In October 2000, a settlement
agreement was filed settling all outstanding issues except one rate design
issue. In December 2000, the APSC approved the unbundled rates as filed,
approved the October 2000 settlement agreement, and ordered compliance
tariffs be filed within 60 days. Bundled rates will continue to be
effective until six months prior to retail open access.
The APSC and various participants in the industry, including Entergy
Arkansas, are involved in the ongoing process of implementing the
legislation through various rulemaking and other proceedings. Some
rulemakings were suspended in late 2000 in anticipation of a delay in the
target date for retail open access. In compliance with the provisions of
the deregulation law and as a result of rulemakings concluded in 2000,
Entergy Arkansas has:
o filed a functional, but not corporate, unbundling plan with the APSC
in August 2000. The functional unbundling plan initially establishes
separate business units for distribution, generation, and a new retail
energy service provider. The plan contemplates the transfer of
transmission assets to the Transco discussed herein. The functional
unbundling plan is tentative because the regulatory requirements to
implement the retail open access law have not been finalized, and
changes to the plan are possible;
o filed a compliance plan in October 2000 detailing the specific
procedures to ensure that the affiliate rules are implemented;
o filed unbundled compliance tariffs in February 2001;
o filed a market power study in October 2000 in accordance with the
guidelines adopted by the APSC. The study included both wholesale
generation and retail markets and examined vertical and horizontal market
power issues. Due to the delay in retail open access, Entergy Arkansas
will file an updated study in 2001 reflecting any changes in generation
supply in the study region;
o agreed to file the stranded cost proceedings following the market
power proceeding; and
o participated in various rulemakings related to standard service
package offerings, the declaration of billing services as a competitive
service, electronic data exchange, consumer education, and affiliate
rules.
In June 2000, the APSC declared that billing would become a
competitive service at the beginning of retail open access. In December
2000, the APSC issued an order requiring utilities to file further customer
service costs from the competitive services costs. In May 2001, Entergy
Arkansas will file further unbundled customer service rates to separate
those costs associated with those billings services that were declared
competitive as of retail open access from those customer services still
regulated by the APSC.
In December 2000, Entergy Arkansas filed an application for approval
to transfer Entergy Arkansas' transmission assets to an independent company
(Transco). This transfer of transmission assets is to comply with
establishing independent transmission operations in accordance with federal
and state deregulation requirements. Entergy's Transco proposal is
discussed in "MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS - SIGNIFICANT
FACTORS AND KNOWN TRENDS - Open Access Transmission and Entergy's Transco
Proposal".
Texas
(Entergy Corporation and Entergy Gulf States)
In June 1999, the Texas legislature enacted a law providing for
competition in the electric utility industry through retail open access.
The law provides for retail open access by most investor-owned electric
utilities, including Entergy Gulf States, on January 1, 2002. With retail
open access, generation and a new retail electric provider operation will
be competitive businesses, but transmission and distribution operations
will continue to be regulated. The new retail electric provider will be
the primary point of contact with customers. The provisions of the new
law:
o require a rate freeze through December 31, 2001 with rates reduced by
6% beyond that for residential and small commercial customers of most
incumbent utilities except Entergy Gulf States,whose rates are exempt
from the 6% reduction requirement. These rates to residential and small
commercial customers are known as the "Price to Beat", and they may be
adjusted periodically after January 1, 2002 for fuel and purchased power
costs according to PUCT rules;
o require utilities to charge the Price to Beat rates through 2004, or
until 40% of customers in the jurisdiction have chosen an alternative
supplier, whichever comes first. However, the Price to Beat rates must
continue to be made available through 2006;
o require utilities to submit a plan to separate (unbundle) their
generation, transmission and distribution, and retail electric provider
functions, which Entergy Gulf States filed in January 2000 as discussed
below;
o require utilities to comply with a code of conduct to ensure that
utilities do not allow affiliates to have a business advantage over
competitors;
o require operation in a non-discriminatory manner of transmission and
distribution facilities by an organization independent from the
generation and retail operations by the time competition is implemented;
o allow for recovery of stranded costs incurred in purchasing power and
providing electric generation service if the costs are approved by the
PUCT;
o allow securitization of regulatory assets and PUCT-approved stranded
costs;
o provide for the determination of and mitigation measures for
generation market power; and
o required utilities to file separated cost data and proposed
transmission, distribution,and competition transition tariffs by
April 1, 2000.
Entergy Gulf States filed its business separation plan with the PUCT
in January 2000 to separate its functions, and amended that plan in June
and December 2000. The plan provides that, by January 2002, Entergy Gulf
States will be divided into a Texas distribution company, a Texas
transmission company, a Texas generation company, at least two Texas retail
electricity providers, and a Louisiana company that will encompass
distribution, generation, transmission, and retail operations. In July
2000, the PUCT issued an interim order approving the amended business
separation plan. The plan provides that the Louisiana company would retain
the liability for all debt obligations of Entergy Gulf States and that the
property of the Texas companies would be released from the lien of Entergy
Gulf States' mortgage. Except for the Texas retail electric providers,
each of the Texas companies would assume a portion of Entergy Gulf States'
debt obligations, which assumptions would not act to release the Louisiana
company's obligations. Except for the Texas retail electric providers,
each of the Texas companies would also grant a lien on its properties in
favor of the Louisiana company to secure its obligations to the Louisiana
company in respect of the assumed obligations. In addition, under the
plan, Entergy Gulf States will refinance or retire the Texas companies'
portion of existing debt by the end of 2004. Regulatory approvals from
FERC, the SEC, and the LPSC, and final approval from the PUCT will be
required before the business separation plan can be implemented. Remaining
business separation issues in Texas subsequent to the July 2000 interim
order will be addressed in the cost unbundling proceeding before the PUCT.
The LPSC has opened a docket to identify the changes in corporate
structure of Entergy Gulf States, and their potential impact on Louisiana
retail ratepayers, resulting from restructuring in Texas and Arkansas.
Entergy Gulf States filed testimony in that proceeding in August 2000. The
LPSC staff filed testimony in that proceeding in October 2000 criticizing
Entergy Gulf States' proposal, particularly the part related to the Texas
portion of generation assets being transferred to an unregulated entity.
Entergy Gulf States filed rebuttal testimony in December 2000. A
procedural schedule has not been set.
Beginning January 1, 2002, the market power measures in the open
access law will prohibit Entergy Gulf States from owning and controlling
more than 20% of the installed generation capacity located in, or capable
of delivering electricity to, a "power region", which is defined as a
distinct region of NERC. In seeking PUCT approval of the Merger, Entergy
and FPL Group are required to demonstrate that the merged company will not
exceed this threshold. However, all the implications of this limit are
uncertain for Entergy Gulf States and Entergy. It is possible that Entergy
Gulf States could decide to divest some of its generation assets or seek to
reduce transmission constraints if Entergy Gulf States is found to have
generation market power in excess of this limit. The legislation also
requires affected utilities to sell at auction entitlements to at least 15%
of their installed generation capacity in Texas at least 60 days before
January 1, 2002. The obligation to auction capacity entitlements continues
for up to 60 months after January 1, 2002, or until 40% of current
customers have chosen an alternative supplier, whichever comes first.
The PUCT and various participants in the industry are currently in the
process of implementing the legislation through various rulemaking and
other proceedings. The Provider of Last Resort (POLR) rule was approved by
the PUCT in October 2000, requiring that such a provider exist in every
area of the state and setting up the process by which such a provider will
be selected and its services priced. The PUCT received bids from retail
electric providers seeking to become the POLR in each area in January 2001.
The PUCT has stated its preference that the POLR not be the retail electric
provider that is affiliated with the incumbent utility in the area.
However, depending on the outcome of the bidding process, Entergy Gulf
States' affiliate retail electric provider may be required to provide POLR
service in Entergy Gulf States' service territory. This may have a
material financial impact on the Entergy Gulf States retail electric
provider depending on the terms and prices eventually approved by the PUCT
for POLR service.
On March 31, 2000, pursuant to the Texas restructuring legislation,
Entergy Gulf States filed cost data with the PUCT for its unbundled
business functions and proposed tariffs for its unbundled distribution
utility. In the filing, Entergy Gulf States is seeking approval for
recovery of the following, among other things:
o the unbundled distribution utility's cost of service; and
o a ten-year nonbypassable charge to recover estimated stranded costs
and a nonbypassable charge to recover nuclear decommissioning costs.
Also included in the proceeding is consideration of the treatment of the
30% share of River Bend acquired from Cajun, which Entergy Gulf States
treats as an asset not subject to regulation by the PUCT.
On March 6, 2001, Entergy Gulf States filed with the PUCT a non-
unanimous settlement agreement in the unbundled cost proceeding that
establishes the distribution revenue requirement. The settlement agreement
is between Entergy Gulf States, the PUCT Staff, and other parties. Pursuant
to a generic rule prescribed by the PUCT, Entergy Gulf States' allowed
return on equity will be 11.25%. The generic capital structure prescribed
by the PUCT is 60% debt and 40% equity. Also in the settlement agreement,
the parties agree that Entergy Gulf States' stranded costs and benefits
are $0, and no charge to recover stranded costs will be implemented. A
rider to recover nuclear decommissioning costs will be implemented.
Hearings before the PUCT on approval of the settlement are scheduled to
begin in April 2001. Management cannot predict the timing or outcome of
this proceeding.
Louisiana
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
In March 1999, the LPSC deferred making a decision on whether
competition in the electric industry is in the public interest. However,
the LPSC staff, outside consultants, and counsel were directed to work
together to analyze and resolve issues related to competition and then
recommend a plan for its implementation to be considered by the LPSC. In
January 2001, a draft response was circulated among interested parties. It
is expected that, after a comment period, a final staff response will be
presented to the LPSC in April 2001.
See above under "Texas" for discussion of the LPSC proceeding
considering Entergy Gulf States' business separation plan.
Mississippi
(Entergy Corporation and Entergy Mississippi)
In May 2000, after two years of studies and hearings, the MPSC
announced that it was suspending its docket studying the opening of the
state's retail electricity markets to competition. The MPSC based its
decision on its finding that competition could raise the electric rates
paid by residential and small commercial customers. The final decision
regarding the introduction of retail competition ultimately lies with the
Mississippi Legislature, which is holding its 2001 session from January
through March. Management cannot predict when, or if, Mississippi will
deregulate its retail electricity market, but does not expect it to occur
before 2003.
New Orleans
(Entergy Corporation and Entergy New Orleans)
Entergy New Orleans filed an electric transition to competition plan
in September 1997. This plan is similar to plans that were filed by the
other domestic utility companies. No procedural schedule has been
established for consideration of that plan by the Council.
In October 1998, the Council began proceedings to determine if natural
gas retail competition is in the public interest. Advisors to the Council
issued a final report that proposed various pilot programs and found that
retail gas open access is not in the public interest at this time. The
Council accepted an offer of settlement from Entergy New Orleans in this
matter that allows for a voluntary pilot program for a limited number of
large industrial non-jurisdictional gas customers.
Retail Rate Proceedings
Filings with the APSC (Entergy Corporation and Entergy Arkansas)
Entergy Arkansas is operating under the terms of a settlement
agreement approved by the APSC in December 1997 that provides for the
following:
o accelerated payment of Entergy Arkansas' Grand Gulf purchased power
obligation in an amount totaling $165.3 million over the period from
January 1999 to June 2004;
o collecting earnings in excess of an 11% return on equity in a
transition cost account to offset stranded costs when retail access is
implemented;
o a rate freeze until at least July 1, 2001; and
o rate decreases totaling $200 million over the two-year period 1998-
1999. The net income effect from the rate reductions was approximately
$22 million.
In June 2000, Entergy Arkansas filed an application to continue the
stranded cost mitigation efforts agreed upon in the settlement agreement
including the funding of a transition cost account and the accelerated
amortization of the Grand Gulf obligation. In December 2000, the APSC
approved a settlement agreement that directed Entergy Arkansas to do the
following:
o seek FERC approval for the cessation of the accelerated payment of the
Grand Gulf purchased power obligation as of July 1, 2001,and approval was
applied for in February 2001; and
o continue the collection of excess earnings in a transition cost
account at least through 2002.
Entergy Arkansas' 2000 operating expenses reflect reserves of $4.4 million
($2.7 million net of taxes) to record the final determination of 1999
excess earnings. Interest of $5.2 million ($3.2 million net of taxes) was
also recorded in the transition cost account for 2000. As of December 31,
2000, the transition cost account balance was $119.6 million. Entergy
Arkansas applied $17.5 million ($10.7 million net of tax) of 2000 excess
earnings recorded in the third quarter 2000 against 2000 ice storm damage
expenses. For additional information on the December 2000 ice storms in
Arkansas, refer to "December 2000 Ice Storms" discussed below.
In March 2000, Entergy Arkansas filed its annually redetermined energy
cost rate with the APSC in accordance with the energy cost recovery rider
formula and special circumstances agreement. The filing reflected that an
increase was warranted to collect an under-recovery of energy costs for
1999. The increased energy cost rate is effective April 2000 through March
2001.
In October 2000, the APSC ordered Entergy Arkansas to cease collection
of funds to decommission ANO 1 and 2 for the calendar year 2001. Based on
anticipated approval of Entergy's application with the NRC to extend the
license of ANO 1 by 20 years, the APSC concluded that the funds previously
collected will be sufficient to decommission the units. This decision will
be reviewed annually and reflected in Entergy Arkansas' filing of its
annual determination of the nuclear decommissioning rate rider.
Filings with the PUCT and Texas Cities
Rate Proceedings (Entergy Corporation and Entergy Gulf States)
In June 1999, the PUCT approved a settlement agreement that Entergy
Gulf States entered into in February 1999. The settlement agreement
resolved Entergy Gulf States' 1996 and 1998 rate proceedings and all of the
settling parties' pending appeals in other matters, except for the appeal
in the River Bend abeyed cost recovery proceeding discussed below. The
Office of Public Utility Counsel, an intervenor in the proceeding, has
appealed certain aspects of this settlement to Travis County District
Court. Entergy Gulf States cannot predict the impact of the appeal.
The settlement agreement provides for the following:
o an annual $4.2 million base rate reduction, effective March 1, 1999,
which is in addition to the annual $69 million base rate reduction
(net of River Bend accounting order deferrals) in the PUCT's second order
on rehearing in October 1998;
o a methodology for semi-annual revisions of the fixed fuel factor
through December 2001 based on the market price of natural gas;
o a base rate freeze through June 1, 2000. The Texas restructuring law
extends the base rate freeze through December 2001;
o amortization of the remaining River Bend accounting order deferrals as
of January 1, 1999, over three years on a straight-line basis, and the
accounting order deferrals will not be recognized in any subsequent base
rate case or stranded cost calculation;
o the dismissal of all pending appeals of the settling parties relating
to Entergy Gulf States' proceedings with the PUCT, except the River Bend
abeyed plant costs appeal discussed below; and
o the potential recovery in the River Bend abeyed plant costs appeal is
limited to $115 million net plant in service as of January 1, 2002, less
depreciation over the remaining life of the plant beginning January 1,
2002 through the date the plant costs are included in rate base, and any
such recovery will not be used to increase rates above the level agreed
to in the settlement agreement (see "Recovery of River Bend Costs" in
this note for further discussion).
As a result of the settlement agreement, in June 1999, Entergy Gulf
States:
o removed from its balance sheet a $207.3 million deferred asset and the
associated provision recorded for unrecovered purchased power costs and
deferred revenue from NISCO, which had no net income impact on Entergy
Gulf States;
o removed the reserve recorded in December 1997 for River Bend plant
costs held in abeyance and reduced the plant asset, resulting in other
income of $4.8 million; and
o removed the $93.9 million reserve recorded in 1998 for the
amortization of River Bend accounting order deferrals to reflect the
three-year amortization schedule detailed in the agreement. The income
impact of this removal was largely offset by an increase in the rate of
amortization of the accounting order deferrals.
In June 1999, the PUCT instituted a proceeding to consider the final
adjustment of the rate refunds ordered as a result of Entergy Gulf States'
November 1996 rate case. These refunds were required to occur over the
fourteen-month period from August 1998 through September 1999. The PUCT
issued an order in July 1999 adopting a calculation methodology which
required Entergy Gulf States to refund an additional $25 million. This
refund was recorded as a reduction in operating revenues. The PUCT
approved the final refund and concluded the proceeding in June 2000.
Recovery of River Bend Costs (Entergy Corporation and Entergy Gulf States)
In March 1998, the PUCT disallowed recovery of $1.4 billion of company-
wide abeyed River Bend plant costs which have been held in abeyance since
1988. Entergy Gulf States appealed the PUCT's decision on this matter to
the Travis County District Court in Texas. In June 1999, subsequent to the
settlement agreement discussed above, Entergy Gulf States removed the
reserve for River Bend plant costs held in abeyance and reduced the value
of the plant asset. The settlement agreement limits potential recovery of
the remaining plant asset, less depreciation, to $115 million, beginning
January 1, 2002 through the date the plant costs are included in rate base,
and any such recovery will not be used to increase rates above the level as
agreed to in the settlement agreement. The settlement agreement also
prohibits Entergy Gulf States from acting on its appeal until January 1,
2002. Based on advice of counsel, management believes that it is probable
that the matter will be remanded again to the PUCT for a further ruling on
the prudence of the abeyed plant costs and it is reasonably possible that
some portion of these costs will be added to the net book value of the
River Bend plant for regulatory purposes. However, no assurance can be
given that additional reserves or write-offs will not be required in the
future.
PUCT Fuel Cost Review (Entergy Corporation and Entergy Gulf States)
In September 1998, Entergy Gulf States filed an application with the
PUCT for an increase in its fixed fuel factor and for a surcharge to Texas
retail customers for the cumulative under-recovery of fuel and purchased
power costs. The PUCT issued an order in December 1998 approving the
implementation of a revised fuel factor and fuel and purchased power
surcharge that would result in recovery of $112.1 million of under-
recovered fuel costs, inclusive of interest, over a 24-month period. These
increases were implemented in the first billing cycle in February 1999.
North Star Steel Texas, Inc. has appealed the PUCT's order to the State
District Court in Travis County, Texas. Entergy Gulf States cannot predict
the outcome of this appeal.
Based on the settlement agreement discussed above, Entergy Gulf States
adopted a methodology for calculating its fixed fuel factor based on the
market price of natural gas. This calculation and any necessary
adjustments began semi-annually as of March 1, 1999 and are scheduled to
continue until December 2001, unless otherwise ordered by the PUCT. The
calculation for the factor that was implemented in September 2000 showed
that the fuel factor should be increased. This fuel factor increase was
approved by the PUCT in August 2000. The amounts collected under Entergy
Gulf States' fixed fuel factor are the subject of fuel reconciliation
proceedings before the PUCT, including a fuel reconciliation case filed by
Entergy Gulf States in January 2001. In connection with the implementation
of restructuring in Texas, Entergy Gulf States anticipates that it will
file a final fuel reconciliation in March 2003 for the period ending
December 31, 2001.
Entergy Gulf States filed a fuel reconciliation case in July 1999
reconciling approximately $731 million (after excluding approximately $14
million related to Cajun issues to be handled in a subsequent proceeding)
of fuel and purchased power costs incurred from July 1996 to February 1999.
In February 2000, Entergy Gulf States reached a settlement with all but one
of the parties to the proceeding. The settlement reduced Entergy Gulf
States' requested surcharge in the reconciliation filing from $14.7 million
to $2.2 million. In April 2000, the PUCT approved this settlement allowing
Entergy Gulf States to recover the $2.2 million surcharge beginning with
the April 2000 billing cycle and continuing until January 2001.
In September 1999, Entergy Gulf States filed an application with the
PUCT requesting an interim fuel surcharge to collect under-recovered fuel
and purchased power expenses incurred from March 1999 through July 1999.
In December 1999, the PUCT approved the collection of $33.9 million over a
five-month period beginning January 2000. An administrative appeal of the
interim fuel surcharge was filed by certain cities in Travis County
District Court. Entergy Gulf States cannot predict the outcome of this
appeal. The fuel and purchased power expenses contained in this surcharge
are subject to the current fuel reconciliation proceeding.
In September 2000, Entergy Gulf States requested an interim surcharge
to collect the under-recovered fuel and purchased power expenses, including
accrued interest, incurred from August 1999 through July 2000. In December
2000, the PUCT issued an order approving Entergy Gulf States' request for
the collection of $79.0 million over an eleven-month period beginning
February 2001.
In January 2001, Entergy Gulf States filed a fuel reconciliation case
covering the period from March 1, 1999 to August 31, 2000. Entergy Gulf
States is reconciling approximately $583 million of fuel and purchased
power costs. As part of this filing, Entergy Gulf States requested the
collection of $28 million plus interest of under-recovered fuel and
purchased power costs.
In March 2001, Entergy Gulf States filed an application with the PUCT
requesting an interim surcharge to collect under-recovered fuel and
purchased power expenses incurred from September 2000 through January
2001. Entergy Gulf States is requesting the recovery of $82 million, plus
interest, from July through December 2001. The request is currently pending
before the PUCT and an order is expected by June 2001. The fuel and
purchased power expenses contained in this surcharge will be subject to
future fuel reconciliation proceedings.
Filings with the LPSC
Annual Earnings Reviews (Entergy Corporation and Entergy Gulf States)
In June 2000, the LPSC approved a settlement between Entergy Gulf
States and the LPSC staff to refund $83 million, including interest,
resolving refund issues in Entergy Gulf States' second, third, fourth, and
fifth post-merger earnings reviews filed with the LPSC in May 1995, 1996,
1997, and 1998, respectively. The refund was made over a three-month
period beginning July 2000.
Although refund issues in the third, fourth, and fifth post-merger
earnings reviews were resolved by the June 2000 settlement, certain
prospective issues remained in dispute following the settlement. On remand
from the Louisiana Supreme Court in the third earnings review, Entergy Gulf
States' allowed return on common equity was reset at 10.83%. The fourth
earnings review is currently on appeal at the Nineteenth Judicial District
Court. A final decision from the LPSC in the fifth earnings review is
expected in the first or second quarter of 2001.
In May 1999, Entergy Gulf States filed its sixth required post-merger
earnings analysis with the LPSC. Hearings were held in February and June
2000. The timing of a final decision in the proceeding is not certain.
In May 2000, Entergy Gulf States filed its seventh required post-
merger earnings analysis with the LPSC. This filing will be subject to
review by the LPSC, which may result in a change in rates. Entergy Gulf
States also is proposing that the allowed return on common equity be
increased to 11.60%. Hearings are scheduled for April 2001.
Formula Rate Plan Filings (Entergy Corporation and Entergy Louisiana)
In May 1997, Entergy Louisiana made its second annual performance-
based formula rate plan filing with the LPSC for the 1996 test year. This
filing resulted in a total rate reduction of approximately $54.5 million,
which was implemented in July 1997. At the same time, rates were reduced
by an additional $0.7 million and by an additional $2.9 million effective
March 1998. Upon completion of the hearing process in December 1998, the
LPSC issued an order requiring an additional rate reduction and refund,
although the resulting amounts were not quantified. Entergy Louisiana has
appealed this order and obtained a preliminary injunction pending a final
decision on appeal.
In April 1999, Entergy Louisiana submitted its fourth annual
performance-based formula rate plan filing for the 1998 test year. A rate
reduction of $15.0 million was implemented effective August 1, 1999. In
May 2000, the LPSC ordered a $6.4 million refund. This refund was made in
July 2000.
In May 2000, Entergy Louisiana submitted its fifth annual performance-
based formula rate plan filing for the 1999 test year. As a result of this
filing, Entergy Louisiana implemented a $24.8 million base rate reduction
in August 2000. Entergy Louisiana is proposing to increase prospectively
the allowed return on common equity from 10.5 % to 11.6%, which, if
approved, would reduce the amount of any rate reduction implemented. This
filing will be subject to review by the LPSC. A procedural schedule has not
yet been established by the LPSC.
As approved by the LPSC, Entergy Louisiana will continue its annual
performance-based formula rate plan filings for an additional year with a
filing to be made in April 2001.
Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy
Louisiana)
In May 1998, a group of ratepayers filed a complaint against Entergy
Corporation, Entergy Power, and Entergy Louisiana in state court in Orleans
Parish purportedly on behalf of all Entergy Louisiana ratepayers. The
plaintiffs seek treble damages for alleged injuries arising from alleged
violations by the defendants of Louisiana's antitrust laws in connection
with the costs included in fuel filings with the LPSC and passed through to
ratepayers. Among other things, the plaintiffs allege that Entergy
Louisiana improperly introduced certain costs into the calculation of the
fuel charges, including high-cost electricity imprudently purchased from
its affiliates and high-cost gas imprudently purchased from independent
third party suppliers. In addition, plaintiffs seek to recover interest
and attorneys' fees. Plaintiffs also requested that the LPSC initiate a
review of Entergy Louisiana's monthly fuel adjustment charge filings and
force restitution to ratepayers of all costs that the plaintiffs allege
were improperly included in those fuel adjustment filings. A few parties
have intervened in the LPSC proceeding. In direct testimony, plaintiffs
purport to quantify many of their claims for the period 1989 through 1998
in an amount totaling $544 million, plus interest.
Entergy Louisiana has reached an agreement in principle with the LPSC
staff for the settlement of the matter before the LPSC and has executed a
definitive agreement with the plaintiffs for the settlement of the matter
before the LPSC and the state court. The LPSC approved the settlement
agreement following a fairness hearing before an ALJ in November 2000.
Plaintiffs have sought class certification and approval of the settlement
by the state court, and a hearing on those issues is scheduled for April
2001.
Under the terms of the settlement agreement, Entergy Louisiana agrees
to refund to customers approximately $72 million to resolve all claims
arising out of or relating to Entergy Louisiana's fuel adjustment clause
filings from January 1, 1975 through December 31, 1999, except with respect
to purchased power and associated costs included in the fuel adjustment
clause filings for the period May 1 through September 30, 1999. Entergy
Louisiana previously provided reserves for the refund. Under the terms of
the settlement, Entergy Louisiana also consents to future fuel cost
recovery under a long-term gas contract based on a formula that would
likely result in an under-recovery of actual costs under that contract for
the remainder of its term, which runs through 2013. The future under-
recovery cannot be precisely estimated at this time because it will depend
upon factors that are not certain, such as the price of gas and the amount
of gas purchased under the long-term contract. In recent years, Entergy
Louisiana has made purchases under that contract totaling from $91 million
to $121 million annually. Had the proposed settlement terms been
applicable to such purchases, the under-recoveries would have ranged from
$4 million to $9 million per year.
Filings with the MPSC
Formula Rate Plan Filings (Entergy Corporation and Entergy Mississippi)
In March 2000, Entergy Mississippi submitted its annual performance-
based formula rate plan for the 1999 test year. The filing indicated that
no change in rate levels was warranted and the current rate levels remain
in effect.
In March 1999, Entergy Mississippi submitted its annual performance-
based formula rate plan filing for the 1998 test year. In April 1999, the
MPSC approved a prospective rate reduction of $13.3 million, effective May
1999. In June 1999, Entergy Mississippi revised its March 1999 filing to
include a portion of refinanced long-term debt not included in the original
filing. This revision resulted in an additional rate reduction of
approximately $1.5 million, effective July 1999.
MPSC Fuel Cost Review (Entergy Corporation and Entergy Mississippi)
In December 2000, the MPSC approved an increase in Entergy
Mississippi's energy cost recovery rider to collect the under-recovered
fuel and purchased power costs incurred as of September 30, 2000. The
recovery of $136.7 million, plus carrying charges, will occur over a 24-
month period effective with the first billing cycle of January 2001. As
approved by the MPSC, Entergy Mississippi will be making quarterly energy
cost recovery filings beginning in January 2001 to reflect under-recovered
fuel and purchased power costs from the second prior calendar quarter.
Filings with the Council
1997 Settlement (Entergy Corporation and Entergy New Orleans)
Entergy New Orleans submitted its cost of service and revenue
requirement filing in September 1997 to the Council. In connection with
this filing, Entergy New Orleans filed a settlement agreement with the
Council, which was approved in November 1998. The settlement agreement
required the following:
o base rate reductions for Entergy New Orleans' electric customers of
$7.1 million effective January 1, 1999, $3.2 million effective October 1,
1999, and $16.1 million effective October 1, 2000;
o a base rate reduction for Entergy New Orleans' gas customers of $1.9
million effective January 1999; and
o no base rate increases prior to October 1, 2001.
Natural Gas (Entergy Corporation and Entergy New Orleans)
The Council held hearings in May 1999 regarding the prudence of
Entergy New Orleans' natural gas purchasing practices. Entergy New Orleans
made an offer to settle this matter in conjunction with the offer to settle
the gas retail open access issue, and the offer was accepted by the
Council. Management has provided adequate reserves for the outcome of this
proceeding.
Fuel Adjustment Clause Litigation (Entergy Corporation and Entergy New
Orleans)
In April 1999, a group of ratepayers filed a complaint against Entergy
New Orleans, Entergy Corporation, Entergy Services, and Entergy Power in
state court in Orleans Parish purportedly on behalf of all Entergy New
Orleans ratepayers. The plaintiffs seek treble damages for alleged
injuries arising from the defendants' alleged violations of Louisiana's
antitrust laws in connection with certain costs passed on to ratepayers in
Entergy New Orleans' fuel adjustment filings with the Council. In
particular, plaintiffs allege that Entergy New Orleans improperly included
certain costs in the calculation of fuel charges and that Entergy New
Orleans imprudently purchased high-cost fuel from other Entergy affiliates.
Plaintiffs allege that Entergy New Orleans and the other defendant Entergy
companies conspired to make these purchases to the detriment of Entergy New
Orleans' ratepayers and to the benefit of Entergy's shareholders, in
violation of Louisiana's antitrust laws. Plaintiffs also seek to recover
interest and attorneys' fees. Exceptions to the plaintiffs' allegations
were filed by Entergy, asserting, among other things, that jurisdiction
over these issues rests with the Council and FERC. If necessary, at the
appropriate time, Entergy will also raise its defenses to the antitrust
claims. At present, the suit in state court is stayed by stipulation of
the parties.
Plaintiffs also filed this complaint with the Council in order to
initiate a review by the Council of the plantiffs' allegations and to force
restitution to ratepayers of all costs they allege were improperly and
imprudently included in the fuel adjustment filings. Discovery has begun
in the proceedings before the Council. In April 2000, testimony was filed
on behalf of the plaintiffs in this proceeding. The testimony asserts,
among other things, that Entergy New Orleans and other defendants have
engaged in fuel procurement and power purchasing practices that could have
resulted in New Orleans customers being overcharged by more than $59
million over a period of years. However, it is not clear precisely what
periods and damages are being alleged. Entergy intends to defend this
matter vigorously, both in court and before the Council. Hearings will be
held in October 2001. The ultimate outcome of the lawsuit and the Council
proceeding cannot be predicted at this time.
Purchased Power for Summer 2000 (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans)
The domestic utility companies filed applications with the APSC, the
LPSC, the MPSC, and the Council to approve the sale of power by Entergy
Gulf States from its unregulated, undivided 30% interest in River Bend
formerly owned by Cajun to the other domestic utility companies during the
summer of 2000. In addition, Entergy Gulf States and Entergy Louisiana
filed an application with the LPSC for authorization to purchase capacity
and electric power from third parties for the summer of 2000. The
commissions and Council approved the applications, with a reservation of
their right to review the prudence of the purchases and the appropriate
categorization of the costs as either capacity or energy charges for
purposes of recovery.
The LPSC reviewed the purchases and found that Entergy Louisiana's and
Entergy Gulf States' costs were prudently incurred, but decided that
approximately 34% of the costs should be categorized as capacity charges,
and therefore should be recovered through base rates and not through the
fuel adjustment clause. In November 2000, the LPSC ordered refunds of
$11.1 million for Entergy Louisiana and $3.6 million for Entergy Gulf
States, for which adequate reserves have been made. These costs
categorized as capacity charges will be included in the costs of service
used to determine the base rates of those companies.
River Bend Cost Deferrals (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States was amortizing $182 million of River Bend
operating and purchased power costs, depreciation, and accrued carrying
charges over a 20-year period. In accordance with the June 1999 Texas
settlement agreement discussed above, Entergy Gulf States reduced these
deferred costs by $93.9 million, for which adequate reserves had been
recorded. Entergy Gulf States also was allowed to amortize the remainder
of the accelerated balance as of January 1, 1999, over three years on a
straight-line basis ending December 31, 2001.
Grand Gulf 1 Deferrals and Retained Shares
(Entergy Corporation and Entergy Arkansas)
Under the settlement agreement entered into with the APSC in 1985 and
amended in 1988, Entergy Arkansas retains 22% of its 36% share of Grand
Gulf 1-related costs and recovers the remaining 78% of its share in rates.
In the event that Entergy Arkansas is not able to sell its retained share
to third parties, it may sell such energy to its retail customers at a
price equal to its avoided energy cost, which is currently less than
Entergy Arkansas' cost of energy from its retained share.
(Entergy Corporation and Entergy Louisiana)
In a series of LPSC orders, court decisions, and agreements from late
1985 to mid-1988, Entergy Louisiana was granted rate relief with respect to
costs associated with Entergy Louisiana's share of capacity and energy from
Grand Gulf 1, subject to certain terms and conditions. Entergy Louisiana
retains and does not recover from retail ratepayers, 18% of its 14% share
of the costs of Grand Gulf 1 capacity and energy and recovers the remaining
82% of its share in rates. Entergy Louisiana is allowed to recover through
the fuel adjustment clause 4.6 cents per KWH for the energy related to its
retained portion of these costs. Non-fuel operation and maintenance costs
for Grand Gulf 1 are recovered through Entergy Louisiana's base rates.
Alternatively, Entergy Louisiana may sell such energy to nonaffiliated
parties at prices above the fuel adjustment clause recovery amount, subject
to the LPSC's approval.
(Entergy Corporation and Entergy New Orleans)
Under various rate settlements with the Council in 1986, 1988, and
1991, Entergy New Orleans agreed to absorb and not recover from ratepayers
a total of $96.2 million of its Grand Gulf 1 costs. Entergy New Orleans
was permitted to implement annual rate increases in decreasing amounts each
year through 1995, and to defer certain costs and related carrying charges
for recovery on a schedule extending from 1991 through 2001. As of
December 31, 2000, the uncollected balance of Entergy New Orleans' deferred
costs was $11 million.
FERC Settlement (Entergy Corporation and System Energy)
In November 1994, FERC approved an agreement settling a long-standing
dispute involving income tax allocation procedures of System Energy. In
accordance with the agreement, System Energy will refund a total of
approximately $62 million, plus interest, to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans through June 2004.
System Energy also reclassified from utility plant to other deferred debits
approximately $81 million of other Grand Gulf 1 costs. Although such costs
are excluded from rate base, System Energy is amortizing and recovering
these costs over a 10-year period. Interest on the $62 million refund and
the loss of the return on the $81 million of other Grand Gulf 1 costs will
reduce Entergy's and System Energy's net income by approximately $10
million annually.
Proposed Rate Increase
(System Energy)
System Energy applied to FERC in May 1995 for a $65.5 million rate
increase. The request sought changes to System Energy's rate schedule,
including increases in the revenue requirement associated with
decommissioning costs, the depreciation rate, and the rate of return on
common equity. The request also includes a proposed change in the
accounting recognition of nuclear refueling outage costs from that of
expensing those costs as incurred to the deferral and amortization method
described in Note 1 to the financial statements. In December 1995, System
Energy implemented the $65.5 million rate increase, subject to refund, for
which a portion has been reserved. After holding hearings in 1996, a FERC
ALJ found that portions of System Energy's request should be rejected,
including a proposed increase in return on common equity from 11% to 13%
and a requested change in decommissioning cost methodology. The ALJ
recommended a decrease in the return on common equity from 11% to 10.8%.
Other portions of System Energy's request for a rate increase were approved
by the ALJ.
After a hearing, FERC issued an order in July 2000 in the proceeding.
FERC affirmed the ALJ's adoption of a 10.8% return on equity, but modified
the return to reflect changes in capital market conditions since the ALJ's
decision. FERC adjusted the rate of return to 10.58% for the period
December 1995 to the date of FERC's decision, and prospectively adjusted
the rate of return to 10.94% from the date of FERC's decision. FERC's
decision also changed other aspects of System Energy's proposed rate
schedule, including the depreciation rate and decommissioning costs and
their methodology.
System Energy has provided reserves for a potential refund to the rate
level of the initial ALJ decision, including interest. Management has
analyzed the effect of FERC's decision, and, given the reserve in place,
has concluded that a refund to the FERC decision rate level is not expected
to have a material adverse effect on Entergy's, System Energy's, or the
domestic utility companies' results of operations. System Energy has filed
a request for rehearing of FERC's order, which defers any refunds until
after further FERC action.
(Entergy Mississippi)
Entergy Mississippi's allocation of the proposed System Energy
wholesale rate increase is $21.6 million annually. In July 1995, Entergy
Mississippi filed a schedule with the MPSC that defers the retail recovery
of the System Energy rate increase. The deferral plan, which was approved
by the MPSC, began in December 1995, the effective date of the System
Energy rate increase, and will end after the issuance of a final order by
FERC. Under this plan, the deferral period was anticipated to have ended
by September 1998, and the deferred amount would have been amortized over
48 months beginning in October 1998. Entergy Mississippi filed a revised
deferral plan with the MPSC in August 1998 that provided for recovery,
effective with October 1998 billings, of $11.8 million of the System Energy
rate increase that was approved by the FERC ALJ's initial decision in July
1996. The $11.8 million was being amortized over the original 48-month
period, which began in October 1998. In August 2000, as a result of the
July 2000 FERC Order and Entergy's request for rehearing, Entergy
Mississippi filed a second revised deferral plan with the MPSC that
provides for a one year suspension of the recovery of the ALJ amount
deferred prior to October 1998. The amount of System Energy's proposed
increase in excess of the $11.8 million will also continue to be deferred
until the issuance of a final order by FERC, or October 2002, whichever
occurs first. These deferred amounts, plus carrying charges, will be
amortized over a 36-month period beginning in October 2002.
(Entergy New Orleans)
Entergy New Orleans' allocation of the proposed System Energy
wholesale rate increase is $11.1 million annually. In February 1996,
Entergy New Orleans filed a plan with the Council to defer 50% of the
amount of the System Energy rate increase. The deferral began in February
1996 and will end after the issuance of a final order by FERC.
