FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-11299 ENTERGY CORPORATION 13-5550175
(a Delaware corporation)
225 Baronne Street
New Orleans, Louisiana 70112
Telephone (504) 529-5262
1-10764 ARKANSAS POWER & LIGHT COMPANY 71-0005900
(an Arkansas corporation)
425 West Capitol Avenue, 40th Floor
Little Rock, Arkansas 72201
Telephone (501) 377-4000
1-2703 GULF STATES UTILITIES COMPANY 74-0662730
(a Texas corporation)
350 Pine Street
Beaumont, Texas 77701
Telephone (409) 838-6631
1-8474 LOUISIANA POWER & LIGHT COMPANY 72-0245590
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
0-320 MISSISSIPPI POWER & LIGHT COMPANY 64-0205830
(a Mississippi corporation)
308 East Pearl Street
Jackson, Mississippi 39201
Telephone (601) 969-2311
0-5807 NEW ORLEANS PUBLIC SERVICE INC. 72-0273040
(a Louisiana corporation)
639 Loyola Avenue
New Orleans, Louisiana 70112
Telephone (504) 569-4000
1-9067 SYSTEM ENERGY RESOURCES, INC. 72-0752777
(an Arkansas corporation)
Echelon One
1340 Echelon Parkway
Jackson, Mississippi 39213
Telephone (601) 368-5000
Indicate by check mark whether the registrants (1) have
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrants were
required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.
Yes X No
Common Stock Outstanding Outstanding at October 31, 1994
Entergy Corporation ($0.01 par value) 227,378,729
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
September 30, 1994
Page
Number
Definitions 1
Financial Statements:
Entergy Corporation and Subsidiaries:
Consolidated Balance Sheets 4
Statements of Consolidated Income 6
Statements of Consolidated Cash Flows 7
Selected Operating Results 9
Arkansas Power & Light Company:
Balance Sheets 10
Statements of Income 12
Statements of Cash Flows 13
Selected Operating Results 14
Gulf States Utilities Company:
Balance Sheets 15
Statements of Income 17
Statements of Cash Flows 18
Selected Operating Results 19
Louisiana Power & Light Company:
Balance Sheets 20
Statements of Income 22
Statements of Cash Flows 23
Selected Operating Results 24
Mississippi Power & Light Company:
Balance Sheets 25
Statements of Income 27
Statements of Cash Flows 28
Selected Operating Results 29
New Orleans Public Service Inc.:
Balance Sheets 30
Statements of Income 32
Statements of Cash Flows 33
Selected Operating Results 34
System Energy Resources, Inc.:
Balance Sheets 35
Statements of Income 37
Statements of Cash Flows 38
Notes to Financial Statements 39
Management's Financial Discussion and Analysis 58
Part II:
Item 1. Legal Proceedings 74
Item 5. Other Information 78
Item 6. Exhibits and Reports on Form 8-K 81
Experts 83
Signature 84
This combined Form 10-Q is separately filed by Entergy
Corporation, Arkansas Power & Light Company, Gulf States
Utilities Company, Louisiana Power & Light Company, Mississippi
Power & Light Company, New Orleans Public Service Inc., and
System Energy Resources, Inc. Information contained herein
relating to any individual company is filed by such company on
its own behalf. Each company makes no representation as to
information relating to the other companies. This combined Form
10-Q supplements and updates the Form 10-K for the calendar year
ended December 31, 1993, and the Forms 10-Q for the quarters
ended March 31, 1994 and June 30, 1994, filed by the individual
registrants with the SEC, and should be read in conjunction
therewith.
DEFINITIONS
Certain abbreviations or acronyms used in the text are defined
below:
Abbreviation or Acronym Term
ALJ Administrative Law Judge
ANO Arkansas Nuclear One Steam Electric
Generating Station
ANO 2 Unit No. 2 of ANO
AP&L Arkansas Power & Light Company
APSC Arkansas Public Service Commission
Availability Agreement Agreement, dated as of June 21, 1974,
as amended, among System Energy and
AP&L, LP&L, MP&L, and NOPSI, and the
assignments thereof
Capital Funds Agreement Agreement, dated as of June 21, 1974,
as amended, between System Energy and
Entergy Corporation, and the assignments
thereof
CCLM Customer-Controlled Load Management (a
DSM activity utilizing residential time-
of-use rates)
City of New Orleans
or City New Orleans, Louisiana
Council Council of the City of New Orleans,
Louisiana
D.C. Circuit United States Court of Appeals for the
District of Columbia Circuit
DSM Demand-Side Management (Least Cost Plan
activities that influence electricity
usage by customers)
Entergy Corporation Entergy Corporation, a Delaware
corporation, successor to Entergy
Corporation, a Florida Corporation
Entergy Operations Entergy Operations, Inc., a subsidiary
of Entergy Corporation that has
operating responsibility for ANO, Grand
Gulf 1, River Bend, and Waterford 3
Entergy or System Entergy Corporation and its various
direct and indirect subsidiaries
Entergy Power Entergy Power, Inc., a subsidiary of
Entergy Corporation that markets
capacity and energy from certain
generating facilities to other parties,
principally non-affiliates, for resale
Entergy Services Entergy Services, Inc.