Grand Gulf Accelerated Recovery Tariff
(Entergy Arkansas)
In April 1998, FERC approved the Grand Gulf Accelerated Recovery
Tariff (GGART) that Entergy Arkansas filed as part of the settlement
agreement that the APSC approved in December 1997. The GGART was designed
to allow Entergy Arkansas to pay down a portion of its Grand Gulf purchased
power obligation in advance of the implementation of retail access in
Arkansas. The GGART provides for the acceleration of $165.3 million of its
obligation over the period January 1, 1999 through June 30, 2004. In
December 2000, the APSC approved an amendment to the settlement agreement
that directed Entergy Arkansas to seek FERC approval for the cessation of
the GGART as of July 1, 2001. The settlement agreement with the APSC is
discussed above in "Filings with the APSC".
(Entergy Mississippi)
In September 1998, FERC approved the GGART for Entergy Mississippi's
allocable portion of Grand Gulf, which was filed with FERC in August 1998.
The GGART provides for the acceleration of Entergy Mississippi's Grand Gulf
purchased power obligation in an amount totaling $221.3 million over the
period October 1, 1998 through June 30, 2004.
December 2000 Ice Storms (Entergy Arkansas)
In mid- and late December 2000, two separate ice storms left 226,000
and 212,500 Arkansas customers, respectively, without electric power in its
service area. The storms were the most severe natural disasters ever to
affect Entergy Arkansas, causing damage to transmission and distribution
lines, equipment, poles, and facilities. Of the $195 million of estimated
storm-related costs, approximately $23 million were capitalized in 2000.
Entergy Arkansas has applied 2000 excess earnings to offset some of these
costs, and Entergy Arkansas intends to seek approval from the APSC for
recovery of the remaining storm-related costs. Historically, the APSC
has allowed recovery of costs associated with the restoration of service
from storms and other natural disasters.
NOTE 3. INCOME TAXES
Income tax expenses for 2000, 1999, and 1998 consist of the following
(in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Current:
Federal $291,616 $51,042 $42,587 $83,369 ($24,598) $10,530 $132,725
Foreign 11,555 - - - - - -
State 51,293 9,694 6,737 12,926 (3,615) 1,706 19,750
---------------------------------------------------------------------------
Total 354,464 60,736 49,324 96,295 (28,213) 12,236 152,475
Deferred -- net 150,018 46,365 61,779 22,111 52,581 (129) (67,509)
Investment tax credit
adjustments -- net (25,561) (6,589) (7,500) (5,761) (1,500) (510) (3,703)
---------------------------------------------------------------------------
Recorded income tax expense $478,921 $100,512 $103,603 $112,645 $22,868 $11,597 $81,263
===========================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Current:
Federal $452,568 $25,811 $64,991 $115,180 ($660) $13,238 $121,733
Foreign 27,730 - - - - - -
State 65,834 5,780 11,669 22,675 131 2,923 18,979
-------------------------------------------------------------------------------
Total 546,132 31,591 76,660 137,855 (529) 16,161 140,712
Deferred -- net (153,304) 26,335 13,513 (9,953) 19,566 (2,615) (77,173)
Investment tax credit
adjustments -- net (36,161) (3,914) (15,008) (5,534) (1,500) (516) (9,688)
-------------------------------------------------------------------------------
Recorded income tax expense $356,667 54,012 $75,165 $122,368 $17,537 $13,030 $53,851
===============================================================================
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Current:
Federal $235,979 $68,814 $43,729 $69,551 $34,984 $15,010 $91,107
Foreign 28,156 - - - - - -
State 67,163 14,853 17,218 12,643 5,541 2,530 14,378
------------------------------------------------------------------------------
Total 331,298 83,667 60,947 82,194 40,525 17,540 105,485
Deferred -- net (109,474) (7,153) (90,314) 32,506 (10,983) (6,993) (24,745)
Investment tax credit
adjustments -- net 44,911 (5,140) 61,140 (5,596) (1,511) (505) (3,477)
------------------------------------------------------------------------------
Recorded income tax expense $266,735 $71,374 $31,773 $109,104 $28,031 $10,042 $77,263
==============================================================================
Total income taxes differ from the amounts computed by applying the
statutory income tax rate to income before taxes. The reasons for the
differences for the years 2000, 1999, and 1998 are (amounts in thousands):
Entergy Entergy Entergy Entergy Entergy System
2000 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Computed at statutory rate (35%) $416,443 $83,147 $99,380 $96,363 $21,644 $9,840 $61,253
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 47,504 11,571 14,421 11,389 2,239 824 7,060
Depreciation 49,741 16,098 4,791 10,810 1,346 1,441 15,255
Amortization of investment
tax credits (23,783) (5,112) (7,664) (5,520) (1,500) (507) (3,480)
Flow-through/permanent
differences (18,495) (5,596) (10,032) (1,623) (825) (401) (18)
US tax on foreign income 1,472 - - - - - -
Other -- net 6,039 404 2,707 1,226 (36) 400 1,193
-----------------------------------------------------------------------------
Total income taxes $478,921 $100,512 $103,603 $112,645 $22,868 $11,597 $81,263
=============================================================================
Effective Income Tax Rate 40.3% 42.3% 36.5% 40.9% 37.0% 41.2% 46.4%
Entergy Entergy Entergy Entergy Entergy System
1999 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Computed at statutory rate (35%) $333,093 $43,164 $70,058 $109,948 $20,693 $11,196 $47,678
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 49,487 6,949 18,805 13,741 1,982 1,930 6,080
Depreciation 49,460 18,429 4,718 9,577 (1,093) 2,232 15,597
Amortization of investment
tax credits (29,015) (5,132) (6,642) (5,532) (1,500) (518) (9,691)
Flow-through/permanent
differences (8,042) (5,250) (2,795) (1,191) (284) (272) 27
US tax benefit on foreign income (9,584) - - - - - -
Benefit of Entergy Corporation
expenses - (3,341) (4,046) (4,053) (1,936) (754) (4,552)
Change in valuation allowance (46,315) - - - - - -
Other -- net 17,583 (807) (4,933) (122) (325) (784) (1,288)
-----------------------------------------------------------------------------
Total income taxes $356,667 $54,012 $75,165 $122,368 $17,537 $13,030 $53,851
=============================================================================
Effective Income Tax Rate 37.5% 43.8% 37.6% 39.0% 29.7% 40.7% 39.5%
Entergy Entergy Entergy Entergy Entergy System
1998 Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Computed at statutory rate (35%) $368,327 $63,814 $27,358 $101,007 $31,734 $9,162 $64,309
Increases (reductions) in tax
resulting from:
State income taxes net of
federal income tax effect 37,494 9,289 7,744 9,156 3,053 831 7,421
Depreciation 40,578 6,497 11,099 8,147 (686) 888 14,633
Amortization of investment
tax credits (21,285) (5,136) (5,061) (5,592) (1,512) (504) (3,480)
Flow-through/permanent
differences (3,570) 1,078 (4,404) (848) 149 (187) (18)
US tax on foreign income 108,194 - - - - - -
Non-taxable gain on sale
of foreign assets (20,283) - - - - - -
Change in UK statutory rate (31,703) - - - - - -
Foreign subsidiary basis difference (58,235) - - - - - -
Reduced rate on gain on sale
of foreign assets (56,712) - - - - - -
Non-deductible franchise fees 7,315 - - - - - -
Interest on perpetual instruments (5,467) - - - - - -
Benefit of Entergy Corporation
expenses - (5,212) (4,948) (3,947) (2,386) (629) (4,999)
Change in valuation allowance (106,636) - - - - - -
Other -- net 8,718 1,044 (15) 1,181 (2,321) 481 (603)
------------------------------------------------------------------------------
Total income taxes $266,735 $71,374 $31,773 $109,104 $28,031 $10,042 $77,263
==============================================================================
Effective Income Tax Rate 25.3% 39.1% 40.6% 37.8% 30.9% 38.4% 42.1%
Significant components of net deferred tax liabilities as of December
31, 2000 and 1999 are as follows (in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Deferred Tax Liabilities:
Net regulatory assets/(liabilities) ($1,193,795) ($197,577) ($448,460) ($249,983) ($32,968) $9,755 ($274,562)
Plant-related basis differences (3,073,388) (536,667) (1,034,502) (746,275) (216,102) (65,066) (413,200)
Rate deferrals (159,147) (17,554) (1,594) - (111,044) (28,955) -
Other (223,095) (132,928) (9,971) (60,390) (4,052) (2,682) (17,019)
--------------------------------------------------------------------------------------
Total (4,649,425) (884,726) (1,494,527) (1,056,648) (364,166) (86,948) (704,781)
--------------------------------------------------------------------------------------
Deferred Tax Assets:
Accumulated deferred investment
tax credit 168,841 34,626 44,526 45,173 7,424 2,852 34,240
Capital loss carryforwards 39,091 - - - - - -
Foreign tax credits 98,468 - - - - - -
Sale and leaseback 229,169 - - 103,200 - - 125,969
Removal cost 105,842 872 27,101 65,690 203 11,976 -
Unbilled revenues 25,790 - 13,143 - 4,845 7,802 -
Pension-related items 27,554 - 7,874 7,889 (2,335) 6,217 2,926
Rate refund 152,408 - 25,607 35,803 - - 123,306
Reserve for regulatory adjustments 117,437 - 117,437 - - - -
Transition cost accrual 43,568 43,568 - - - - -
Other 259,938 34,642 49,688 20,986 - 7,804 25,187
Valuation allowance (93,413) - - - - - -
---------------------------------------------------------------------------------------
Total 1,174,693 113,708 285,376 278,741 10,137 36,651 311,628
---------------------------------------------------------------------------------------
Net deferred tax liability ($3,474,732) ($771,018) ($1,209,151) ($777,907) ($354,029) ($50,297) ($393,153)
=======================================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Deferred Tax Liabilities:
Net regulatory assets/(liabilities) ($1,268,257) ($229,555) ($432,256) ($278,289) ($32,048) $4,480 ($300,589)
Plant-related basis differences (3,041,135) (533,375) (1,013,110) (749,257) (220,827) (62,104) (452,083)
Rate deferrals (77,652) (6,168) (3,128) - (44,214) (24,142) -
Other (201,958) (77,812) (15,157) (24,741) (9,214) (7,718) (22,412)
--------------------------------------------------------------------------------------
Total (4,589,002) (846,910) (1,463,651) (1,052,287) (306,303) (89,484) (775,084)
--------------------------------------------------------------------------------------
Deferred Tax Assets:
Accumulated deferred investment
tax credit 178,153 37,211 46,851 47,390 7,997 3,048 35,656
Net operating loss carryforwards 2,137 - 2,137 - - - -
Capital loss carryforwards 62,754 - - - - - -
Foreign tax credits 116,701 - - - - - -
Alternative minimum tax credit 40,658 - 40,658 - - - -
Sale and leaseback 230,690 - - 107,184 - - 123,506
Removal cost 108,572 943 26,848 66,786 1,994 12,001 -
Unbilled revenues 40,761 - 21,161 17,618 (1,183) 3,165 -
Pension-related items 32,734 - 10,810 9,509 (1,508) 8,064 2,883
Rate refund 142,984 - 45,781 20,270 - 1,347 102,422
Reserve for regulatory adjustments 124,078 - 124,078 - - - -
Transition cost accrual 43,127 43,127 - - - - -
FERC Settlement 12,638 - - - - - 12,638
Other 161,074 13,358 18,485 3,760 - 7,118 8,872
Valuation allowance (91,039) - - - - - -
-------------------------------------------------------------------------------------
Total 1,206,022 94,639 336,809 272,517 7,300 34,743 285,977
-------------------------------------------------------------------------------------
Net deferred tax liability ($3,382,980) ($752,271) ($1,126,842) ($779,770) ($299,003) ($54,741) ($489,107)
=====================================================================================
The valuation allowance is provided primarily against foreign tax
credit carryforwards, which can be utilized against future United States
taxes on foreign source income. If these carryforwards are not utilized,
they will expire between 2001 and 2004.
At December 31, 2000, unremitted earnings of foreign subsidiaries were
approximately $58.7 million. Since it is Entergy's intention to
indefinitely reinvest these earnings, no U.S. taxes have been provided.
Upon distribution of these earnings in the form of dividends or otherwise,
Entergy could be subject to U.S. income taxes (subject to foreign tax
credits) and withholding taxes payable to various foreign countries.
NOTE 4. LINES OF CREDIT AND RELATED SHORT-TERM BORROWINGS (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
The short-term borrowings of the domestic utility companies and System
Energy are limited to amounts authorized by the SEC. The current limits
authorized are effective through November 30, 2001. In addition to
borrowing from commercial banks, Entergy companies are authorized to borrow
from the Entergy System Money Pool (money pool). The money pool is an
inter-company borrowing arrangement designed to reduce the domestic utility
companies' dependence on external short-term borrowings. Borrowings from
the money pool and external borrowings combined may not exceed the SEC
authorized limits. The following are the SEC-authorized limits and
borrowings from the money pool for the domestic utility companies and
System Energy as of December 31, 2000 (there were no borrowings outstanding
from external sources):
Outstanding
Authorized Borrowings
(In Millions)
Entergy Arkansas $235 $30.7
Entergy Gulf States 340 -
Entergy Louisiana 225 -
Entergy Mississippi 103 33.3
Entergy New Orleans 35 5.7
System Energy 140 -
------ -----
Total $1,078 $69.7
====== =====
Other Entergy companies have SEC authorization to borrow from Entergy
Corporation through the money pool and from external sources in an
aggregate principal amount up to $265 million. These Entergy companies had
$153.2 million outstanding as of December 31, 2000 borrowed from the money
pool. Some of these borrowings are restricted as to use and are
collateralized by certain assets.
In May 2000, Entergy Corporation amended its 364-day bank credit
facility, increasing the capacity from $250 million to $500 million, of
which $387 million was outstanding as of December 31, 2000. The weighted-
average interest rate on Entergy's outstanding borrowings as of December
31, 2000 and 1999 was 7.43% and 7.48%, respectively. The commitment fee
for this facility is currently 0.15% of the line amount. Commitment fees
and interest rates on loans under the credit facility can fluctuate
depending on the senior debt ratings of the domestic utility companies.
There is further discussion of commitments for long-term financing
arrangements in Note 7 to the financial statements.
Entergy Arkansas, Entergy Louisiana, and Entergy Mississippi each
obtained 364-day credit facilities in 2001, and the lines have been fully
drawn. Entergy Arkansas will primarily use the proceeds to pay for costs
incurred in the December 2000 ice storms. Entergy Louisiana and Entergy
Mississippi will use the proceeds for general corporate purposes and
working capital needs. The facilities have variable interest rates and the
average commitment fee is 0.13%. The amounts and dates obtained for the
facilities follow:
Amount of
Company Facility Date Obtained
Entergy Arkansas $ 63 million January 31, 2001
Entergy Louisiana $ 30 million January 31, 2001
Entergy Mississippi $ 25 million February 2, 2001
In 2001, Entergy, Entergy Mississippi, and Entergy New Orleans
requested an increase from the SEC in their current authorized short-term
borrowing limits, which includes borrowings through the money pool. The
increases requested are as follows:
Company Current Limit Requested Limit
Entergy Mississippi $ 103 million $ 160 million
Entergy New Orleans $ 35 million $ 100 million
Other Entergy subsidiaries $ 265 million $ 420 million
The request will increase the current SEC authorized short-term borrowing
limits for the domestic utility companies and System Energy, which are
effective through November 30, 2001, from $1.078 billion to $1.2 billion.
NOTE 5. PREFERRED, PREFERENCE, AND COMMON STOCK (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans)
The number of shares authorized and outstanding, and dollar value of
preferred and preference stock for Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans as of December 31, 2000, and 1999 were:
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy Arkansas Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.32% Series 70,000 70,000 $ 7,000 $ 7,000 $103.65
4.72% Series 93,500 93,500 9,350 9,350 107.00
4.56% Series 75,000 75,000 7,500 7,500 102.83
4.56% 1965 Series 75,000 75,000 7,500 7,500 102.50
6.08% Series 100,000 100,000 10,000 10,000 102.83
7.32% Series 100,000 100,000 10,000 10,000 103.17
7.80% Series 150,000 150,000 15,000 15,000 103.25
7.40% Series 200,000 200,000 20,000 20,000 102.80
7.88% Series 150,000 150,000 15,000 15,000 103.00
Cumulative, $0.01 par value:
$1.96 Series (a) 600,000 600,000 15,000 15,000 25.00
--------- --------- -------- --------
Total without sinking fund 1,613,500 1,613,500 $116,350 $116,350
========= ========= ======== ========
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy Gulf States Preferred and Preference Stock
Preference Stock
Cumulative, without par value
7% Series (a)(b) - 6,000,000 $ - $150,000
========= ========= ======== ========
Preferred Stock
Authorized 6,000,000, $100 par
value, cumulative
Without sinking fund:
4.40% Series 51,173 51,173 $ 5,117 $ 5,117 $108.00
4.50% Series 5,830 5,830 583 583 105.00
4.40%-1949 Series 1,655 1,655 166 166 103.00
4.20% Series 9,745 9,745 975 975 102.82
4.44% Series 14,804 14,804 1,480 1,480 103.75
5.00% Series 10,993 10,993 1,099 1,099 104.25
5.08% Series 26,845 26,845 2,685 2,685 104.63
4.52% Series 10,564 10,564 1,056 1,056 103.57
6.08% Series 32,829 32,829 3,283 3,283 103.34
7.56% Series 312,329 350,000 31,233 35,000 101.80
--------- --------- -------- --------
Total without sinking fund 476,767 514,438 $ 47,677 $ 51,444
========= ========= ======== ========
With sinking fund:
Adjustable Rate - A, 7.02%(c) 132,024 144,000 $ 13,202 $ 14,400 $100.00
Adjustable Rate - B, 7.03%(c) 175,562 202,500 17,556 20,250 100.00
--------- --------- -------- --------
Total with sinking fund 307,586 346,500 $ 30,758 $ 34,650
========= ========= ======== ========
Fair Value of Preference Stock and
Preferred Stock with sinking fund (e) $ 29,475 $183,357
======== ========
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy Louisiana Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.96% Series 60,000 60,000 $ 6,000 $ 6,000 $104.25
4.16% Series 70,000 70,000 7,000 7,000 104.21
4.44% Series 70,000 70,000 7,000 7,000 104.06
5.16% Series 75,000 75,000 7,500 7,500 104.18
5.40% Series 80,000 80,000 8,000 8,000 103.00
6.44% Series 80,000 80,000 8,000 8,000 102.92
7.84% Series 100,000 100,000 10,000 10,000 103.78
7.36% Series 100,000 100,000 10,000 10,000 103.36
Cumulative, $25 par value:
8.00% Series 1,480,000 1,480,000 37,000 37,000 25.00
--------- --------- -------- --------
Total without sinking fund 2,115,000 2,115,000 $100,500 $100,500
========= ========= ======== ========
With sinking fund:
8.00% Series (d) 350,000 350,000 35,000 35,000 -
--------- --------- -------- --------
Total with sinking fund 350,000 350,000 $ 35,000 $ 35,000
========= ========= ======== ========
Fair Value of Preferred Stock with sinking fund (e) $ 34,300 $ 35,364
======== ========
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy Mississippi Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.36% Series 59,920 59,920 $ 5,992 $ 5,992 $103.86
4.56% Series 43,887 43,888 4,389 4,389 107.00
4.92% Series 100,000 100,000 10,000 10,000 102.88
7.44% Series 100,000 100,000 10,000 10,000 102.81
8.36% Series 200,000 200,000 20,000 20,000 100.00
--------- --------- -------- --------
Total without sinking fund 503,807 503,808 $ 50,381 $ 50,381
========= ========= ======== ========
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy New Orleans Preferred Stock
Without sinking fund:
Cumulative, $100 par value
4.75% Series 77,798 77,798 $ 7,780 $ 7,780 $105.00
4.36% Series 60,000 60,000 6,000 6,000 104.57
5.56% Series 60,000 60,000 6,000 6,000 102.59
--------- --------- -------- --------
Total without sinking fund 197,798 197,798 $ 19,780 $ 19,780
========= ========= ======== ========
Shares Call Price Per
Authorized Share as of
and Outstanding December 31,
2000 1999 2000 1999 2000
(Dollars in Thousands)
Entergy Corporation
Subsidiary's Preference Stock
(a)(b) - 6,000,000 $ - $150,000
========= ========= ======== ========
Subsidiaries' Preferred Stock
Without sinking fund 4,906,872 4,944,544 $334,688 $338,455
========= ========= ======== ========
With sinking fund 657,586 696,500 $ 65,758 $ 69,650
========= ========= ======== ========
Fair Value of Preference Stock
and Preferred Stock with
sinking fund (e) $ 63,775 $218,721
======== ========
(a) The total dollar value represents the liquidation value of $25 per
share.
(b) These series became mandatorily redeemable on July 15, 2000.
(c) Represents weighted-average annualized rates for 2000.
(d) This series is not redeemable as of December 31, 2000, but becomes
mandatorily redeemable on November 1, 2001.
(e) Fair values were determined using bid prices reported by dealer
markets and by nationally recognized investment banking firms. There
is additional disclosure of fair value of financial instruments in
Note 15 to the financial statements.
Changes in the preferred stock, with and without sinking fund, and
preference stock of Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy Mississippi during the last three years were:
Number of Shares
2000 1999 1998
Preference stock retirements
Entergy Gulf States (6,000,000) - -
Preferred stock retirements
Entergy Arkansas
$100 par value - (200,000) (50,000)
$25 par value - (81,085) (160,000)
Entergy Gulf States
$100 par value (76,585) (258,471) (84,812)
Entergy Louisiana
$100 par value - (500,000) -
Cash sinking fund requirements and mandatory redemptions for the next
five years for preferred stock outstanding as of December 31, 2000, are as
follows:
Entergy Entergy
Entergy Gulf States Louisiana
(In Thousands)
2001 $38,450 $ 3,450 $35,000
2002 3,450 3,450 -
2003 3,450 3,450 -
2004 3,450 3,450 -
2005 3,450 3,450 -
Entergy Gulf States has the annual non-cumulative option to redeem, at
par, additional amounts of certain series of its outstanding preferred
stock.
Under the terms of the Merger Agreement, Entergy will use its
commercially reasonable efforts to purchase in open market transactions
$430 million of its common stock prior to the close of the Merger. As of
December 31, 2000, Entergy has repurchased 4.2 million shares for an
aggregate amount of $145.6 million after the signing of the Merger
Agreement. Prior to the date of the Merger Agreement, Entergy had been
repurchasing shares under two Board authorizations. In October 1998, the
Board approved a plan for the repurchase of Entergy common stock through
December 31, 2001 to fulfill the requirements of various compensation and
benefit plans. This stock repurchase plan provided for open market
purchases of up to 5 million shares for an aggregate consideration of up to
$250 million. In July 1999, the Board approved the commitment of up to an
additional $750 million for the repurchase of Entergy common stock through
December 31, 2001. Shares were repurchased on a discretionary basis.
Prior to the date of the Merger Agreement, Entergy had repurchased 25.3
million shares for an aggregate amount of $652.5 million under these two
Board authorizations.
Entergy Corporation reissues treasury shares to meet the requirements
of the Stock Plan for Outside Directors (Directors' Plan), the Equity
Ownership Plan of Entergy Corporation and Subsidiaries (Equity Ownership
Plan), and certain other stock benefit plans. The Directors' Plan awards
to nonemployee directors a portion of their compensation in the form of a
fixed number of shares of Entergy Corporation previously repurchased common
stock. Shares awarded under the Directors' Plan were 5,650 during 2000;
11,400 during 1999; and 5,100 during 1998.
During 2000, Entergy Corporation issued 89,425 shares of its
previously repurchased common stock to satisfy stock options exercised and
stock purchases under the Equity Ownership Plan. In addition, Entergy
Corporation received proceeds of $2.0 million from the issuance of 89,894
shares of common stock under its dividend reinvestment and stock purchase
plan during 2000.
The Equity Ownership Plan grants stock options, equity awards, and
incentive awards to key employees of the domestic utility companies. The
costs of equity and incentive awards are charged to income over the period
of the grant or restricted period, as appropriate. In 2000, $14 million
was charged to compensation expense. Stock options are granted at exercise
prices not less than market value on the date of grant. The options
granted prior to 1999 were generally exercisable six months from the date
of grant, with the exception of 40,000 options granted on December 1, 1998,
which became exercisable on January 1, 2000. The majority of options
granted in 2000 and 1999 will become exercisable in equal amounts on each
of the first three anniversaries of the date of grant. Options are not
exercisable beyond ten years from the date of the grant.
In April 2000, the Board authorized the establishment of the Equity
Awards Plan in substantially the same form as the Equity Ownership Plan.
Equity awards and incentive awards earned under this plan will be in the
form of performance units, which are equal to the cash value of shares of
Entergy Corporation common stock at the time of payment. Performance units
will earn the cash equivalent of the dividends paid during the performance
period applicable to each plan. Beginning January 2001, most stock options
will be granted under the Equity Awards Plan. Stock options under this plan
will be granted on the same general terms as stock options granted under
the Equity Ownership Plan.
Entergy does not recognize compensation expense for stock options
issued with exercise prices at market value on the date of grant. The
impact on Entergy's net income for each of the years 2000, 1999, and 1998
would have been $19.0 million, $15.5 million, and $278,000, respectively,
had compensation cost for the stock options been recognized based on the
fair value of options at the grant date for awards under the option plan.
The impact on earnings per share for each of the years 2000 and 1999 would
have been a reduction of $.08 and $.06, respectively. The impact on
earnings per share for 1998 would have been less than $.01 per share.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following stock
option weighted-average assumptions:
2000 1999 1998
Stock price volatility 24.4% 20.3% 20.9%
Expected term in years 5 5 5
Risk-free interest rate 6.6% 4.7% 5.1%
Dividend yield 5.2% 4.0% 5.4%
Dividend payment $1.20 $1.20 $1.58
Stock option transactions are summarized as follows:
2000 1999 1998
---------------------------------------------------------------------
Weighted- Weighted- Weighted-
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Options Price Options Price Options Price
---------------------------------------------------------------------
Beginning-of-year balance 5,493,882 $29.48 901,639 $26.21 1,176,308 $25.12
Options granted 7,219,134 22.98 5,228,189 29.88 125,000 29.46
Options exercised (920,077) 28.26 (213,084) 23.69 (350,169) 23.37
Options forfeited (324,623) 28.29 (422,862) 30.38 (49,500) 28.56
---------------------------------------------------------------------
End-of-year balance 11,468,316 $25.52 5,493,882 $29.48 901,639 $26.21
=====================================================================
Options exercisable at year-end 1,641,062 601,307 861,639
Weighted average fair value of
options on date of grant $4.30 $4.72 $4.11
The following table summarizes information about stock options outstanding
as of December 31, 2000:
Options Outstanding Options Exercisable
Weighted-Avg
Remaining Weighted- Number Weighted-
Range of As of Contractual Avg. Exercise Exercisable Avg. Exercise
Exercise 12/31/00 Life-Yrs. Price at Price
Prices 12/31/00
------------------------------------------------------------------------------------
$18 - $30 11,032,956 9.1 $25.28 1,466,774 $29.00
$30 - $40 435,360 7.5 $31.57 174,288 $32.58
---------- ---------
$18 - $40 11,468,316 9.1 $25.52 1,641,062 $29.38
========== =========
Near the end of January 2001, an additional 3,274,774 options became
exercisable with a weighted average exercise price of $25.32.
To meet the requirements of the Employee Stock Investment Plan (ESIP),
the SEC had authorized Entergy Corporation to issue or acquire, through
March 31, 2000, up to 2,000,000 shares of its common stock to be held as
treasury shares. The ESIP was authorized through the 1999 plan year ending
March 31, 2000 and was not renewed for the 2000 plan year. Entergy
Corporation could issue either treasury shares or previously authorized but
unissued shares to satisfy ESIP requirements. Under the terms of the ESIP,
employees could choose each year to have up to 10% of their regular annual
salary (not to exceed $25,000) withheld to purchase the Company's common
stock at a purchase price equal to 85% of the lower of the market value on
the first or last business day of the plan year ending March 31. Under the
plan, the number of subscribed shares was 382,878 in 2000; 285,505 in 1999;
and 294,108 in 1998.
The fair value of ESIP shares granted was estimated on the date of the
grant using the Black-Scholes option-pricing model with expected ESIP
weighted-average assumptions:
2000 1999 1998
Stock price volatility 35.6% 20.9% 24.1%
Expected term in years 1 1 1
Risk-free interest rate 5.9% 4.6% 5.1%
Dividend yield 5.9% 4.3% 6.1%
Dividend payment $1.20 $1.20 $1.80
The weighted-average fair value of those purchase rights granted was
$3.39, $5.90, and $6.32 in 2000, 1999, and 1998 respectively. The impact
on, or (benefit) to Entergy's net income would have been $1 million,
($3,086), and ($256,000) in 2000, 1999, and 1998, respectively, had
compensation cost for the ESIP been determined based on the fair value at
the grant date for awards under the ESIP. The impact on earnings per share
for each of the years would have been less than $.01 per share.
Entergy sponsors the Savings Plan of Entergy Corporation and
Subsidiaries (Savings Plan). The Savings Plan is a defined contribution
plan covering eligible employees of Entergy and its subsidiaries who have
completed certain service requirements. The Savings Plan provides that the
employing Entergy subsidiary may make matching contributions to the plan in
an amount equal to 50% of the participant's basic contribution, up to 6% of
their salary, in shares of Entergy Corporation common stock. Entergy's
subsidiaries' contributions to the Savings Plan, and any income thereon,
are invested in shares of Entergy Corporation common stock. Effective
January 1, 2001, participants in the Savings Plan may direct their matching
contributions from the employing Entergy subsidiary in an amount equal to
50% of the employee's contribution to other investment funds. Employees
who continue to direct their company-matching contributions to the purchase
of shares of Entergy Corporation common stock will receive matching
contributions in the amount of 75% of their basic contribution, which is
limited to 6% of their salary. Entergy's subsidiaries contributed $16.1
million in 2000, $14.5 million in 1999, and $13.6 million in 1998 to the
Savings Plan.
NOTE 6. COMPANY-OBLIGATED REDEEMABLE PREFERRED SECURITIES
(Entergy Arkansas, Entergy Louisiana, Entergy Gulf States)
Entergy Arkansas Capital I, Entergy Louisiana Capital I, and Entergy
Gulf States Capital I (Trusts) were established as financing subsidiaries
of Entergy Arkansas, Entergy Louisiana, and Entergy Gulf States,
respectively, for the purpose of issuing common and preferred securities.
The Trusts issue Cumulative Quarterly Income Preferred Securities
(Preferred Securities) to the public and issue common securities to their
parent companies. Proceeds from such issues are used to purchase junior
subordinated deferrable interest debentures (Debentures) from the parent
company. The Debentures held by each Trust are its only assets. Each
Trust uses interest payments received on the Debentures owned by it to make
cash distributions on the Preferred Securities.
Fair
Market
Preferred Common Interest Trust's Value of
Date Securities Securities Rate Investment Preferred
Trusts Of Issue Issued Issued Securities/ in Securities
Debentures Debentures at 12-31-00
(In Millions) (In Millions)
Arkansas Capital I 8-14-96 $60.0 $1.9 8.50% $61.9 $57.6
Louisiana Capital I 7-16-96 $70.0 $2.2 9.00% $72.2 $70.0
Gulf States Capital I 1-28-97 $85.0 $2.6 8.75% $87.6 $83.3
The Preferred Securities of the Trusts mature in the years 2045 and
2046. The Preferred Securities are redeemable at 100% of their principal
amount at the option of Entergy Arkansas, Entergy Louisiana, and Entergy
Gulf States beginning in 2001 and 2002, or earlier under certain limited
circumstances, including the loss of the tax deduction arising out of the
interest paid on the Debentures. Entergy Arkansas, Entergy Louisiana, and
Entergy Gulf States have, pursuant to certain agreements, fully and
unconditionally guaranteed payment of distributions on the Preferred
Securities issued by their respective trusts. Entergy Arkansas, Entergy
Louisiana, and Entergy Gulf States are the owners of all of the common
securities of their individual Trusts, which constitute 3% of each Trust's
total capital.
NOTE 7. LONG - TERM DEBT (Entergy Corporation, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
Long-term debt as of December 31, 2000 was:
Maturities Interest Rates Entergy Entergy Entergy Entergy Entergy System
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
Mortgage Bonds
2001 2005 5.800% 8.500% $2,455,109 $455,000 $1,001,750 $338,359 $400,000 $55,000 $205,000
2006 2010 6.450% 8.000% 365,000 100,000 115,000 80,000 70,000
2011 2026 7.000% 8.940% 954,950 260,000 444,950 115,000 60,000 75,000
Governmental Obligations (a)
2010 2020 5.450% 9.000% 591,635 214,200 377,435
2021 2030 4.850% 8.000% 1,051,750 72,000 102,000 415,120 46,030 416,600
Saltend Project Credit
Facility, avg rate 6.70% due 2014 581,938
Damhead Creek Project Credit
Facility, avg rate 6.55% due 2016 507,194
Note Payable to NYPA
non-interest bearing, due 2001-2015 744,405
Long-Term DOE Obligation (Note 9) 144,316 144,316
Waterford 3 Lease Obligation
7.45% (Note 10) 330,306 330,306
Grand Gulf Lease Obligation
7.02% (Note 10) 462,534 462,534
Other Long-Term Debt 23,596 621 9,581
Unamortized Premium and Discount - Net (16,425) (6,325) (4,087) (2,001) (1,563) (969) (1,480)
-------------------------------------------------------------------------------------
Total Long-Term Debt 8,196,308 1,239,812 1,931,629 1,311,784 584,467 199,031 1,082,654
Less Amount Due Within One Year 464,215 100 122,750 35,088 - - 151,800
-------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
Within One Year $7,732,093 $1,239,712 $1,808,879 $1,276,696 $584,467 $199,031 $930,854
=====================================================================================
Fair Value of Long-Term Debt (b) $7,342,810 $1,104,206 $2,013,249 $1,003,426 $592,697 $202,525 $593,170
=====================================================================================
Long-term debt as of December 31, 1999 was:
Maturities Interest Rates Entergy Entergy Entergy Entergy Entergy System
From To From To Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
Mortgage Bonds
2000 2004 5.800% 8.250% $1,642,109 $240,000 $603,750 $288,359 $280,000 $25,000 $205,000
2005 2010 6.450% 8.000% 578,000 215,000 98,000 115,000 80,000 70,000
2011 2026 7.000% 8.940% 954,950 260,000 444,950 115,000 60,000 75,000
Governmental Obligations (a)
2000 2010 5.450% 8.250% 22,315 220 22,095
2011 2020 5.600% 9.000% 569,535 214,200 355,335
2021 2030 4.850% 8.000% 1,051,750 72,000 102,000 415,120 46,030 416,600
Debentures
2000 2000 7.380% 7.800% 75,000 75,000
Saltend Project Credit
Facility, avg rate 6.93% due 2014 578,681
Damhead Creek Project Credit
Facility, avg rate 5.98% due 2016 342,929
EP Edegel, Inc. Note Payable, 7.7%,
due 2000 67,000
Long-Term DOE Obligation (Note 9) 136,088 136,088
Waterford 3 Lease Obligation
7.45% (Note 10) 330,306 330,306
Grand Gulf Lease Obligation
7.02% (Note 10) 465,480 465,480
Other Long-Term Debt 10,391 620 9,771
Unamortized Premium and Discount - Net (17,396) (7,107) (4,320) (1,934) (1,564) (917) (1,554)
-------------------------------------------------------------------------------------
Total Long-Term Debt 6,807,138 1,131,021 1,631,581 1,261,851 464,466 169,083 1,160,526
Less Amount Due Within One Year 194,555 220 - 116,388 - - 77,947
-------------------------------------------------------------------------------------
Long-Term Debt Excluding Amount Due
Within One Year $6,612,583 $1,130,801 $1,631,581 $1,145,463 $464,466 $169,083 $1,082,579
=====================================================================================
Fair Value of Long-Term Debt (b) $5,815,189 $966,559 $1,651,415 $934,404 $446,168 $163,131 $664,902
=====================================================================================
(a) Consists of pollution control bonds, certain series of which are
secured by non-interest bearing first mortgage bonds.
(b) The fair value excludes lease obligations, long-term DOE obligations,
and other long-term debt and includes debt due within one year. It is
determined using bid prices reported by dealer markets and by
nationally recognized investment banking firms.
On January 31, 2001, Entergy Mississippi issued $70 million of 6.25%
Series First Mortgage Bonds due February 1, 2003. Proceeds of the issuance
will be used for general corporate purposes, including the retirement of
short-term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
On February 23, 2001, Entergy New Orleans issued $30 million of 6.65%
Series First Mortgage Bonds due March 1, 2004. Proceeds of the issuance
will be used for general corporate purposes, including the retirement of
short-term indebtedness incurred from money pool borrowings for capital
expenditures and working capital needs.
The annual long-term debt maturities (excluding lease obligations) and
annual cash sinking fund requirements for debt outstanding as of December
31, 2000, for the next five years are as follows:
Entergy Entergy Entergy Entergy Entergy System
Entergy(a) Arkansas Gulf States(b) Louisiana(c) Mississippi New Orleans Energy
(In Thousands)
2001 $430,927 - $122,750 $18,700 - - $135,000
2002 667,348 $85,000 150,000 169,660 $ 65,000 - 70,000
2003 1,086,379 255,000 339,000 150,000 185,000 $25,000 -
2004 583,647 - 292,000 - 150,000 - -
2005 365,200 115,000 98,000 - - 30,000 -
(a) Not included are other sinking fund requirements of approximately
$40.9 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(b) Not included are other sinking fund requirements of approximately
$39.9 million annually, which may be satisfied by cash or by
certification of property additions at the rate of 167% of such
requirements.
(c) Not included are other sinking fund requirements of approximately $1.0
million annually, which may be satisfied by cash or by certification
of property additions at the rate of 167% of such requirements.
EPDC maintains a credit facility of BPS45 million ($67.2 million) to
finance the acquisition of the Damhead Creek Project, to assist in the
financing of the Saltend project, and for general corporate purposes in
connection with the acquisition and development of power generation,
distribution or transmission facilities. No cash advances were outstanding
under this facility at December 31, 2000 and 1999. The interest rate on
the facility was 6.55% and 5.88% as of December 31, 2000 and 1999,
respectively. The commitment fee is 0.17% of the undrawn amount. As of
December 31, 2000, EPDC had BPS40.3 million ($60.2 million) of letters of
credit outstanding under the credit facility to support project commitments
on the Saltend and Damhead Creek projects and for other development
purposes. In February 2001, after the Damhead Creek project reached
commercial operation, EPDC paid its equity commitment of BPS36.1 million
($53.9 million) on the project and cancelled the letter of credit securing
that commitment. The amount of letters of credit outstanding under this
facility was therefore reduced to BPS4.2 million ($6.3 million).
Saltend Cogeneration Company Limited (SCCL), an indirect wholly-owned
subsidiary of EPDC, maintains a BPS402.8 million ($601.4 million) non-
recourse senior credit facility. This facility provides term loan
facilities, cost overrun and working capital facilities, and contingent
letter of credit and guarantee facilities to finance the construction and
operation of the Saltend power plant. Borrowings under the senior credit
facility are repayable over a 15-year period that began December 31, 2000.
In addition, SCCL maintains a BPS68.2 million ($101.8 million) subordinated
credit facility, which was drawn August 31, 2000. SCCL used the proceeds
from the subordinated credit facility to repay a portion of the senior
credit facility. The subordinated credit facility is repayable over a 10-
year period that began December 31, 2000. All of the assets of SCCL are
pledged as collateral under these two credit facilities. Under the
facilities, SCCL's ability to make distributions of dividends, loans, or
advances to EPDC is restricted by, among other things, the requirement to
pay permitted project costs, make debt repayments, and maintain cash
reserves.
In February 1998, SCCL entered into 15-year interest rate swap
agreements for 85% of the debt outstanding under the bridge and term loan
portion of its senior credit facility on an average fixed-rate basis of
6.44%. At December 31, 2000, SCCL had outstanding interest rate swap
agreements totalling a notional amount of BPS296.9 million ($443.3
million). The mark-to-market valuation of the interest rate swap
agreements at December 31, 2000, was a net liability of BPS11.1 million
($16.6 million).
Damhead Finance LDC (DFLDC), an indirect wholly-owned subsidiary of
EPDC, maintains a BPS463.4 million ($691.9 million) non-recourse senior
credit facility. The facility provides bridge and term loan facilities,
cost overrun and working capital facilities, and contingent letters of
credit and guarantee facilities to finance the construction and operation
of the Damhead Creek power plant. Borrowings under the senior credit
facility are repayable over a fifteen-year period beginning December 31,
2001. DFLDC also maintains a BPS36.1 million ($53.9 million) subordinated
credit facility, which was drawn in February 2001. DFLDC used the proceeds
from the subordinated credit facility to repay a portion of the senior
credit facility. The subordinated credit facility is payable over a ten-
year period beginning December 31, 2001. After EPDC paid its equity
commitment in February 2001, an equity bridge facility of BPS35.8 million
($53.5 million) under the senior credit facility was repaid. All of the
assets of DFLDC are pledged as collateral under the senior credit facility
and the subordinated credit facility. DFLDC's ability to make
distributions of dividends, loans, or advances to EPDC is restricted by,
among other things, the requirement to pay permitted project costs, make
debt repayments, and maintain cash reserves.
In 2000, a subsidiary of DFLDC entered into 10-year interest rate swap
agreements with an average fixed rate of 6.52% for approximately 80.9% of
the debt outstanding under the bridge and senior term loan portion of the
senior credit facility. At December 31, 2000, the interest rate swap
agreements outstanding totalled a notional amount of BPS277.6 million
($414.5 million). The mark-to-market valuation of the interest rate swap
agreements at December 31, 2000, was a net liability of BPS12.3 million
($18.4 million).
In November 2000, Entergy's domestic non-utility nuclear business
purchased the FitzPatrick and Indian Point 3 power plants in a seller-
financed transaction. Entergy issued notes to NYPA with seven annual
installments of approximately $108 million commencing one year from the
date of the closing, and eight annual installments of $20 million
commencing eight years from the date of the closing. These notes do not
have a stated interest rate.
NOTE 8. DIVIDEND RESTRICTIONS (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, System Energy)
Provisions within the Articles of Incorporation or pertinent
indentures and various other agreements relating to the long-term debt and
preferred stock of certain of Entergy Corporation's subsidiaries restrict
the payment of cash dividends or other distributions on their common and
preferred stock. Additionally, PUHCA prohibits Entergy Corporation's
subsidiaries from making loans or advances to Entergy Corporation. As of
December 31, 2000, Entergy Arkansas and Entergy Mississippi had restricted
retained earnings unavailable for distribution to Entergy Corporation of
$199.3 million and $15.8 million, respectively. In 2000, Entergy
Corporation received dividend payments and returns of capital totaling
$918.3 million from subsidiaries.
Under the Merger Agreement, Entergy can continue to pay dividends at
existing levels with increases permitted up to 5% over the amount of the
previous twelve-month period. In October 2000 and January 2001, the Board
declared quarterly dividends of $0.315 per share on Entergy's common stock.
This dividend level is an increase of 5% over the dividend level for the
twelve-month period prior to the Merger Agreement.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Capital Requirements and Financing (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy)
For the years 2001 through 2003, Entergy plans to spend $8.2 billion
in a capital investment plan focused on improving service at the domestic
utility companies and growing the global power development and domestic non-
utility nuclear businesses. It is estimated that $2.6 billion will be
spent by the domestic utility companies, $3.6 billion by the global power
development business, and $2.0 billion by the domestic non-utility nuclear
business. The capital investment plan is subject to modification based on
the ongoing effects of transition to competition planning, the ability to
recover regulated utility costs in rates, and the proposed business
combination with FPL Group. Additionally, the plan is contingent upon the
ability to access the capital necessary to finance the planned
expenditures, and significant borrowings may be necessary to implement
these capital spending plans. Capital expenditures (including nuclear fuel
but excluding AFUDC) for Entergy are estimated at $3.2 billion in 2001,
$2.5 billion in 2002, and $2.6 billion in 2003. Included in these totals
are estimated construction expenditures for the domestic utility companies
and System Energy as follows:
2001 2002 2003 Total
(In Millions)
Entergy Arkansas $297 $200 $205 $702
Entergy Gulf States $293 $216 $220 $729
Entergy Louisiana $222 $175 $168 $565
Entergy Mississippi $147 $128 $113 $388
Entergy New Orleans $53 $46 $48 $147
System Energy $41 $14 $12 $67
The domestic utility companies will mainly focus their planned
spending on distribution and transmission projects that will support
continued reliability improvements and transitioning to a more competitive
environment.
The global power development business will mainly focus its planned
spending on several merchant power plant projects either under construction
or in the planning stages in the U.S. and Europe, including the purchase of
gas turbines scheduled for delivery in 2001 through 2004 under an option to
purchase obtained from GE Power Systems.
The domestic non-utility nuclear business will mainly focus its
planned spending on the acquisition of U.S. nuclear power plants from other
utilities, including the anticipated purchase in 2001, pending regulatory
approvals, of the 957 MW Indian Point 2 nuclear power plant located in
Westchester County, New York.
Entergy will also require $2.4 billion during the period 2001-2003 to
meet long-term debt and preferred stock maturities and cash sinking fund
requirements. Entergy plans to meet these requirements primarily with
internally generated funds and cash on hand, supplemented by proceeds from
the issuance of debt, outstanding credit facilities, and project financing.
Certain domestic utility companies and System Energy may also continue the
reacquisition or refinancing of all or a portion of certain outstanding
series of preferred stock and long-term debt. See "MANAGEMENT'S FINANCIAL
DISCUSSION AND ANALYSIS - LIQUIDITY AND CAPITAL RESOURCES" for additional
discussion of Entergy's capital spending plans.
Sales Warranties and Indemnities (Entergy Corporation)
In the Entergy London and CitiPower sales transactions, Entergy or its
subsidiaries made certain warranties to the purchasers. These warranties
include representations regarding litigation, accuracy of financial
accounts, and the adequacy of existing tax provisions. Notice of a claim
on the CitiPower warranties must have been given by December 2000, and
Entergy's potential liability is limited to A$100 million ($56 million).
Notice of a claim on the Entergy London warranties had to be given for
certain items by December 1999, and for the tax warranties, must be given
by June 30, 2001. Entergy's liability is limited to BPS1.4 billion ($2.1
billion) on certain tax warranties and BPS140 million ($209 million) on the
remaining warranties relating to the Entergy London sale. No such notices
have been received. Entergy has also agreed to maintain the net asset
value of the subsidiary that sold Entergy London at $700 million through
June 30, 2001. Management periodically reviews reserve levels for these
warranties and believes it has adequately provided for the ultimate
resolution of such matters as of December 31, 2000.
Fuel Purchase Agreements
(Entergy Arkansas and Entergy Mississippi)
Entergy Arkansas has long-term contracts for the supply of low-sulfur
coal to White Bluff and Independence (which is also 25% owned by Entergy
Mississippi). These contracts, which expire in 2002 and 2011,
respectively, provide for approximately 85% of Entergy Arkansas' expected
annual coal requirements. Additional requirements are satisfied by spot
market purchases.
(Entergy Gulf States)
Entergy Gulf States has a contract for a supply of low-sulfur coal for
Nelson Unit 6, which should be sufficient to satisfy the fuel requirements
at Nelson Unit 6 through 2010. Effective April 1, 2000, Louisiana
Generating LLC assumed ownership of Cajun's interest in the Big Cajun
generating facilities. The management of Louisiana Generating LLC has
advised Entergy Gulf States that it has executed coal supply and
transportation contracts that should provide an adequate supply of coal for
the operation of Big Cajun 2, Unit 3 for the foreseeable future.
(Entergy Louisiana)
In June 1992, Entergy Louisiana agreed to a 20-year natural gas supply
contract. Entergy Louisiana agreed to purchase natural gas in annual
amounts equal to approximately one-third of its projected annual fuel
requirements for certain generating units. Annual demand charges
associated with this contract are estimated to be $7.2 million. Such
charges aggregate $87 million for the years 2001 through 2012.
(Entergy Corporation)
Entergy's global power development business has entered into gas
supply contracts at the project level to supply up to 100% of the gas
requirements for the Saltend and Damhead Creek power plants located in the
UK. Both contracts have 15-year terms and include a take-or-pay obligation
for approximately 75% of the gas requirement for each plant.
Sales Agreements/Power Purchases
(Entergy Gulf States)
In 1988, Entergy Gulf States entered into a joint venture with a
primary term of 20 years with Conoco, Inc., Citgo Petroleum Corporation,
and Vista Chemical Company (collectively the Industrial Participants).
Under this joint venture, Entergy Gulf States' Nelson Units 1 and 2 were
sold to NISCO, a partnership consisting of the Industrial Participants and
Entergy Gulf States. The Industrial Participants supply the fuel for the
units, while Entergy Gulf States operates the units at the discretion of
the Industrial Participants and purchases the electricity produced by the
units. Entergy Gulf States purchased electricity from the joint venture
totaling $62.8 million in 2000, $51.4 million in 1999, and $57.5 million in
1998.
(Entergy Louisiana)
Entergy Louisiana has an agreement extending through the year 2031 to
purchase energy generated by a hydroelectric facility known as the Vidalia
project. Entergy Louisiana made payments under the contract of
approximately $58.6 million in 2000, $70.3 million in 1999, and
$77.8 million in 1998. If the maximum percentage (94%) of the energy is
made available to Entergy Louisiana, current production projections would
require estimated payments of approximately $88.8 million in 2001, and a
total of $3.4 billion for the years 2002 through 2031. Entergy Louisiana
currently recovers the costs of the purchased energy through its fuel
adjustment clause.
(Entergy Corporation)
In the purchase transaction with Boston Edison, Entergy entered into
firm power purchase agreements with Boston Edison and other utilities that
expire at the end of 2004. One hundred percent of Pilgrim's output is
committed to those parties through 2001, and that commitment decreases to
50% by 2003. In the purchase transaction with NYPA, Entergy entered into
firm power purchase agreements with NYPA that expire at the end of 2004.
The Indian Point 3 power purchase agreement is for 100% of the plant's
output. The FitzPatrick power purchase agreement is for 100% of the
plant's output through 2003 and approximately 45% of the plant's output in
2004.
System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
The domestic utility companies that are owners of System Fuels have
made loans to System Fuels to finance its fuel procurement, delivery, and
storage activities. The following loans outstanding to System Fuels as of
December 31, 2000 mature in 2008:
Owner Ownership Loan Outstanding at December 31, 2000
Percentage
Entergy Arkansas 35% $11.0 million
Entergy Louisiana 33% $14.2 million
Entergy Mississippi 19% $ 5.5 million
Entergy New Orleans 13% $ 3.3 million
Nuclear Insurance (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, System
Energy)
The Price-Anderson Act limits public liability of a nuclear plant
owner for a single nuclear incident to approximately $9.5 billion.
Protection for this liability is provided through a combination of private
insurance (currently $200 million each for Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, System Energy, and Entergy's domestic non-
utility nuclear business) and an industry assessment program. Under the
assessment program, the maximum payment requirement for each nuclear
incident would be $88.1 million per reactor, payable at a rate of
$10 million per licensed reactor per incident per year. Entergy has eight
licensed reactors, including Pilgrim, Indian Point 3, and FitzPatrick. As
a co-licensee of Grand Gulf 1 with System Energy, SMEPA would share 10% of
this obligation. In addition, each owner/licensee of Entergy's eight
nuclear units participates in a private insurance program that provides
coverage for worker tort claims filed for bodily injury caused by radiation
exposure. The program provides for a maximum assessment of approximately
$24.8 million for the eight nuclear units in the event that losses exceed
accumulated reserve funds.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System
Energy, and Entergy's domestic non-utility nuclear business are also
members of certain insurance programs that provide coverage for property
damage, including decontamination and premature decommissioning expense, to
members' nuclear generating plants. As of December 31, 2000, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy were
each insured against such losses up to $2.3 billion. Entergy's domestic non-
utility nuclear business is insured for $1.115 billion in property damages
under these insurance programs. In addition, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and Entergy's domestic non-utility nuclear business are members of an
insurance program that covers certain replacement power and business
interruption costs incurred due to prolonged nuclear unit outages. Under
the property damage and replacement power/business interruption insurance
programs, these Entergy subsidiaries could be subject to assessments if
losses exceed the accumulated funds available to the insurers. As of
December 31, 2000, the maximum amounts of such possible assessments were:
Entergy Arkansas - $12.0 million; Entergy Gulf States - $9.4 million;
Entergy Louisiana - $10.7 million; Entergy Mississippi - $0.7 million;
Entergy New Orleans - $0.3 million; System Energy - $9.6 million, and
Entergy's domestic non-utility nuclear business - $25.3 million. Under its
agreement with System Energy, SMEPA would share in System Energy's
obligation.
Entergy maintains property insurance for each of its nuclear units in
excess of the NRC's minimum requirement for nuclear power plant licensees
of $1.06 billion per site. NRC regulations provide that the proceeds of
this insurance must be used, first, to render the reactor safe and stable,
and second, to complete decontamination operations. Only after proceeds
are dedicated for such use and regulatory approval is secured would any
remaining proceeds be made available for the benefit of plant owners or
their creditors.
Spent Nuclear Fuel and Decommissioning Costs (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, and System Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, System
Energy, and Entergy's domestic non-utility nuclear business provide for
estimated future disposal costs for spent nuclear fuel in accordance with
the Nuclear Waste Policy Act of 1982. The affected Entergy companies
entered into contracts with the DOE, whereby the DOE will furnish disposal
service at a cost of one mill per net KWH generated and sold after April 7,
1983, plus a one-time fee for generation prior to that date. Entergy
Arkansas is the only Entergy company that generated electricity with
nuclear fuel prior to that date and has recorded a liability as of
December 31, 2000 of approximately $144 million for the one-time fee. The
fees payable to the DOE may be adjusted in the future to assure full
recovery. Entergy's domestic non-utility nuclear business has accepted
assignment of the Pilgrim, FitzPatrick, and Indian Point 3 spent fuel
disposal contracts with the DOE previously held by Boston Edison and NYPA.
Boston Edison and NYPA have paid or retained liability for the fees for all
generation prior to the purchase dates of those plants. Entergy considers
all costs incurred for the disposal of spent nuclear fuel, except accrued
interest, to be proper components of nuclear fuel expense. Provisions to
recover such costs have been or will be made by the domestic utility
companies in applications to regulatory authorities.
Delays have occurred in the DOE's program for the acceptance and
disposal of spent nuclear fuel at a permanent repository. Considerable
uncertainty exists regarding the time frame under which the DOE will begin
to accept spent fuel from Entergy facilities for storage or disposal.
Pending DOE acceptance and disposal of spent nuclear fuel, the owners
of nuclear plants are responsible for their own spent fuel storage.
Current on-site spent fuel storage capacity at Grand Gulf 1 and River Bend
is estimated to be sufficient until approximately 2005 and 2003,
respectively. The spent fuel pool at Waterford 3 was recently expanded
through the replacement of the existing storage racks with higher density
storage racks. This expansion should provide sufficient storage for
Waterford 3 until after 2010. An ANO storage facility using dry casks
began operation in 1996 and was expanded in 2000. Current on-site spent
fuel storage capacity at ANO, including the current expansion, is estimated
to be sufficient until approximately 2002. This facility will be further
expanded as required. The spent fuel storage facility at Pilgrim is
licensed to provide enough storage capacity until approximately 2012.
FitzPatrick has sufficient spent fuel storage capacity until 2002, and
additional dry cask storage capacity is being constructed that will provide
sufficient storage capacity through 2004. FitzPatrick will begin accepting
dry casks this year. Indian Point 3 currently has sufficient spent fuel
storage capacity until approximately 2010.
During 2000, a contract was signed with a spent fuel storage provider
to develop on-site dry cask storage capacity for ANO, River Bend, and
potentially Grand Gulf. This additional capacity will meet the spent fuel
storage requirements for those plants through at least 2005. In addition,
a contract is in place to provide dry cask storage capacity for FitzPatrick
through at least 2003, with further extensions possible.
Total approved decommissioning costs for rate recovery purposes as of
December 31, 2000, for the domestic utility companies' nuclear power
plants, excluding the co-owner share of Grand Gulf 1, are as follows:
Total Estimated Approved
Decommissioning Costs
(In Millions)
ANO 1 and ANO 2 (based on a 1998 cost study reflecting 1997 dollars) $813.1
River Bend - Louisiana (based on a 1996 cost study reflecting 1996 dollars) 419.0
River Bend - Texas (based on a 1996 cost study reflecting 1996 dollars) 385.2
Waterford 3 (based on a 1994 updated study in 1993 dollars) 320.1
Grand Gulf 1 (based on a 1994 cost study using 1993 dollars) 365.9
--------
$2,303.3
========
Entergy Arkansas filed a request with the NRC for a 20-year life
extension for ANO 1 in February 2000. In October 2000, the APSC ordered
Entergy Arkansas to reflect 20-year license extensions in its determination
of the ANO 1 and ANO 2 decommissioning revenue requirements for rates to be
effective January 1, 2001. Entergy Arkansas will not recover
decommissioning costs in 2001 for ANO 1 and 2 based on the assumption that
the licenses will be extended and that the existing decommissioning trust
funds, together with their expected future earnings, will meet the
estimated decommissioning costs.
Entergy Louisiana prepared a decommissioning cost update for Waterford
3 in 1999 and produced a revised decommissioning cost update of $481.5
million. This cost update was filed with the LPSC in the third quarter of
2000.
In the Texas retail jurisdiction in a case filed with the PUCT in
March 2000, Entergy Gulf States included River Bend decommissioning costs
of $481.5 million based on a 1999 cost update amount of $525.8 million.
PUCT substantive rules for rate requests for decommissioning limit the
allowance for contingencies to ten percent, although the actual estimate
employs greater contingency amounts. In LPSC rate reviews filed in May
1999 and 2000, Entergy Gulf States included decommissioning costs based on
a 1998 update of $562.7 million and a 1999 update of $525.8 million,
respectively. The decommissioning liability for the 30 percent share of
River Bend formerly owned by Cajun was funded by a transfer of $132 million
to the River Bend Decommissioning Trust at the completion of Cajun's
bankruptcy proceedings.
System Energy was previously recovering amounts through rates
sufficient to fund $198 million (in 1989 dollars) of its Grand Gulf 1
decommissioning costs. System Energy included updated decommissioning
costs (based on the 1994 study) in its pending rate increase filing with
FERC. Rates requested in this proceeding were placed into effect in
December 1995, subject to refund. In July 2000, FERC issued an order
approving a lower decommissioning cost than what was requested by System
Energy. System Energy filed a motion for rehearing, which has been
granted, and System Energy continues to collect decommissioning revenue at
the requested level. A 1999 decommissioning cost update of $540.8 million
for Grand Gulf has not yet been filed with FERC.
As part of the Pilgrim purchase, Boston Edison funded a $471.3 million
decommissioning trust fund, which was transferred to Entergy's domestic non-
utility nuclear business. After a favorable tax determination regarding
the trust fund, Entergy returned $43 million of the trust fund to Boston
Edison. Based on cost estimates provided by an outside consultant, Entergy
believes that Pilgrim's decommissioning fund will be adequate to cover
future decommissioning costs for the Pilgrim plant without any additional
deposits to the trust.
For the Indian Point 3 and FitzPatrick plants purchased in 2000, NYPA
retains the decommissioning trusts and the decommissioning liability. NYPA
and Entergy executed decommissioning agreements, which specify their
respective obligations with respect to decommissioning. NYPA has the
right, but not the obligation, to require Entergy to assume the
decommissioning liability provided the corresponding decommissioning trust,
up to a specified level, is assigned to Entergy. If the decommissioning
liability is retained by NYPA, Entergy will perform the decommissioning of
the plants at a price equal to the lesser of a pre-specified level or the
amount in the respective trusts. Entergy believes that amounts available to
it under either scenario are sufficient to cover the future decommissioning
costs without any additional contributions to the trusts.
Entergy periodically reviews and updates estimated decommissioning
costs. Although Entergy is presently under-recovering for Grand Gulf,
Waterford 3, and River Bend based on the above estimates, applications have
been and will continue to be made to the appropriate regulatory authorities
to reflect projected decommissioning costs in rates.
Entergy amounts recovered in rates are deposited in trust funds and
reported at market value based upon market quotes or as determined by
widely used pricing services. These trust fund assets largely offset the
accumulated decommissioning liability that is recorded as accumulated
depreciation for Entergy Arkansas, Entergy Gulf States, and Entergy
Louisiana, and are recorded as deferred credits for System Energy and
Entergy's domestic non-utility nuclear business. The liability associated
with the trust funds received from Cajun with the transfer of Cajun's 30%
share of River Bend is also recorded as a deferred credit by Entergy Gulf
States.
The cumulative liabilities and actual decommissioning expenses
recorded in 2000 by Entergy were as follows:
Cumulative 2000 Cumulative
Liabilities as of 2000 Trust Decommissioning Liabilities as of
December 31, 1999 Earnings Expenses December 31, 2000
(In Millions)
ANO 1 and ANO 2 $271.7 $7.8 $3.8 $283.3
River Bend 203.5 5.8 6.2 215.5
Waterford 3 83.0 4.5 10.4 97.9
Grand Gulf 1 129.4 4.7 18.9 153.0
Pilgrim 434.8 - (a) 19.2 454.0
-------- ----- ----- --------
$1,122.4 $22.8 $58.5 $1,203.7
======== ===== ===== ========
(a) Trust earnings on the decommissioning trust fund for Pilgrim are
recorded as income and, therefore, are not included in the
decommissioning liability.
In 1999 and 1998, ANO's decommissioning expense was $10.7 million and
$15.6 million, respectively; River Bend's decommissioning expense was $7.6
million and $3.4 million, respectively; Waterford 3's decommissioning
expense was $8.8 million in both years; and Grand Gulf 1's decommissioning
expense was $18.9 million in both years. Pilgrim's decommissioning expense
was $6.8 million for 1999. The actual decommissioning costs may vary from
the estimates because of regulatory requirements, changes in technology,
and increased costs of labor, materials, and equipment.
The EPAct contains a provision that assesses domestic nuclear
utilities with fees for the decontamination and decommissioning of the
DOE's past uranium enrichment operations. The decontamination and
decommissioning assessments are being used to set up a fund into which
contributions from utilities and the federal government will be placed.
Annual assessments (in 2000 dollars), which will be adjusted annually for
inflation, are for 15 years and are approximately $4.0 million for Entergy
Arkansas, $1.0 million for Entergy Gulf States, $1.5 million for Entergy
Louisiana, and $1.7 million for System Energy. At December 31, 2000, six
years of assessments were remaining. DOE fees are included in other
current liabilities and other non-current liabilities and, as of December
31, 2000, recorded liabilities were $23.9 million for Entergy Arkansas,
$4.2 million for Entergy Gulf States, $9.1 million for Entergy Louisiana,
and $8.8 million for System Energy. Regulatory assets in the financial
statements offset these liabilities. FERC requires that utilities treat
these assessments as costs of fuel as they are amortized and recover these
costs through rates in the same manner as other fuel costs.
Environmental Issues
(Entergy Arkansas)
Entergy Arkansas has received notices from the EPA and the Arkansas
Department of Environmental Quality (ADEQ) alleging that Entergy Arkansas,
along with others, may be a potentially responsible party (PRP) for clean-
up costs associated with a site in Arkansas. As of December 31, 2000, a
remaining recorded liability of approximately $5.0 million existed related
to the cleanup of that site.
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP for the cleanup of
certain hazardous waste disposal sites. Entergy Gulf States is currently
negotiating with the EPA and state authorities regarding the cleanup of
these sites. Several class action and other suits have been filed in state
and federal courts seeking relief from Entergy Gulf States and others for
damages caused by the disposal of hazardous waste and for asbestos-related
disease allegedly resulting from exposure on Entergy Gulf States' premises.
While the amounts at issue in the clean-up efforts and suits may be
substantial, Entergy Gulf States believes that its results of operations
and financial condition will not be materially adversely affected by the
outcome of the suits. As of December 31, 2000, a remaining provision of
$16.8 million existed relating to the cleanup of the remaining sites at
which the EPA has designated Entergy Gulf States as a PRP.
(Entergy Louisiana and Entergy New Orleans)
During 1993, the LDEQ issued new rules for solid waste regulation,
including regulation of wastewater impoundments. Entergy Louisiana and
Entergy New Orleans have determined that certain of their power plant
wastewater impoundments were affected by these regulations and have chosen
to upgrade or close them. As a result, a remaining recorded liability in
the amount of $5.8 million for Entergy Louisiana and $0.5 million for
Entergy New Orleans existed at December 31, 2000 for wastewater upgrades
and closures. Completion of this work is pending LDEQ approval.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the City of
New Orleans pursuant to franchise ordinances. These ordinances contain a
continuing option for the city to purchase Entergy New Orleans' electric
and gas utility properties. A resolution to study the advantages for
ratepayers that might result from an acquisition of these properties has
been filed in a committee of the Council. The committee has deferred
consideration of that resolution until May 2001. The full Council must
approve the resolution to commence such a study before it can become
effective.
Waterford 3 Lease Obligations (Entergy Louisiana)
On September 28, 1989, Entergy Louisiana entered into three identical
transactions for the sale and leaseback of undivided interests (aggregating
approximately 9.3%) in Waterford 3. In July 1997, Entergy Louisiana caused
the lessors to issue $307.6 million aggregate principal amount of Waterford
3 Secured Lease Obligation Bonds, 8.76% Series due 2017, to refinance the
outstanding bonds originally issued to finance the purchase of the
undivided interests by the lessors. The lease payments were reduced to
reflect the lower interest costs. Upon the occurrence of certain events,
Entergy Louisiana may be obligated to pay amounts sufficient to permit the
termination of the lease transactions and may be required to assume the
outstanding bonds issued to finance, in part, the lessors' acquisition of
the undivided interests in Waterford 3.
Employment Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are defendants in numerous lawsuits
filed by former employees asserting that they were wrongfully terminated
and/or discriminated against on the basis of age, race, and/or sex.
Entergy Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are vigorously defending these suits and
deny any liability to the plaintiffs. However, no assurance can be given
as to the outcome of these cases.
Grand Gulf 1-Related Agreements
Capital Funds Agreement (Entergy Corporation and System Energy)
Entergy Corporation has agreed to supply System Energy with sufficient
capital to (i) maintain System Energy's equity capital at an amount equal
to a minimum of 35% of its total capitalization (excluding short-term
debt), and (ii) permit the continued commercial operation of Grand Gulf 1
and pay in full all indebtedness for borrowed money of System Energy when
due. In addition, under supplements to the Capital Funds Agreement
assigning System Energy's rights as security for specific debt of System
Energy, Entergy Corporation has agreed to make cash capital contributions
to enable System Energy to make payments on such debt when due.
System Energy has entered into agreements with Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans whereby
they are obligated to purchase their respective entitlements of capacity
and energy from System Energy's 90% ownership and leasehold interest in
Grand Gulf 1, and to make payments that, together with other available
funds, are adequate to cover System Energy's operating expenses. System
Energy would have to secure funds from other sources, including Entergy
Corporation's obligations under the Capital Funds Agreement, to cover any
shortfalls from payments received from Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans under these agreements.
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
System Energy has agreed to sell all of its 90% owned and leased share
of capacity and energy from Grand Gulf 1 to Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans in accordance with
specified percentages (Entergy Arkansas-36%, Entergy Louisiana-14%, Entergy
Mississippi-33%, and Entergy New Orleans-17%) as ordered by FERC. Charges
under this agreement are paid in consideration for the purchasing
companies' respective entitlement to receive capacity and energy and are
payable irrespective of the quantity of energy delivered so long as the
unit remains in commercial operation. The agreement will remain in effect
until terminated by the parties and the termination is approved by FERC,
most likely upon Grand Gulf 1's retirement from service. Monthly
obligations for payments under the agreement are approximately $19 million
for Entergy Arkansas, $7 million for Entergy Louisiana, $17 million for
Entergy Mississippi, and $9 million for Entergy New Orleans.
Availability Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy
New Orleans are individually obligated to make payments or subordinated
advances to System Energy in accordance with stated percentages (Entergy
Arkansas-17.1%, Entergy Louisiana-26.9%, Entergy Mississippi-31.3%, and
Entergy New Orleans-24.7%) in amounts that, when added to amounts received
under the Unit Power Sales Agreement or otherwise, are adequate to cover
all of System Energy's operating expenses as defined, including an amount
sufficient to amortize the cost of Grand Gulf 2 over 27 years. (See
Reallocation Agreement terms below.) System Energy has assigned its rights
to payments and advances to certain creditors as security for certain
obligations. Since commercial operation of Grand Gulf 1, payments under
the Unit Power Sales Agreement have exceeded the amounts payable under the
Availability Agreement. Accordingly, no payments under the Availability
Agreement have ever been required. If Entergy Arkansas or Entergy
Mississippi fails to make its Unit Power Sales Agreement payments, and
System Energy is unable to obtain funds from other sources, Entergy
Louisiana and Entergy New Orleans could become subject to claims or demands
by System Energy or its creditors for payments or advances under the
Availability Agreement (or the assignments thereof) equal to the difference
between their required Unit Power Sales Agreement payments and their
required Availability Agreement payments.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans entered into the Reallocation
Agreement relating to the sale of capacity and energy from Grand Gulf and
the related costs, in which Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans agreed to assume all of Entergy Arkansas'
responsibilities and obligations with respect to Grand Gulf under the
Availability Agreement. FERC's decision allocating a portion of Grand Gulf
1 capacity and energy to Entergy Arkansas supersedes the Reallocation
Agreement as it relates to Grand Gulf 1. Responsibility for any Grand Gulf
2 amortization amounts has been individually allocated (Entergy Louisiana-
26.23%, Entergy Mississippi-43.97%, and Entergy New Orleans-29.80%) under
the terms of the Reallocation Agreement. However, the Reallocation
Agreement does not affect Entergy Arkansas' obligation to System Energy's
lenders under the assignments referred to in the preceding paragraph.
Entergy Arkansas would be liable for its share of such amounts if Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans were unable to meet
their contractual obligations. No payments of any amortization amounts
will be required so long as amounts paid to System Energy under the Unit
Power Sales Agreement, including other funds available to System Energy,
exceed amounts required under the Availability Agreement, which is expected
to be the case for the foreseeable future.
Reimbursement Agreement (System Energy)
In December 1988, System Energy entered into two separate, but
identical, arrangements for the sale and leaseback of an approximate
aggregate 11.5% ownership interest in Grand Gulf 1. In connection with the
equity funding of the sale and leaseback arrangements, letters of credit
are required to be maintained to secure certain amounts payable for the
benefit of the equity investors by System Energy under the leases. The
current letters of credit are effective until March 20, 2003.
Under the provisions of a bank letter of credit reimbursement
agreement, System Energy has agreed to a number of covenants relating to
the maintenance of certain capitalization and fixed charge coverage ratios.
System Energy agreed, during the term of the reimbursement agreement, to
maintain its equity at not less than 33% of its adjusted capitalization
(defined in the reimbursement agreement to include certain amounts not
included in capitalization for financial statement purposes). In addition,
System Energy must maintain, with respect to each fiscal quarter during the
term of the reimbursement agreement, a ratio of adjusted net income to
interest expense (calculated, in each case, as specified in the
reimbursement agreement) of at least 1.60 times earnings. As of December
31, 2000, System Energy's equity approximated 42.76% of its adjusted
capitalization, and its fixed charge coverage ratio for 2000 was 2.47.
Litigation (Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans)
In addition to those discussed above, Entergy and the domestic utility
companies are involved in a number of legal proceedings and claims in the
ordinary course of their business. While management is unable to predict
the outcome of such litigation, it is not expected that the ultimate
resolution of these matters will have a material adverse effect on results
of operations, cash flows, or financial condition of these entities.
NOTE 10. LEASES
General
As of December 31, 2000, Entergy had capital leases and non-cancelable
operating leases for equipment, buildings, vehicles, and fuel storage
facilities (excluding nuclear fuel leases and the sale and leaseback
transactions) with minimum lease payments as follows:
Capital Leases
Entergy Entergy
Year Entergy Arkansas Gulf States
(In Thousands)
2001 $23,677 $9,645 $11,853
2002 19,415 9,645 9,720
2003 19,415 9,645 9,720
2004 19,415 9,645 9,720
2005 10,380 9,610 720
Years thereafter 15,519 13,667 1,800
-------------------------------
Minimum lease payments 107,821 61,857 43,533
Less: Amount
representing interest 29,664 20,811 8,663
-------------------------------
Present value of net
minimum lease payments $78,157 $41,046 $34,870
===============================
Operating Leases
Entergy Entergy Entergy
Year Entergy Arkansas Gulf States Louisiana
(In Thousands)
2001 $86,573 $28,127 $22,130 $12,213
2002 72,408 24,440 18,653 11,175
2003 58,730 14,384 17,032 10,103
2004 53,977 13,423 16,408 9,076
2005 44,170 11,551 14,565 5,502
Years thereafter 82,430 13,636 22,309 3,107
-----------------------------------------------
Minimum lease payments $398,288 $105,561 $111,097 $51,176
===============================================
Rental expense for Entergy's leases (excluding nuclear fuel leases and
the Grand Gulf 1 and Waterford 3 sale and leaseback transactions) amounted
to approximately $53.3 million, $65.2 million, and $69.4 million, in 2000,
1999, and 1998, respectively. These amounts include $18.9 million, $23.9
million, and $19.4 million, respectively, for Entergy Arkansas; $18.9
million, $19.2 million, and $18.1 million, respectively, for Entergy Gulf
States; and $7.9 million, $13.1 million, and $13.3 million, respectively,
for Entergy Louisiana. In addition to the above rental expense, Entergy
Arkansas and Entergy Gulf States railcar operating lease payments, which
are recorded in fuel expense, amounted to approximately $13.7 million and
$2.7 million, respectively, for each of the years 2000, 1999, and 1998.
The railcar lease payments are recorded as fuel expense in accordance with
regulatory treatment.
Nuclear Fuel Leases (Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, System Energy)
As of December 31, 2000, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and System Energy each had arrangements to lease nuclear
fuel in an aggregate amount up to $135 million, $115 million, $90 million,
and $100 million, respectively. As of December 31, 2000, the unrecovered
cost base of Entergy Arkansas', Entergy Gulf States', Entergy Louisiana's,
and System Energy's nuclear fuel leases amounted to approximately
$107.0 million, $57.5 million, $63.9 million, and $49.3 million,
respectively. The lessors finance the acquisition and ownership of nuclear
fuel through loans made under revolving credit agreements, the issuance of
commercial paper, and the issuance of intermediate-term notes. The credit
agreements for Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
and System Energy have termination dates of November 2003, November 2003,
January 2002, and November 2003, respectively. Such termination dates may
be extended from time to time with the consent of the lenders. The
intermediate-term notes issued pursuant to these fuel lease arrangements
have varying maturities through March 15, 2002. It is expected that
additional financing under the leases will be arranged as needed to acquire
additional fuel, to pay interest, and to pay maturing debt. However, if
such additional financing cannot be arranged, the lessee in each case must
repurchase sufficient nuclear fuel to allow the lessor to meet its
obligations.
Lease payments are based on nuclear fuel use. The table below
represents the total nuclear fuel lease payments (principal and interest)
as well as the separate interest component charged to operations by the
domestic utility companies and System Energy in 2000, 1999, and 1998:
2000 1999 1998
Lease Lease Lease
Payments Interest Payments Interest Payments Interest
(In Millions)
Entergy Arkansas $42.7 $5.5 $48.6 $5.6 $50.5 $4.9
Entergy Gulf States 54.3 6.1 31.4 1.8 36.1 3.1
Entergy Louisiana 30.5 3.1 29.7 3.7 36.8 3.9
System Energy 31.2 5.2 28.1 3.4 35.4 4.7
------------------------------------------------------
Total $158.7 $19.9 $137.8 $14.5 $158.8 $16.6
======================================================
Sale and Leaseback Transactions
Waterford 3 Lease Obligations (Entergy Louisiana)
In 1989, Entergy Louisiana sold and leased back 9.3% of its interest
in Waterford 3 for the aggregate sum of $353.6 million. The lease has an
approximate term of 28 years. The lessors financed the sale-leaseback
through the issuance of Waterford 3 Secured Lease Obligation Bonds. The
lease payments made by Entergy Louisiana are sufficient to service the
debt.
In 1994, Entergy Louisiana did not exercise its option to repurchase
the 9.3% interest in Waterford 3. As a result, Entergy Louisiana issued
$208.2 million of non-interest bearing first mortgage bonds as collateral
for the equity portion of certain amounts payable under the lease.
In 1997, the lessors refinanced the outstanding bonds used to finance
the purchase of Waterford 3 at lower interest rates, which reduced the
annual lease payments.