FERC Federal Energy Regulatory Commission
First Quarter Form 10-Q The combined Quarterly Report on Form
10-Q for the quarter ended March 31,
1994, of Entergy, AP&L, GSU, LP&L, MP&L,
NOPSI, and System Energy
Form 10-K The combined Annual Report on Form 10-K
for the year ended December 31, 1993, of
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI,
and System Energy
G&R Bonds General and Refunding Mortgage Bonds
issued and issuable by MP&L and NOPSI
Grand Gulf Station Grand Gulf Steam Electric Generating
Station
Grand Gulf 1 Unit No. 1 of the Grand Gulf Station
GSU Gulf States Utilities Company
KWH Kilowatt-Hour(s)
Least Cost Plan Least Cost Integrated Resource Plan
(combination of demand- and supply-side
resources to be used by Entergy to
satisfy electricity demand)
LP&L Louisiana Power & Light Company
LPSC Louisiana Public Service Commission
Merger The combination transaction,
consummated on December 31, 1993, by
which GSU became a subsidiary of Entergy
Corporation and Entergy Corporation
became a Delaware Corporation
Money Pool System Money Pool, which allows certain
System companies to borrow from, or lend
to, certain other System companies
MP&L Mississippi Power & Light Company
MPSC Mississippi Public Service Commission
1991 NOPSI Settlement Agreement, retroactive to October 4,
1991, among NOPSI, the Council and the
Alliance for Affordable Energy, Inc.
that settled certain Grand Gulf 1
prudence issues and pending litigation
related to a resolution adopted by the
Council disallowing the recovery by
NOPSI of $135 million of previously
deferred Grand Gulf 1-related costs
NOPSI New Orleans Public Service Inc.
NRC Nuclear Regulatory Commission
Owner Participant A corporation that, in connection with
the Waterford 3 sale and leaseback
transactions, has acquired a beneficial
interest in a trust, the Owner Trustee
of which is the owner and lessor of
undivided interests in Waterford 3
Owner Trustee Each institution and/or individual
acting as Owner Trustee under a trust
agreement with an Owner Participant in
connection with the Waterford 3 sale
and leaseback transactions
PUCT Public Utility Commission of Texas
Rate Cap The level of GSU's retail electric base
rates in effect at December 31, 1993 for
the Louisiana retail jurisdiction, and
the level in effect prior to the Texas
Cities Rate Settlement for the Texas
retail jurisdiction, which may not be
exceeded for the five years following
December 31, 1993
Reallocation Agreement 1981 Agreement, superseded in part by a
June 13, 1985 decision of the FERC,
among AP&L, LP&L, MP&L, NOPSI, and
System Energy, relating to the sale of
capacity and energy from the Grand Gulf
Station
River Bend River Bend Steam Electric Generating
Station, owned 70% by GSU
Revised Plan MP&L's Grand Gulf 1-related rate phase-
in plan, originally approved by the MPSC
in an order issued on September 16,
1985, as modified by the MPSC order
issued September 29, 1988, to bring such
plan into compliance with the
requirements of SFAS No. 92
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting
Standards as promulgated by the
Financial Accounting Standards Board
SFAS 109 SFAS No. 109, "Accounting for Income
Taxes"
Second Quarter Form 10-Q The combined Quarterly Report on Form
10-Q for the quarter ended June 30,
1994, of Entergy, AP&L, GSU, LP&L, MP&L,
NOPSI, and System Energy
System Agreement Agreement, effective January 1, 1983,
as subsequently modified by decisions of
the FERC, among the System operating
companies relating to the sharing of
generating capacity and other power
resources
System Energy System Energy Resources, Inc.
System Fuels System Fuels, Inc.
System operating
companies AP&L, GSU, LP&L, MP&L, and NOPSI,
collectively
System or Entergy Entergy Corporation and its various
direct and indirect subsidiaries
Unit Power Sales
Agreement Agreement, dated as of June 10,
1982, as amended, among AP&L, LP&L,
MP&L, NOPSI, and System Energy, relating
to the sale of capacity and energy from
System Energy's share of Grand Gulf 1
Waterford 3 Unit No. 3 of the Waterford Steam
Electric Generating Station
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $21,323,257 $20,848,844
Plant acquisition adjustment - GSU 424,540 380,117
Electric plant under leases 665,579 663,024
Property under capital leases - electric 167,304 175,276
Natural gas 161,811 156,452
Steam products 75,922 75,689
Construction work in progress 442,780 533,112
Nuclear fuel under capital leases 289,775 329,433
Nuclear fuel 44,101 17,760
----------- -----------
Total 23,595,069 23,179,707
Less - accumulated depreciation and amortization 7,563,520 7,157,981
----------- -----------
Utility plant - net 16,031,549 16,021,726
----------- -----------
Other Property and Investments:
Decommissioning trust funds 208,362 172,960
Other 192,915 183,597
----------- -----------
Total 401,277 356,557
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 118,682 27,345
Temporary cash investments - at cost,
which approximates market 565,346 536,404
----------- -----------
Total cash and cash equivalents 684,028 563,749
Special deposits 9,854 36,612
Notes receivable 15,795 17,710
Accounts receivable:
Customer (less allowance for doubtful accounts of
$6.7 million in 1994 and $8.8 million in 1993) 400,106 315,796
Other 68,513 81,931
Accrued unbilled revenues 285,842 257,321
Fuel inventory 86,294 110,204
Materials and supplies - at average cost 360,663 360,353
Rate deferrals 363,747 333,311
Prepayments and other 96,655 98,144
----------- -----------
Total 2,371,497 2,175,131
----------- -----------
Deferred Debits and Other Assets:
Rate deferrals 1,545,303 1,876,051
SFAS 109 regulatory asset - net 1,390,075 1,385,824
Long-term receivables 244,790 228,030