Upon the occurrence of certain events, Entergy Louisiana may be
obligated to assume the outstanding bonds used to finance the purchase of
the unit and to pay an amount sufficient to withdraw from the lease
transaction. Such events include lease events of default, events of loss,
deemed loss events, or certain adverse "Financial Events." "Financial
Events" include, among other things, failure by Entergy Louisiana,
following the expiration of any applicable grace or cure period, to
maintain (i) total equity capital (including preferred stock) at least
equal to 30% of adjusted capitalization, or (ii) a fixed charge coverage
ratio of at least 1.50 computed on a rolling 12 month basis.
As of December 31, 2000, Entergy Louisiana's total equity capital
(including preferred stock) was 48.7% of adjusted capitalization and its
fixed charge coverage ratio for 2000 was 3.32.
As of December 31, 2000, Entergy Louisiana had future minimum lease
payments (reflecting an overall implicit rate of 7.45%) in connection with
the Waterford 3 sale and leaseback transactions, which are recorded as long-
term debt, as follows (in thousands):
2001 $40,909
2002 39,246
2003 59,709
2004 31,739
2005 14,554
Years thereafter 426,136
--------
Total 612,293
Less: Amount representing interest 281,987
--------
Present value of net minimum lease payments $330,306
========
Grand Gulf 1 Lease Obligations (System Energy)
In December 1988, System Energy sold 11.5% of its undivided ownership
interest in Grand Gulf 1 for the aggregate sum of $500 million.
Subsequently, System Energy leased back its interest in the unit for a term
of 26-1/2 years. System Energy has the option of terminating the lease and
repurchasing the 11.5% interest in the unit at certain intervals during the
lease. Furthermore, at the end of the lease term, System Energy has the
option of renewing the lease or repurchasing the 11.5% interest in Grand
Gulf 1.
System Energy is required to report the sale-leaseback as a financing
transaction in its financial statements. For financial reporting purposes,
System Energy expenses the interest portion of the lease obligation and the
plant depreciation. However, operating revenues include the recovery of
the lease payments because the transactions are accounted for as a sale and
leaseback for ratemaking purposes. Until 2004, the total of interest and
depreciation expense exceeds the corresponding revenues realized.
Consistent with a recommendation contained in a FERC audit report, System
Energy recorded as a net deferred asset the difference between the recovery
of the lease payments and the amounts expensed for interest and
depreciation and is recording this difference as a deferred asset on an
ongoing basis. The amount of this deferred asset was $100.8 million and
$104.5 million as of December 31, 2000 and 1999, respectively.
As of December 31, 2000, System Energy had future minimum lease
payments (reflecting an implicit rate of 7.02%), which are recorded as long-
term debt as follows (in thousands):
2001 $46,803
2002 53,827
2003 48,524
2004 36,133
2005 52,253
Years thereafter 522,529
--------
Total 760,069
Less: Amount representing interest 297,535
--------
Present value of net minimum lease payments $462,534
========
NOTE 11. RETIREMENT AND OTHER POSTRETIREMENT BENEFITS (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
Pension Plans
Entergy has five postretirement benefit plans, "Entergy
Corporation Retirement Plan for Non-Bargaining Employees", "Entergy
Corporation Retirement Plan for Bargaining Employees," "Entergy
Corporation Retirement Plan II for Non-Bargaining Employees", Entergy
Corporation Retirement Plan II for Bargaining Employees," and "Entergy
Corporation Retirement Plan III" covering substantially all of its
domestic employees. Except for the Entergy Corporation Retirement Plan
III, the pension plans are noncontributory and provide pension benefits
that are based on employees' credited service and compensation during
the final years before retirement. The Entergy Corporation Retirement
Plan III includes a mandatory employee contribution of 3% of earnings
during the first 10 years of plan participation, and allows voluntary
contributions from 1% to 10% of earnings for a limited group of
employees. Entergy Corporation and its subsidiaries fund pension costs
in accordance with contribution guidelines established by the Employee
Retirement Income Security Act of 1974, as amended, and the Internal
Revenue Code of 1986, as amended. The assets of the plans include
common and preferred stocks, fixed-income securities, interest in a
money market fund, and insurance contracts.
Total 2000, 1999, and 1998 pension cost of Entergy Corporation and
its subsidiaries, including amounts capitalized, included the following
components (in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $37,130 $8,125 $6,051 $4,710 $2,314 $1,138 $2,140
Interest cost on projected
benefit obligation 108,782 31,128 25,135 18,287 11,268 3,591 2,430
Expected return on assets (145,717) (38,571) (41,322) (28,588) (15,341) (2,710) (3,014)
Amortization of transition asset (9,740) (2,336) (2,387) (2,823) (1,250) (180) (319)
Amortization of prior service cost 12,953 1,701 1,896 805 669 262 59
Recognized net (gain)/loss (8,576) (200) (7,204) (1,849) (292) 247 (96)
-------------------------------------------------------------------------
Net pension cost (income) ($5,168) ($153) ($17,831) ($9,458) ($2,632) $2,348 $1,200
=========================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $39,327 $8,723 $6,531 $4,948 $2,278 $997 $2,334
Interest cost on projected
benefit obligation 104,591 29,457 24,757 17,950 10,810 3,296 3,017
Expected return on assets (130,535) (34,784) (37,170) (25,629) (13,815) (2,601) (3,738)
Amortization of transition asset (9,740) (2,336) (2,387) (2,808) (1,250) (195) (482)
Amortization of prior service cost 11,362 1,227 1,434 558 480 165 64
---------------------------------------------------------------------------
Net pension cost (income) $15,005 $2,287 ($6,835) ($4,981) ($1,497) $1,662 $1,195
===========================================================================
<CAPTION
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $45,470 $7,428 $5,448 $4,148 $1,913 $818 $2,494
Interest cost on projected
benefit obligation 192,132 27,919 24,564 16,845 10,362 3,020 3,265
Expected return on assets (233,058) (31,119) (32,506) (22,526) (12,335) (2,083) (3,979)
Amortization of transition asset (9,740) (2,336) (2,387) (2,808) (1,250) (195) (597)
Amortization of prior service cost 11,459 1,227 1,434 558 480 259 80
--------------------------------------------------------------------------
Net pension cost (income) $6,263 $3,119 ($3,447) ($3,783) ($830) $1,819 $1,263
==========================================================================
The funded status of Entergy's various pension plans as of
December 31, 2000 and 1999 was (in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Change in Projected Benefit
Obligation (PBO)
Balance at 1/1/00 $1,499,601 $424,554 $348,217 $256,949 $153,262 $46,042 $43,262
Service cost 37,130 8,125 6,051 4,710 2,314 1,138 2,140
Interest cost 108,782 31,128 25,135 18,287 11,268 3,591 2,430
Amendment 18,376 5,321 5,166 3,139 2,129 1,220 11
Actuarial (gain)/loss (32,916) (3,455) (6,134) (7,077) (901) 1,739 (10,810)
Benefits paid (85,185) (24,565) (25,620) (16,643) (9,906) (2,239) (138)
Acquisitions 56,884 - - - - - -
----------------------------------------------------------------------------
Balance at 12/31/00 $1,602,672 $441,108 $352,815 $259,365 $158,166 $51,491 $36,895
----------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/00 $1,965,178 $518,262 $563,597 $389,755 $207,475 $31,370 $56,442
Actual return on plan assets (40,047) (9,637) (15,720) (10,685) (3,781) 2,576 (19,389)
Employer contributions 3,083 - - - - - -
Employee contributions 86 - - - - - -
Benefits paid (85,185) (24,565) (25,620) (16,643) (9,906) (2,239) (138)
----------------------------------------------------------------------------
Fair value of assets at 12/31/00 $1,843,115 $484,060 $522,257 $362,427 $193,788 $31,707 $36,915
----------------------------------------------------------------------------
Funded status $240,443 $42,952 $169,442 $103,062 $35,622 ($19,784) $20
Unrecognized transition asset (10,094) (2,336) - (2,792) (1,250) - (1,262)
Unrecognized prior service cost 44,223 14,822 13,050 6,572 4,915 2,241 364
Unrecognized net (gain)/loss (328,642) (77,710) (192,154) (88,761) (35,234) 9,402 (7,219)
----------------------------------------------------------------------------
Prepaid/(accrued) pension cost ($54,070) ($22,272) ($9,662) $18,081 $4,053 ($8,141) ($8,097)
============================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Change in Projected Benefit
Obligation (PBO)
Balance at 1/1/99 $1,553,251 $435,638 $377,288 $261,858 $158,778 $47,881 $44,876
Service cost 39,327 8,723 6,531 4,948 2,277 997 2,334
Interest cost 104,591 29,457 24,757 17,950 10,810 3,296 3,017
Actuarial (gain) (126,715) (25,915) (35,000) (11,638) (9,038) (4,663) (6,294)
Benefits paid (80,580) (23,349) (25,359) (16,169) (9,565) (1,469) (671)
Acquisitions 9,727 - - - - - -
----------------------------------------------------------------------------
Balance at 12/31/99 $1,499,601 $424,554 $348,217 $256,949 $153,262 $46,042 $43,262
----------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/99 $1,791,192 $473,353 $513,365 $356,663 $192,438 $28,927 $48,910
Actual return on plan assets 241,460 68,258 74,249 49,260 24,602 2,668 8,203
Employer contributions 13,106 - 1,343 - - 1,244 -
Benefits paid (80,580) (23,349) (25,360) (16,168) (9,565) (1,469) (671)
----------------------------------------------------------------------------
Fair value of assets at 12/31/99 $1,965,178 $518,262 $563,597 $389,755 $207,475 $31,370 $56,442
----------------------------------------------------------------------------
Funded status $465,577 $93,708 $215,380 $132,806 $54,213 ($14,672) $13,180
Unrecognized transition asset (17,446) (4,671) (2,387) (5,615) (2,501) (180) (2,829)
Unrecognized prior service cost 30,092 11,203 9,780 4,238 3,455 1,282 696
Unrecognized net (gain)/loss (483,741) (122,663) (250,266) (122,806) (53,747) 7,776 (16,495)
----------------------------------------------------------------------------
Prepaid/(accrued) pension cost ($5,518) ($22,423) ($27,493) $8,623 $1,420 ($5,794) ($5,448)
============================================================================
Other Postretirement Benefits
Entergy also provides health care and life insurance benefits for
retired employees. Substantially all domestic employees may become
eligible for these benefits if they reach retirement age while still
working for Entergy.
Effective January 1, 1993, Entergy adopted SFAS 106, which
required a change from a cash method to an accrual method of accounting
for postretirement benefits other than pensions. At January 1, 1993,
the actuarially determined accumulated postretirement benefit
obligation (APBO) earned by retirees and active employees was estimated
to be approximately $241.4 million and $128 million for Entergy (other
than Entergy Gulf States) and for Entergy Gulf States, respectively.
Such obligations are being amortized over a 20-year period which began
in 1993.
Entergy Arkansas, the portion of Entergy Gulf States regulated by
the PUCT, Entergy Mississippi, and Entergy New Orleans have received
regulatory approval to recover SFAS 106 costs through rates. Entergy
Arkansas began recovery in 1998, pursuant to an APSC order. This order
also allowed Entergy Arkansas to amortize a regulatory asset
(representing the difference between SFAS 106 costs and cash
expenditures for other postretirement benefits incurred for a five-year
period that began January 1, 1993) over a period of 15 years beginning
in January 1998.
The LPSC ordered the portion of Entergy Gulf States regulated by
the LPSC and Entergy Louisiana to continue the use of the pay-as-you-go
method for ratemaking purposes for postretirement benefits other than
pensions. However, the LPSC retains the flexibility to examine
individual companies' accounting for postretirement benefits to
determine if special exceptions to this order are warranted.
Pursuant to regulatory directives, Entergy Arkansas, Entergy
Mississippi, Entergy New Orleans, the portion of Entergy Gulf States
regulated by the PUCT, and System Energy fund postretirement benefit
obligations collected in rates. System Energy is funding on behalf of
Entergy Operations postretirement benefits associated with Grand Gulf
1. Entergy Louisiana and Entergy Gulf States continue to recover a
portion of these benefits regulated by the LPSC and FERC on a pay-as-
you-go basis. The assets of the various postretirement benefit plans
other than pensions include common stocks, fixed-income securities, and
a money market fund.
Total 2000, 1999, and 1998, postretirement benefit costs of
Entergy Corporation and its subsidiaries, including amounts capitalized
and deferred, included the following components (in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $18,252 $4,395 $3,147 $2,405 $1,236 $667 $998
Interest cost on APBO 34,022 7,945 8,346 5,073 2,714 3,012 788
Expected return on assets (10,566) (2,196) (3,682) - (1,696) (1,661) (811)
Amortization of transition obligation 17,874 3,954 5,803 2,971 1,502 2,678 220
Amortization of prior service cost 520 123 161 71 44 45 12
Recognized net (gain) (3,070) - (1,803) (30) - (561) (8)
-------------------------------------------------------------------------
Net postretirement benefit cost $57,032 $14,221 $11,972 $10,490 $3,800 $4,180 $1,199
=========================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $16,950 $3,952 $3,227 $2,140 $1,009 $512 $982
Interest cost on APBO 29,467 6,596 8,206 4,234 2,167 2,699 631
Expected return on assets (8,208) (1,309) (2,980) - (1,634) (1,425) (522)
Amortization of transition obligation 17,874 3,954 5,803 2,971 1,502 2,678 222
Amortization of prior service cost 44 - 44 - - - -
Recognized net (gain) (1,452) - (393) (227) (69) (616) (8)
-------------------------------------------------------------------------
Net postretirement benefit cost $54,675 $13,193 $13,907 $9,118 $2,975 $3,848 $1,305
=========================================================================
1998 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Service cost - benefits earned
during the period $13,878 $3,325 $2,553 $1,776 $862 $432 $871
Interest cost on APBO 28,443 6,519 8,103 4,089 2,085 2,714 652
Expected return on assets (5,260) (215) (2,385) - (1,059) (1,155) (446)
Amortization of transition obligation 17,874 3,954 5,803 2,971 1,502 2,678 262
Amortization of prior service cost 44 - 44 - - - -
Recognized net (gain) (3,501) - (1,216) (686) (264) (1,024) (79)
-------------------------------------------------------------------------
Net postretirement benefit cost $51,478 $13,583 $12,902 $8,150 $3,126 $3,645 $1,260
=========================================================================
The funded status of Entergy's postretirement plans as of December
31, 2000 and 1999 was (in thousands):
2000 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Change in APBO
Balance at 1/1/00 $429,772 $95,656 $118,295 $61,156 $31,133 $38,363 $9,546
Service cost 18,252 4,395 3,147 2,405 1,236 667 998
Interest cost 34,022 7,945 8,346 5,073 2,714 3,012 788
Amendment 5,691 1,471 1,406 848 524 536 139
Actuarial (gain)/loss 34,759 13,486 (3,845) 8,551 6,060 3,891 1,104
Benefits paid (33,238) (8,286) (8,525) (5,312) (2,673) (4,336) (585)
Acquisitions 18,498 - - - - - -
-----------------------------------------------------------------------------
Balance at 12/31/00 $507,756 $114,667 $118,824 $72,721 $38,994 $42,133 $11,990
-----------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/00 $120,208 $22,205 $39,045 $ - $19,614 $23,716 $9,549
Actual return on plan assets 3,719 808 1,448 - 422 584 288
Employer contributions 52,339 18,116 12,440 5,312 4,294 6,253 2,403
Benefits paid (33,238) (8,286) (8,525) (5,312) (2,673) (4,336) (585)
Acquisitions 10 - - - - - -
-----------------------------------------------------------------------------
Fair value of assets at 12/31/00 $143,038 $32,843 $44,408 $ - $21,657 $26,217 $11,655
-----------------------------------------------------------------------------
Funded status ($364,718) ($81,824) ($74,416) ($72,721) ($17,337) ($15,916) ($335)
Unrecognized transition obligation 137,669 47,436 69,641 35,662 18,023 32,149 2,673
Unrecognized prior service cost 5,506 1,348 1,580 777 480 491 127
Unrecognized net (gain)/loss 18,900 7,933 (24,311) (3,467) 2,217 (8,341) (2,018)
-----------------------------------------------------------------------------
Prepaid/(accrued) postretirement ($202,643) ($25,107) ($27,506) ($39,749) $3,383 $8,383 $447
benefit asset/(liability) ==============================================================================
1999 Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
Change in APBO
Balance at 1/1/99 $444,509 $101,856 $124,431 $63,449 $32,404 $40,838 $9,087
Service cost 16,950 3,952 3,227 2,140 1,009 512 982
Interest cost 29,467 6,596 8,206 4,234 2,167 2,699 631
Actuarial (gain) (40,202) (10,375) (10,287) (4,924) (2,131) (2,098) (882)
Benefits paid (25,881) (6,373) (7,282) (3,743) (2,316) (3,588) (272)
Acquisitions 4,929 - - - - - -
----------------------------------------------------------------------------
Balance at 12/31/99 $429,772 $95,656 $118,295 $61,156 $31,133 $38,363 $9,546
----------------------------------------------------------------------------
Change in Plan Assets
Fair value of assets at 1/1/99 $89,579 $11,774 $31,510 $ - $18,759 $20,380 $7,156
Actual return on plan assets 7,134 1,278 3,403 - 150 1,476 548
Employer contributions 43,576 15,526 11,414 3,743 3,021 5,448 2,117
Benefits paid (25,881) (6,373) (7,282) (3,743) (2,316) (3,588) (272)
Acquisitions 5,800 - - - - - -
----------------------------------------------------------------------------
Fair value of assets at 12/31/99 $120,208 $22,205 $39,045 $ - $19,614 $23,716 $9,549
----------------------------------------------------------------------------
Funded status ($309,564) ($73,451) ($79,250) ($61,156) ($11,519) ($14,647) $3
Unrecognized transition obligation
149,141 51,390 75,444 38,633 19,525 34,827 2,893
Unrecognized prior service cost 335 - 335 - - - -
Unrecognized net (gain) (19,374) (6,941) (24,503) (12,048) (5,117) (13,870) (3,653)
----------------------------------------------------------------------------
Prepaid/(accrued) postretirement ($179,462) ($29,002) ($27,974) ($34,571) $2,889 $6,310 ($757)
benefit asset/(liability) =============================================================================
The assumed health care cost trend rate used in measuring the APBO of
Entergy was 7.5% for 2001, gradually decreasing each successive year
until it reaches 5.0% in 2006 and beyond. A one percentage-point
change in the assumed health care cost trend rate for 2000 would have
the following effects (in thousands):
2000 Increase Increase Decrease in Decrease
in the in the sum of the APBO in the sum of
APBO service cost service cost
and interest and interest
cost cost
Entergy $42,378 $6,981 ($35,809) ($5,743)
Entergy Arkansas $9,233 $1,445 ($7,820) ($1,193)
Entergy Gulf States $10,171 $1,343 ($8,619) ($1,112)
Entergy Louisiana $5,543 $814 ($4,702) ($675)
Entergy Mississippi $3,037 $428 ($2,575) ($355)
Entergy New Orleans $2,693 $308 ($2,319) ($260)
System Energy $1,243 $272 ($1,032) ($222)
The significant actuarial assumptions used in determining the pension
PBO and the SFAS 106 APBO for 2000, 1999, and 1998 were as follows:
2000 1999 1998
Weighted-average discount rate 7.50% 7.50% 6.75%
Weighted-average rate of increase
in future compensation levels 4.60% 4.60% 4.60%
Expected long-term rate of
return on plan assets:
Taxable assets 5.50% 5.50% 5.50%
Non-taxable assets 9.00% 9.00% 9.00%
Entergy's pension transition assets are being amortized over the
greater of the remaining service period of active participants or 15
years and its SFAS 106 transition obligations are being amortized over
20 years.
NOTE 12. ACQUISITIONS AND DISPOSITIONS (Entergy Corporation)
Asset Acquisitions
Indian Point 3 and FitzPatrick
On November 21, 2000, Entergy's domestic non-utility nuclear
business acquired from NYPA the 825 MW James A. FitzPatrick nuclear
power plant near Oswego, New York, and the 980 MW Indian Point 3
nuclear power plant located in Westchester County, New York, in
exchange for $50 million at closing and notes to NYPA with payments
totaling $906 million. Entergy will also be required to make certain
additional payments to NYPA in the event that the plants' license lives
are extended, or in the event that the acquisition of Indian Point 2 is
ultimately consummated.
The acquisition encompassed the nuclear plants, materials and
supplies, and nuclear fuel, as well as the assumption of $123.7 million
in liabilities. The purchase agreement provides that NYPA will retain
the decommissioning obligations and related trust funds through the
original license expiration date (approximately 2015). At that time,
NYPA is required either to transfer the decommissioning liability to
Entergy along with a specified amount in the decommissioning trust
funds, or to retain Entergy to perform decommissioning services for a
specified price that may be limited by the amount in the trust. The
purchase agreement also provides that NYPA will purchase a substantial
majority of the output of the units at specified prices through 2004.
The acquisition was accounted for using the purchase method. The
results of operations of Indian Point 3 and FitzPatrick subsequent to
November 21, 2000 have been included in Entergy's consolidated
statements of income. The purchase price has been allocated to the
acquired assets, including identifiable intangible assets, and
liabilities assumed based on their estimated fair values on the
purchase date. Intangible assets are being amortized straight-line
over the remaining lives of the plants.
Pilgrim Nuclear Station
On July 13, 1999, Entergy's domestic non-utility nuclear business
acquired the 670 MW Pilgrim Nuclear Station located in Plymouth,
Massachusetts, from Boston Edison. The acquisition included the plant,
real estate, materials and supplies, and nuclear fuel, for a total
purchase price of $81 million. The purchase price was funded with a
portion of the proceeds from the sales of non-regulated businesses. As
part of the Pilgrim purchase, Boston Edison funded a $471 million
decommissioning trust fund, which was transferred to an Entergy
subsidiary. Based on a favorable tax determination regarding the trust
fund, Entergy returned $43 million of the trust fund to Boston Edison.
Business Dispositions
As part of the new strategic plan adopted by Entergy in August
1998, Entergy sold several businesses during 1998, including the
following:
Business Pre-tax Gain (Loss) on Sale
(In Millions)
London Electricity $327
CitiPower (a) 38
Efficient Solutions, Inc. (69)
(a) The gain on the CitiPower sale reflects a $7.6 million favorable
adjustment to the final sale price in January 1999.
In keeping with this plan, in January 1999, Entergy disposed of
its security monitoring subsidiary, Entergy Security, Inc. at a minimal
gain. Several telecommunication businesses were sold in June 1999,
also at small gains.
The results of operations of these businesses are included in
Entergy's consolidated statements of income through their respective
dates of sale. Gains and losses arising from sales of businesses are
included in "Other Income, Gain (loss) on sale of assets - net" in that
statement.
NOTE 13. TRANSACTIONS WITH AFFILIATES (Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy)
The domestic utility companies purchase electricity from and/or
sell electricity to the other domestic utility companies, System
Energy, and Entergy Power (in the case of Entergy Arkansas) under rate
schedules filed with FERC. In addition, the domestic utility companies
and System Energy purchase fuel from System Fuels; receive management,
technical, advisory, operating, and administrative services from
Entergy Services; and receive management, technical, and operating
services from Entergy Operations. Pursuant to SEC rules under PUHCA,
these transactions are on an "at cost" basis.
As described in Note 1 to the financial statements, all of System
Energy's operating revenues consist of billings to Entergy Arkansas,
Entergy Louisiana, Entergy Mississippi, and Entergy New Orleans.
The tables below contain the various affiliate transactions among
the domestic utility companies and System Energy (in millions).
Intercompany Revenues
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy
2000 $255.3 $93.7 $20.8 $88.1 $31.6 $656.7
1999 $189.2 $38.4 $27.3 $68.3 $14.2 $620.0
1998 $162.0 $16.7 $16.7 $88.3 $11.0 $602.4
Intercompany Operating Expenses
Entergy Entergy Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(1)
2000 $387.9 $513.9 $388.5 $388.2 $177.0 $10.1
1999 $357.5 $436.7 $294.3 $315.6 $182.5 $ 9.8
1998 $353.7 $419.7 $269.0 $338.1 $194.9 $ 9.8
(1)Includes $47.3 million in 2000, $15.8 million in 1999, and $18.8
million in 1998 for power purchased from Entergy Power.
Operating Expenses Paid or Reimbursed to Entergy Operations
Entergy Entergy Entergy System
Arkansas Gulf States Louisiana Energy
2000 $163.0 $116.0 $113.2 $92.6
1999 $179.2 $110.9 $113.8 $91.3
1998 $167.5 $114.2 $125.0 $92.7
NOTE 14. BUSINESS SEGMENT INFORMATION (Entergy Corporation and
Entergy New Orleans)
Entergy's reportable segments as of December 31, 2000 are domestic
utility and power marketing and trading. Entergy's operating segments
below the quantitative threshold for separate disclosure principally
include global power development and the domestic non-utility nuclear
businesses. They are reported in the "All Other" column along with the
parent, Entergy Corporation, and other business activities, which are
principally the gains or losses on the sales of businesses. Entergy's
international electric distribution businesses, Entergy London and
CitiPower, were sold in December 1998. These businesses would have
been a reportable segment had they been held as of December 31, 1998,
and financial information regarding them is also provided below for
1998.
Domestic utility provides retail electric service in portions of
Arkansas, Louisiana, Mississippi, and Texas, and provides natural gas
utility service in portions of Louisiana. Entergy's power marketing
and trading segment markets wholesale electricity, gas, other
generating fuels, and electric capacity, and markets financial
instruments to third parties. Entergy's operating segments are
strategic business units managed separately due to their different
operating and regulatory environments.
Entergy's segment financial information is as follows (in
thousands):
Domestic Power Entergy CitiPower* All Eliminations Consolidated
Utility and Marketing London* Other*
System and
Energy Trading*
2000
Operating revenues $7,401,598 $2,131,342 $ - $ - $547,066 ($63,858) $10,016,148
Deprec, amort. & decomm. 770,144 6,286 - - 9,179 - 785,609
Amort. of rate deferrals 30,392 - - - - - 30,392
Interest income 57,795 10,071 - - 103,691 (8,507) 163,050
Interest charges 515,156 6,073 - - 45,518 (9,317) 557,430
Income taxes 435,667 26,385 - - 16,869 - 478,921
Net income 618,263 19,642 - - 73,010 - 710,915
Total assets 20,680,764 728,406 - - 4,709,553 (553,496) 25,565,227
1999
Operating revenues $6,414,623 $2,249,274 $ - $ - $143,146 ($33,815) $8,773,228
Deprec, amort. & decomm. 732,182 5,212 - - 7,475 - 744,869
Amort. of rate deferrals 115,627 - - - - - 115,627
Interest income 49,556 4,408 - - 93,177 (3,540) 143,601
Interest charges 536,543 2,006 - - 20,592 (3,540) 555,601
Income taxes 351,448 (3,228) - - 8,447 - 356,667
Net income (loss) 553,525 (491) - - 41,992 - 595,026
Total assets 18,941,603 460,063 - - 3,762,115 (193,841) 22,969,940
1998
Operating revenues $6,310,543 $2,854,980 $1,911,875 $303,245 $150,297 ($36,168) $11,494,772
Deprec, amort. & decomm. 763,818 5,058 126,586 28,444 61,023 - 984,929
Amort. of rate deferrals 237,302 - - - - - 237,302
Interest income 49,271 7,689 9,033 - 35,417 (822) 100,588
Interest charges 548,299 122 182,479 80,586 21,851 (822) 832,515
Income taxes 331,931 (8,216) 4,589 - (61,569) - 266,735
Net income (loss) 528,498 (15,540) 117,749 3,103 151,819 - 785,629
Total assets 19,727,666 359,626 - - 2,783,732 (34,330) 22,836,694
Businesses marked with * are referred to as the "competitive
businesses," with the exception of the parent company, Entergy
Corporation, which is also included in the "All Other" column.
Eliminations are primarily intersegment activity.
Products and Services
In addition to retail electric service, Entergy New Orleans
supplies natural gas services in the City of New Orleans. Revenue from
these two services is disclosed in Entergy New Orleans' Income
Statements.
Geographic areas
For the years ended December 31, 2000, 1999, and 1998, Entergy did
not derive material revenues from outside of the United States, other
than from Entergy London and CitiPower, which are noted above.
Long-lived assets as of December 31 were as follows (in
thousands):
2000 1999 1998
Domestic $15,476,794 $14,751,166 $14,863,488
Foreign 1,019,831 749,590 465,094
----------- ----------- -----------
Consolidated $16,496,625 $15,500,756 $15,328,582
=========== =========== ===========
NOTE 15. RISK MANAGEMENT AND FAIR VALUES (Entergy Corporation)
Commodity Derivatives
Entergy uses a variety of commodity derivatives, including natural
gas and electricity futures, forwards, and options, as a part of its
overall risk management strategy.
The power marketing and trading business engages in the trading of
commodity instruments and, therefore, experiences net open positions.
The business manages open positions with policies that limit its
exposure to market risk and require daily reporting to management of
potential financial exposure. These policies include statistical risk
tolerance limits using historical price movements to calculate a value
at risk measurement. The weighted-average life of the business'
commodity risk portfolio was less than 18 months at December 31, 2000
and less than 12 months at December 31, 1999.
At December 31, 2000 and 1999, the power marketing and trading
business had outstanding absolute notional contract quantities as
follows (power volumes in thousands of megawatt hours, natural gas
volumes in thousands of British thermal units):
2000 1999
Energy Commodities:
Power 116,513 23,015
Natural gas 657,463 1,075,660
Market risk is the potential loss that Entergy may incur as a
result of changes in the market or fair value of a particular instrument
or commodity. All financial and commodity-related instruments,
including derivatives, are subject to market risk. Entergy's exposure
to market risk is determined by a number of factors, including the size,
duration, composition, and diversification of positions held, as well as
market volatility and liquidity. For instruments such as options, the
time period during which the option may be exercised and the
relationship between the current market price of the underlying
instrument and the option's contractual strike or exercise price also
affect the level of market risk. The most significant factor
influencing the overall level of market risk to which Entergy is exposed
is its use of hedging techniques to mitigate such risk. Entergy manages
market risk by actively monitoring compliance with stated risk
management policies as well as monitoring the effectiveness of its
hedging policies and strategies. Entergy's risk management policies
limit the amount of total net exposure and rolling net exposure during
the stated periods. These policies, including related risk limits, are
regularly assessed to ensure their appropriateness given Entergy's
objectives.
The New York Mercantile Exchange (Exchange) guarantees futures and
option contracts traded on the Exchange, which assures nominal credit
risk. On all other transactions described above, Entergy is exposed to
credit risk in the event of nonperformance by the counterparties. For
each counterparty, Entergy analyzes the financial condition prior to
entering into an agreement, establishes credit limits, and monitors the
appropriateness of these limits on an ongoing basis. In some
circumstances, Entergy requires letters of credit or parental
guarantees. Entergy also uses netting arrangements whenever possible to
mitigate Entergy's exposure to counterparty risk. Netting arrangements
enable Entergy to net certain assets and liabilities by counterparty.
The change in market value of Exchange-traded futures and options
contracts requires daily cash settlement in margin accounts with
brokers. Swap contracts and most other over-the-counter instruments are
generally settled at the expiration of the contract term and may be
subject to margin requirements with the counterparty.
Entergy's principal markets for power and natural gas marketing
services are utilities and industrial end-users located throughout the
United States and the UK. The power marketing and trading business has
a concentration of receivables due from those customers. These industry
concentrations may affect the power marketing and trading business'
overall credit risk, either positively or negatively, in that changes in
economic, industry, regulatory, or other conditions may similarly affect
certain customers. Trade receivables are generally not collateralized.
However, Entergy analyzes customers' credit positions prior to extending
credit, establishes credit limits, and monitors the appropriateness of
these limits on an ongoing basis.
Fair Values
Commodity Instruments
Fair value estimates of the power marketing and trading business'
commodity instruments are made at discrete points in time based on
relevant market information. These estimates may be subjective in
nature and involve uncertainties and matters of significant judgment;
therefore, actual results may differ from these estimates. At December
31, 2000 and 1999, the fair values of the power marketing and trading
business' energy-related commodity contracts used for trading purposes
were as follows:
2000 1999
Assets Liabilities Assets Liabilities
(In Thousands)
Commodity Instruments:
Natural Gas $362,221 $343,726 $ 44,675 $ 39,361
Electricity $260,969 $219,721 $190,850 $130,209
Financial Instruments
The estimated fair value of Entergy's financial instruments is
determined using bid prices reported by dealer markets and by
nationally recognized investment banking firms. The estimated fair
value of derivative financial instruments is based on market quotes of
the applicable interest rates. Considerable judgment is required in
developing the estimates of fair value. Therefore, estimates are not
necessarily indicative of the amounts that Entergy could realize in a
current market exchange. In addition, gains or losses realized on
financial instruments held by regulated businesses may be reflected in
future rates and therefore do not accrue to the benefit or detriment of
stockholders.
Entergy considers the carrying amounts of financial instruments
classified as current assets and liabilities to be a reasonable
estimate of their fair value because of the short maturity of these
instruments. In addition, Entergy does not expect that performance of
its obligations will be required in connection with certain off-balance
sheet commitments and guarantees considered financial instruments. For
these reasons, and because of the related-party nature of these
commitments and guarantees, determination of fair value is not
considered practicable. Additional information regarding financial
instruments and their fair values is included in Notes 4, 5, 6, and 7
to the financial statements.
NOTE 16. ENTERGY-FPL GROUP MERGER (Entergy Corporation)
On July 30, 2000, Entergy Corporation and FPL Group entered into a
Merger Agreement providing for a business combination that will result
in the creation of a new company. For accounting purposes, the Merger
will be recorded under the purchase method of accounting as an
acquisition of Entergy by FPL Group. Each outstanding share of FPL
Group common stock will be converted into the right to receive one
share of the new company's common stock, and each outstanding share of
Entergy Corporation common stock will be converted into the right to
receive 0.585 of a share of the new company's common stock. It is
expected that FPL Group's shareholders will own approximately 57% of
the common equity of the new company and Entergy's shareholders will
own approximately 43%. The Merger Agreement generally allows Entergy
to continue business in the ordinary course consistent with past
practice and contains certain restrictions on Entergy's capital
activities, including restrictions on the issuance of securities,
capital expenditures, dispositions, incurrence or guarantee of
indebtedness, and trading or marketing of energy. Entergy generally
will be permitted to take actions pursuant to restructuring legislation
in the domestic utility companies' jurisdictions of operation and to
reorganize its transmission business. Under certain circumstances, if
the Merger Agreement is terminated, a termination fee of $215 million
may be payable by one of the parties. The Merger Agreement may be
terminated if the Merger is not consummated by April 30, 2002, unless
automatically extended until October 30, 2002 under certain
circumstances. Both the FPL Group and Entergy Boards of Directors
unanimously approved the Merger, and the shareholders of Entergy
Corporation and FPL Group have approved the Merger. The Merger is
conditioned upon, among other things, the receipt of required
regulatory approvals of various local, state, and federal regulatory
agencies and commissions, including the SEC and FERC. Entergy has
filed for approval of the Merger in all of its state and local
regulatory jurisdictions (Arkansas, Louisiana, Mississippi, Texas, and
New Orleans), and at FERC, the SEC, and the NRC. In their filing with
the SEC, Entergy and FPL Group requested to remain in existence as
intermediate holding companies after the Merger is consummated.
The objective of Entergy and FPL Group is to consummate the Merger by
late 2001.
NOTE 17. QUARTERLY FINANCIAL DATA (UNAUDITED) (Entergy Corporation,
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
The business of the domestic utility companies and System Energy
is subject to seasonal fluctuations with the peak periods occurring
during the third quarter. Operating results for the four quarters of
2000 and 1999 were:
Operating Revenue
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
2000:
First Quarter $1,811,492 $346,877 $483,231 $346,820 $182,775 $119,742 $157,089
Second Quarter 2,137,788 447,823 586,386 448,067 215,606 136,651 159,389
Third Quarter 3,431,555 548,156 817,152 722,175 297,966 200,861 169,114
Fourth Quarter 2,635,313 419,779 624,471 545,375 241,024 183,036 171,157
1999:
First Quarter $1,639,922 $311,969 $423,819 $352,135 $182,443 $106,056 $140,617
Second Quarter 2,316,404 387,191 546,543 505,601 194,637 121,287 159,505
Third Quarter 3,064,535 488,801 676,076 576,956 267,159 163,140 163,801
Fourth Quarter 1,752,367 353,933 480,770 371,902 188,580 117,305 156,109
Operating Income (Loss)
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
2000:
First Quarter $286,604 $76,759 $50,435 $46,513 $13,214 $6,372 $74,440
Second Quarter 433,538 82,931 125,033 102,587 28,784 15,087 66,895
Third Quarter 593,837 93,917 190,136 178,889 36,295 32,136 67,580
Fourth Quarter 231,602 56,413 47,685 44,371 15,470 (14,209) 61,830
1999:
First Quarter $203,435 $32,160 $61,032 $65,989 $12,220 $749 $53,837
Second Quarter 363,951 60,212 61,586 179,278 20,630 22,089 68,695
Third Quarter 597,595 113,570 160,784 172,052 42,519 28,622 71,199
Fourth Quarter 86,673 (10,541) 37,596 2,823 12,716 (8,924) 69,705
Net Income (Loss)
Entergy Entergy Entergy Entergy Entergy System
Entergy Arkansas Gulf States Louisiana Mississippi New Orleans Energy
(In Thousands)
2000:
First Quarter $108,410 $35,314 $10,757 $11,191 $4,295 $1,817 $25,786
Second Quarter 245,773 38,978 60,815 46,687 13,503 7,217 21,786
Third Quarter 306,689 43,922 97,325 94,167 17,611 17,593 23,709
Fourth Quarter 50,043 18,833 11,446 10,634 3,564 (10,109) 22,464
1999:
First Quarter $72,906 $11,011 $13,437 $21,487 $3,015 $(1,535) $700
Second Quarter 209,758 28,929 17,022 93,371 8,222 11,695 29,483
Third Quarter 296,158 58,021 80,921 88,680 23,212 15,581 24,042
Fourth Quarter 16,204 (28,648) 13,620 (11,768) 7,139 (6,780) 28,147
Earnings per Average Common Share (Entergy Corporation)
2000 1999
Basic Diluted Basic and Diluted
First Quarter $0.42 $0.42 $0.25
Second Quarter $1.04 $1.04 $0.81
Third Quarter $1.35 $1.34 $1.16
Fourth Quarter $0.19 $0.17 $0.03
Item 9. Changes In and Disagreements With Accountants On Accounting
and Financial Disclosure.