Unamortized loss on reacquired debt 237,598 210,698
Other 592,310 622,680
----------- -----------
Total 4,010,076 4,323,283
----------- -----------
TOTAL $22,814,399 $22,876,697
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value, authorized 500,000,000
shares; issued 229,989,737 shares in 1994 and
231,219,737 shares in 1993 $2,300 $2,312
Paid-in capital 4,201,981 4,223,682
Retained earnings 2,345,156 2,310,082
Less - treasury stock (2,611,158 shares in 1994) 77,440 -
----------- -----------
Total common shareholders' equity 6,471,997 6,536,076
Preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 550,955 550,955
With sinking fund 305,183 349,053
Long-term debt 7,288,021 7,355,962
----------- -----------
Total 14,766,156 14,942,046
----------- -----------
Other Noncurrent Liabilities:
Obligations under capital leases 266,457 322,867
Other 296,551 296,876
----------- -----------
Total 563,008 619,743
----------- -----------
Current Liabilities:
Currently maturing long-term debt 353,930 322,010
Notes payable 106,866 43,667
Accounts payable 373,245 413,727
Customer deposits 133,864 127,524
Taxes accrued 230,890 118,267
Accumulated deferred income taxes 52,666 44,637
Interest accrued 196,616 210,894
Dividends declared 13,858 13,404
Deferred revenue - gas supplier judgment proceeds - 14,632
Deferred fuel cost 9,915 4,528
Obligations under capital leases 190,301 194,015
Other 235,411 233,009
----------- -----------
Total 1,897,562 1,740,314
----------- -----------
Deferred Credits:
Accumulated deferred income taxes 3,812,618 3,849,439
Accumulated deferred investment tax credits 762,513 802,273
Other 1,012,542 922,882
----------- -----------
Total 5,587,673 5,574,594
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $22,814,399 $22,876,697
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands, Except Share Data)
Operating Revenues:
Electric $1,776,982 $1,397,007 $4,668,907 $3,345,757
Natural gas 17,107 13,944 93,952 61,708
Steam products 11,435 - 35,002 -
---------- ---------- ---------- ----------
Total 1,805,524 1,410,951 4,797,861 3,407,465
---------- ---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 430,718 305,928 1,103,157 664,824
Purchased power 72,169 72,679 306,798 208,212
Nuclear refueling outage expenses 14,960 12,079 46,949 42,764
Operation and maintenance 469,681 257,438 1,172,916 735,938
Depreciation and decommissioning 166,387 110,676 488,052 329,898
Taxes other than income taxes 71,446 48,599 214,365 145,643
Income taxes 130,795 150,033 254,101 252,744
Rate deferrals
Rate deferrals - (25) - (1,651)
Amortization of rate deferrals 112,757 93,606 295,107 215,838
---------- ---------- ---------- ----------
Total 1,468,913 1,051,013 3,881,445 2,594,210
---------- ---------- ---------- ----------
Operating Income 336,611 359,938 916,416 813,255
---------- ---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,603 1,451 9,273 5,777
Miscellaneous - net (2,900) 13,894 14,991 43,928
Income taxes (2,859) (1,194) (14,239) (16,411)
---------- ---------- ---------- ----------
Total (3,156) 14,151 10,025 33,294
---------- ---------- ---------- ----------
Interest Charges:
Interest on long-term debt 160,928 121,503 480,189 368,332
Other interest - net 11,250 6,125 33,705 17,624
Allowance for borrowed funds used
during construction (2,228) (953) (7,397) (3,974)
Preferred dividend requirements of
subsidiaries and other 20,306 13,984 61,674 42,964
---------- ---------- ---------- ----------
Total 190,256 140,659 568,171 424,946
---------- ---------- ---------- ----------
Income before Cumulative Effect of
a Change in Accounting Principle 143,199 233,430 358,270 421,603
Cumulative effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $57,188) - - - 93,841
---------- ---------- ---------- ----------
Net Income $143,199 $233,430 $358,270 $515,444
========== ========== ========== ==========
Earnings per average common share
before cumulative effect of a
change in accounting principle $0.63 $1.34 $1.56 $2.41
Earnings per average common share $0.63 $1.34 $1.56 $2.95
Dividends declared per common share $0.45 $0.40 $1.35 $1.20
Average number of common shares
outstanding 227,470,521 174,534,253 229,154,520 174,794,391
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $358,270 $515,444
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (93,841)
Change in rate deferrals/excess capacity-net 307,313 158,287
Depreciation and decommissioning 488,052 329,898
Deferred income taxes and investment tax credits 7,582 16,022
Allowance for equity funds used during construction (9,273) (5,777)
Amortization of deferred revenues (14,632) (32,196)
Changes in working capital:
Receivables (99,413) (148,980)
Fuel inventory 23,910 20,909
Accounts payable (40,482) (55,775)
Taxes accrued 112,623 90,085
Interest accrued (14,278) (13,001)
Other working capital accounts 43,981 (35,784)
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (18,215) (14,903)
Provision for estimated losses and reserves (6,242) 39,741
Other (18,596) 62,330
--------- --------
Net cash flow provided by operating activities 1,120,600 776,432
--------- --------
Investing Activities:
Construction / capital expenditures (481,178) (279,561)
Allowance for equity funds used during construction 9,273 5,777
Nuclear fuel purchases (109,838) (62,170)
Proceeds from sale/leaseback of nuclear fuel 85,178 61,302
Investment in nonregulated/nonutility properties 199 (58,407)
Decrease in other temporary investments - 17,012
--------- --------
Net cash flow used in investing activities (496,366) (316,047)
--------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds 83,944 275,000
General and refunding mortgage bonds - 285,000
Other long-term debt 63,590 80,299