No event that would be described in response to this item has
occurred with respect to Entergy, System Energy, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi, or
Entergy New Orleans.
PART III
Item 10. Directors and Executive Officers of the Registrants (Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
All officers and directors listed below held the specified
positions with their respective companies as of the date of filing
this report.
Name Age Position Period
ENTERGY ARKANSAS, INC.
Directors
Hugh T. McDonald 42 President and Chief Executive Officer 2000-Present
of Entergy Arkansas
Director of Entergy Arkansas 2000-Present
Senior Vice President, Retail of 1999-2000
Entergy Services, Inc.
Director, Regulatory Affairs - TX of 1995-1999
Entergy Gulf States
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
C. Gary Clary 56 Senior Vice President - Human 1998-Present
Resources and Administration of
Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans
Vice President - Human Resources and 1997-1998
Administration of Entergy Arkansas,
Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and
Entergy New Orleans
Director - System Human Resources of 1993-1996
Entergy Services
John Thomas Kennedy 41 Vice President - State Governmental 2000-Present
Affairs of Entergy Arkansas
Attorney at Law, Russellville, 1985-2000
Arkansas
James T. Pickens 63 Vice President - Public Affairs of 2000-Present
Entergy Arkansas
Director of State Governmental & 1990-2000
External Affairs of Entergy Arkansas
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part
I.
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Hugh T. McDonald See information under the Entergy
Arkansas Directors Section above.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
ENTERGY GULF STATES, INC.
Directors
E. Renae Conley 43 Director of Entergy Gulf States and 2000-Present
Entergy Louisiana
President and Chief Executive Officer 2000-Present
- LA of Entergy Gulf States and
Entergy Louisiana
Vice President, Investor Relations of 1999-2000
Entergy Services
President of Cincinnati Gas & 1998-1999
Electric, (a subsidiary of Cinergy
Corp.)
Chief Executive Officer of Cadence 1997-1998
LLC (a subsidiary of Cinergy Corp.)
Vice President of Sales of Cinergy 1996-1997
Corp.
General Manager of Corporate 1994-1996
Communications and Investor
Relations of Cinergy Corp.
Joseph F. Domino 52 Director of Entergy Gulf States 1999-Present
President and Chief Executive Officer 1998-Present
- TX of Entergy Gulf States
Director - Southwest Franchise of 1997-1998
Entergy Gulf States
Director - Eastern Region of Entergy 1995-1997
Services
Director - Southern Region of Entergy 1994-1995
Services
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
James D. Bruno 61 Vice President - Region of Entergy 1999-Present
Gulf States and Entergy Louisiana
Vice President of Customer Service of 1998-1999
Entergy Louisiana and Entergy Gulf
States
Vice President of Customer Service of 1994-1998
Entergy Louisiana and Entergy New
Orleans
Murphy A. Dreher 48 Vice President - State Governmental 1999-Present
Affairs - LA of Entergy Gulf States
and Entergy Louisiana
Legislative Executive - Governmental 1995-1998
Affairs of Entergy Gulf States
Director of Governmental Affairs of 1993-1995
Entergy Gulf States
Randall W. Helmick 46 Vice President - Operations - LA of 1998-Present
Entergy Gulf States and Entergy
Louisiana
Director of Special Projects of 1997-1998
London Electricity
Director of Reliability of Entergy 1997
Services
Director of Operations and 1994-1997
Engineering of Entergy Services
J. Parker McCollough 49 Vice President - State Governmental 1996-Present
Affairs - TX of Entergy Gulf States
Vice President - Governmental 1993-1996
Affairs, Texas Association of
Realtors (trade association)
Wade H. Stewart 55 Vice President, Regulatory Affairs - 2000-Present
LA of Entergy Gulf States and Entergy
Louisiana
Director, Regulatory Affairs - LA of 1995-2000
Entergy Gulf States and Entergy
Louisiana
C. Gary Clary See information under the Entergy
Arkansas Officers Section above.
E. Renae Conley See information under the Entergy
Gulf States Directors Section above.
Joseph F. Domino See information under the Entergy
Gulf States Directors Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part
I.
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
ENTERGY LOUISIANA, INC.
Directors
E. Renae Conley See information under the Entergy
Gulf States Directors Section above.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
James D. Bruno See information under the Entergy
Gulf States Officers Section above.
C. Gary Clary See information under the Entergy
Arkansas Officers Section above.
E. Renae Conley See information under the Entergy
Gulf States Directors Section above.
Murphy A. Dreher See information under the Entergy
Gulf States Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part
I.
Randall W. Helmick See information under the Entergy
Gulf States Officers Section above.
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Wade H. Stewart See information under the Entergy
Gulf States Officers Section above.
ENTERGY MISSISSIPPI, INC.
Directors
Carolyn C. Shanks 39 President and Chief Executive Officer 1999-Present
of Entergy Mississippi
Director of Entergy Mississippi 1999-Present
Vice President of Finance and 1997-1999
Administration of Entergy
Mississippi
Director of Business Services of 1994-1997
Entergy Operations
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
Bill F. Cossar 62 Vice President - State Governmental 1987-Present
Affairs of Entergy Mississippi
C. Gary Clary See information under the Entergy
Arkansas Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part
I.
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
Carolyn C. Shanks See information under the Entergy
Mississippi Directors Section above.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
ENTERGY NEW ORLEANS, INC.
Directors
Daniel F. Packer 53 Chief Executive Officer Entergy New 1998-Present
Orleans
President and Director of Entergy New 1997-Present
Orleans
State President - City of New Orleans 1996-1997
Vice President - Regulatory and 1994-1996
Governmental Affairs of Entergy New
Orleans
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
Elaine Coleman 51 Vice President, External Affairs of 1998-Present
Entergy New Orleans
Director of Customer Service of 1998
Entergy Services
Lead Customer Service Manager of 1995-1998
Entergy Services
Manager of Employee Communication of 1993-1995
Entergy Services
C. Gary Clary See information under the Entergy
Arkansas Officers Section above.
Frank F. Gallaher See information under the Entergy
Corporation Officers Section in Part
I.
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Jerry D. Jackson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
Daniel F. Packer See information under the Entergy New
Orleans Directors Section above.
Michael G. Thompson See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
SYSTEM ENERGY RESOURCES, INC.
Directors
Jerry W. Yelverton 56 Director, President and Chief 1999-Present
Executive Officer of System Energy
Senior Vice President of Nuclear of 1997-1998
Entergy Services
Executive Vice President and Chief 1996-1998
Operating Officer of Entergy
Operations
Vice President of Operations of ANO 1992-1996
In addition, Mr. Yelverton is an executive
officer and/or director of various other
wholly owned subsidiaries of Entergy
Corporation and its operating companies.
Donald C. Hintz See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Officers
Joseph L. Blount 54 Secretary of System Energy and 1991-Present
Entergy Operations
Joseph T. Henderson See information under the Entergy
Corporation Officers Section in Part
I.
Nathan E. Langston See information under the Entergy
Corporation Officers Section in Part
I.
Steven C. McNeal See information under the Entergy
Corporation Officers Section in Part
I.
C. John Wilder See information under the Entergy
Corporation Officers Section in Part
I.
Jerry W. Yelverton See information under the System
Energy Directors Section above.
Each director and officer of the applicable Entergy company is
elected yearly to serve by the unanimous consent of the sole
stockholder, Entergy Corporation, at its annual meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement of
Entergy Corporation to be filed in connection with its Annual Meeting
of Stockholders to be held on May 11, 2001, under the heading "Section
16(a) Beneficial Ownership Reporting Compliance", which information is
incorporated herein by reference.
Item 11. Executive Compensation
ENTERGY CORPORATION
Information called for by this item concerning the directors and
officers of Entergy Corporation is set forth in the Proxy Statement
under the headings "Executive Compensation Tables", "General
Information About Nominees", "Director Compensation", and "Comparison
of Five Year Cumulative Total Return", all of which information is
incorporated herein by reference.
ENTERGY ARKANSAS, ENTERGY GULF STATES, ENTERGY LOUISIANA, ENTERGY
MISSISSIPPI, ENTERGY NEW ORLEANS, AND SYSTEM ENERGY
Summary Compensation Table
The following table includes the Chief Executive Officer and the
four other most highly compensated executive officers in office as of
December 31, 2000 at Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
(collectively, the "Named Executive Officers"). This determination
was based on total annual base salary and bonuses from all Entergy
sources earned by each officer for the year 2000. See Item 10,
"Directors and Executive Officers of the Registrants," for information
on the principal positions of the Named Executive Officers in the
table below.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
As shown in Item 10, most Named Executive Officers are employed
by several Entergy companies. Because it would be impracticable to
allocate such officers' salaries among the various companies, the
table below includes the aggregate compensation paid by all Entergy
companies.
Long-Term
Compensation
Annual Awards Payouts
Compensatio
n
Other Restricted Securities (a) (b) All
Annual Stock Underlying LTIP Other
Name Year Salary Bonus Comp. Awards Options Payouts Comp.
E. Renae Conley 2000 $282,642 $280,000 $41,573 (c) 20,000 shares $181,109 $8,559
CEO-Entergy Louisiana 1999 215,000 344,934 29,662 $84,188(c)(d) 7,500 0 7,747
CEO-LA-Entergy Gulf States
Joseph F. Domino 2000 $235,358 $180,732 $51,399 (c) 20,000 shares $142,314 $7,084
CEO-TX-Entergy Gulf States 1999 223,569 200,210 7,072 (c) 13,487 0 6,838
1998 164,011 39,492 4,558 (c) 0 0 5,409
Frank F. Gallaher 2000 $416,390 $504,642 $127,484 (c) 34,500 shares $328,084 $13,910
1999 401,161 303,855 38,496 (c) 39,500 0 13,545
1998 382,829 280,747 89,137 (c) 2,500 0 12,396
Donald C. Hintz 2000 $570,096 $743,000 $104,399 (c) 175,000 shares $1,181,837 $26,516
1999 535,713 495,000 76,188 (c) 272,000 0 22,156
1998 423,379 310,571 28,508 (c) 2,500 0 14,236
Jerry D. Jackson (e) 2000 $458,223 $554,214 $58,758 (c) 58,500 shares $1,181,575 $15,162
1999 442,809 403,554 39,670 (c) 94,000 0 15,497
1998 408,456 348,156 59,630 (c) 2,500 0 13,849
J. Wayne Leonard 2000 $836,538 $1,190,000 $11,646 (c) 330,600 shares $2,410,413 $ 0
1999 771,938 840,000 2,570 (c) 255,000 0 0
1998 412,843 1,145,416 65,787 $796,860(c)(d) 0 0 18,125
Hugh T. McDonald 2000 $209,400 $165,000 $53,808 (c) 34,600 shares $172,773 $54,878
CEO-Entergy Arkansas 1999 181,704 176,267 438 (c) 14,700 0 5,429
1998 131,880 47,788 0 (c) 0 0 0
Daniel F. Packer 2000 $219,432 $167,382 $16,433 (c) 20,000 shares $196,929 $6,658
CEO-Entergy New Orleans 1999 211,055 127,920 10,517 (c) 16,750 0 6,583
1998 170,326 123,513 54,208(f) (c) 0 0 4,018
Carolyn C. Shanks 2000 $231,193 $182,530 $2,594 (c) 20,000 shares $104,241 $4,858
CEO-Entergy Mississippi 1999 208,931 133,950 2,549 (c) 11,050 0 4,800
1998 144,798 41,394 3,901 (c) 0 0 4,340
C. John Wilder 2000 $468,392 $619,370 $148,540 (c) 87,700 shares $953,006 $13,919
1999 445,191 406,693 119,878 (c) 52,500 0 20,035
1998 201,413 513,106 7,255 $758,560(c)(d) 0 0 3,300
Thomas J. Wright (e) 2000 $298,180 $343,883 $186,470(f) (c) 35,000 shares $196,929 $32,921
1999 263,120 225,458 159,653(f) (c) 18,999 0 32,356
1998 234,361 757,045(g) 519,610(f) (c) 0 0 20,833
Jerry W. Yelverton 2000 $408,846 $510,000 $4,197 $201,875(c)(d) 58,900 shares $503,482 $12,732
CEO-System Energy 1999 363,997 328,500 8,036 (c) 49,400 0 11,286
1998 282,410 184,959 22,068 (c) 1,250 0 8,886
(a) Amounts include the value of restricted shares that vested in
2000 (see note (c) below) under Entergy's Equity Ownership Plan.
(b) Includes the following:
(1) 2000 benefit accruals under the Defined Contribution Restoration
Plan as follows: Ms. Conley $3,459; Mr. Domino $2,044; Mr. Gallaher
$8,810; Mr. Hintz $13,618; Mr. Jackson $10,269; Mr. McDonald $1,183;
Mr. Packer $1,558; Mr. Wilder $9,393; Mr. Wright $2,340; and Mr.
Yelverton $7,816.
(2) 2000 employer contributions to the System Savings Plan as
follows: Ms. Conley $5,100; Mr. Domino $5,040; Mr. Gallaher $5,100;
Mr. Hintz $4,882; Mr. Jackson $4,893; Mr. McDonald $5,100; Mr. Packer
$5,100; Ms. Shanks $4,858; Mr. Wilder $4,526; Mr. Wright $5,100; and
Mr. Yelverton $4,916.
(3) 2000 reimbursements for moving expenses as follows: Mr. Hintz
$8,016; Mr. McDonald $48,595; and Mr. Wright $25,481.
(c) Restricted unit awards (equivalent to shares of Entergy
Corporation common stock) in 2000 are reported under the "Long-Term
Incentive Plan Awards" table, and reference is made to this table for
information on the aggregate number of restricted units awarded during
2000 and the vesting schedule for such units. At December 31, 2000,
the number and value of the aggregate restricted unit holdings were as
follows: Ms. Conley 8,700 units, $368,119; Mr. Domino 3,100 units,
$131,169; Mr. Gallaher 11,800 units, $499,288; Mr. Hintz 28,500 units,
$1,205,906; Mr. Jackson 12,700 units, $537,369; Mr. Leonard 58,000
units, $2,454,125; Mr. McDonald 3,700 units, $156,556; Mr. Packer
3,100 units, $131,169; Ms. Shanks 3,100 units, $131,169; Mr. Wilder
21,367 units, $904,091; Mr. Wright 7,500 units, $317,344; and Mr.
Yelverton 22,700 units, $960,494. Accumulated dividends are paid on
restricted units when vested. The value of restricted unit holdings
as of December 31, 2000 is determined by multiplying the total number
of units held by the closing market price of Entergy Corporation
common stock on the New York Stock Exchange Composite Transactions on
December 31, 2000 ($42.3125 per share). The value of stock for which
restrictions were lifted in 2000, and the applicable portion of
accumulated cash dividends, are reported in the LTIP payouts column in
the above table.
(d) Restricted units were granted to the following individuals in
addition to those granted under the Long Term Incentive Plan. Ms.
Conley was granted 3,000 units in 1999. The units will vest
incrementally over a three-year period that began in 2000, based on
continued service with Entergy Corporation. Accumulated dividends
will be paid. Mr. Leonard and Mr. Wilder were granted 30,000 and
26,000 restricted units, respectively, in 1998. Restricted units
awarded vest incrementally over a three-year period that began in
1999, based on continued service with Entergy Corporation.
Restrictions are lifted annually. Accumulated dividends will not be
paid on Mr. Leonard's units and 21,000 units of Mr. Wilder's
restricted units when vested. Accumulated dividends will be paid on
5,000 units of Mr. Wilder's restricted units. Mr. Yelverton was
granted 10,000 units in 2000. Restrictions will be lifted on 3,000
units in 2001 and 2002, and the remaining 4,000 units in 2003.
Accumulated dividends will not be paid. The value these individuals
may realize is dependent upon both the number of units that vest and
the future market price of Entergy Corporation common stock.
(e) Mr. Jackson is the former Chief Executive Officer of Entergy Gulf
States, LA and Entergy Louisiana. Mr. Wright is the former Chief
Executive Officer of Entergy Arkansas.
(f) Includes living expenses, including taxes and housing, for Mr.
Packer of approximately $24,000 in 1998. Includes closing costs for a
home purchase for Mr. Wright of approximately $34,000 in 2000 and
approximately $30,000 in 1999 and $465,000 in 1998 related to various
overseas living expenses associated with Mr. Wright's assignments in
London and Australia.
(g) Includes approximately $596,000 of performance bonus for service
years 1996-1998. A portion of the bonus was paid during 1999 with the
remaining amount paid in 2000.
Option Grants in 2000
The following table summarizes option grants during 2000 to the
Named Executive Officers. The absence, in the table below, of any
Named Executive Officer indicates that no options were granted to such
officer.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
Individual Grants Potential Realizable
% of Total Value
Number of Options at Assumed Annual
Securities Granted to Exercise Rates of Stock
Underlying Employees Price Price Appreciaton
Options in (per Expiration for Option Term(b)
Name Granted (a) 2000 share) (a) Date 5% 10%
E. Renae Conley 20,000 0.3% $23.00 1/27/10 $ 289,292 $ 733,122
Joseph F. Domino 20,000 0.3% 23.00 1/27/10 289,292 733,122
Frank F. Gallaher 34,500 0.5% 23.00 1/27/10 499,028 1,264,635
Donald C. Hintz 175,000 2.4% 23.00 1/27/10 2,531,301 6,414,813
Jerry D. Jackson 58,500 0.8% 23.00 1/27/10 846,178 2,144,380
J. Wayne Leonard 330,600 4.6% 23.00 1/27/10 4,781,989 12,118,499
Hugh T. McDonald 34,600 0.5% 23.00 1/27/10 500,474 1,268,300
Daniel F. Packer 20,000 0.3% 23.00 1/27/10 289,292 733,122
Carolyn C. Shanks 20,000 0.3% 23.00 1/27/10 289,292 733,122
C. John Wilder 87,700 1.2% 23.00 1/27/10 1,268,543 3,214,738
Thomas J. Wright 35,000 0.5% 23.00 1/27/10 506,260 1,282,963
Jerry W. Yelverton 58,900 0.8% 23.00 1/27/10 851,964 2,159,043
(a) Options were granted on January 27, 2000, pursuant to the Equity
Ownership Plan. All options granted on this date have an exercise
price equal to the closing price of Entergy Corporation common stock
on the New York Stock Exchange Composite Transactions on
January 27, 2000. These options will vest incrementally over a three-
year period beginning in 2001.
(b) Calculation based on the market price of the underlying
securities assuming the market price increases over a ten-year
option period and assuming annual compounding. The column
presents estimates of potential values based on simple
mathematical assumptions. The actual value, if any, a Named
Executive Officer may realize is dependent upon the market price
on the date of option exercise.
Aggregated Option Exercises in 2000 and December 31, 2000 Option
Values
The following table summarizes the number and value of all
unexercised options held by the Named Executive Officers. The
absence, in the table below, of any Named Executive Officer indicates
that no options are held by such officer.
Number of Securities Value of Unexercised
Underlying Unexercisable Option In-the-Money Options
Shares Acquired Value as of December 31, 2000 as of December 31, 2000(b)
Name on Exercise Realized (a) Exercisable Unexercisable Exercisable Unexercisable
E. Renae Conley - $ - 2,500 25,000 $35,625 $457,500
Joseph F. Domino - - 5,995 28,992 83,844 497,526
Frank F. Gallaher 34,000 566,563 24,166 60,834 309,054 992,165
Donald C. Hintz - - 119,000 383,000 1,676,688 5,873,688
Jerry D. Jackson 71,525 960,091 11,719 121,167 68,780 1,905,285
J. Wayne Leonard - - 85,000 500,600 1,051,875 8,488,463
Hugh T. McDonald - - 4,899 44,401 68,749 805,751
Daniel F. Packer - - 5,583 31,167 69,090 524,442
Carolyn C. Shanks 3,683 44,196 - 27,367 - 477,417
C. John Wilder - - 17,500 122,700 216,563 2,126,831
Thomas J. Wright - - 6,332 47,667 78,359 832,692
Jerry W. Yelverton - - 24,716 91,834 330,376 1,545,065
(a) Based on the difference between the closing price of Entergy
Corporation's common stock on the New York Stock Exchange Composite
Transactions on the exercise date and the option exercise price.
(b) Based on the difference between the closing price of Entergy
Corporation's common stock on the New York Stock Exchange Composite
Transactions on December 31, 2000, and the option exercise price.
Long-Term Incentive Plan Awards in 2000
The following Table summarizes the awards of restricted units
(equivalent to shares of Entergy Corporation common stock) granted
under the Equity Ownership Plan in 2000 to the Named Executive
Officers.
Estimated Future Payouts Under
Non-Stock Price-Based Plans (#
of units) (a) (b)
Number of Performance Period Until
Name Units Maturation or Payout Threshold Target Maximum
E. Renae Conley 6,700 1/1/00-12/31/02 2,300 4,517 6,700
Joseph F. Domino 3,100 1/1/00-12/31/02 1,100 2,100 3,100
Frank F. Gallaher 11,800 1/1/00-12/31/02 4,000 7,917 11,800
Donald C. Hintz 28,500 1/1/00-12/31/02 9,500 19,000 28,500
Jerry D. Jackson 12,700 1/1/00-12/31/02 4,300 8,500 12,700
J. Wayne Leonard 48,000 1/1/00-12/31/02 16,000 32,000 48,000
Hugh T. McDonald 3,700 1/1/00-12/31/02 1,300 2,503 3,700
Daniel F. Packer 3,100 1/1/00-12/31/02 1,100 2,100 3,100
Carolyn C. Shanks 3,100 1/1/00-12/31/02 1,100 2,100 3,100
C. John Wilder 12,700 1/1/00-12/31/02 4,300 8,500 12,700
Thomas J. Wright 7,500 1/1/00-12/31/02 2,500 5,000 7,500
Jerry W. Yelverton 12,700 1/1/00-12/31/02 4,300 8,500 12,700
(a) Restricted units awarded will vest at the end of a three-year
period, subject to the attainment of approved performance goals for
Entergy. Restrictions are lifted based upon the achievement of the
cumulative result of these goals for the performance period. The
value any Named Executive Officer may realize is dependent upon both
the number of units that vest and the future market price of Entergy
Corporation common stock.
(b) The threshold, target, and maximum levels correspond to the
achievement of 50%, 100%, and 150%, respectively, of Equity Ownership
Plan goals. Achievement of a threshold, target, or maximum level
would result in the award of the number of units indicated in the
respective column. Achievement of a level between these three
specified levels would result in the award of a number of units
calculated by means of interpolation.
Pension Plan Tables
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
Retirement Income Plan Table
Annual
Covered Years of Service
Compensation 15 20 25 30 35
$100,000 $22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
200,000 45,000 60,000 75,000 90,000 105,000
300,000 67,500 90,000 112,500 135,000 157,500
400,000 90,000 120,000 150,000 180,000 210,000
500,000 112,500 150,000 187,500 225,000 262,500
650,000 146,250 195,000 243,750 292,500 341,250
950,000 213,750 285,000 356,250 427,500 498,750
All of the Named Executive Officers participate in a Retirement
Income Plan, a defined benefit plan, that provides a benefit for
employees at retirement from Entergy based upon (1) generally all
years of service beginning at age 21 through termination, with a
forty-year maximum, multiplied by (2) 1.5%, multiplied by (3) the
final average compensation. Final average compensation is based on
the highest consecutive 60 months of covered compensation in the last
120 months of service. The normal form of benefit for a single
employee is a lifetime annuity and for a married employee is a 50%
joint and survivor annuity. Other actuarially equivalent options are
available to each retiree. Retirement benefits are not subject to any
deduction for Social Security or other offset amounts. The amount of
the Named Executive Officers' annual compensation covered by the plan
as of December 31, 2000, is represented by the salary column in the
Summary Compensation Table above.
The credited years of service under the Retirement Income Plan,
as of December 31, 2000, for the following Named Executive Officers is
as follows: Ms. Conley 1; Mr. Domino 30; Mr. Gallaher 31; Mr. Jackson
21; Mr. Leonard 2; Mr. McDonald 18; Mr. Packer 18; Ms. Shanks 17; Mr.
Wright 31; and Mr. Yelverton 21. The credited years of service under
the Retirement Income Plan, as of December 31, 2000 for the following
Named Executive Officers, as a result of entering into supplemental
retirement agreements, is as follows: Mr. Hintz 29 and Mr. Wilder 17.
The maximum benefit under the Retirement Income Plan is limited
by Sections 401 and 415 of the Internal Revenue Code of 1986, as
amended; however, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System Energy
have elected to participate in the Pension Equalization Plan sponsored
by Entergy Corporation. Under this plan, certain executives,
including the Named Executive Officers, would receive an additional
amount equal to the benefit that would have been payable under the
Retirement Income Plan, except for the Sections 401 and 415
limitations discussed above.
In addition to the Retirement Income Plan discussed above,
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy participate in the Supplemental Retirement
Plan of Entergy Corporation and Subsidiaries and the Post-Retirement
Plan of Entergy Corporation and Subsidiaries. Participation is limited
to one of these two plans and is at the invitation of Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy. The participant may receive from the appropriate
Entergy company a monthly benefit payment not in excess of .025 (under
the Supplemental Retirement Plan) or .0333 (under the Post-Retirement
Plan) times the participant's average basic annual salary (as defined
in the plans) for a maximum of 120 months. Mr. Hintz, Mr. Packer and
Mr. Yelverton have entered into a Supplemental Retirement Plan
participation contract, and Mr. Gallaher, Mr. Jackson, and Mr. Wright
have entered into Post-Retirement Plan participation contracts.
Current estimates indicate that the annual payments to each Named
Executive Officer under the above plans would be less than the
payments to that officer under the System Executive Retirement Plan
discussed below.
System Executive Retirement Plan Table (1)
Annual
Covered Years of Service
Compensation 10 15 20 25 30+
$ 200,000 $60,000 $90,000 $100,000 $110,000 $120,000
300,000 90,000 135,000 150,000 165,000 180,000
400,000 120,000 180,000 200,000 220,000 240,000
500,000 150,000 225,000 250,000 275,000 300,000
600,000 180,000 270,000 300,000 330,000 360,000
700,000 210,000 315,000 350,000 385,000 420,000
1,000,000 300,000 450,000 500,000 550,000 600,000
(1) Covered pay includes the average of the highest three years of
annual base pay and incentive awards earned by the executive
during the ten years immediately preceding his retirement.
Benefits shown are based on a target replacement ratio of 50%
based on the years of service and covered compensation shown. The
benefits for 10, 15, and 20 or more years of service at the 45%
and 55% replacement levels would decrease (in the case of 45%) or
increase (in the case of 55%) by the following percentages: 3.0%,
4.5%, and 5.0%, respectively.
In 1993, Entergy Corporation adopted the System Executive
Retirement Plan (SERP). This plan was amended in 1998. Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy are participating employers in
the SERP. The SERP is an unfunded defined benefit plan offered at
retirement to certain senior executives, which would currently include
all the Named Executive Officers. Participating executives choose, at
retirement, between the retirement benefits paid under provisions of
the SERP or those payable under the Supplemental Retirement Plan or
the Post-Retirement Plan discussed above. The plan was amended in
1998 to provide that covered pay is the average of the highest three
years annual base pay and incentive awards earned by the executive
during the ten years immediately preceding his retirement. Benefits
paid under the SERP are calculated by multiplying the covered pay
times target pay replacement ratios (45%, 50%, or 55%, dependent on
job rating at retirement) that are attained, according to plan design,
at 20 years of credited service. The target ratios are increased by
1% for each year of service over 20 years, up to a maximum of 30 years
of service. In accordance with the SERP formula, the target ratios
are reduced for each year of service below 20 years. The credited
years of service under this plan are identical to the years of service
for Named Executive Officers (other than Mr. Jackson, Mr. Thompson,
and Mr. Yelverton) disclosed above in the section entitled "Pension
Plan Tables-Retirement Income Plan Table". Mr. Jackson, Mr. Thompson,
and Mr. Yelverton have 27 years, 19 years, and 31 years, respectively,
of credited service under this plan.
The amended plan provides that a single employee receives a
lifetime annuity and a married employee receives the reduced benefit
with a 50% surviving spouse annuity. Other actuarially equivalent
options are available to each retiree. SERP benefits are offset by
any and all defined benefit plan payments from Entergy. SERP benefits
are not subject to Social Security offsets.
Eligibility for and receipt of benefits under any of the
executive plans described above are contingent upon several factors.
The participant must agree, without the specific consent of the
Entergy company for which such participant was last employed, not to
take employment after retirement with any entity that is in
competition with, or similar in nature to, Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, Entergy Mississippi, Entergy New
Orleans, and System Energy or any affiliate thereof. Eligibility for
benefits is forfeitable for various reasons, including violation of an
agreement with Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy, certain resignations of employment, or certain terminations of
employment without Company permission.
In addition to the Retirement Income Plan discussed above,
Entergy Gulf States provides, among other benefits to officers, an
Executive Income Security Plan for key managerial personnel. The plan
provides participants with certain retirement, disability,
termination, and survivors' benefits. To the extent that such
benefits are not funded by the employee benefit plans of Entergy Gulf
States or by vested benefits payable by the participants' former
employers, Entergy Gulf States is obligated to make supplemental
payments to participants or their survivors. The plan provides that
upon the death or disability of a participant during his employment,
he or his designated survivors will receive (i) during the first year
following his death or disability an amount not to exceed his annual
base salary, and (ii) thereafter for a number of years until the
participant attains or would have attained age 65, but not less than
nine years, an amount equal to one-half of the participant's annual
base salary. The plan also provides supplemental retirement benefits
for life for participants retiring after reaching age 65 equal to one-
half of the participant's average final compensation rate, with one-
half of such benefit upon the death of the participant being payable
to a surviving spouse for life.
Entergy Gulf States amended and restated the plan effective March
1, 1991, to provide such benefits for life upon termination of
employment of a participating officer or key managerial employee
without cause (as defined in the plan) or if the participant separates
from employment for good reason (as defined in the plan), with 1/2 of
such benefits to be payable to a surviving spouse for life. Further,
the plan was amended to provide medical benefits for a participant and
his family when the participant separates from service. These medical
benefits generally continue until the participant is eligible to
receive medical benefits from a subsequent employer; but in the case
of a participant who is over 50 at the time of separation and was
participating in the plan on March 1, 1991, medical benefits continue
for life. By virtue of the 1991 amendment and restatement, benefits
for a participant under such plan cannot be modified once he becomes
eligible to participate in the plan. Mr. Domino is a participant in
this plan.
Upon completion of the merger with FPL Group, benefits already
accrued under Entergy's System Executive Retirement Plan, Post-
Retirement Plan, Supplemental Retirement Plan and Pension Equalization
Plan will be funded in an irrevocable trust, the assets of which may
be used only to pay benefits under such plans and become fully vested
if the participant is involuntarily terminated without "cause" or
terminates employment for "good reason" (as such terms are,
respectively, defined in such plans), and (b) all amounts credited to
participants' accounts under Entergy's Deferred Compensation Plan will
be funded in an irrevocable trust, the assets of which may be used
only to pay amounts under such agreements (unless Entergy becomes
insolvent, in which case the assets in the trust will be available
to satisfy the claims of creditors) (a "rabbi trust").
Compensation of Directors
For information regarding compensation of the directors of
Entergy Corporation, see the Proxy Statement under the heading
"Director Compensation", which information is incorporated herein by
reference. Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy currently
have no non-employee directors, and none of the current directors of
these companies are compensated for their responsibilities as
director.
Retired non-employee directors of Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans with a minimum
of five years of service on the respective Boards of Directors are
paid $200 a month for a term of years corresponding to the number of
years of active service as directors. Retired non-employee directors
with over ten years of service receive a lifetime benefit of $200 a
month. Years of service as an advisory director are included in
calculating this benefit. System Energy has no retired non-employee
directors.
Retired non-employee directors of Entergy Gulf States receive
retirement benefits under a plan in which all directors who served
continuously for a period of years will receive a percentage of their
retainer fee in effect at the time of their retirement for life. The
retirement benefit is 30 percent of the retainer fee for service of
not less than five nor more than nine years, 40 percent for service of
not less than ten nor more than fourteen years, and 50 percent for
fifteen or more years of service. For those directors who retired
prior to the retirement age, their benefits are reduced. The plan
also provides disability retirement and optional hospital and medical
coverage if the director has served at least five years prior to the
disability. The retired director pays one-third of the premium for
such optional hospital and medical coverage and Entergy Gulf States
pays the remaining two-thirds. Years of service as an advisory
director are included in calculating this benefit.
Executive Retention and Employment Agreements and Change-in-Control
Arrangements
Entergy Gulf States
As a result of the Merger, Entergy Gulf States is obligated to
pay benefits under the Executive Income Security Plan to those persons
who were participants at the time of the Merger and who later
terminated their employment under circumstances described in the plan.
For additional description of the benefits under the Executive Income
Security Plan, see the "Pension Plan Tables-System Executive
Retirement Plan Table" section noted above.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy
In connection with the proposed merger between Entergy and FPL
Group, Inc., Entergy has entered into retention agreements with its
executive officers. In addition, WCB Holding Corp., a new company
formed by Entergy and FPL Group, has entered into an employment
agreement with Mr. Leonard.
Retention Agreement with Mr. Leonard - Entergy has entered into a
retention agreement with Mr. Leonard which provides that upon a
termination of employment prior to the earlier to occur of the
termination of the merger agreement with FPL Group or the effective
date of the employment agreement between Mr. Leonard and WCB Holding
(see "Employment Agreement with Mr. Leonard" below) (a) by Entergy
without "cause" or by Mr. Leonard for "good reason", as such terms
are defined in the agreement, other than a termination of employment
described in the next paragraph, or (b) by reason of Mr. Leonard's
death or disability:
o Entergy will pay to him a lump sum cash severance payment
equal to three times the sum of Mr. Leonard's base salary and target
annual incentive award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum annual achievement of applicable
performance goals;
o his supplemental retirement benefit will fully vest, will be
determined as if he had remained employed with Entergy until the
attainment of age 55, and will commence upon his attainment of age 55;
o he will be entitled to immediate payment of performance awards,
based upon an assumed target achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term; and
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur.
If Mr. Leonard's employment is terminated by Entergy prior to
the earlier of completion of the merger with FPL Group or termination
of the merger agreement with FPL Group upon the determination of the
Board that for reasons other than "cause" and in the best interests
of Entergy's shareholders in connection with the completion of the
merger with FPL Group, it is necessary that Mr. Leonard no longer
serve as Chief Executive Officer of Entergy:
o Entergy will pay to him a lump sum severance payment equal to
five times the sum of his base salary and maximum annual incentive
award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals;
o his supplemental retirement benefit will fully vest, will be
determined as if he had remained employed with Entergy until the
attainment of age 55, and will commence upon his attainment of age 55;
o he will be entitled to immediate payment of performance awards,
based upon an assumed maximum achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term; and
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur.
If Mr. Leonard's employment is terminated by Entergy for "cause"
at any time, or by Mr. Leonard without "good reason" and without
Entergy's permission prior to his attainment of age 55, Mr. Leonard
will forfeit his supplemental retirement benefit. If Mr. Leonard's
employment is terminated by Mr. Leonard without "good reason" with
the Entergy's permission prior to his attainment of age 55, Mr.
Leonard will be entitled to a supplemental retirement benefit,
reduced by 6.5% for each year that the termination date precedes his
attainment of age 55, payable commencing upon Mr. Leonard's attainment
of age 62. If Mr. Leonard's employment is terminated by Mr. Leonard
without "good reason" following his attainment of age 55, Mr. Leonard
will be entitled to his full supplemental retirement benefit. The
amounts payable under the agreement will be funded in a rabbi trust.
Additionally, the Board of Directors has approved a grant to Mr.
Leonard of 200,000 restricted stock units pursuant to Entergy's
Equity Ownership Plan. 50,000 of the restricted stock units (without
dividends) will vest on each of December 31, 2001, December 31, 2002,
December 31, 2003 and December 31, 2004. In addition, the restricted
stock units will vest upon the termination of Mr. Leonard's employment
by Entergy without "cause" or by Mr. Leonard for "good reason" (as
defined in the retention agreement between Mr. Leonard and Entergy).
Retention Agreement with Mr. Gallaher - Entergy has entered into
a retention agreement with Mr. Gallaher which provides that upon
termination of employment prior to the earlier of the termination of
the merger agreement with FPL Group or the second anniversary of the
completion of the merger with FPL Group (a) by Mr. Gallaher for "good
reason" or by Entergy without "cause", as such terms are defined
in the agreement or (b) by reason of Mr. Gallaher's death or
disability:
o Entergy will pay to him a lump sum cash severance payment
equal to four times the sum of his base salary and maximum annual
incentive award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals;
o he will be entitled to immediate payment of performance awards,
based upon an assumed maximum achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term;
o he may elect to receive either a lump sum supplemental retirement
benefit equal to $3.8 million or the benefit he would have earned
under the terms of the SERP applicable to individuals who became
participants on or after March 25, 1998;
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur; and
o the amounts payable under the agreement will be funded in a rabbi
trust.
Retention agreement with Mr. Hintz - Entergy has entered into a
retention agreement with Mr. Hintz which provides that Mr. Hintz will
be paid an initial retention payment of approximately $2.8 million on
the date on which the merger with FPL Group is completed and an
additional retention payment of approximately $2.3 million on the
second anniversary of the completion of the merger with FPL Group if
he remains employed on each of those dates. The agreement also
provides that upon termination of employment prior to the earlier of
the termination of the merger agreement with FPL Group or the second
anniversary of the completion of the merger with FPL Group (a) by Mr.
Hintz for "good reason" or by Entergy without "cause", as such
terms are defined in the agreement or (b) by reason of Mr. Hintz's
death or disability:
o Entergy will pay to him a lump sum cash severance payment
equal to $2.8 million if such termination occurs prior to completion
of the merger of FPL Group or equal to $2.3 million if such
termination occurs following completion of the merger with FPL Group;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals, if such termination occurs following completion of the merger
with FPL Group;
o he will be entitled to immediate payment of performance awards
based upon an assumed target achievement of applicable performance
goals, if such termination occurs prior to completion of the merger,
or based upon an assumed maximum achievement of applicable performance
goals, if such termination occurs following completion of the merger
with FPL Group;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term;
o he will be entitled to receive a supplemental retirement benefit
that, when combined with Mr. Hintz's SERP benefit, equals the benefit
he would have earned under the terms of the SERP as in effect
immediately prior to March 25, 1998;
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur; and
o the amounts payable under the agreement will be funded in a rabbi
trust.
Retention Agreement with Mr. Jackson - Entergy has entered into a
retention agreement with Mr. Jackson which provides that upon
termination of employment (a) by him for "good reason" or by Entergy
without "cause", as such terms are defined in the agreement, or by
reason of his death or disability, in each case prior to the earlier
of completion of the merger with FPL Group or termination of the
merger agreement with FPL Group or (b) for any reason following
completion of the merger with FPL Group:
o Entergy will pay to him a lump sum cash severance payment
equal to four times the sum of his base salary and maximum
annual incentive award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals;
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur;
o he will be entitled to immediate payment of performance awards,
based upon an assumed maximum achievement of applicable performance
goals;
o he may elect to receive either a lump sum supplemental retirement
benefit equal to (a) $4.3 million or (b) the benefit that he
would have earned under the terms of the SERP applicable to
individuals who became participants on or after March 25, 1998;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term; and
o the amounts payable under the agreements will be funded in a
rabbi trust.
Retention Agreement with Mr. Wilder - Entergy has entered into a
retention agreement with Mr. Wilder which provides that upon
termination of employment (a) by Mr. Wilder for "good reason" or by
Entergy without "cause", as such terms are defined in the
agreement, in each case prior to the termination of the merger
agreement with FPL Group or prior to the second anniversary of the
completion of the merger with FPL Group,(b) by reason of Mr.
Wilder's death or disability prior to the termination of the
merger agreement with FPL Group or prior to the second anniversary of
the completion of the merger with FPL Group or (c) for any reason
following the second anniversary of the completion of the merger with
FPL Group:
o Entergy will pay to him a lump sum cash severance payment
equal to four times the sum of the his base salary and maximum annual
incentive award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals;
o except in the case of a termination by reason of death or
disability, he will continue to be employed as a Special Project
Coordinator at an annual base salary of $200,000, and will continue to
participate in all of Entergy's benefit plans, until the earliest
of (a) his attainment of age 55 (at which time he will be deemed eligible
to retire under Entergy's plans then in effect), (b) his employment
with a company listed in the Fortune Global 500 Index or (c) his
employment with any company that has a conflict of interest policy
that would prohibit his continued employment with Entergy;
o Entergy will credit him with 15 additional years of service
under Entergy's supplemental retirement plan and he may
elect to receive either (a) approximately $1.9 million in a cash lump
sum in full settlement of all nonqualified retirement benefits or (b)
the benefit that he would have earned under the terms of the SERP
applicable to individuals who became participants on or after March
25, 1998 (which amount he may elect to receive upon completion of the
merger with FPL Group);
o he will be entitled to immediate payment of performance awards,
based upon an assumed maximum achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term; and
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur.
If Mr. Wilder terminates his employment for any reason following
shareholder approval of the merger with FPL Group but prior to the
completion of the merger, Entergy will pay to him a lump sum cash
severance payment equal to three times the sum of his base salary and
target annual incentive award and a "gross-up" payment in respect of
any excise taxes he might incur.
If Mr. Wilder terminates employment without good reason and
other than on account of death or disability, on or after the
completion of the merger and before the second anniversary of the
completion of the merger with FPL Group:
o Entergy will pay to him a lump sum cash severance payment
equal to three times the sum of his base salary and target annual
incentive award;
o Entergy will pay to him a pro rata annual incentive award,
based on an assumed maximum achievement of applicable performance
goals;
o he will continue to be employed as a Special Project Coordinator
at an annual base salary of $200,000, and will continue to participate
in all of Entergy's benefit plans, until the earliest of (a) his
attainment of age 55 (at which time he will be deemed eligible to
retire under Entergy's plans then in effect), (b) his employment
with a company listed in the Fortune Global 500 Index or (c) his
employment with any company that has a conflict of interest policy
that would prohibit his continued employment with Entergy;
o Entergy will credit him with 15 additional years of service
under Entergy's supplemental retirement plan and he may elect to
receive either (a) approximately $1.9 million in a cash lump sum in
full settlement of all nonqualified retirement benefits or (b) the
benefit that he would have earned under the terms of the SERP
applicable to individuals who became participants on or after March
25, 1998 (which amount he may elect to receive upon completion of the
merger with FPL Group);
o he will be entitled to immediate payment of performance awards,
based upon an assumed target achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term;
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur; and
o the amounts payable under the agreement will be funded in a rabbi
trust.
Retention Agreement with Mr. Yelverton - Entergy has entered into
a retention agreement with Mr. Yelverton which provides that he will
be paid cash retention payments of $680,000 on each of the first
three anniversaries of the completion of the merger with FPL Group if
he remains employed on each of those dates. The agreement also
provides that upon termination of employment prior to the earlier of
the termination of the merger agreement or the third anniversary of
the completion of the merger with FPL Group (a) by Mr. Yelverton for
"good reason" or by Entergy without "cause", as such terms are
defined in the agreement or (b) by reason of Mr. Yelverton's death or
disability:
o Entergy will pay him a lump sum cash severance payment equal
to the remaining unpaid portion of the cash retention payments;
o he will be entitled to immediate payment of performance awards,
based upon an assumed target achievement of applicable performance
goals;
o all of his stock options will become fully vested and will remain
outstanding for their full ten-year term;
o Entergy will pay to him a "gross-up" payment in respect of
any excise taxes he might incur; and
o the amounts payable under the agreement will be funded in a rabbi
trust.
Employee Retention Bonus Plan - Ms. Conley, Mr. Domino, Mr. McDonald,
Mr. Packer and Ms. Shanks are participants in the Employee Retention
Bonus Plan of Entergy and its Subsidiaries. Under the Plan, he or
she will be paid (a) on the date on which the merger with FPL Group
is completed, an initial retention payment of one time his or her
annual base salary and (b) on the first anniversary of the completion
of the merger with FPL Group, an additional retention payment of one
time his or her annual base salary. Each of them must remain
employed on each of those dates and satisfy certain other conditions.
Upon termination of employment by any of them for "good reason" or by
Entergy without "cause", as such terms are defined in the Plan,
(a) if prior to closing of the merger with FPL Group, then he or she
would receive both payments on date on which the merger is completed,
or (b) if after the closing of the merger with FPL Group, he or she
would receive the remaining payment upon termination of employment.
In the event of death or disability before the closing of the merger
with FPL Group, each of them or their beneficiary would receive one
time his or her annual base salary and in the event of death or
disability after the closing of the merger with FPL Group, each of
them or their beneficiary would receive the remaining payment. If
the merger is terminated, each of them would receive one-half of his
or her annual base salary.
Employment Agreement with Mr. Leonard - WCB Holding has entered into
an employment agreement with Mr. Leonard pursuant to which Mr.
Leonard will serve as Chief Executive Officer and President of WCB
Holding. Pursuant to WCB Holding's By-laws, during a specified period
following the consummation of the merger with FPL Group (until the
earlier of (a) a vacancy on WCB Holding's Board of Directors with
respect to a director designated by FPL Group which follows the first
anniversary of the consummation of the merger and (b) the third
annual shareholder meeting of WCB Holding which occurs following the
calendar year in which the merger is consummated), Mr. Leonard may be
removed or replaced from his positions with WCB Holding (and any
person other than Mr. Leonard may be elected to such positions) only
upon the affirmative vote of at least two-thirds of WCB Holding's
entire Board of Directors. The agreement is for an initial three-year
term commencing upon consummation of the merger with FPL Group, with
opportunity for extension. The agreement also provides the following:
o During the first year following the merger, Mr. Leonard's
compensation will be determined by the compensation committee of the
WCB Holding Board of Directors based on competitive practices for the
chief executive officer of companies of comparable size and standing,
but in no event will Mr. Leonard's base salary, annual incentive
compensation, long-term incentives, fringe benefits, and eligibility
to participate in all savings and retirement plans, practices,
policies and programs be less favorable than that of Mr. Broadhead,
currently Chairman and Chief Executive Officer of FPL Group, and also
designated to be the Chairman of the Board of WCB Holdings. Mr.
Broadhead's annual base salary will be no less than $1,050,000, his
annual incentive compensation target will be no less than 75% of base
salary, and his long-term incentive compensation target will be no
less than 185% of base salary.
o Thereafter, Mr. Leonard's base salary and additional compensation
will be reviewed by the compensation committee of WCB Holding for
possible increase at least annually during the term of his employment.
o Mr. Leonard will participate in supplemental executive plans,
agreements and arrangements such that the aggregate value of
retirement benefits available to Mr. Leonard and his beneficiaries at
the end of his employment with WCB Holding will not be less than that
to which he would have been entitled had he remained in Entergy's
employment for the same period of time under his current arrangements
with Entergy.
If Mr. Leonard's employment is involuntarily terminated without
"cause" or if he terminates for "good reason", as such terms are
defined in his employment agreement, Mr. Leonard will be entitled to
receive, in lieu of benefits, a cash severance payment equal to three
times the sum of his Annual Base Salary and Highest Bonus, as such
terms are defined in the agreement, continued benefits for three
additional years, certain additional benefits and a "gross-up" payment
in respect of any excise taxes he might incur.
Personnel Committee Interlocks and Insider Participation
The compensation of Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and
System Energy executive officers was set by the Personnel Committee of
Entergy Corporation's Board of Directors, composed solely of Directors
of Entergy Corporation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Entergy Corporation owns 100% of the outstanding common stock of
registrants Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy. The
information with respect to persons known by Entergy Corporation to be
beneficial owners of more than 5% of Entergy Corporation's outstanding
common stock is included under the heading "Stockholders Who Own at
Least Five Percent" in the Proxy Statement, which information is
incorporated herein by reference. Other than the Merger Agreement
with FPL Group, the registrants know of no contractual arrangements
that may, at a subsequent date, result in a change in control of any
of the registrants.
As of December 31, 2000, the directors, the Named Executive
Officers, and the directors and officers as a group for Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy,
respectively, beneficially owned directly or indirectly common stock
of Entergy Corporation as indicated:
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(c)
Entergy Corporation
Maureen S. Bateman* 300 -
W. Frank Blount* 6,834 -
George W. Davis* 1,500 -
Norman C. Francis* 2,500 -
Frank F. Gallaher** 7,640 24,166
Donald C. Hintz** 3,536 119,000
Jerry D. Jackson** 22,960 11,719
J. Wayne Leonard*** 13,065 85,000
Robert v.d. Luft* 15,052 85,000
Kathleen A. Murphy* 1,300(b) -
Paul W. Murrill* 2,704 -
James R. Nichols* 8,859 -
William A. Percy, III* 550 -
Dennis H. Reilley* 600 -
Wm. Clifford Smith* 9,485 -
Bismark A. Steinhagen* 9,647 -
C. John Wilder** 9,017 17,500
All directors and executive
officers 137,171 367,326
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(c)
Entergy Arkansas
Donald C Hintz*** 3,536 119,000
Jerry D. Jackson*** 22,960 11,719
J. Wayne Leonard** 13,065 85,000
Hugh T. McDonald*** 3,475 4,899
C. John Wilder*** 9,017 17,500
Thomas J. Wright**(d) 15,332(b) 6,332
All directors and executive
officers 105,303 281,224
Entergy Gulf States
E. Renae Conley*** 220 2,500
Joseph F. Domino*** 6,917 5,995
Frank F. Gallaher** 7,640 24,166
Donald C. Hintz*** 3,536 119,000
Jerry D. Jackson***(d) 22,960 11,719
J. Wayne Leonard** 13,065 85,000
C. John Wilder*** 9,017 17,500
All directors and executive
officers 104,687 284,238
Entergy Louisiana
E. Renae Conley*** 220 2,500
Frank F. Gallaher** 7,640 24,166
Donald C. Hintz*** 3,536 119,000
Jerry D. Jackson***(d) 22,960 11,719
J. Wayne Leonard** 13,065 85,000
C. John Wilder*** 9,017 17,500
All directors and executive
officers 97,020 278,243
Entergy Corporation
Common Stock
Amount and Nature of
Beneficial Ownership(a)
Sole Voting
and Other
Investment Beneficial
Name Power Ownership(c)
Entergy Mississippi
Donald C. Hintz*** 3,536 119,000
Jerry D. Jackson*** 22,960 11,719
J. Wayne Leonard** 13,065 85,000
Carolyn C. Shanks*** 3,708 -
C. John Wilder*** 9,017 17,500
All directors and executive
officers 89,639 269,993
Entergy New Orleans
Donald C. Hintz*** 3,536 119,000
Jerry D. Jackson*** 22,960 11,719
J. Wayne Leonard** 13,065 85,000
Daniel F. Packer*** 2,858 5,583
C. John Wilder*** 9,017 17,500
All directors and executive
officers 86,470 275,576
System Energy
Donald C. Hintz*** 3,536 119,000
Jerry D. Jackson** 22,960 11,719
J. Wayne Leonard** 13,065 85,000
C. John Wilder*** 9,017 17,500
Jerry W. Yelverton*** 8,349 24,716
All directors and executive
officers 72,639 270,543
* Director of the respective Company
** Named Executive Officer of the respective Company
*** Director and Named Executive Officer of the respective Company
(a) Based on information furnished by the respective individuals.
Except as noted, each individual has sole voting and investment power.
The number of shares of Entergy Corporation common stock owned by each
individual and by all directors and executive officers as a group does
not exceed one percent of the outstanding Entergy Corporation common
stock.
(b) Includes 1,000 shares for Ms. Murphy in which she has joint
ownership. Includes 5,171 shares for Mr. Wright in which he has joint
ownership and 1,793 shares in which he has custodial ownership.
(c) Other Beneficial Ownership includes, for the Named Executive
Officers, shares of Entergy Corporation common stock in the form of
unexercised stock options awarded pursuant to the Equity Ownership
Plan.
(d) Mr. Wright is the former Chief Executive Officer and a former
director of Entergy Arkansas. Mr. Jackson is the former Chief
Executive Officer of Entergy Gulf States, LA and Entergy Louisiana.
Item 13. Certain Relationships and Related Transactions
During 2000, T. Baker Smith & Son, Inc. performed land-surveying
services for, and received payments of approximately $427,014 from
Entergy companies. Mr. Wm. Clifford Smith, a director of Entergy
Corporation, is President of T. Baker Smith & Son, Inc. Mr. Smith's
children own 100% of the voting stock of T. Baker Smith & Son, Inc.
See Item 10, "Directors and Executive Officers of the
Registrants," for information on certain relationships and
transactions required to be reported under this item.
Other than as provided under applicable corporate laws, Entergy
does not have policies whereby transactions involving executive
officers and directors are approved by a majority of disinterested
directors. However, pursuant to the Entergy Corporation Code of
Conduct, transactions involving an Entergy company and its executive
officers must have prior approval by the next higher reporting level
of that individual, and transactions involving an Entergy company and
its directors must be reported to the secretary of the appropriate
Entergy company.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a)1. Financial Statements and Independent Auditors' Reports for
Entergy, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, Entergy New Orleans, and System
Energy are listed in the Index to Financial Statements (see
pages 41 and 42)
(a)2. Financial Statement Schedules
Reports of Independent Accountants on Financial Statement
Schedules (see page 241)
Financial Statement Schedules are listed in the Index to
Financial Statement Schedules (see page S-1)
(a)3. Exhibits
Exhibits for Entergy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi, Entergy New Orleans,
and System Energy are listed in the Exhibit Index (see page E-
1). Each management contract or compensatory plan or
arrangement required to be filed as an exhibit hereto is
identified as such by footnote in the Exhibit Index.
(b) Reports on Form 8-K
Entergy Corporation and Entergy Louisiana
A Current Report on Form 8-K, dated October 19, 2000, was filed
with the SEC on October 19, 2000, reporting information under
Item 5. "Other Events" and Item 7. "Financial Statements, Pro
Forma Financial Statements and Exhibits".
Entergy Corporation
A Current Report on Form 8-K, dated December 15, 2000, was
filed with the SEC on December 15, 2000, reporting information
under Item 5. "Other Events" and Item 7. "Financial Statements,
Pro Forma Financial Statements and Exhibits".
Entergy Corporation
A Current Report on Form 8-K, dated January 9, 2001, was filed
with the SEC on January 9, 2001, reporting information under
Item 7. "Financial Statements, Pro Forma Financial Statements
and Exhibits" and Item 9. "Regulation FD Disclosure".
Entergy Corporation
A Current Report on Form 8-K, dated February 1, 2001, was filed
with the SEC on February 1, 2001, reporting information under
Item 7. "Financial Statements, Pro Forma Financial Statements
and Exhibits" and Item 9. "Regulation FD Disclosure".
ENTERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY CORPORATION
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President and
Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
J. Wayne Leonard (Chief Executive Officer and Director;
Principal Executive Officer); Robert v.d. Luft (Chairman
of the Board and Director); C. John Wilder (Executive
Vice President and Chief Financial Officer; Principal
Financial Officer); Maureen S. Bateman, W. Frank Blount,
George W. Davis, Norman C. Francis, Thomas F. McLarty,
III, Kathleen A. Murphy, Paul W. Murrill, James R.
Nichols, William A. Percy, II, Dennis H. Reilley, Wm.
Clifford Smith, and Bismark A. Steinhagen (Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
ENTERGY ARKANSAS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY ARKANSAS, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
Hugh T. McDonald (Chairman of the Board, President, Chief
Executive Officer, and Director; Principal Executive
Officer); C. John Wilder (Executive Vice President, Chief
Financial Officer, and Director; Principal Financial
Officer); Donald C. Hintz and Jerry D. Jackson
(Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
ENTERGY GULF STATES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY GULF STATES, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
Joseph F. Domino (Chairman of the Board, President, Chief
Executive Officer-Texas, and Director; Principal Executive
Officer); E. Renae Conley (President, Chief Executive
Officer-Louisiana, and Director; Principal Executive
Officer); C. John Wilder (Executive Vice President, Chief
Financial Officer, and Director; Principal Financial
Officer); Donald C. Hintz and Jerry D. Jackson (Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
ENTERGY LOUISIANA, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY LOUISIANA, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
E. Renae Conley (Chairman of the Board, President, Chief
Executive Officer, and Director; Principal Executive
Officer); C. John Wilder (Executive Vice President, Chief
Financial Officer, and Director; Principal Financial
Officer); Donald C. Hintz and Jerry D. Jackson
(Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
ENTERGY MISSISSIPPI, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY MISSISSIPPI, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
Carolyn C. Shanks (Chairman of the Board, President,
Chief Executive Officer, and Director; Principal
Executive Officer); C. John Wilder (Executive Vice
President, Chief Financial Officer, and Director;
Principal Financial Officer); Donald C. Hintz and Jerry
D. Jackson (Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
ENTERGY NEW ORLEANS, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
ENTERGY NEW ORLEANS, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
Daniel F. Packer (Chairman of the Board, President, Chief
Executive Officer, and Director; Principal Executive
Officer); C. John Wilder (Executive Vice President, Chief
Financial Officer, and Director; Principal Financial
Officer); Donald C. Hintz and Jerry D. Jackson
(Directors).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
SYSTEM ENERGY RESOURCES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized. The signature of the undersigned company shall be deemed
to relate only to matters having reference to such company and any
subsidiaries thereof.
SYSTEM ENERGY RESOURCES, INC.
By /s/ Nathan E. Langston
Nathan E. Langston, Vice President
and Chief Accounting Officer
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated. The signature of each of the undersigned shall be deemed
to relate only to matters having reference to the above-named company
and any subsidiaries thereof.
Signature Title Date
/s/ Nathan E. Langston
Nathan E. Langston Vice President and Chief March 16, 2001
Accounting Officer
(Principal Accounting Officer)
Jerry W. Yelverton (Chairman of the Board, President,
Chief Executive Officer, and Director; Principal
Executive Officer); C. John Wilder (Executive Vice
President, Chief Financial Officer, and Director;
Principal Financial Officer); and Donald C. Hintz
(Director).
By: /s/ Nathan E. Langston March 16, 2001
(Nathan E. Langston, Attorney-in-fact)
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Post-
Effective Amendment Nos. 2, 3, 4A, and 5A on Form S-8 and their
related prospectuses to the registration statement on Form S-4
(No. 33-54298), the registration statements on Form S-8 (Nos.
333-75097 and 333-55692) and the registration statements and
related prospectuses on Form S-3 (Nos. 333-02503 and 333-22007)
of Entergy Corporation of our reports dated February 1, 2001,
relating to the financial statements and financial statement
schedules, which appear in this Form 10-K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-50289, 333-00103, 333-05045 and 333-39018) of
Entergy Arkansas, Inc. of our reports dated February 1, 2001,
relating to the financial statements and financial statement
schedule, which appear in this Form 10-K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-49739, 33-51181 and 333-60957), on Form S-8 (Nos. 2-
76551 and 2-98011) and on Form S-2 (No. 333-17911), of Entergy
Gulf States, Inc. of our reports dated February 1, 2001,
relating to the financial statements and financial statement
schedule, which appear in this Form 10-K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-46085, 33-39221, 33-50937, 333-00105, 333-01329, 333-
03567 and 333-93683) of Entergy Louisiana, Inc. of our reports
dated February 1, 2001, relating to the financial statements
and financial statement schedule, which appear in this Form 10-
K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-53004, 33-55826, 33-50507, 333-64023 and 333-53554)
of Entergy Mississippi, Inc. of our reports dated February 1,
2001, relating to the financial statements and financial
statement schedule, which appear in this Form 10-K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-57926, 333-00255 and 333-95599) of Entergy New
Orleans, Inc. of our reports dated February 1, 2001, relating
to the financial statements and financial statement schedule,
which appear in this Form 10-K.
We hereby consent to the incorporation by reference in the
registration statements and the related prospectuses on Form S-
3 (Nos. 33-47662, 33-61189 and 333-06717) of System Energy
Resources, Inc. of our report dated February 1, 2001, relating
to the financial statements, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
March 14, 2001
Report of Independent Accountants on Financial Statement Schedules
To the Board of Directors and Shareholders
of Entergy Corporation:
Our audits of the consolidated financial statements of Entergy
Corporation and the financial statements of Entergy Arkansas, Inc.,
Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc. and Entergy New Orleans, Inc. (which reports and
financial statements are included in this Annual Report on Form 10-K)
also included an audit of the financial statement schedules listed in
Item 14(a)(2) of this Form 10-K. In our opinion, these financial
statement schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the
related financial statements.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 1, 2001
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule Page
I Financial Statements of Entergy Corporation:
Statements of Income - For the Years Ended
December 31, 2000, 1999, and 1998 S-2
Statements of Cash Flows - For the Years Ended
December 31, 2000, 1999, and 1998 S-3
Balance Sheets, December 31, 2000 and 1999 S-4
Statements of Retained Earnings, Comprehensive Income,
and Paid-In Capital for the Years Ended
December 31, 2000, 1999, and 1998 S-5
II Valuation and Qualifying Accounts
2000, 1999 and 1998:
Entergy Corporation and Subsidiaries S-6
Entergy Arkansas, Inc. S-7
Entergy Gulf States, Inc. S-8
Entergy Louisiana, Inc. S-9
Entergy Mississippi, Inc. S-10
Entergy New Orleans, Inc. S-11
Schedules other than those listed above are omitted because they
are not required, not applicable, or the required information is shown
in the financial statements or notes thereto.
Columns have been omitted from schedules filed because the
information is not applicable.
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF INCOME
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
Income:
Equity in income of subsidiaries $698,243 $651,977 $822,758
Interest on temporary investments 12,273 5,703 2,536
-------- -------- --------
Total 710,516 657,680 825,294
-------- -------- --------
Expenses and Other Deductions:
Administrative and general expenses 25,146 85,815 77,296
Income taxes (credit) (15,212) 12,524 (6,847)
Taxes other than income 661 739 1,325
Interest 20,627 6,143 14,451
-------- -------- --------
Total 31,222 105,221 86,225
-------- -------- --------
Net Income $679,294 $552,459 $739,069
======== ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial
Statements in Part II, Item 8.
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF CASH FLOWS
Year to Date December 31,
2000 1999 1998
(In Thousands)
Operating Activities:
Net income $679,294 $552,459 $739,069
Noncash items included in net income:
Equity in earnings of subsidiaries (698,243) (651,977) (822,758)
Deferred income taxes (9,014) (15,237) (1,997)
Depreciation 962 1,438 2,069
Changes in working capital:
Receivables 2,013 198 (21,033)
Payables (13,822) 17,256 357
Other working capital accounts 98,489 (83,711) 26,683
Common stock dividends received from subsidiaries 314,300 532,300 488,500
Other (11,694) 68,276 36,948
-------- -------- --------
Net cash flow provided by operating activities 362,285 421,002 447,838
-------- -------- --------
Investing Activities:
Investment in subsidiaries 194,665 237,121 (96,383)
Capital expenditures (360) (604) (212)
Other (1,000) 9,328 -
-------- -------- --------
Net cash flow provided by (used in) investing activities 193,305 245,845 (96,595)
-------- -------- --------
Financing Activities:
Changes in short-term borrowings 267,000 (165,500) 99,500
Advances to subsidiaries (32,833) (32,261) (33,000)
Common stock dividends paid (271,019) (291,483) (373,441)
Repurchase of common stock (550,206) (245,004) (2,964)
Issuance of common stock 41,908 15,320 19,340
-------- -------- --------
Net cash flow used in financing activities (545,150) (718,928) (290,565)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 10,440 (52,081) 60,678
Cash and cash equivalents at beginning of period 16,493 68,574 7,896
-------- -------- --------
Cash and cash equivalents at end of period $26,933 $16,493 $68,574
======== ======== ========
See Entergy Corporation and Subsidiaries Notes to Financial Statements
in Part II, Item 8.
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
BALANCE SHEETS
December 31,
2000 1999
(In Thousands)
ASSETS
Current Assets:
Cash and cash equivalents:
Temporary cash investments - at cost,
which approximates market $26,933 $16,493
---------- ----------
Total cash and cash equivalents 26,933 16,493
Accounts receivable:
Associated companies 117,019 177,501
Interest receivable 154 93
Other 1,858 1,937
---------- ----------
Total 145,964 196,024
---------- ----------
Investment in Wholly-owned Subsidiaries 7,310,589 7,114,525
---------- ----------
Deferred Debits and Other Assets 58,571 50,357
---------- ----------
Total $7,515,124 $7,360,906
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $387,000 $120,000
Accounts payable:
Associated companies 2,206 2,165
Other 3,964 17,786
Taxes accrued 13,123 9,142
Other current liabilities 10,542 6,399
---------- ----------
Total 416,835 155,492
---------- ----------
Deferred Credits and Noncurrent Liabilities 93,588 80,989
---------- ----------
Shareholders' Equity:
Common stock, $.01 par value, authorized
500,000,000 shares; issued 248,094,614 shares
in 2000 and 247,082,345 shares in 1999 2,481 2,471
Paid-in capital 4,660,483 4,636,163
Retained earnings 3,190,640 2,786,467
Cumulative foreign currency translation adjustment (73,998) (68,782)
Less cost of treasury stock (28,490,031 shares in
2000 and 8,045,434 shares in 1999) 774,905 231,894
---------- ----------
Total common shareholders' equity 7,004,701 7,124,425
---------- ----------
Total $7,515,124 $7,360,906
========== ==========
See Entergy Corporation and Subsidiaries Notes to
Financial Statements in Part II, Item 8.
ENTERGY CORPORATION
SCHEDULE I - FINANCIAL STATEMENTS OF ENTERGY CORPORATION
STATEMENTS OF RETAINED EARNINGS, COMPREHENSIVE INCOME, AND PAID-IN CAPITAL
For the Years Ended December 31,
2000 1999 1998
(In Thousands)
RETAINED EARNINGS
Retained Earnings - Beginning of period $2,786,467 $2,526,888 $2,157,912
Add - Earnings applicable to common stock 679,294 $679,294 552,459 $552,459 739,069 $739,069
Deduct:
Dividends declared on common stock 275,929 294,352 369,498
Capital stock and other expenses (807) (1,472) 595
---------- ---------- ----------
Total 275,122 292,880 370,093
---------- ---------- ----------
Retained Earnings - End of period $3,190,639 $2,786,467 $2,526,888
========== ========== ==========
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Balance at beginning of period ($68,782) ($46,739) ($69,817)
Foreign currency translation adjustments (5,216) (5,216) (22,043) (22,043) 23,078 23,078
---------- ---------- ----------
Balance at end of period ($73,998) ($68,782) ($46,739)
========== -------- ========== -------- ========== --------
Comprehensive Income $674,078 $530,416 $762,147
======== ======== ========
PAID-IN CAPITAL
Paid-in Capital - Beginning of period $4,636,163 $4,630,609 $4,613,572
Add:
Common stock issuances related to stock plans 24,320 5,554 17,037
---------- ---------- ----------
Paid-in Capital - End of period $4,660,483 $4,636,163 $4,630,609
========== ========== ==========
See Entergy Corporation and Subsidiaries Notes to Financial
Statements in part II, item 8.
ENTERGY CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $9,507 $17,550 $17,110 $9,947
======= ======= ======== =========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(33,267) $66,866 $141,950 $(108,351)
Injuries and damages (Note 2) 34,309 16,785 15,959 35,135
Environmental 37,793 9,084 9,694 37,183
------- ------- -------- ---------
Total $38,835 $92,735 $167,603 $(36,033)
======= ======= ======== =========
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $10,300 $19,349 $20,142 $9,507
======= ======= ======== =========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(14,846) $35,208 $53,629 $(33,267)
Injuries and damages (Note 2) 28,162 25,162 19,015 34,309
Environmental 35,857 11,344 9,408 37,793
------- ------- -------- ---------
Total $49,173 $71,714 $82,052 $38,835
======= ======= ======== =========
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $9,800 $16,451 $15,951 $10,300
======= ======= ======== =========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $23,422 $28,838 $67,106 $(14,846)
Injuries and damages (Note 2) 26,484 17,960 16,282 28,162
Environmental 36,368 7,596 8,107 35,857
------- ------- -------- ---------
Total $86,274 $54,394 $91,495 $49,173
======= ======= ======== =========
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of
amounts previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling
claims for injuries and damages.
ENTERGY ARKANSAS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,768 $3,840 $3,941 $1,667
======= ======= ======== ========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $858 $35,521 $116,676 $(80,297)
Injuries and damages (Note 2) 3,253 1,322 1,423 3,152
Environmental 4,934 4,082 1,880 7,136
------- ------- -------- --------
Total $9,045 $40,925 $119,979 $(70,009)
======= ======= ======== ========
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,753 $4,175 $4,160 $1,768
======= ======= ======== ========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $7,600 $18,306 $25,048 $858
Injuries and damages (Note 2) 4,618 2,502 3,867 3,253
Environmental 4,894 3,132 3,092 4,934
------- ------- -------- --------
Total $17,112 $23,940 $32,007 $9,045
======= ======= ======== ========
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,799 $3,848 $3,894 $1,753
======= ======= ======== ========
Accumulated Provisions Not
Deducted from Assets:
Property insurance $858 $18,805 $12,063 $7,600
Injuries and damages (Note 2) 4,798 3,144 3,324 4,618
Environmental 4,753 1,470 1,329 4,894
------- ------- -------- --------
Total $10,409 $23,419 $16,716 $17,112
======= ======= ======== ========
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current expenses
as appropriate and for the estimated cost of settling claims for injuries
and damages.
ENTERGY GULF STATES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,828 $4,757 $4,454 $2,131
======= ======= ======== =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $(3,452) $4,486 $6,732 $(5,698)
Injuries and damages (Note 2) 8,684 6,538 5,816 9,406
Environmental 24,445 1,844 5,618 20,671
------- ------- -------- -------
Total $29,677 $12,868 $18,166 $24,379
======= ======= ======== =======
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,735 $4,271 $4,178 $1,828
======= ======= ======== =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $(4,184) $4,486 $3,754 $(3,452)
Injuries and damages (Note 2) 4,759 9,810 5,885 8,684
Environmental 22,309 4,187 2,051 24,445
------- ------- -------- -------
Total $22,884 $18,483 $11,690 $29,677
======= ======= ======== =======
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,791 $3,169 $3,225 $1,735
======= ======= ======== =======
Accumulated Provisions
Not Deducted from Assets--
Property insurance $4,317 $5,583 $14,084 $(4,184)
Injuries and damages (Note 2) 5,339 4,634 5,214 4,759
Environmental 23,789 3,058 4,538 22,309
------- ------- -------- -------
Total $33,445 $13,275 $23,836 $22,884
======= ======= ======== =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries
of amounts previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
ENTERGY LOUISIANA, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,615 $4,603 $4,447 $1,771
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(24,089) $11,900 $14,851 $(27,040)
Injuries and damages (Note 2) 12,452 3,889 4,758 11,583
Environmental 7,022 2,132 1,361 7,793
------- ------- ------- -------
Total $(4,615) $17,921 $20,970 $(7,664)
======= ======= ======= =======
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,164 $4,797 $4,346 $1,615
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(17,825) $6,680 $12,944 $(24,089)
Injuries and damages (Note 2) 13,124 7,038 7,710 12,452
Environmental 7,236 1,059 1,273 7,022
------- ------- ------- -------
Total $2,535 $14,777 $21,927 $(4,615)
======= ======= ======= =======
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,157 $1,919 $1,912 $1,164
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $581 $2,930 $21,336 $(17,825)
Injuries and damages (Note 2) 9,944 9,263 6,083 13,124
Environmental 7,599 668 1,031 7,236
------- ------- ------- -------
Total $18,124 $12,861 $28,450 $2,535
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
ENTERGY MISSISSIPPI, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $886 $2,635 $2,477 $1,044
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(16,356) $14,956 $3,365 $(4,765)
Injuries and damages (Note 2) 6,849 1,579 1,734 6,694
Environmental 594 418 501 511
------- ------- ------- -------
Total $(8,913) $16,953 $5,600 $2,440
======= ======= ======= =======
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $1,217 $2,106 $2,437 $886
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $(11,543) $5,736 $10,549 $(16,356)
Injuries and damages (Note 2) 3,796 2,950 (103) 6,849
Environmental 704 895 1,005 594
------- ------- ------- -------
Total $(7,043) $9,581 $11,451 $(8,913)
======= ======= ======= =======
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $931 $2,747 $2,461 $1,217
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $2,179 $1,520 $15,242 $(11,543)
Injuries and damages (Note 2) 4,662 (437) 429 3,796
Environmental 227 900 423 704
------- ------- ------- -------
Total $7,068 $1,983 $16,094 $(7,043)
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
ENTERGY NEW ORLEANS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999, and 1998
(In Thousands)
Column A Column B Column C Column D Column E
Other
Additions Changes
Deductions
Balance at from Balance
Beginning Charged to Provisions at End
Description of Period Income (Note 1) of Period
Year ended December 31, 2000
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $846 $1,715 $1,791 $770
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $9,772 $3 $326 $9,449
Injuries and damages (Note 2) 3,071 3,457 2,228 4,300
Environmental 798 608 334 1,072
------- ------- ------- -------
Total $13,641 $4,068 $2,888 $14,821
======= ======= ======= =======
Year ended December 31, 1999
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $761 $1,936 $1,851 $846
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $11,106 $- $1,334 $9,772
Injuries and damages (Note 2) 1,865 2,862 1,656 3,071
Environmental 714 2,071 1,987 798
------- ------- ------- -------
Total $13,685 $4,933 $4,977 $13,641
======= ======= ======= =======
Year ended December 31, 1998
Accumulated Provisions
Deducted from Assets--
Doubtful Accounts $711 $- $(50) $761
======= ======= ======= =======
Accumulated Provisions Not
Deducted from Assets:
Property insurance $15,487 $- $4,381 $11,106
Injuries and damages (Note 2) 1,741 1,356 1,232 1,865
Environmental - 1,500 786 714
------- ------- ------- -------
Total $17,228 $2,856 $6,399 $13,685
======= ======= ======= =======
___________
Notes:
(1) Deductions from provisions represent losses or expenses for which the
respective provisions were created. In the case of the provision for
doubtful accounts, such deductions are reduced by recoveries of amounts
previously written off.
(2) Injuries and damages provision is provided to absorb all current
expenses as appropriate and for the estimated cost of settling claims
for injuries and damages.
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the
exhibit number are filed herewith. The balance of the exhibits
have heretofore been filed with the SEC, respectively, as the
exhibits and in the file numbers indicated and are incorporated
herein by reference. The exhibits marked with a (+) are
management contracts or compensatory plans or arrangements
required to be filed herewith and required to be identified as
such by Item 14 of Form 10-K. Reference is made to a duplicate
list of exhibits being filed as a part of this Form 10-K, which
list, prepared in accordance with Item 102 of Regulation S-T of
the SEC, immediately precedes the exhibits being physically filed
with this Form 10-K.
(3) (i) Articles of Incorporation
Entergy Corporation
(a) 1 -- Certificate of Incorporation of Entergy
Corporation dated December 31, 1993 (A-1(a) to Rule 24
Certificate in 70-8059).
System Energy
(b) 1 -- Amended and Restated Articles of Incorporation of
System Energy and amendments thereto through April 28,
1989 (A-1(a) to Form U-1 in 70-5399).
Entergy Arkansas
(c) 1 -- Amended and Restated Articles of Incorporation of
Entergy Arkansas effective November 12, 1999 (3(i)(c)1 to
Form 10-K for the year ended December 31, 1999 in 1-
10764).
Entergy Gulf States
(d) 1 -- Restated Articles of Incorporation of Entergy Gulf
States effective November 17, 1999 (3(i)(d)1 to Form 10-K
for the year ended December 31, 1999 in 1-27031).
Entergy Louisiana
(e) 1 -- Amended and Restated Articles of Incorporation of
Entergy Louisiana effective November 15, 1999 (3(a) to
Form S-3 in 333-93683).
Entergy Mississippi
(f) 1 -- Amended and Restated Articles of Incorporation of
Entergy Mississippi effective November 12, 1999 (3(i)(f)1
to Form 10-K for the year ended December 31, 1999 in 0-
320).
Entergy New Orleans
(g) 1 -- Amended and Restated Articles of Incorporation of
Entergy New Orleans effective November 15, 1999 (3(a) to
Form S-3 in 333-95599).
(3) (ii) By-Laws
(a) -- By-Laws of Entergy Corporation as amended January
29, 1999, and as presently in effect (4.2 to Form S-8 in
File No. 333-75097).
(b) -- By-Laws of System Energy effective July 6, 1998,
and as presently in effect (3(f) to Form 10-Q for the
quarter ended June 30, 1998 in 1-9067).