Premium and expense on refinancing sale/leaseback bonds (47,663) -
Retirement of:
First mortgage bonds (103,800) (475,615)
General and refunding mortgage bonds (45,000) (99,400)
Other long-term debt (45,410) (68,563)
Repurchase of common stock (119,486) (20,558)
Redemption of preferred stock (43,860) (44,000)
Common stock dividends paid (309,469) (208,908)
Changes in short-term borrowings 63,199 -
--------- --------
Net cash flow used in financing activities (503,955) (276,745)
--------- --------
Net increase in cash and cash equivalents 120,279 183,640
Cash and cash equivalents at beginning of period 563,749 379,792
--------- --------
Cash and cash equivalents at end of period $684,028 $563,432
========= ========
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $496,933 $388,051
Income taxes $131,607 $101,782
Noncash investing and financing activities:
Capital lease obligations incurred $69,520 $61,302
Excess of fair value of decommissioning trust
assets over amount invested $9,068 -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 726.3 $ 598.5 $ 127.8 21
Commercial 435.8 334.4 101.4 30
Industrial 488.6 333.4 155.2 47
Governmental 42.7 39.4 3.3 8
--------- -------- -------
Total retail 1,693.4 1,305.7 387.7 30
Sales for resale 112.2 91.1 21.1 23
Other (28.6) 0.2 (28.8) *
--------- -------- -------
Total $ 1,777.0 $1,397.0 $ 380.0 27
========= ======== =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 8,848 6,916 1,932 28
Commercial 5,916 4,220 1,696 40
Industrial 10,675 6,592 4,083 62
Governmental 609 540 69 13
--------- -------- --------
Total retail 26,048 18,268 7,780 43
Sales for resale 2,503 2,296 207 9
--------- -------- --------
Total 28,551 20,564 7,987 39
========= ======== ========
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 1,691.3 $1,241.9 $ 449.4 36
Commercial 1,147.2 805.1 342.1 42
Industrial 1,386.2 878.4 507.8 58
Governmental 122.3 101.9 20.4 20
--------- -------- --------
Total retail 4,347.0 3,027.3 1,319.7 44
Sales for resale 272.3 225.3 47.0 21
Other 49.6 93.2 (43.6) (47)
--------- -------- --------
Total $ 4,668.9 $3,345.8 $1,323.1 40
========= ======== ========
Billed Electric Energy
Sales (Millions of KWH):
Residential 20,716 14,788 5,928 40
Commercial 15,135 10,173 4,962 49
Industrial 30,481 18,479 12,002 65
Governmental 1,688 1,414 274 19
--------- -------- --------
Total retail 68,020 44,854 23,166 52
Sales for resale 6,274 6,416 (142) (2)
--------- -------- --------
Total 74,294 51,270 23,024 45
========= ======== ========
Note: On December 31, 1993, GSU became a wholly-owned subsidiary of Entergy
Corporation. In accordance with the purchase method of accounting, the 1993
third quarter and year to date operating results do not include GSU operating
results.
* Decrease greater than 200 percent.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $4,286,317 $4,098,355
Property under capital leases 59,190 62,139
Construction work in progress 111,961 197,005
Nuclear fuel under capital lease 100,060 93,606
---------- ----------
Total 4,557,528 4,451,105
Less - accumulated depreciation and amortization 1,696,801 1,604,318
---------- ----------
Utility plant - net 2,860,727 2,846,787
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,232 11,232
Decommissioning trust fund 130,514 108,192
Other - at cost (less accumulated depreciation) 4,545 4,257
---------- ----------
Total 146,291 123,681
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 18,663 1,825
Temporary cash investments - at cost,
which approximates market:
Associated companies 4,904 -
Other 27,993 -
---------- ----------
Total cash and cash equivalents 51,560 1,825
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.0 million in 1994 and $2.1 million in 1993) 81,652 65,641
Associated companies 30,441 18,312
Other 12,478 20,817
Accrued unbilled revenues 102,240 83,378
Fuel inventory - at average cost 25,015 51,920
Materials and supplies - at average cost 79,650 81,398
Rate deferrals 108,113 92,592
Deferred excess capacity 9,062 9,115
Prepayments and other 20,222 28,303
---------- ----------
Total 520,433 453,301
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 389,260 475,387
Deferred excess capacity 21,517 28,465
SFAS 109 regulatory asset - net 211,835 234,015
Unamortized loss on reacquired debt 58,176 60,169
Other 116,448 112,300
---------- ----------
Total 797,236 910,336
---------- ----------
TOTAL $4,324,687 $4,334,105
========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $0.01 par value, authorized
325,000,000 shares; issued and outstanding
46,980,196 shares in 1994 and 1993 $470 $470
Paid-in capital 590,844 590,844
Retained earnings 464,062 448,811
---------- ----------
Total common shareholder's equity 1,055,376 1,040,125
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 61,027 70,027
Long-term debt 1,293,886 1,313,315
---------- ----------
Total 2,586,639 2,599,817
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 97,976 94,861
Other 70,664 66,879
---------- ----------
Total 168,640 161,740
---------- ----------
Current Liabilities:
Currently maturing long-term debt 28,020 3,020
Notes payable:
Associated companies - 21,395
Other 34,667 667
Accounts payable:
Associated companies 38,010 45,177
Other 98,088 93,611
Customer deposits 16,839 15,241
Taxes accrued 86,239 43,013
Accumulated deferred income taxes 36,537 32,367
Interest accrued 31,870 31,410
Dividends declared 4,780 5,049
Co-owner advances 22,402 39,435
Deferred fuel cost 19,840 16,130
Nuclear refueling reserve 30,347 30,677
Obligations under capital leases 61,274 60,883
Other 25,446 25,730
---------- ----------
Total 534,359 463,805
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 816,232 876,618