(c) -- By-Laws of Entergy Arkansas effective November 26,
1999, and as presently in effect (3(ii)(c) to Form 10-K
for the year ended December 31, 1999 in 1-10764).
(d) -- By-Laws of Entergy Gulf States effective November
26, 1999, and as presently in effect (3(ii)(d) to Form 10-
K for the year ended December 31, 19991-27031).
(e) -- By-Laws of Entergy Louisiana effective November
26, 1999, and as presently in effect (3(b) to Form S-3 in
File No. 333-93683).
(f) -- By-Laws of Entergy Mississippi effective November
26, 1999, and as presently in effect (3(ii)(f) to Form 10-
K for the year ended December 31, 1999 in 0-320).
(g) -- By-Laws of Entergy New Orleans effective November
30, 1999, and as presently in effect (3(b) to Form S-3 in
File No. 333-95599).
(4) Instruments Defining Rights of Security Holders,
Including Indentures
Entergy Corporation
(a) 1 -- See (4)(b) through (4)(g) below for instruments
defining the rights of holders of long-term debt of
System Energy, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, Entergy Mississippi and Entergy New
Orleans.
(a) 2 -- Second Amended and Restated Credit Agreement,
dated as of May 18, 2000, among Entergy, the Banks (The
Bank of New York, The Chase Manhattan Bank, Citibank,
N.A., ABN AMRO Bank N.V., The Bank of Nova Scotia, Bank
One, N.A., Bayerische Landesbank Girozentrale, The Royal
Bank of Scotland PLC, Barclays Bank PLC, Credit Agricole
Indosuez, The Industrial Bank of Japan, KBC Bank NV,
Union Bank of California, N.A., Westdeutsche Landesbank
Girozentrale, and Mellon Bank, N.A.) and Citibank, N.A.,
as Agent (4(b) to Form 10-Q for the quarter ended June
30, 2000 in 1-11299).
System Energy
(b) 1 -- Mortgage and Deed of Trust, dated as of June 15,
1977, as amended by twenty-one Supplemental Indentures
(A-1 in 70-5890 (Mortgage); B and C to Rule 24
Certificate in 70-5890 (First); B to Rule 24 Certificate
in 70-6259 (Second); 20(a)-5 to Form 10-Q for the quarter
ended June 30, 1981 in 1-3517 (Third); A-1(e)-1 to
Rule 24 Certificate in 70-6985 (Fourth); B to Rule 24
Certificate in 70-7021 (Fifth); B to Rule 24 Certificate
in 70-7021 (Sixth); A-3(b) to Rule 24 Certificate in
70-7026 (Seventh); A-3(b) to Rule 24 Certificate in
70-7158 (Eighth); B to Rule 24 Certificate in 70-7123
(Ninth); B-1 to Rule 24 Certificate in 70-7272 (Tenth);
B-2 to Rule 24 Certificate in 70-7272 (Eleventh); B-3 to
Rule 24 Certificate in 70-7272 (Twelfth); B-1 to Rule 24
Certificate in 70-7382 (Thirteenth); B-2 to Rule 24
Certificate in 70-7382 (Fourteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Fifteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Sixteenth); A-2(d) to Rule 24
Certificate in 70-7946 (Seventeenth); A-2(e) to Rule 24
Certificate dated May 4, 1993 in 70-7946 (Eighteenth); A-
2(g) to Rule 24 Certificate dated May 6, 1994 in 70-7946
(Nineteenth); A-2(a)(1) to Rule 24 Certificate dated
August 8, 1996 in 70-8511 (Twentieth); and A-2(a)(2) to
Rule 24 Certificate dated August 8, 1996 in 70-8511
(Twenty-first)).
(b) 2 -- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(1) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (1) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-3(d) to
Rule 24 Certificate dated January 31, 1994 in 70-8215).
(b) 3 -- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Steven Kaba, successor), as Owner Trustees, and System
Energy (B-2(c)(2) to Rule 24 Certificate dated January 9,
1989 in 70-7561), as supplemented by Lease Supplement No.
1 dated as of April 1, 1989 (B-22(b) (2) to Rule 24
Certificate dated April 21, 1989 in 70-7561) and Lease
Supplement No. 2 dated as of January 1, 1994 (B-4(d) Rule
24 Certificate dated January 31, 1994 in 70-8215).
(b) 4 -- Indenture (for Unsecured Debt Securities), dated
as of September 1, 1995, between System Energy Resources,
Inc., and Chemical Bank (B-10(a) to Rule 24 Certificate
in 70-8511).
Entergy Arkansas
(c) 1 -- Mortgage and Deed of Trust, dated as of
October 1, 1944, as amended by fifty-five Supplemental
Indentures (7(d) in 2-5463 (Mortgage); 7(b) in 2-7121
(First); 7(c) in 2-7605 (Second); 7(d) in 2-8100 (Third);
7(a)-4 in 2-8482 (Fourth); 7(a)-5 in 2-9149 (Fifth);
4(a)-6 in 2-9789 (Sixth); 4(a)-7 in 2-10261 (Seventh);
4(a)-8 in 2-11043 (Eighth); 2(b)-9 in 2-11468 (Ninth);
2(b)-10 in 2-15767 (Tenth); D in 70-3952 (Eleventh); D in
70-4099 (Twelfth); 4(d) in 2-23185 (Thirteenth); 2(c) in
2-24414 (Fourteenth); 2(c) in 2-25913 (Fifteenth); 2(c)
in 2-28869 (Sixteenth); 2(d) in 2-28869 (Seventeenth);
2(c) in 2-35107 (Eighteenth); 2(d) in 2-36646
(Nineteenth); 2(c) in 2-39253 (Twentieth); 2(c) in
2-41080 (Twenty-first); C-1 to Rule 24 Certificate in
70-5151 (Twenty-second); C-1 to Rule 24 Certificate in
70-5257 (Twenty-third); C to Rule 24 Certificate in
70-5343 (Twenty-fourth); C-1 to Rule 24 Certificate in
70-5404 (Twenty-fifth); C to Rule 24 Certificate in
70-5502 (Twenty-sixth); C-1 to Rule 24 Certificate in
70-5556 (Twenty-seventh); C-1 to Rule 24 Certificate in
70-5693 (Twenty-eighth); C-1 to Rule 24 Certificate in
70-6078 (Twenty-ninth); C-1 to Rule 24 Certificate in
70-6174 (Thirtieth); C-1 to Rule 24 Certificate in
70-6246 (Thirty-first); C-1 to Rule 24 Certificate in
70-6498 (Thirty-second); A-4b-2 to Rule 24 Certificate in
70-6326 (Thirty-third); C-1 to Rule 24 Certificate in
70-6607 (Thirty-fourth); C-1 to Rule 24 Certificate in
70-6650 (Thirty-fifth); C-1 to Rule 24 Certificate dated
December 1, 1982 in 70-6774 (Thirty-sixth); C-1 to
Rule 24 Certificate dated February 17, 1983 in 70-6774
(Thirty-seventh); A-2(a) to Rule 24 Certificate dated
December 5, 1984 in 70-6858 (Thirty-eighth); A-3(a) to
Rule 24 Certificate in 70-7127 (Thirty-ninth); A-7 to
Rule 24 Certificate in 70-7068 (Fortieth); A-8(b) to
Rule 24 Certificate dated July 6, 1989 in 70-7346
(Forty-first); A-8(c) to Rule 24 Certificate dated
February 1, 1990 in 70-7346 (Forty-second); 4 to Form
10-Q for the quarter ended September 30, 1990 in 1-10764
(Forty-third); A-2(a) to Rule 24 Certificate dated
November 30, 1990 in 70-7802 (Forty-fourth); A-2(b) to
Rule 24 Certificate dated January 24, 1991 in 70-7802
(Forty-fifth); 4(d)(2) in 33-54298 (Forty-sixth); 4(c)(2)
to Form 10-K for the year ended December 31, 1992 in 1-
10764 (Forty-seventh); 4(b) to Form 10-Q for the quarter
ended June 30, 1993 in 1-10764 (Forty-eighth); 4(c) to
Form 10-Q for the quarter ended June 30, 1993 in 1-10764
(Forty-ninth); 4(b) to Form 10-Q for the quarter ended
September 30, 1993 in 1-10764 (Fiftieth); 4(c) to Form 10-
Q for the quarter ended September 30, 1993 in 1-10764
(Fifty-first); 4(a) to Form 10-Q for the quarter ended
June 30, 1994 in 1-10764 (Fifty-second); C-2 to Form U5S
for the year ended December 31, 1995 (Fifty-third); C-
2(a) to Form U5S for the year ended December 31, 1996
(Fifty-fourth); and 4(a) to Form 10-Q for the quarter
ended March 31, 2000 in 1-10764 (Fifty-fifth)).
(c) 2 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities between Entergy
Arkansas and Bank of New York (as Trustee), dated as of
August 1, 1996 (filed as Exhibit A-1(a) to Rule 24
Certificate dated August 26, 1996 in 70-8723).
(c) 3 -- Amended and Restated Trust Agreement of
Entergy Arkansas Capital I, dated as of August 14, 1996
(filed as Exhibit A-3(a) to Rule 24 Certificate dated
August 26, 1996 in 70-8723).
(c) 4 -- Guarantee Agreement between Entergy Arkansas
(as Guarantor) and The Bank of New York (as Trustee),
dated as of August 14, 1996, with respect to Entergy
Arkansas Capital I's obligations on its 8 1/2% Cumulative
Quarterly Income Preferred Securities, Series A (filed as
Exhibit A-4(a) to Rule 24 Certificate dated August 26,
1996 in 70-8723).
Entergy Gulf States
(d) 1 -- Indenture of Mortgage, dated September 1, 1926, as
amended by certain Supplemental Indentures (B-a-I-1 in
Registration No. 2-2449 (Mortgage); 7-A-9 in Registration
No. 2-6893 (Seventh); B to Form 8-K dated September 1,
1959 (Eighteenth); B to Form 8-K dated February 1, 1966
(Twenty-second); B to Form 8-K dated March 1, 1967
(Twenty-third); C to Form 8-K dated March 1, 1968 (Twenty-
fourth); B to Form 8-K dated November 1, 1968 (Twenty-
fifth); B to Form 8-K dated April 1, 1969 (Twenty-sixth);
2-A-8 in Registration No. 2-66612 (Thirty-eighth); 4-2 to
Form 10-K for the year ended December 31, 1984 in 1-27031
(Forty-eighth); 4-2 to Form 10-K for the year ended
December 31, 1988 in 1-27031 (Fifty-second); 4 to Form 10-
K for the year ended December 31, 1991 in 1-27031 (Fifty-
third); 4 to Form 8-K dated July 29, 1992 in 1-27031
(Fifth-fourth); 4 to Form 10-K dated December 31, 1992
in 1-27031 (Fifty-fifth); 4 to Form 10-Q for the quarter
ended March 31, 1993 in 1-27031 (Fifty-sixth); 4-2 to
Amendment No. 9 to Registration No. 2-76551 (Fifty-
seventh); 4(b) to Form 10-Q for the quarter ended March
31,1999 in 1-27031 (Fifty-eighth); and A-2(a) to Rule 24
Certificate dated June 23, 2000 in 70-8721 (Fifty-
ninth)).
(d) 2 -- Indenture, dated March 21, 1939, accepting
resignation of The Chase National Bank of the City of New
York as trustee and appointing Central Hanover Bank and
Trust Company as successor trustee (B-a-1-6 in
Registration No. 2-4076).
(d) 3 -- Trust Indenture for 9.72% Debentures due July 1,
1998 (4 in Registration No. 33-40113).
(d) 4 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of
January 15, 1997 (A-11(a) to Rule 24 Certificate dated
February 6, 1997 in 70-8721).
(d) 5 -- Amended and Restated Trust Agreement of Entergy
Gulf States Capital I dated January 28, 1997 of Series A
Preferred Securities (A-13(a) to Rule 24 Certificate
dated February 6, 1997 in 70-8721).
(d) 6 -- Guarantee Agreement between Entergy Gulf States,
Inc. (as Guarantor) and The Bank of New York (as Trustee)
dated as of January 28, 1997 with respect to Entergy Gulf
States Capital I's obligation on its 8.75% Cumulative
Quarterly Income Preferred Securities, Series A (A-14(a)
to Rule 24 Certificate dated February 6, 1997 in 70-
8721).
Entergy Louisiana
(e) 1 -- Mortgage and Deed of Trust, dated as of April 1,
1944, as amended by fifty-five Supplemental Indentures
(7(d) in 2-5317 (Mortgage); 7(b) in 2-7408 (First); 7(c)
in 2-8636 (Second); 4(b)-3 in 2-10412 (Third); 4(b)-4 in
2-12264 (Fourth); 2(b)-5 in 2-12936 (Fifth); D in 70-3862
(Sixth); 2(b)-7 in 2-22340 (Seventh); 2(c) in 2-24429
(Eighth); 4(c)-9 in 2-25801 (Ninth); 4(c)-10 in 2-26911
(Tenth); 2(c) in 2-28123 (Eleventh); 2(c) in 2-34659
(Twelfth); C to Rule 24 Certificate in 70-4793
(Thirteenth); 2(b)-2 in 2-38378 (Fourteenth); 2(b)-2 in
2-39437 (Fifteenth); 2(b)-2 in 2-42523 (Sixteenth); C to
Rule 24 Certificate in 70-5242 (Seventeenth); C to
Rule 24 Certificate in 70-5330 (Eighteenth); C-1 to
Rule 24 Certificate in 70-5449 (Nineteenth); C-1 to
Rule 24 Certificate in 70-5550 (Twentieth); A-6(a) to
Rule 24 Certificate in 70-5598 (Twenty-first); C-1 to
Rule 24 Certificate in 70-5711 (Twenty-second); C-1 to
Rule 24 Certificate in 70-5919 (Twenty-third); C-1 to
Rule 24 Certificate in 70-6102 (Twenty-fourth); C-1 to
Rule 24 Certificate in 70-6169 (Twenty-fifth); C-1 to
Rule 24 Certificate in 70-6278 (Twenty-sixth); C-1 to
Rule 24 Certificate in 70-6355 (Twenty-seventh); C-1 to
Rule 24 Certificate in 70-6508 (Twenty-eighth); C-1 to
Rule 24 Certificate in 70-6556 (Twenty-ninth); C-1 to
Rule 24 Certificate in 70-6635 (Thirtieth); C-1 to
Rule 24 Certificate in 70-6834 (Thirty-first); C-1 to
Rule 24 Certificate in 70-6886 (Thirty-second); C-1 to
Rule 24 Certificate in 70-6993 (Thirty-third); C-2 to
Rule 24 Certificate in 70-6993 (Thirty-fourth); C-3 to
Rule 24 Certificate in 70-6993 (Thirty-fifth); A-2(a) to
Rule 24 Certificate in 70-7166 (Thirty-sixth); A-2(a) in
70-7226 (Thirty-seventh); C-1 to Rule 24 Certificate in
70-7270 (Thirty-eighth); 4(a) to Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988 in 1-8474
(Thirty-ninth); A-2(b) to Rule 24 Certificate in 70-7553
(Fortieth); A-2(d) to Rule 24 Certificate in 70-7553
(Forty-first); A-3(a) to Rule 24 Certificate in 70-7822
(Forty-second); A-3(b) to Rule 24 Certificate in 70-7822
(Forty-third); A-2(b) to Rule 24 Certificate in 70-7822
(Forty-fourth); A-3(c) to Rule 24 Certificate in 70-7822
(Forty-fifth); A-2(c) to Rule 24 Certificate dated April
7, 1993 in 70-7822 (Forty-sixth); A-3(d) to Rule 24
Certificate dated June 4, 1993 in 70-7822 (Forth-
seventh); A-3(e) to Rule 24 Certificate dated December
21, 1993 in 70-7822 (Forty-eighth); A-3(f) to Rule 24
Certificate dated August 1, 1994 in 70-7822 (Forty-
ninth); A-4(c) to Rule 24 Certificate dated September 28,
1994 in 70-7653 (Fiftieth); A-2(a) to Rule 24 Certificate
dated April 4, 1996 in 70-8487 (Fifty-first); A-2(a) to
Rule 24 Certificate dated April 3, 1998 in 70-9141 (Fifty-
second); A-2(b) to Rule 24 Certificate dated April 9,
1999 in 70-9141 (Fifty-third); A-3(a) to Rule 24
Certificate dated July 6, 1999 in 70-9141 (Fifty-fourth);
and A-2(c) to Rule 24 Certificate dated June 2, 2000 in
70-9141 (Fifty-fifth)).
(e) 2 -- Facility Lease No. 1, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-1 in Registration
No. 33-30660).
(e) 3 -- Facility Lease No. 2, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-2 in Registration
No. 33-30660).
(e) 4 -- Facility Lease No. 3, dated as of September 1,
1989, between First National Bank of Commerce, as Owner
Trustee, and Entergy Louisiana (4(c)-3 in Registration
No. 33-30660).
(e) 5 -- Indenture for Unsecured Subordinated Debt
Securities relating to Trust Securities, dated as of July
1, 1996 (A-14(a) to Rule 24 Certificate dated July 25,
1996 in 70-8487).
(e) 6 -- Amended and Restated Trust Agreement of Entergy
Louisiana Capital I dated July 16, 1996 of Series A
Preferred Securities (A-16(a) to Rule 24 Certificate
dated July 25, 1996 in 70-8487).
(e) 7 -- Guarantee Agreement between Entergy Louisiana,
Inc. (as Guarantor) and The Bank of New York (as Trustee)
dated as of July 16, 1996 with respect to Entergy
Louisiana Capital I's obligation on its 9% Cumulative
Quarterly Income Preferred Securities, Series A (A-19(a)
to Rule 24 Certificate dated July 25, 1996 in 70-8487).
Entergy Mississippi
(f) 1 -- Mortgage and Deed of Trust, dated as of
February 1, 1988, as amended by sixteen Supplemental
Indentures (A-2(a)-2 to Rule 24 Certificate in 70-7461
(Mortgage); A-2(b)-2 in 70-7461 (First); A-5(b) to
Rule 24 Certificate in 70-7419 (Second); A-4(b) to
Rule 24 Certificate in 70-7554 (Third); A-1(b)-1 to Rule
24 Certificate in 70-7737 (Fourth); A-2(b) to Rule 24
Certificate dated November 24, 1992 in 70-7914 (Fifth);
A-2(e) to Rule 24 Certificate dated January 22, 1993 in
70-7914 (Sixth); A-2(g) to Form U-1 in 70-7914 (Seventh);
A-2(i) to Rule 24 Certificate dated November 10, 1993 in
70-7914 (Eighth); A-2(j) to Rule 24 Certificate dated
July 22, 1994 in 70-7914 (Ninth); (A-2(l) to Rule 24
Certificate dated April 21, 1995 in 70-7914 (Tenth); A-
2(a) to Rule 24 Certificate dated June 27, 1997 in 70-
8719 (Eleventh); A-2(b) to Rule 24 Certificate dated
April 16, 1998 in 70-8719 (Twelfth); A-2(c) to Rule 24
Certificate dated May 12, 1999 in 70-8719 (Thirteenth); A-
3(a) to Rule 24 Certificate dated June 8, 1999 in 70-8719
(Fourteenth); A-2(d) to Rule 24 Certificate dated
February 24, 2000 in 70-8719 (Fifteenth); and A-2(a) to
Rule 24 Certificate dated February 9, 2001 in 70-9757
(Sixteenth)).
Entergy New Orleans
(g) 1 -- Mortgage and Deed of Trust, dated as of May 1,
1987, as amended by eight Supplemental Indentures (A-2(c)
to Rule 24 Certificate in 70-7350 (Mortgage); A-5(b) to
Rule 24 Certificate in 70-7350 (First); A-4(b) to Rule 24
Certificate in 70-7448 (Second); 4(f)4 to Form 10-K for
the year ended December 31, 1992 in 0-5807 (Third); 4(a)
to Form 10-Q for the quarter ended September 30, 1993 in
0-5807 (Fourth); 4(a) to Form 8-K dated April 26, 1995 in
0-5807 (Fifth); 4(a) to Form 8-K dated March 22, 1996 in
0-5807 (Sixth); 4(b) to Form 10-Q for the quarter ended
June 30, 1998 in 0-5807 (Seventh); and 4(d) to Form 10-Q
for the quarter ended June 30, 2000 in 0-5807 (Eighth)).
(10) Material Contracts
Entergy Corporation
(a) 1 -- Agreement, dated April 23, 1982, among certain
System companies, relating to System Planning and
Development and Intra-System Transactions (10(a)1 to
Form 10-K for the year ended December 31, 1982 in
1-3517).
(a) 2 -- Middle South Utilities (now Entergy Corporation)
System Agency Agreement, dated December 11, 1970 (5(a)-2
in 2-41080).
(a) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(a) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a)-4 in 2-41080).
(a) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(a) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(a) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)-6 in 2-43175).
(a) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a)-7 to Form 10-K for
the year ended December 31, 1984, in 1-3517).
(a) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(a)-8 to Form 10-K for
the year ended December 31, 1988, in 1-3517).
(a) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(a)-9 to Form 10-K for
the year ended December 31, 1990, in 1-3517).
(a) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 for the year
ended December 31, 1994 in 1-3517).
(a) 12-- Availability Agreement, dated June 21, 1974, among
System Energy and certain other System companies (B to
Rule 24 Certificate dated June 24, 1974 in 70-5399).
(a) 13-- First Amendment to Availability Agreement, dated
as of June 30, 1977 (B to Rule 24 Certificate dated
June 24, 1977 in 70-5399).
(a) 14-- Second Amendment to Availability Agreement, dated
as of June 15, 1981 (E to Rule 24 Certificate dated
July 1, 1981 in 70-6592).
(a) 15-- Third Amendment to Availability Agreement, dated
as of June 28, 1984 (B-13(a) to Rule 24 Certificate dated
July 6, 1984 in 70-6985).
(a) 16-- Fourth Amendment to Availability Agreement, dated
as of June 1, 1989 (A to Rule 24 Certificate dated
June 8, 1989 in 70-5399).
(a) 17-- Eighteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-2 to Rule 24 Certificate
dated October 1, 1986 in 70-7272).
(a) 18-- Nineteenth Assignment of Availability Agreement,
Consent and Agreement, dated as of September 1, 1986,
with United States Trust Company of New York and
Gerard F. Ganey, as Trustees (C-3 to Rule 24 Certificate
dated October 1, 1986 in 70-7272).
(a) 19-- Twenty-sixth Assignment of Availability Agreement,
Consent and Agreement, dated as of October 1, 1992, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-2(c) to Rule 24 Certificate dated
November 2, 1992 in 70-7946).
(a) 20-- Twenty-seventh Assignment of Availability
Agreement, Consent and Agreement, dated as of April 1,
1993, with United States Trust Company of New York and
Gerard F. Ganey as Trustees (B-2(d) to Rule 24
Certificate dated May 4, 1993 in 70-7946).
(a) 21-- Twenty-ninth Assignment of Availability Agreement,
Consent and Agreement, dated as of April 1, 1994, with
United States Trust Company of New York and Gerard F.
Ganey as Trustees (B-2(f) to Rule 24 Certificate dated
May 6, 1994 in 70-7946).
(a) 22-- Thirtieth Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-2(a) to Rule 24 Certificate dated August 8,
1996 in 70-8511).
(a) 23-- Thirty-first Assignment of Availability Agreement,
Consent and Agreement, dated as of August 1, 1996, among
System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-2(b) to Rule 24 Certificate dated August 8,
1996 in 70-8511).
(a) 24-- Thirty-second Assignment of Availability
Agreement, Consent and Agreement, dated as of December
27, 1996, among System Energy, Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans,
and The Chase Manhattan Bank (B-2(a) to Rule 24
Certificate dated January 13, 1997 in 70-7561).
(a) 25-- Thirty-third Assignment of Availability Agreement,
Consent and Agreement, dated as of December 20, 1999,
among System Energy, Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, and Entergy New Orleans, and The
Chase Manhattan Bank (B-2(b) to Rule 24 Certificate dated
March 3, 2000 in 70-7561).
(a) 26-- Capital Funds Agreement, dated June 21, 1974,
between Entergy Corporation and System Energy (C to
Rule 24 Certificate dated June 24, 1974 in 70-5399).
(a) 27-- First Amendment to Capital Funds Agreement, dated
as of June 1, 1989 (B to Rule 24 Certificate dated
June 8, 1989 in 70-5399).
(a) 28-- Eighteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-2 to Rule 24 Certificate dated
October 1, 1986 in 70-7272).
(a) 29-- Nineteenth Supplementary Capital Funds Agreement
and Assignment, dated as of September 1, 1986, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (D-3 to Rule 24 Certificate dated
October 1, 1986 in 70-7272).
(a) 30-- Twenty-sixth Supplementary Capital Funds Agreement
and Assignment, dated as of October 1, 1992, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(c) to Rule 24 Certificate dated November 2,
1992 in 70-7946).
(a) 31-- Twenty-seventh Supplementary Capital Funds
Agreement and Assignment, dated as of April 1, 1993, with
United States Trust Company of New York and Gerard F.
Ganey, as Trustees (B-3(d) to Rule 24 Certificate dated
May 4, 1993 in 70-7946).
(a) 32-- Twenty-ninth Supplementary Capital Funds Agreement
and Assignment, dated as of April 1, 1994, with United
States Trust Company of New York and Gerard F. Ganey, as
Trustees (B-3(f) to Rule 24 Certificate dated May 6, 1994
in 70-7946).
(a) 33-- Thirtieth Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees (B-
3(a) to Rule 24 Certificate dated August 8, 1996 in 70-
8511).
(a) 34-- Thirty-first Supplementary Capital Funds Agreement
and Assignment, dated as of August 1, 1996, among Entergy
Corporation, System Energy and United States Trust
Company of New York and Gerard F. Ganey, as Trustees (B-
3(b) to Rule 24 Certificate dated August 8, 1996 in 70-
8511).
(a) 35-- Thirty-second Supplementary Capital Funds
Agreement and Assignment, dated as of December 27, 1996,
among Entergy Corporation, System Energy and The Chase
Manhattan Bank (B-1(a) to Rule 24 Certificate dated
January 13, 1997 in 70-7561).
(a) 36-- Thirty-third Supplementary Capital Funds Agreement
and Assignment, dated as of December 20, 1999, among
Entergy Corporation, System Energy and The Chase
Manhattan Bank (B-3(b) to Rule 24 Certificate dated March
3, 2000 in 70-7561).
(a) 37-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, Deposit
Guaranty National Bank, United States Trust Company of
New York and Gerard F. Ganey (C to Rule 24 Certificate
dated June 8, 1989 in 70-7026).
(a) 38-- First Amendment to Supplementary Capital Funds
Agreements and Assignments, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy, United
States Trust Company of New York and Gerard F. Ganey (C
to Rule 24 Certificate dated June 8, 1989 in 70-7123).
(a) 39-- First Amendment to Supplementary Capital Funds
Agreement and Assignment, dated as of June 1, 1989, by
and between Entergy Corporation, System Energy and
Chemical Bank (C to Rule 24 Certificate dated June 8,
1989 in 70-7561).
(a) 40-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(a) 41-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to Rule
24 Certificate dated October 30, 1981 in 70-6337).
(a) 42-- Operating Agreement dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(a) 43-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate dated January 9, 1989
in 70-7561).
(a) 44-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate dated January 9, 1989
in 70-7561).
(a) 45-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(a) 46-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(a) 47-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K dated June 4, 1982 in 1-3517).
+(a) 48-- Post-Retirement Plan (10(a)37 to Form 10-K for the
year ended December 31, 1983 in 1-3517).
(a) 49-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(a) 50-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(a) 51-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(a) 52-- Middle South Utilities Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(a) 53-- First Amendment, dated January 1, 1990, to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(a) 54-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(a) 55-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(a) 56-- Fourth Amendment dated April 1, 1997 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-5 to Form U5S for the year
ended December 31, 1996).
(a) 57-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate dated September 27, 1990 in
70-7757).
(a) 58-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a) to Rule 24 Certificate dated September 27, 1990
in 70-7757).
(a) 59-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate dated September 27, 1990 in 70-
7757).
(a) 60-- Loan Agreement between Entergy Operations and
Entergy Corporation, dated as of September 20, 1990
(B-12(b) to Rule 24 Certificate dated June 15, 1990 in
70-7679).
(a) 61-- Loan Agreement between Entergy Power and Entergy
Corporation, dated as of August 28, 1990 (A-4(b) to Rule
24 Certificate dated September 6, 1990 in 70-7684).
(a) 62-- Loan Agreement between Entergy Corporation and
Entergy Systems and Service, Inc., dated as of
December 29, 1992 (A-4(b) to Rule 24 Certificate in
70-7947).
+(a) 63-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(a) 64-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989 in
1-3517).
+(a) 65-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate dated May 24,
1991 in 70-7831).
+(a) 66-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 67-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(a) 68-- Retired Outside Director Benefit Plan (10(a)63 to
Form 10-K for the year ended December 31, 1991 in
1-3517).
+(a) 69-- Agreement between Entergy Corporation and Jerry D.
Jackson. (10(a) 67 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(a) 70-- Supplemental Retirement Plan (10(a) 69 to Form 10-
K for the year ended December 31, 1992 in 1-3517).
+(a) 71-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(a) 72-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(a) 73-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a) 74 to
Form 10-K for the year ended December 31, 1992 in 1-
3517).
(a) 74-- Agreement and Plan of Reorganization Between
Entergy Corporation and Gulf States Utilities Company,
dated June 5, 1992 (1 to Current Report on Form 8-K dated
June 5, 1992 in 1-3517).
+(a) 75-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(a) 76-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(a) 77-- Letter of Intent regarding the Employment of Wayne
Leonard (10-(a)78 to Form 10-K for the year ended
December 31, 1998 in 1-11299).
+(a) 78-- Letter to John Wilder offering Employment (10(b)62
to Form 10-K for the year ended December 31, 1998 in 1-
9067).
+(a) 79-- Agreement between Entergy Corporation and Donald
C. Hintz effective July 29, 1999 (10(a)80 to Form 10-K
for the year ended December 31, 1999 in 1-11299).
(a) 80-- Agreement and Plan of Merger dated as of July 30,
2000, among FPL Group, Inc., Entergy Corporation, WCB
Holding Corp., Ranger Acquisition Corp. and Ring
Acquisition Corp (2.1 to Form 8-K dated July 31, 2000 in
1-11299).
*+(a)81 -- Retention Agreement effective November 21, 2000
between J. Wayne Leonard and Entergy Corporation.
*+(a)82 -- Retention Agreement effective July 29, 2000 between
Frank F. Gallaher and Entergy Corporation.
*+(a)83 -- Retention Agreement effective July 29, 2000 between
C. Gary Clary and Entergy Corporation.
*+(a)84 -- Retention Agreement effective July 29, 2000
between Jerry D. Jackson and Entergy Corporation.
*+(a)85 -- Retention Agreement effective July 29, 2000 between
Donald C. Hintz and Entergy Corporation.
*+(a)86 -- Retention Agreement effective July 29, 2000
between Michael G. Thompson and Entergy Corporation.
*+(a)87 -- Retention Agreement effective January 22, 2001
between Richard J. Smith and Entergy Services, Inc.
*+(a)88 -- Retention Agreement effective January 25, 2001
between Horace Webb and Entergy Services, Inc.
*+(a)89 -- Retention Agreement effective July 29, 2000 between
Jerry W. Yelverton and Entergy Corporation.
*+(a)90 -- Retention Agreement effective July 29, 2000 between
C. John Wilder and Entergy Corporation.
*+(a)91-- Employment Retention Bonus Plan of Entergy
Corporation and Subsidiaries dated July 30, 2000.
+(a) 92 -- Employment Agreement by and between WCB Holding
Corporation and J. Wayne Leonard dated as of July 30,
2000 (99.3 to Form 8-K dated July 31, 2000 in 1-11299).
+(a) 93 -- Employment Agreement by and between WCB Holding
Corporation and James L. Broadhead dated as of July 30,
2000 (99.2 to Form 8-K dated July 31, 2000 in 1-11299).
(a) 94-- Agreement of Limited Partnership of Entergy-Koch,
LP among EKLP, LLC, EK Holding I, LLC, EK Holding II, LLC
and Koch Energy, Inc. dated January 31, 2001 (filed under
confidentiality request).
System Energy
(b) 1 through
(b) 14-- See 10(a)-12 through 10(a)-25 above.
(b) 15 through
(b) 28-- See 10(a)-26 through 10(a)-39 above.
(b) 29-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(b) 30-- Joint Construction, Acquisition and Ownership
Agreement, dated as of May 1, 1980, between System Energy
and SMEPA (B-1(a) in 70-6337), as amended by Amendment
No. 1, dated as of May 1, 1980 (B-1(c) in 70-6337) and
Amendment No. 2, dated as of October 31, 1980 (1 to
Rule 24 Certificate dated October 30, 1981 in 70-6337).
(b) 31-- Operating Agreement, dated as of May 1, 1980,
between System Energy and SMEPA (B(2)(a) in 70-6337).
(b) 32- Amended and Restated Installment Sale Agreement,
dated as of February 15, 1996, between System Energy and
Claiborne County, Mississippi (B-6(a) to Rule 24
Certificate dated March 4, 1996 in 70-8511).
(b) 33-- Loan Agreement, dated as of October 15, 1998,
between System Energy and Mississippi Business Finance
Corporation (B-6(b) to Rule 24 Certificate dated November
12, 1998 in 70-8511).
(b) 34-- Loan Agreement, dated as of May 15, 1999, between
System Energy and Mississippi Business Finance
Corporation (B-6(c) to Rule 24 Certificate dated June 8,
1999 in 70-8511).
(b) 35-- Facility Lease No. 1, dated as of December 1,
1988, between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(1) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (1)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
3(d) to Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 36-- Facility Lease No. 2, dated as of December 1, 1988
between Meridian Trust Company and Stephen M. Carta
(Stephen J. Kaba, successor), as Owner Trustees, and
System Energy (B-2(c)(2) to Rule 24 Certificate dated
January 9, 1989 in 70-7561), as supplemented by Lease
Supplement No. 1 dated as of April 1, 1989 (B-22(b) (2)
to Rule 24 Certificate dated April 21, 1989 in 70-7561)
and Lease Supplement No. 2 dated as of January 1, 1994 (B-
4(d) Rule 24 Certificate dated January 31, 1994 in 70-
8215).
(b) 37-- Assignment, Assumption and Further Agreement
No. 1, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(1) to Rule 24 Certificate dated January 9, 1989
in 70-7561).
(b) 38-- Assignment, Assumption and Further Agreement
No. 2, dated as of December 1, 1988, among System Energy,
Meridian Trust Company and Stephen M. Carta, and SMEPA
(B-7(c)(2) to Rule 24 Certificate dated January 9, 1989
in 70-7561).
(b) 39-- Collateral Trust Indenture, dated as of January 1,
1994, among System Energy, GG1B Funding Corporation and
Bankers Trust Company, as Trustee (A-3(e) to Rule 24
Certificate dated January 31, 1994 in 70-8215), as
supplemented by Supplemental Indenture No. 1 dated
January 1, 1994, (A-3(f) to Rule 24 Certificate dated
January 31, 1994 in 70-8215).
(b) 40-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B(3)(a) in 70-6337).
(b) 41-- Grand Gulf Unit No. 2 Supplementary Agreement,
dated as of February 7, 1986, between System Energy and
SMEPA (10(aaa) in 33-4033).
(b) 42-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a)-39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(b) 43-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(b) 44-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(b) 45-- Fuel Lease, dated as of February 24, 1989, between
River Fuel Funding Company #3, Inc. and System Energy
(B-1(b) to Rule 24 Certificate dated March 3, 1989 in
70-7604).
(b) 46-- System Energy's Consent, dated January 31, 1995,
pursuant to Fuel Lease, dated as of February 24, 1989,
between River Fuel Funding Company #3, Inc. and System
Energy (B-1(c) to Rule 24 Certificate dated February 13,
1995 in 70-7604).
(b) 47-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to
Rule 24 Certificate dated June 26, 1974 in 70-5399).
(b) 48-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to
Rule 24 Certificate dated June 26, 1974 in 70-5399).
(b) 49-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate dated January 8,
1987 in 70-5399).
(b) 50-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(b) 51-- First Amendment, dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(b) 52-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(b) 53-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(b) 54-- Service Agreement with Entergy Services, dated as
of July 16, 1974, as amended (10(b)-43 to Form 10-K for
the year ended December 31, 1988 in 1-9067).
(b) 55-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(b)-45 to Form 10-K
for the year ended December 31, 1990 in 1-9067).
(b) 56-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a) -11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(b) 57-- Operating Agreement between Entergy Operations and
System Energy, dated as of June 6, 1990 (B-3(b) to Rule
24 Certificate dated June 15, 1990 in 70-7679).
(b) 58-- Guarantee Agreement between Entergy Corporation
and System Energy, dated as of September 20, 1990 (B-3(a)
to Rule 24 Certificate dated September 27, 1990 in
70-7757).
(b) 59-- Amended and Restated Reimbursement Agreement,
dated as of December 1, 1988 as amended and restated as
of December 20, 1999, among System Energy Resources,
Inc., The Bank of Tokyo-Mitsubishi, Ltd., as Funding Bank
and The Chase Manhattan Bank, as administrating bank,
Union Bank of California, N.A., as documentation agent,
and the Banks named therein, as Participating Banks (B-
1(b) to Rule 24 Certificate dated March 3, 2000 in 70-
7561).
+(b) 60-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
Entergy Arkansas
(c) 1 -- Agreement, dated April 23, 1982, among Entergy
Arkansas and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982 in 1-3517).
(c) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)2 in 2-41080).
(c) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(c) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(c) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(c) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-41080).
(c) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (5(a)- 6 in 2-43175).
(c) 8 -- Amendment, dated April 27, 1984, to Service
Agreement, with Entergy Services (10(a)- 7 to Form 10-K
for the year ended December 31, 1984 in 1-3517).
(c) 9 -- Amendment, dated August 1, 1988, to Service
Agreement with Entergy Services (10(c)- 8 to Form 10-K
for the year ended December 31, 1988 in 1-10764).
(c) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(c)-9 to Form 10-K for
the year ended December 31, 1990 in 1-10764).
(c) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(c) 12 through
(c) 25-- See 10(a)-12 through 10(a)-25 above.
(c) 26-- Agreement, dated August 20, 1954, between Entergy
Arkansas and the United States of America (SPA)(13(h) in
2-11467).
(c) 27-- Amendment, dated April 19, 1955, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-2 in 2-41080).