Accumulated deferred investment tax credits 145,946 154,723
Other 72,871 77,402
---------- ----------
Total 1,035,049 1,108,743
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,324,687 $4,334,105
========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues $470,770 $519,822 $1,256,762 $1,250,213
-------- -------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 74,050 80,284 205,283 197,559
Purchased power 80,326 90,653 264,935 265,084
Nuclear refueling outage expenses 8,059 5,279 25,532 26,011
Other operation and maintenance 118,413 95,052 288,311 272,550
Depreciation and decommissioning 38,671 34,601 110,929 101,156
Taxes other than income taxes 7,961 6,750 25,584 20,491
Income taxes 30,569 40,680 45,487 45,226
Amortization of rate deferrals 56,558 65,039 130,283 130,359
-------- -------- ---------- ----------
Total 414,607 418,338 1,096,344 1,058,436
-------- -------- ---------- ----------
Operating Income 56,163 101,484 160,418 191,777
-------- -------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 894 383 2,944 2,695
Miscellaneous - net 10,785 14,662 35,346 44,739
Income taxes (4,250) (6,838) (13,934) (24,233)
-------- -------- ---------- ----------
Total 7,429 8,207 24,356 23,201
-------- -------- ---------- ----------
Interest Charges:
Interest on long-term debt 25,464 27,171 75,842 81,607
Other interest - net 2,410 1,080 6,730 3,097
Allowance for borrowed funds used
during construction (912) (237) (2,579) (1,869)
-------- -------- ---------- ----------
Total 26,962 28,014 79,993 82,835
-------- -------- ---------- ----------
Income before Cumulative Effect of
a Change in Accounting Principle 36,630 81,677 104,781 132,143
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $31,140) - - - 50,187
-------- -------- ---------- ----------
Net Income 36,630 81,677 104,781 182,330
Preferred Stock Dividend Requirements
and Other 4,781 5,267 14,530 15,828
-------- -------- ---------- ----------
Earnings Applicable to Common Stock $31,849 $76,410 $90,251 $166,502
======== ======== ========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $104,781 $182,330
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (50,187)
Change in rate deferrals/excess capacity-net 77,607 65,517
Depreciation and decommissioning 110,929 101,156
Deferred income taxes and investment tax credits (42,973) (25,214)
Allowance for equity funds used during construction (2,944) (2,695)
Changes in working capital:
Receivables (38,663) (22,383)
Fuel inventory 26,905 24,812
Accounts payable (2,690) 2,100
Taxes accrued 43,226 24,449
Interest accrued 460 (395)
Other working capital accounts 586 (15,615)
Decommissioning trust contributions (8,525) (8,224)
Provision for estimated losses and reserves 5,206 8,862
Other (17,073) (15,022)
--------- --------
Net cash flow provided by operating activities 256,832 269,491
--------- --------
Investing Activities:
Construction expenditures (122,279) (108,063)
Allowance for equity funds used during construction 2,944 2,695
Nuclear fuel purchases (33,477) (29,072)
Proceeds from sale/leaseback of nuclear fuel 33,477 29,072
--------- --------
Net cash flow used in investing activities (119,335) (105,368)
--------- --------
Financing Activities:
Proceeds from issuance of:
First mortgage bonds - 115,000
Other long-term debt 27,992 47,299
Retirement of:
First mortgage bonds (800) (135,889)
Other long-term debt (28,761) (46,350)
Redemption of preferred stock (9,000) (9,000)
Changes in short-term borrowings 12,605 (4,000)
Dividends paid:
Common stock (75,000) (37,700)
Preferred stock (14,798) (16,095)
--------- --------
Net cash flow provided by financing activities (87,762) (86,735)
--------- --------
Net increase in cash and cash equivalents 49,735 77,388
Cash and cash equivalents at beginning of period 1,825 -
--------- --------
Cash and cash equivalents at end of period $51,560 $77,388
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $73,515 $79,265
Income taxes $54,117 $54,293
Noncash investing and financing activities:
Capital lease obligations incurred $41,122 $29,072
Excess of fair value of decommissioning trust
assets over amount invested $8,872 -
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 170.5 $ 197.9 ($27.4) (14)
Commercial 95.2 103.0 (7.8) (8)
Industrial 100.5 107.1 (6.6) (6)
Governmental 4.7 5.0 (0.3) (6)
------- ------- ------
Total retail 370.9 413.0 (42.1) (10)
Sales for resale 99.9 96.9 3.0 3
Other 0.0 9.9 (9.9) (100)
------- ------- ------
Total $ 470.8 $ 519.8 ($49.0) (9)
======= ======= ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,802 2,041 (239) (12)
Commercial 1,260 1,329 (69) (5)
Industrial 1,587 1,605 (18) (1)
Governmental 63 68 (5) (7)
------- ------- ------
Total retail 4,712 5,043 (331) (7)
Sales for resale 3,711 2,980 731 25
------- ------- ------
Total 8,423 8,023 400 5
======= ======= ======
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 402.1 $ 420.5 ($ 18.4) (4)
Commercial 236.3 236.1 0.2 -
Industrial 253.9 253.1 0.8 -
Governmental 12.9 12.8 0.1 1
-------- -------- ------
Total retail 905.2 922.5 (17.3) (2)
Sales for resale 313.7 291.8 21.9 8
Other 37.9 35.9 2.0 6
-------- -------- ------
Total $1,256.8 $1,250.2 $ 6.6 1
======== ======== ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 4,381 4,517 (136) (3)
Commercial 3,177 3,136 41 1
Industrial 4,392 4,247 145 3
Governmental 178 177 1 1
------- ------- ------
Total retail 12,128 12,077 51 -
Sales for resale 12,218 10,895 1,323 12
------- ------- ------
Total 24,346 22,972 1,374 6
======= ======= ======
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $6,879,066 $6,825,989
Natural gas 43,556 42,786
Steam products 75,922 75,689
Property under capital leases 84,142 86,039
Construction work in progress 94,476 50,080
Nuclear fuel under capital leases 81,464 94,828
---------- ----------
Total 7,258,626 7,175,411
Less - accumulated depreciation and amortization 2,458,358 2,323,804
---------- ----------
Utility plant - net 4,800,268 4,851,607
---------- ----------
Other Property and Investments:
Decommissioning trust fund 20,712 17,873
Other - at cost (less accumulated depreciation) 29,738 29,360
---------- ----------
Total 50,450 47,233
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 18,748 3,012
Temporary cash investments - at cost,
which approximates market:
Associated companies 13,515 -
Other 89,809 258,337
---------- ----------
Total cash and cash equivalents 122,072 261,349
Accounts receivable:
Customer (less allowance for doubtful accounts
of $0.7 million in 1994 and $2.4 million in 1993) 145,636 117,369
Associated companies 11,651 -
Other 19,855 18,371
Accrued unbilled revenues 42,051 32,572
Deferred fuel costs 18,930 5,883
Accumulated deferred income taxes 29,064 28,425
Fuel inventory 27,198 23,448
Materials and supplies - at average cost 89,234 86,831
Rate deferrals 97,850 90,775
Prepayments and other 21,404 20,523
---------- ----------
Total 624,945 685,546
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 532,532 638,015
SFAS 109 regulatory asset - net 427,634 432,411
Long-term receivables 239,327 218,079
Unamortized loss on reacquired debt 65,802 70,970
Other 189,723 193,490
---------- ----------
Total 1,455,018 1,552,965
---------- ----------
TOTAL $6,930,681 $7,137,351
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares in 1994 and 1993 $114,055 $114,055
Paid-in capital 1,152,344 1,152,304
Retained earnings 367,323 666,401
---------- ----------
Total common shareholder's equity 1,633,722 1,932,760
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 96,143 101,004
Long-term debt 2,318,375 2,368,639
---------- ----------
Total 4,334,684 4,688,847
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 129,021 152,359
Other 66,214 65,259
---------- ----------
Total 195,235 217,618
---------- ----------
Current Liabilities:
Currently maturing long-term debt 50,425 425
Accounts payable:
Associated companies 37,221 2,745
Other 98,236 109,840
Customer deposits 22,916 21,958
Taxes accrued 37,435 22,856
Interest accrued 63,308 59,516
Nuclear refueling reserve 8,425 22,356
Obligations under capital leases 37,720 41,713
Other 114,283 97,741
---------- ----------
Total 469,969 379,150
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,259,262 1,222,999
Accumulated deferred investment tax credits 91,090 94,455
Deferred River Bend finance charges 88,495 106,765
Other 491,946 427,517
---------- ----------
Total 1,930,793 1,851,736
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $6,930,681 $7,137,351
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues:
Electric $530,209 $559,296 $1,371,328 $1,364,027
Natural gas 3,887 4,818 25,714 23,349
Steam products 11,435 10,493 35,002 33,632
-------- -------- ---------- ----------
Total 545,531 574,607 1,432,044 1,421,008
-------- -------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses and
gas purchased for resale 154,881 185,138 393,240 430,452
Purchased power 44,330 27,294 159,389 101,600
Nuclear refueling outage expenses 2,707 3,360 7,747 10,080
Other operation and maintenance 171,054 103,401 376,616 293,403
Depreciation and decommissioning 48,786 47,276 145,862 141,830
Taxes other than income taxes 24,623 24,322 58,633 72,869
Income taxes 17,458 50,359 34,210 55,656
Amortization of rate deferrals 16,839 15,425 49,576 45,689
-------- -------- ---------- ----------
Total 480,678 456,575 1,225,273 1,151,579
-------- -------- ---------- ----------
Operating Income 64,853 118,032 206,771 269,429
-------- -------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 417 126 1,056 383
Miscellaneous - net (78,886) 5,786 (70,653) 14,978
Income taxes 31,590 (1,678) 27,407 (9,572)
-------- -------- ---------- ----------
Total (46,879) 4,234 (42,190) 5,789
-------- -------- ---------- ----------
Interest Charges:
Interest on long-term debt 48,804 50,925 146,554 153,538
Other interest - net 1,172 1,335 6,409 5,924
Allowance for borrowed funds used
during construction (340) (149) (847) (472)
-------- -------- ---------- ----------
Total 49,636 52,111 152,116 158,990
-------- -------- ---------- ----------
Income (Loss) before Extraordinary Items and
the Cumulative Effect of Accounting Changes (31,662) 70,155 12,465 116,228
Extraordinary Items (net of income taxes) - (974) - (1,259)
Cumulative Effect to January 1, 1993,
of Accruing Unbilled Revenues (net
of income taxes of $ 6,940) - - - 10,660
-------- -------- ---------- ----------
Net Income (Loss) (31,662) 69,181 12,465 125,629
Preferred and Preference Stock
Dividend Requirements and Other 7,506 7,921 22,442 28,118
-------- -------- ---------- ----------
Earnings (Loss) Applicable to Common Stock ($39,168) $61,260 ($9,977) $97,511
======== ======== ========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $12,465 $125,629
Noncash items included in net income:
Extraordinary items - 1,259
Cumulative effect of a change in accounting principle - (10,660)
Change in rate deferrals 80,138 45,689
Depreciation and decommissioning 145,862 141,830
Deferred income taxes and investment tax credits 16,257 53,452
Allowance for equity funds used during construction (1,056) (383)
Changes in working capital:
Receivables (50,881) (35,524)
Fuel inventory (3,750) 4,468
Accounts payable 22,872 (2,336)
Taxes accrued 14,579 38,151
Interest accrued 3,792 3,878
Other working capital accounts 15,330 (15,214)
Decommissioning trust contributions (2,217) (2,217)