(c) 28-- Amendment, dated January 3, 1964, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-3 in 2-41080).
(c) 29-- Amendment, dated September 5, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-4 in 2-41080).
(c) 30-- Amendment, dated November 19, 1970, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-5 in 2-41080).
(c) 31-- Amendment, dated July 18, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-6 in 2-41080).
(c) 32-- Amendment, dated December 27, 1961, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-7 in 2-41080).
(c) 33-- Amendment, dated January 25, 1968, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-8 in 2-41080).
(c) 34-- Amendment, dated October 14, 1971, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-9 in 2-43175).
(c) 35-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated August 20, 1954
(5(d)-10 in 2-60233).
(c) 36-- Agreement, dated May 14, 1971, between Entergy
Arkansas and the United States of America (SPA) (5(e) in
2-41080).
(c) 37-- Amendment, dated January 10, 1977, to the United
States of America (SPA) Contract, dated May 14, 1971
(5(e)-1 in 2-60233).
(c) 38-- Contract, dated May 28, 1943, Amendment to
Contract, dated July 21, 1949, and Supplement to
Amendment to Contract, dated December 30, 1949, between
Entergy Arkansas and McKamie Gas Cleaning Company;
Agreements, dated as of September 30, 1965, between
Entergy Arkansas and former stockholders of McKamie Gas
Cleaning Company; and Letter Agreement, dated June 22,
1966, by Humble Oil & Refining Company accepted by
Entergy Arkansas on June 24, 1966 (5(k)-7 in 2-41080).
(c) 39-- Agreement, dated April 3, 1972, between Entergy
Services and Gulf United Nuclear Fuels Corporation
(5(l)-3 in 2-46152).
(c) 40-- Fuel Lease, dated as of December 22, 1988, between
River Fuel Trust #1 and Entergy Arkansas (B-1(b) to Rule
24 Certificate in 70-7571).
(c) 41-- White Bluff Operating Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-2(a) to Rule 24
Certificate dated June 30, 1977 in 70-6009).
(c) 42-- White Bluff Ownership Agreement, dated June 27,
1977, among Entergy Arkansas and Arkansas Electric
Cooperative Corporation and City Water and Light Plant of
the City of Jonesboro, Arkansas (B-1(a) to Rule 24
Certificate dated June 30, 1977 in 70-6009).
(c) 43-- Agreement, dated June 29, 1979, between Entergy
Arkansas and City of Conway, Arkansas (5(r)-3 in
2-66235).
(c) 44-- Transmission Agreement, dated August 2, 1977,
between Entergy Arkansas and City Water and Light Plant
of the City of Jonesboro, Arkansas (5(r)-3 in 2-60233).
(c) 45-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of June 27, 1977, between
Arkansas Electric Cooperative Corporation and Entergy
Arkansas (5(r)-4 in 2-60233).
(c) 46-- Independence Steam Electric Station Operating
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-6 in 2-66235).
(c) 47-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984 in 1-10764).
(c) 48-- Independence Steam Electric Station Ownership
Agreement, dated July 31, 1979, among Entergy Arkansas
and Arkansas Electric Cooperative Corporation and City
Water and Light Plant of the City of Jonesboro, Arkansas
and City of Conway, Arkansas (5(r)-7 in 2-66235).
(c) 49-- Amendment, dated December 28, 1979, to the
Independence Steam Electric Station Ownership Agreement
(5(r)-7(a) in 2-66235).
(c) 50-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984 in 1-10764).
(c) 51-- Owner's Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi, other co-owners of
the Independence Station (10(c) 55 to Form 10-K for the
year ended December 31, 1984 in 1-10764).
(c) 52-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984 in
1-10764).
(c) 53-- Power Coordination, Interchange and Transmission
Service Agreement, dated as of July 31, 1979, between
Entergy Arkansas and City Water and Light Plant of the
City of Jonesboro, Arkansas (5(r)-8 in 2-66235).
(c) 54-- Power Coordination, Interchange and Transmission
Agreement, dated as of June 29, 1979, between City of
Conway, Arkansas and Entergy Arkansas (5(r)-9 in
2-66235).
(c) 55-- Agreement, dated June 21, 1979, between Entergy
Arkansas and Reeves E. Ritchie ((10)(b)-90 to Form 10-K
for the year ended December 31, 1980 in 1-10764).
(c) 56-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(c) 57-- Post-Retirement Plan (10(b) 55 to Form 10-K for
the year ended December 31, 1983 in 1-10764).
(c) 58-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(c) 59-- First Amendment to Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy, Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(c) 60-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(c) 61-- Contract For Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated June 30, 1983, among
the DOE, System Fuels and Entergy Arkansas (10(b)-57 to
Form 10-K for the year ended December 31, 1983 in
1-10764).
(c) 62-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(c) 63-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(c) 64-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(c) 65-- Third Amendment dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(c) 66-- Assignment of Coal Supply Agreement, dated
December 1, 1987, between System Fuels and Entergy
Arkansas (B to Rule 24 letter filing dated November 10,
1987 in 70-5964).
(c) 67-- Coal Supply Agreement, dated December 22, 1976,
between System Fuels and Antelope Coal Company (B-1 in
70-5964), as amended by First Amendment (A to Rule 24
Certificate in 70-5964); Second Amendment (A to Rule 24
letter filing dated December 16, 1983 in 70-5964); and
Third Amendment (A to Rule 24 letter filing dated
November 10, 1987 in 70-5964).
(c) 68-- Operating Agreement between Entergy Operations and
Entergy Arkansas, dated as of June 6, 1990 (B-1(b) to
Rule 24 Certificate dated June 15, 1990 in 70-7679).
(c) 69-- Guaranty Agreement between Entergy Corporation and
Entergy Arkansas, dated as of September 20, 1990 (B-1(a)
to Rule 24 Certificate dated September 27, 1990 in
70-7757).
(c) 70-- Agreement for Purchase and Sale of Independence
Unit 2 between Entergy Arkansas and Entergy Power, dated
as of August 28, 1990 (B-3(c) to Rule 24 Certificate
dated September 6, 1990 in 70-7684).
(c) 71-- Agreement for Purchase and Sale of Ritchie Unit 2
between Entergy Arkansas and Entergy Power, dated as of
August 28, 1990 (B-4(d) to Rule 24 Certificate dated
September 6, 1990 in 70-7684).
(c) 72-- Ritchie Steam Electric Station Unit No. 2
Operating Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-5(a) to Rule 24
Certificate dated September 6, 1990 in 70-7684).
(c) 73-- Ritchie Steam Electric Station Unit No. 2
Ownership Agreement between Entergy Arkansas and Entergy
Power, dated as of August 28, 1990 (B-6(a) to Rule 24
Certificate dated September 6, 1990 in 70-7684).
(c) 74-- Power Coordination, Interchange and Transmission
Service Agreement between Entergy Power and Entergy
Arkansas, dated as of August 28, 1990 (10(c)-71 to Form
10-K for the year ended December 31, 1990 in 1-10764).
+(c) 75-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(c) 76-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989 in
1-3517).
+(c) 77-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate dated May 24,
1991 in 70-7831).
+(c) 78-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 79-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(c) 80-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(c) 81-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(c) 82-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(c) 83-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(c) 84-- Summary Description of Retired Outside Director
Benefit Plan. (10(c) 90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(c) 85-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(c) 86-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(c) 87-- Loan Agreement dated June 15, 1993, between
Entergy Arkansas and Independence Country, Arkansas (B-1
(a) to Rule 24 Certificate dated July 9, 1993 in 70-
8171).
(c) 88-- Installment Sale Agreement dated January 1, 1991,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(b) to Rule 24 Certificate dated January 24, 1991 in 70-
7802).
(c) 89-- Installment Sale Agreement dated November 1, 1990,
between Entergy Arkansas and Pope Country, Arkansas (B-1
(a) to Rule 24 Certificate dated November 30, 1990 in 70-
7802).
(c) 90-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Jefferson County, Arkansas (B-1(a)
to Rule 24 Certificate dated June 30, 1994 in 70-8405).
(c) 91-- Loan Agreement dated June 15, 1994, between
Entergy Arkansas and Pope County, Arkansas (B-1(b) to
Rule 24 Certificate in 70-8405).
(c) 92-- Loan Agreement dated November 15, 1995,
between Entergy Arkansas and Pope County, Arkansas (10(c)
96 to Form 10-K for the year ended December 31, 1995 in 1-
10764).
(c) 93-- Agreement as to Expenses and Liabilities
between Entergy Arkansas and Entergy Arkansas Capital I,
dated as of August 14, 1996 (4(j) to Form 10-Q for the
quarter ended September 30, 1996 in 1-10764).
(c) 94-- Loan Agreement dated December 1, 1997,
between Entergy Arkansas and Jefferson County, Arkansas
(10(c)100 to Form 10-K for the year ended December 31,
1997 in 1-10764).
Entergy Gulf States
(d) 1 -- Guaranty Agreement, dated July 1, 1976, between
Entergy Gulf States and American Bank and Trust Company
(C and D to Form 8-K dated August 6, 1976 in 1-27031).
(d) 2 -- Lease of Railroad Equipment, dated as of December
1, 1981, between The Connecticut Bank and Trust Company
as Lessor and Entergy Gulf States as Lessee and First
Supplement, dated as of December 31, 1981, relating to
605 One Hundred-Ton Unit Train Steel Coal Porter Cars (4-
12 to Form 10-K for the year ended December 31, 1981 in 1-
27031).
(d) 3 -- Guaranty Agreement, dated August 1, 1992, between
Entergy Gulf States and Hibernia National Bank, relating
to Pollution Control Revenue Refunding Bonds of the
Industrial Development Board of the Parish of Calcasieu,
Inc. (Louisiana) (10-1 to Form 10-K for the year ended
December 31, 1992 in 1-27031).
(d) 4 -- Guaranty Agreement, dated January 1, 1993, between
Entergy Gulf States and Hancock Bank of Louisiana,
relating to Pollution Control Revenue Refunding Bonds of
the Parish of Pointe Coupee (Louisiana) (10-2 to Form 10-
K for the year ended December 31, 1992 in 1-27031).
(d) 5 -- Deposit Agreement, dated as of December 1, 1983
between Entergy Gulf States, Morgan Guaranty Trust Co. as
Depositary and the Holders of Depository Receipts,
relating to the Issue of 900,000 Depositary Preferred
Shares, each representing 1/2 share of Adjustable Rate
Cumulative Preferred Stock, Series E-$100 Par Value (4-17
to Form 10-K for the year ended December 31, 1983 in 1-
27031).
(d) 6 -- Agreement effective February 1, 1964, between
Sabine River Authority, State of Louisiana, and Sabine
River Authority of Texas, and Entergy Gulf States,
Central Louisiana Electric Company, Inc., and Louisiana
Power & Light Company, as supplemented (B to Form 8-K
dated May 6, 1964, A to Form 8-K dated October 5, 1967, A
to Form 8-K dated May 5, 1969, and A to Form 8-K dated
December 1, 1969 in 1-27031).
(d) 7 -- Joint Ownership Participation and Operating
Agreement regarding River Bend Unit 1 Nuclear Plant,
dated August 20, 1979, between Entergy Gulf States,
Cajun, and SRG&T; Power Interconnection Agreement with
Cajun, dated June 26, 1978, and approved by the REA on
August 16, 1979, between Entergy Gulf States and Cajun;
and Letter Agreement regarding CEPCO buybacks, dated
August 28, 1979, between Entergy Gulf States and Cajun
(2, 3, and 4, respectively, to Form 8-K dated September
7, 1979 in 1-27031).
(d) 8 -- Ground Lease, dated August 15, 1980, between
Statmont Associates Limited Partnership (Statmont) and
Entergy Gulf States, as amended (3 to Form 8-K dated
August 19, 1980 and A-3-b to Form 10-Q for the quarter
ended September 30, 1983 in 1-27031).
(d) 9 -- Lease and Sublease Agreement, dated August 15,
1980, between Statmont and Entergy Gulf States, as
amended (4 to Form 8-K dated August 19, 1980 and A-3-c to
Form 10-Q for the quarter ended September 30, 1983 in 1-
27031).
(d) 10-- Lease Agreement, dated September 18, 1980, between
BLC Corporation and Entergy Gulf States (1 to Form 8-K
dated October 6, 1980 in 1-27031).
(d) 11-- Joint Ownership Participation and Operating
Agreement for Big Cajun, between Entergy Gulf States,
Cajun Electric Power Cooperative, Inc., and Sam Rayburn
G&T, Inc, dated November 14, 1980 (6 to Form 8-K dated
January 29, 1981 in 1-27031); Amendment No. 1, dated
December 12, 1980 (7 to Form 8-K dated January 29, 1981
in 1-27031); Amendment No. 2, dated December 29, 1980 (8
to Form 8-K dated January 29, 1981 in 1-27031).
(d) 12-- Agreement of Joint Ownership Participation between
SRMPA, SRG&T and Entergy Gulf States, dated June 6, 1980,
for Nelson Station, Coal Unit #6, as amended (8 to Form 8-
K dated June 11, 1980, A-2-b to Form 10-Q for the quarter
ended June 30, 1982; and 10-1 to Form 8-K dated February
19, 1988 in 1-27031).
(d) 13-- Agreements between Southern Company and Entergy
Gulf States, dated February 25, 1982, which cover the
construction of a 140-mile transmission line to connect
the two systems, purchase of power and use of
transmission facilities (10-31 to Form 10-K for the year
ended December 31, 1981 in 1-27031).
+(d) 14-- Executive Income Security Plan, effective October
1, 1980, as amended, continued and completely restated
effective as of March 1, 1991 (10-2 to Form 10-K for the
year ended December 31, 1991 in 1-27031).
(d) 15-- Transmission Facilities Agreement between Entergy
Gulf States and Mississippi Power Company, dated February
28, 1982, and Amendment, dated May 12, 1982 (A-2-c to
Form 10-Q for the quarter ended March 31, 1982 in 1-
27031) and Amendment, dated December 6, 1983 (10-43 to
Form 10-K for the year ended December 31, 1983 in 1-
27031).
(d) 16-- Lease Agreement dated as of June 29, 1983, between
Entergy Gulf States and City National Bank of Baton
Rouge, as Owner Trustee, in connection with the leasing
of a Simulator and Training Center for River Bend Unit 1
(A-2-a to Form 10-Q for the quarter ended June 30, 1983
in 1-27031) and Amendment, dated December 14, 1984 (10-55
to Form 10-K for the year ended December 31, 1984 in 1-
27031).
(d) 17-- Participation Agreement, dated as of June 29,
1983, among Entergy Gulf States, City National Bank of
Baton Rouge, PruFunding, Inc. Bank of the Southwest
National Association, Houston and Bankers Life Company,
in connection with the leasing of a Simulator and
Training Center of River Bend Unit 1 (A-2-b to Form 10-Q
for the quarter ended June 30, 1983 in 1-27031).
(d) 18-- Tax Indemnity Agreement, dated as of June 29,
1983, between Entergy Gulf States and PruFunding, Inc.,
in connection with the leasing of a Simulator and
Training Center for River Bend Unit I (A-2-c to Form 10-Q
for the quarter ended June 30, 1993 in 1-27031).
(d) 19-- Agreement to Lease, dated as of August 28, 1985,
among Entergy Gulf States, City National Bank of Baton
Rouge, as Owner Trustee, and Prudential Interfunding
Corp., as Trustor, in connection with the leasing of
improvement to a Simulator and Training Facility for
River Bend Unit I (10-69 to Form 10-K for the year ended
December 31, 1985 in 1-27031).
(d) 20-- First Amended Power Sales Agreement, dated
December 1, 1985 between Sabine River Authority, State of
Louisiana, and Sabine River Authority, State of Texas,
and Entergy Gulf States, Central Louisiana Electric Co.,
Inc., and Louisiana Power and Light Company (10-72 to
Form 10-K for the year ended December 31, 1985 in 1-
27031).
+(d) 21-- Deferred Compensation Plan for Directors of
Entergy Gulf States and Varibus Corporation, as amended
January 8, 1987, and effective January 1, 1987 (10-77 to
Form 10-K for the year ended December 31, 1986 in 1-
27031). Amendment dated December 4, 1991 (10-3 to
Amendment No. 8 in Registration No. 2-76551).
+(d) 22-- Trust Agreement for Deferred Payments to be made
by Entergy Gulf States pursuant to the Executive Income
Security Plan, by and between Entergy Gulf States and
Bankers Trust Company, effective November 1, 1986 (10-78
to Form 10-K for the year ended December 31, 1986 in 1-
27031).
+(d) 23-- Trust Agreement for Deferred Installments under
Entergy Gulf States' Management Incentive Compensation
Plan and Administrative Guidelines by and between Entergy
Gulf States and Bankers Trust Company, effective June 1,
1986 (10-79 to Form 10-K for the year ended December 31,
1986 in 1-27031).
+(d) 24-- Nonqualified Deferred Compensation Plan for
Officers, Nonemployee Directors and Designated Key
Employees, effective December 1, 1985, as amended,
continued and completely restated effective as of March
1, 1991 (10-3 to Amendment No. 8 in Registration No. 2-
76551).
+(d) 25-- Trust Agreement for Entergy Gulf States'
Nonqualified Directors and Designated Key Employees by
and between Entergy Gulf States and First City Bank,
Texas-Beaumont, N.A. (now Texas Commerce Bank), effective
July 1, 1991 (10-4 to Form 10-K for the year ended
December 31, 1992 in 1-27031).
(d) 26-- Lease Agreement, dated as of June 29, 1987, among
GSG&T, Inc., and Entergy Gulf States related to the
leaseback of the Lewis Creek generating station (10-83 to
Form 10-K for the year ended December 31, 1988 in 1-
27031).
(d) 27-- Nuclear Fuel Lease Agreement between Entergy Gulf
States and River Bend Fuel Services, Inc. to lease the
fuel for River Bend Unit 1, dated February 7, 1989 (10-64
to Form 10-K for the year ended December 31, 1988 in 1-
27031).
(d) 28-- Trust and Investment Management Agreement between
Entergy Gulf States and Morgan Guaranty and Trust Company
of New York (the "Decommissioning Trust Agreement) with
respect to decommissioning funds authorized to be
collected by Entergy Gulf States, dated March 15, 1989
(10-66 to Form 10-K for the year ended December 31, 1988
in 1-27031).
(d) 29-- Amendment No. 2 dated November 1, 1995 between
Entergy Gulf States and Mellon Bank to Decommissioning
Trust Agreement (10(d) 31 to Form 10-K for the year ended
December 31, 1995 in 1-27031).
(d) 30-- Credit Agreement, dated as of December 29, 1993,
among River Bend Fuel Services, Inc. and Certain
Commercial Lending Institutions and CIBC Inc. as Agent
for the Lenders (10(d) 34 to Form 10-K for year ended
December 31, 1994 in 1-27031).
(d) 31-- Amendment No. 1 dated as of January 31, to Credit
Agreement, dated as of December 31, 1993, among River
Bend Fuel Services, Inc. and certain commercial lending
institutions and CIBC Inc. as agent for Lenders (10(d) 33
to Form 10-K for the year ended December 31, 1995 in 1-
27031).
(d) 32-- Partnership Agreement by and among Conoco Inc.,
and Entergy Gulf States, CITGO Petroleum Corporation and
Vista Chemical Company, dated April 28, 1988 (10-67 to
Form 10-K for the year ended December 31, 1988 in 1-
27031).
+(d) 33-- Gulf States Utilities Company Executive Continuity
Plan, dated January 18, 1991 (10-6 to Form 10-K for the
year ended December 31, 1990 in 1-27031).
+(d) 34-- Trust Agreement for Entergy Gulf States' Executive
Continuity Plan, by and between Entergy Gulf States and
First City Bank, Texas-Beaumont, N.A. (now Texas Commerce
Bank), effective May 20, 1991 (10-5 to Form 10-K for the
year ended December 31, 1992 in 1-27031).
+(d) 35-- Gulf States Utilities Board of Directors'
Retirement Plan, dated February 15, 1991 (10-8 to Form 10-
K for the year ended December 31, 1990 in 1-27031).
+(d) 36-- Gulf States Utilities Company Employees' Trustee
Retirement Plan effective July 1, 1955 as amended,
continued and completely restated effective January 1,
1989; and Amendment No.1 effective January 1, 1993 (10-6
to Form 10-K for the year ended December 31, 1992 in 1-
27031).
(d) 37-- Agreement and Plan of Reorganization, dated June
5, 1992, between Entergy Gulf States and Entergy
Corporation (2 to Form 8-K dated June 8, 1992 in 1-
27031).
+(d) 38-- Gulf States Utilities Company Employee Stock
Ownership Plan, as amended, continued, and completely
restated effective January 1, 1984, and January 1, 1985
(A to Form 11-K dated December 31, 1985 in 1-27031).
+(d) 39-- Trust Agreement under the Gulf States Utilities
Company Employee Stock Ownership Plan, dated December 30,
1976, between Entergy Gulf States and the Louisiana
National Bank, as Trustee (2-A to Registration No. 2-
62395).
+(d) 40-- Letter Agreement dated September 7, 1977 between
Entergy Gulf States and the Trustee, delegating certain
of the Trustee's functions to the ESOP Committee (2-B to
Registration Statement No. 2-62395).
+(d) 41-- Gulf States Utilities Company Employees Thrift
Plan as amended, continued and completely restated
effective as of January 1, 1992 (28-1 to Amendment No. 8
to Registration No. 2-76551).
+(d) 42-- Restatement of Trust Agreement under the Gulf
States Utilities Company Employees Thrift Plan,
reflecting changes made through January 1, 1989, between
Entergy Gulf States and First City Bank, Texas-Beaumont,
N.A., (now Texas Commerce Bank ), as Trustee (2-A to Form
8-K dated October 20, 1989 in 1-27031).
(d) 43-- Operating Agreement between Entergy Operations and
Entergy Gulf States, dated as of December 31, 1993 (B-
2(f) to Rule 24 Certificate in 70-8059).
(d) 44-- Guarantee Agreement between Entergy Corporation
and Entergy Gulf States, dated as of December 31, 1993 (B-
5(a) to Rule 24 Certificate in 70-8059).
(d) 45-- Service Agreement with Entergy Services, dated as
of December 31, 1993 (B-6(c) to Rule 24 Certificate in
70-8059).
(d) 46-- Assignment, Assumption and Amendment Agreement to
Letter of Credit and Reimbursement Agreement between
Entergy Gulf States, Canadian Imperial Bank of Commerce
and Westpac Banking Corporation (10(d) 58 to Form 10-K
for the year ended December 31, 1993 in 1-27031).
(d) 47-- Third Amendment, dated January 1, 1994, to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(d) 48-- Agreement as to Expenses and Liabilities
between Entergy Gulf States and Entergy Gulf States
Capital I, dated as of January 28, 1997 (10(d)52 to Form
10-K for the year ended December 31, 1996 in 1-27031).
(d) 49-- Refunding Agreement dated as of May 1, 1998
between Entergy Gulf States and Parish of Iberville,
State of Louisiana (B-3(a) to Rule 24 Certificate dated
May 29, 1998 in 70-8721).
(d) 50-- Refunding Agreement dated as of May 1, 1998
between Entergy Gulf States and Industrial Development
Board of the Parish of Calcasieu, Inc. (B-3(b) to Rule 24
Certificate dated January 29, 1999 in 70-8721).
(d) 51-- Refunding Agreement (Series 1999-A) dated as of
September 1, 1999 between Entergy Gulf States and Parish
of West Feliciana, State of Louisiana (B-3(c) to Rule 24
Certificate dated October 8, 1999 in 70-8721).
(d) 52-- Refunding Agreement (Series 1999-B) dated as of
September 1, 1999 between Entergy Gulf States and Parish
of West Feliciana, State of Louisiana (B-3(d) to Rule 24
Certificate dated October 8, 1999 in 70-8721).
+(d) 53-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
Entergy Louisiana
(e) 1 -- Agreement, dated April 23, 1982, among Entergy
Louisiana and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982, in 1-3517).
(e) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(e) 3 -- Amendment, dated as of February 10, 1971, to
Middle South Utilities System Agency Agreement, dated
December 11, 1970 (5(a)-4 in 2-41080).
(e) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(e) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(e) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(e) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(e) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984 in 1-3517).
(e) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(d)-8 to Form 10-K for
the year ended December 31, 1988 in 1-8474).
(e) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(d)-9 to Form 10-K for
the year ended December 31, 1990 in 1-8474).
(e) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(e) 12 through
(e) 25-- See 10(a)-12 through 10(a)-25 above.
(e) 26-- Fuel Lease, dated as of January 31, 1989, between
River Fuel Company #2, Inc., and Entergy Louisiana
(B-1(b) to Rule 24 Certificate in 70-7580).
(e) 27-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
(e) 28-- Compromise and Settlement Agreement, dated June 4,
1982, between Texaco, Inc. and Entergy Louisiana (28(a)
to Form 8-K dated June 4, 1982 in 1-8474).
+(e) 29-- Post-Retirement Plan (10(c)23 to Form 10-K for the
year ended December 31, 1983 in 1-8474).
(e) 30-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(e) 31-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(e) 32-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(e) 33-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Tax Allocation Agreement, dated
April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(e) 34-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement, dated
January 1, 1990 (D-2 to Form U5S for the year ended
December 31, 1989).
(e) 35-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(e) 36-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
(e) 37-- Contract for Disposal of Spent Nuclear Fuel and/or
High-Level Radioactive Waste, dated February 2, 1984,
among DOE, System Fuels and Entergy Louisiana (10(d)33 to
Form 10-K for the year ended December 31, 1984 in
1-8474).
(e) 38-- Operating Agreement between Entergy Operations and
Entergy Louisiana, dated as of June 6, 1990 (B-2(c) to
Rule 24 Certificate dated June 15, 1990 in 70-7679).
(e) 39-- Guarantee Agreement between Entergy Corporation
and Entergy Louisiana, dated as of September 20, 1990
(B-2(a), to Rule 24 Certificate dated September 27, 1990
in 70-7757).
+(e) 40-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(e) 41-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989 in
1-3517).
+(e) 42-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate dated May 24,
1991 in 70-7831).
+(e) 43-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a) 71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 44-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(e) 45-- Supplemental Retirement Plan (10(a) 69 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(e) 46-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a) 53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(e) 47-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a) 72 to Form 10-K for the year
ended December 31, 1992 in 1-3517).
+(e) 48-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries (10(a) 74 to Form 10-K for
the year ended December 31, 1992 in 1-3517).
+(e) 49-- Summary Description of Retired Outside Director
Benefit Plan (10(c)90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(e) 50-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(e) 51-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(e) 52-- Installment Sale Agreement, dated July 20, 1994,
between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(e) to Rule 24 Certificate dated August 1,
1994 in 70-7822).
(e) 53-- Installment Sale Agreement, dated November 1,
1995, between Entergy Louisiana and St. Charles Parish,
Louisiana (B-6(a) to Rule 24 Certificate dated December
19, 1995 in 70-8487).
(e) 54-- Refunding Agreement (Series 1999-A), dated as of
June 1, 1999, between Entergy Louisiana and Parish of St.
Charles, State of Louisiana (B-6(a) to Rule 24
Certificate dated July 6, 1999 in 70-9141).
(e) 55-- Refunding Agreement (Series 1999-B), dated as of
June 1, 1999, between Entergy Louisiana and Parish of St.
Charles, State of Louisiana (B-6(b) to Rule 24
Certificate dated July 6, 1999 in 70-9141).
(e) 56-- Refunding Agreement (Series 1999-C), dated as of
October 1, 1999, between Entergy Louisiana and Parish of
St. Charles, State of Louisiana (B-11(a) to Rule 24
Certificate dated October 15, 1999 in 70-9141).
(e) 57-- Agreement as to Expenses and Liabilities between
Entergy Louisiana, Inc. and Entergy Louisiana Capital I
dated July 16, 1996 (4(d) to Form 10-Q for the quarter
ended June 30, 1996 in 1-8474).
Entergy Mississippi
(f) 1 -- Agreement dated April 23, 1982, among Entergy
Mississippi and certain other System companies, relating
to System Planning and Development and Intra-System
Transactions (10(a) 1 to Form 10-K for the year ended
December 31, 1982 in 1-3517).
(f) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(f) 3 -- Amendment, dated February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a) 4 in 2-41080).
(f) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(f) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(f) 6 -- Service Agreement with Entergy Services, dated as
of April 1, 1963 (D in 37-63).
(f) 7 -- Amendment, dated January 1, 1972, to Service
Agreement with Entergy Services (A to Notice, dated
October 14, 1971 in 37-63).
(f) 8 -- Amendment, dated April 27, 1984, to Service
Agreement with Entergy Services (10(a) 7 to Form 10-K for
the year ended December 31, 1984 in 1-3517).
(f) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(e) 8 to Form 10-K for
the year ended December 31, 1988 in 0-320).
(f) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(e) 9 to Form 10-K for
the year ended December 31, 1990 in 0-320).
(f) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for the year ended December 31, 1994 in 1-3517).
(f) 12 through
(f) 25-- See 10(a)-12 - 10(a)-25above.
(f) 26-- Installment Sale Agreement, dated as of June 1,
1974, between Entergy Mississippi and Washington County,
Mississippi (B-2(a) to Rule 24 Certificate dated August
1, 1974 in 70-5504).
(f) 27-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Warren County, Mississippi (B-6(a) to Rule 24
Certificate dated May 4, 1994 in 70-7914).
(f) 28-- Amended and Restated Installment Sale Agreement,
dated as of April 1, 1994, between Entergy Mississippi
and Washington County, Mississippi, (B-6(b) to Rule 24
Certificate dated May 4, 1994 in 70-7914).
(f) 29-- Refunding Agreement, dated as of May 1, 1999,
between Entergy Mississippi and Independence County,
Arkansas (B-6(a) to Rule 24 Certificate dated June 8,
1999 in 70-8719).
(f) 30-- Substitute Power Agreement, dated as of May 1,
1980, among Entergy Mississippi, System Energy and SMEPA
(B-3(a) in 70-6337).
(f) 31-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Operating Agreement
(10(c) 51 to Form 10-K for the year ended December 31,
1984 in 0-375).
(f) 32-- Amendment, dated December 4, 1984, to the
Independence Steam Electric Station Ownership Agreement
(10(c) 54 to Form 10-K for the year ended December 31,
1984 in 0-375).
(f) 33-- Owners Agreement, dated November 28, 1984, among
Entergy Arkansas, Entergy Mississippi and other co-owners
of the Independence Station (10(c) 55 to Form 10-K for
the year ended December 31, 1984 in 0-375).
(f) 34-- Consent, Agreement and Assumption, dated December
4, 1984, among Entergy Arkansas, Entergy Mississippi,
other co-owners of the Independence Station and United
States Trust Company of New York, as Trustee (10(c) 56 to
Form 10-K for the year ended December 31, 1984 in 0-375).
(f) 35-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(f) 36-- Post-Retirement Plan (10(d) 24 to Form 10-K for
the year ended December 31, 1983 in 0-320).
(f) 37-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(f) 38-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(f) 39-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(f) 40-- Sales Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (D to Rule
24 Certificate dated June 26, 1974 in 70-5399).
(f) 41-- Service Agreement, dated as of June 21, 1974,
between System Energy and Entergy Mississippi (E to Rule
24 Certificate dated June 26, 1974 in 70-5399).
(f) 42-- Partial Termination Agreement, dated as of
December 1, 1986, between System Energy and Entergy
Mississippi (A-2 to Rule 24 Certificate dated January 8,
1987 in 70-5399).
(f) 43-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(f) 44-- First Amendment dated January 1, 1990 to the
Middle South Utilities Inc. and Subsidiary Companies
Intercompany Tax Allocation Agreement (D-2 to Form U5S
for the year ended December 31, 1989).
(f) 45-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(f) 46-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(f) 47-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a) 52 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(f) 48-- Entergy Corporation Annual Incentive Plan (10(a)
54 to Form 10-K for the year ended December 31, 1989 in
1-3517).
+(f) 49-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate dated May 24,
1991 in 70-7831).
+(f) 50-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 51-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(f) 52-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(f) 53-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(f) 54-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(f) 55-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to Form
10-K for the year ended December 31, 1992 in 1-3517).
+(f) 56-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(f) 57-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(f) 58-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
Entergy New Orleans
(g) 1 -- Agreement, dated April 23, 1982, among Entergy New
Orleans and certain other System companies, relating to
System Planning and Development and Intra-System
Transactions (10(a)-1 to Form 10-K for the year ended
December 31, 1982 in 1-3517).
(g) 2 -- Middle South Utilities System Agency Agreement,
dated December 11, 1970 (5(a)-2 in 2-41080).
(g) 3 -- Amendment dated as of February 10, 1971, to Middle
South Utilities System Agency Agreement, dated December
11, 1970 (5(a)-4 in 2-41080).
(g) 4 -- Amendment, dated May 12, 1988, to Middle South
Utilities System Agency Agreement, dated December 11,
1970 (5(a) 4 in 2-41080).
(g) 5 -- Middle South Utilities System Agency Coordination
Agreement, dated December 11, 1970 (5(a)-3 in 2-41080).
(g) 6 -- Service Agreement with Entergy Services dated as
of April 1, 1963 (5(a)-5 in 2-42523).
(g) 7 -- Amendment, dated as of January 1, 1972, to Service
Agreement with Entergy Services (4(a)-6 in 2-45916).
(g) 8 -- Amendment, dated as of April 27, 1984, to Service
Agreement with Entergy Services (10(a)7 to Form 10-K for
the year ended December 31, 1984 in 1-3517).
(g) 9 -- Amendment, dated as of August 1, 1988, to Service
Agreement with Entergy Services (10(f)-8 to Form 10-K for
the year ended December 31, 1988 in 0-5807).
(g) 10-- Amendment, dated January 1, 1991, to Service
Agreement with Entergy Services (10(f)-9 to Form 10-K for
the year ended December 31, 1990 in 0-5807).
(g) 11-- Amendment, dated January 1, 1992, to Service
Agreement with Entergy Services (10(a)-11 to Form 10-K
for year ended December 31, 1994 in 1-3517).
(g) 12 through
(g) 25-- See 10(a)-12 - 10(a)-25 above.
(g) 26-- Reallocation Agreement, dated as of July 28, 1981,
among System Energy and certain other System companies
(B-1(a) in 70-6624).
+(g) 27-- Post-Retirement Plan (10(e) 22 to Form 10-K for
the year ended December 31, 1983 in 1-1319).
(g) 28-- Unit Power Sales Agreement, dated as of June 10,
1982, between System Energy and Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi and Entergy New Orleans
(10(a) 39 to Form 10-K for the year ended December 31,
1982 in 1-3517).
(g) 29-- First Amendment to the Unit Power Sales Agreement,
dated as of June 28, 1984, between System Energy and
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi
and Entergy New Orleans (19 to Form 10-Q for the quarter
ended September 30, 1984 in 1-3517).
(g) 30-- Revised Unit Power Sales Agreement (10(ss) in
33-4033).
(g) 31-- Transfer Agreement, dated as of June 28, 1983,
among the City of New Orleans, Entergy New Orleans and
Regional Transit Authority (2(a) to Form 8-K dated June
24, 1983 in 1-1319).
(g) 32-- Middle South Utilities, Inc. and Subsidiary
Companies Intercompany Income Tax Allocation Agreement,
dated April 28, 1988 (D-1 to Form U5S for the year ended
December 31, 1987).
(g) 33-- First Amendment, dated January 1, 1990, to the
Middle South Utilities, Inc. and Subsidiary Companies
Intercompany Income Tax Allocation Agreement (D-2 to
Form U5S for the year ended December 31, 1989).
(g) 34-- Second Amendment dated January 1, 1992, to the
Entergy Corporation and Subsidiary Companies Intercompany
Income Tax Allocation Agreement (D-3 to Form U5S for the
year ended December 31, 1992).
(g) 35-- Third Amendment dated January 1, 1994 to Entergy
Corporation and Subsidiary Companies Intercompany Income
Tax Allocation Agreement (D-3(a) to Form U5S for the year
ended December 31, 1993).
+(g) 36-- Executive Financial Counseling Program of Entergy
Corporation and Subsidiaries (10(a)52 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(g) 37-- Entergy Corporation Annual Incentive Plan (10(a)54
to Form 10-K for the year ended December 31, 1989 in
1-3517).
+(g) 38-- Equity Ownership Plan of Entergy Corporation and
Subsidiaries (A-4(a) to Rule 24 Certificate dated May 24,
1991 in 70-7831).
+(g) 39-- Amendment No. 1 to the Equity Ownership Plan of
Entergy Corporation and Subsidiaries (10(a)71 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 40-- 1998 Equity Ownership Plan of Entergy Corporation
and Subsidiaries (Filed with the Proxy Statement dated
March 30, 1998).
+(g) 41-- Supplemental Retirement Plan (10(a)69 to Form 10-K
for the year ended December 31, 1992 in 1-3517).
+(g) 42-- Defined Contribution Restoration Plan of Entergy
Corporation and Subsidiaries (10(a)53 to Form 10-K for
the year ended December 31, 1989 in 1-3517).
+(g) 43-- Executive Disability Plan of Entergy Corporation
and Subsidiaries (10(a)72 to Form 10-K for the year ended
December 31, 1992 in 1-3517).
+(g) 44-- Stock Plan for Outside Directors of Entergy
Corporation and Subsidiaries, as amended (10(a)74 to
Form 10-K for the year ended December 31, 1992 in
1-3517).
+(g) 45-- Summary Description of Retired Outside Director
Benefit Plan (10(c)-90 to Form 10-K for the year ended
December 31, 1992 in 1-10764).
+(g) 46-- Amendment to Defined Contribution Restoration Plan
of Entergy Corporation and Subsidiaries (10(a) 81 to Form
10-K for the year ended December 31, 1993 in 1-11299).
+(g) 47-- System Executive Retirement Plan (10(a) 82 to Form
10-K for the year ended December 31, 1993 in 1-11299).
(12) Statement Re Computation of Ratios
*(a) Entergy Arkansas's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(b) Entergy Gulf States' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(c) Entergy Louisiana's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(d) Entergy Mississippi's Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(e) Entergy New Orleans' Computation of Ratios of
Earnings to Fixed Charges and of Earnings to Fixed Charges
and Preferred Dividends, as defined.
*(f) System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
*(21) Subsidiaries of the Registrants
(23) Consents of Experts and Counsel
*(a) The consent of PricewaterhouseCoopers LLP is contained
herein at page 240.
*(24) Powers of Attorney
_________________
* Filed herewith.
+ Management contracts or compensatory plans or arrangements.