Purchased power settlement - (169,300)
Other 24,946 (5,491)
--------- --------
Net cash flow provided by operating activities 278,337 173,231
--------- --------
Investing Activities:
Construction expenditures (101,952) (82,454)
Allowance for equity funds used during construction 1,056 383
Nuclear fuel purchases (25,205) (2,118)
Proceeds from sale/leaseback of nuclear fuel 25,205 2,118
Refund of escrow account and other property - 6,710
--------- --------
Net cash flow used in investing activities (100,896) (75,361)
--------- --------
Financing Activities:
Proceeds from the issuance of:
Preference stock - 146,625
First mortgage bonds - 338,379
Other long-term debt - 21,440
Retirement of:
First mortgage bonds - (360,200)
Other long-term debt (425) (18,398)
Redemption of preferred and preference stock (4,850) (172,408)
Dividends paid:
Common stock (289,100) -
Preferred and preference stock (22,343) (28,525)
--------- --------
Net cash flow used in financing activities (316,718) (73,087)
--------- --------
Net increase (decrease) in cash and cash equivalents (139,277) 24,783
Cash and cash equivalents at beginning of period 261,349 197,741
--------- --------
Cash and cash equivalents at end of period $122,072 $222,524
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $136,957 $143,875
Income taxes $137 -
Noncash investing and financing activities:
Capital lease obligations incurred $18,721 $2,302
Deficiency of fair value of decommissioning
trust assets over amount invested ($200) -
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 192.2 $ 218.4 ($ 26.2) (12)
Commercial 115.6 126.4 (10.8) (9)
Industrial 162.8 174.4 (11.6) (7)
Governmental 6.4 6.9 (0.5) (7)
------- ------- -------
Total retail 477.0 526.1 (49.1) (9)
Sales for resale 36.3 10.9 25.4 233
Other 16.9 22.3 (5.4) (24)
------- ------- -------
Total Electric Department $ 530.2 $ 559.3 ($ 29.1) (5)
======= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 2,502 2,639 (137) (5)
Commercial 1,743 1,756 (13) (1)
Industrial 3,851 3,736 115 3
Governmental 77 78 (1) (1)
------- ------- -------
Total retail 8,173 8,209 (36) -
Sales for resale 1,340 249 1,091 438
------- ------- -------
Total Electric Department 9,513 8,458 1,055 12
Steam Department 426 418 8 2
------- ------- -------
Total 9,939 8,876 1,063 12
======= ======= =======
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 448.7 $ 464.5 ($ 15.8) (3)
Commercial 312.7 318.6 (5.9) (2)
Industrial 475.7 494.6 (18.9) (4)
Governmental 19.1 20.1 (1.0) (5)
-------- -------- -------
Total retail 1,256.2 1,297.8 (41.6) (3)
Sales for resale 75.1 24.3 50.8 209
Other 40.0 41.9 (1.9) (5)
-------- -------- -------
Total Electric Department $1,371.3 $1,364.0 $ 7.3 1
======== ======== =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 5,775 5,589 186 3
Commercial 4,512 4,332 180 4
Industrial 11,237 10,758 479 4
Governmental 225 224 1 -
-------- -------- -------
Total retail 21,749 20,903 846 4
Sales for resale 2,590 510 2,080 408
-------- -------- -------
Total Electric Department 24,339 21,413 2,926 14
Steam Department 1,257 1,210 47 4
-------- -------- -------
Total 25,596 22,623 2,973 13
======== ======== =======
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $4,754,371 $4,646,020
Electric plant under lease 226,395 225,083
Construction work in progress 100,690 133,536
Nuclear fuel under capital lease 52,413 61,375
Nuclear fuel 5,065 3,823
---------- ----------
Total 5,138,934 5,069,837
Less - accumulated depreciation and amortization 1,575,308 1,496,107
---------- ----------
Utility plant - net 3,563,626 3,573,730
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 26,802 22,109
Investment in subsidiary company - at equity 14,230 14,230
Other 1,032 984
---------- ----------
Total 62,124 57,383
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 13,157 -
Temporary cash investments - at cost,
which approximates market:
Associated companies 4,815 -
Other 55,835 33,489
---------- ----------
Total cash and cash equivalents 73,807 33,489
Special deposits 4,683 19,077
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.2 million in 1994 and of $1.1 million in 1993) 82,159 66,575
Associated companies 4,319 2,952
Other 11,444 10,656
Accrued unbilled revenues 71,768 64,314
Accumulated deferred income taxes 2,510 6,031
Materials and supplies - at average cost 87,108 87,204
Rate deferrals 28,422 28,422
Prepayments and other 29,080 16,510
---------- ----------
Total 395,300 335,230
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 32,368 54,031
SFAS 109 regulatory asset - net 357,214 349,703
Unamortized loss on reacquired debt 44,705 47,853
Other 48,140 46,068
---------- ----------
Total 482,427 497,655
---------- ----------
TOTAL $4,503,477 $4,463,998
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
250,000,000 shares; issued and outstanding
165,173,180 shares in 1994 and 1993 $1,088,900 $1,088,900
Capital stock expense and other (5,529) (6,109)
Retained earnings 134,409 89,849
---------- ----------
Total common shareholder's equity 1,217,780 1,172,640
Preferred stock:
Without sinking fund 160,500 160,500
With sinking fund 112,793 126,302
Long-term debt 1,477,964 1,457,626
---------- ----------
Total 2,969,037 2,917,068
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 18,546 27,508
Other 48,480 28,909
---------- ----------
Total 67,026 56,417
---------- ----------
Current Liabilities:
Currently maturing long-term debt 320 25,315
Notes payable:
Associated companies - 52,041
Other 19,200 -
Accounts payable:
Associated companies 29,141 33,523
Other 56,260 76,284
Customer deposits 54,457 52,234
Taxes accrued 54,977 15,110
Interest accrued 37,365 42,141
Dividends declared 5,523 5,938
Deferred revenue - gas supplier judgment proceeds - 14,632
Deferred fuel cost 11,644 605
Obligations under capital leases 33,867 33,867
Other 12,528 9,741
---------- ----------
Total 315,282 361,431
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 870,810 834,899
Accumulated deferred investment tax credits 183,698 188,843
Deferred interest - Waterford 3 lease obligation 25,844 25,372
Other 71,780 79,968
---------- ----------
Total 1,152,132 1,129,082
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,503,477 $4,463,998
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues $502,458 $545,487 $1,327,927 $1,302,913
-------- -------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 113,688 120,692 257,314 233,279
Purchased power 83,942 99,256 289,279 289,488
Nuclear refueling outage expenses 4,195 4,591 13,671 13,789
Other operation and maintenance 100,800 86,306 260,575 244,857
Depreciation and decommissioning 38,499 35,537 113,342 106,446
Taxes other than income taxes 14,377 11,823 42,733 35,707
Income taxes 39,015 54,375 80,171 96,547
Amortization of rate deferrals 8,118 8,118 21,664 21,664
-------- -------- ---------- ----------
Total 402,634 420,698 1,078,749 1,041,777
-------- -------- ---------- ----------
Operating Income 99,824 124,789 249,178 261,136
-------- -------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 766 545 2,855 1,869
Miscellaneous - net (154) 198 287 848
Income taxes 150 361 190 2,601
-------- -------- ---------- ----------
Total 762 1,104 3,332 5,318
-------- -------- ---------- ----------
Interest Charges:
Interest on long-term debt 31,264 30,818 93,561 93,691
Other interest - net 2,839 3,169 8,467 9,077
Allowance for borrowed funds used
during construction (546) (381) (1,996) (1,266)
-------- -------- ---------- ----------
Total 33,557 33,606 100,032 101,502
-------- -------- ---------- ----------
Net Income 67,029 92,287 152,478 164,952
Preferred Stock Dividend Requirements
and Other 5,848 6,069 17,668 18,816
-------- -------- ---------- ----------
Earnings Applicable to Common Stock $61,181 $86,218 $134,810 $146,136
======== ======== ========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $152,478 $164,952
Noncash items included in net income:
Change in rate deferrals 21,664 21,663
Depreciation and decommissioning 113,342 106,446
Deferred income taxes and investment tax credits 31,788 44,430
Allowance for equity funds used during construction (2,855) (1,869)
Amortization of deferred revenues (14,632) (32,196)
Changes in working capital:
Receivables (25,193) (39,410)
Accounts payable (24,406) (30,916)
Taxes accrued 39,867 42,703
Interest accrued (4,776) (4,406)
Other working capital accounts 17,969 (3,862)
Refunds to customers - gas contract settlement - (56,027)
Decommissioning trust contributions (3,796) (3,000)
Other 3,051 16,922
--------- --------
Net cash flow provided by operating activities 304,501 225,430
--------- --------
Investing Activities:
Construction expenditures (107,708) (98,021)
Allowance for equity funds used during construction 2,855 1,869
--------- --------
Net cash flow used in investing activities (104,853) (96,152)
--------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 100,000
Other long-term debt 19,946 33,000
Changes in short-term borrowings (32,841) -
Retirement of:
First mortgage bonds (25,000) (100,919)
Other long-term debt (240) (21,983)
Redemption of preferred stock (13,510) (18,500)
Dividends paid:
Common stock (90,400) (81,400)
Preferred stock (17,285) (19,265)
--------- --------
Net cash flow used in financing activities (159,330) (109,067)
--------- --------
Net increase in cash and cash equivalents 40,318 20,211
Cash and cash equivalents at beginning of period 33,489 22,782
--------- --------
Cash and cash equivalents at end of period $73,807 $42,993
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $100,081 $101,463
Income taxes $32,400 $20,967
Noncash investing and financing activities:
Capital lease obligations incurred $9,677 -
Excess of fair value of decommissioning trust
assets over amount invested $184 -
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 196.4 $ 213.9 ($ 17.5) (8)
Commercial 102.6 105.2 (2.6) (2)
Industrial 170.9 171.8 (0.9) (1)
Governmental 8.4 7.8 0.6 8
------- ------- -------
Total retail 478.3 498.7 (20.4) (4)
Sales for resale 10.4 19.8 (9.4) (47)
Other 13.8 27.0 (13.2) (49)
------- ------- -------
Total $ 502.5 $ 545.5 ($43.0) (8)
======= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 2,493 2,674 (181) (7)
Commercial 1,356 1,370 (14) (1)
Industrial 4,305 4,122 183 4
Governmental 112 103 9 9
------- ------- -------
Total retail 8,266 8,269 (3) -
Sales for resale 275 519 (244) (47)
------- ------- -------
Total 8,541 8,788 (247) (3)
======= ======= =======
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 460.8 $ 440.5 $ 20.3 5
Commercial 275.4 257.1 18.3 7
Industrial 499.9 476.5 23.4 5
Governmental 24.2 21.9 2.3 11
-------- -------- -------
Total retail 1,260.3 1,196.0 64.3 5
Sales for resale 26.1 38.7 (12.6) (33)
Other 41.5 68.2 (26.7) (39)
-------- -------- -------
Total $1,327.9 $1,302.9 $ 25.0 2
======== ======== =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 5,864 5,693 171 3
Commercial 3,502 3,330 172 5
Industrial 12,261 11,856 405 3
Governmental 318 297 21 7
------- ------- -------
Total retail 21,945 21,176 769 4
Sales for resale 620 1,038 (418) (40)
------- ------- -------
Total 22,565 22,214 351 2
======= ======= =======
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $1,460,766 $1,389,229
Construction work in progress 63,444 62,699
---------- ----------
Total 1,524,210 1,451,928
Less - accumulated depreciation and amortization 575,410 577,728
---------- ----------
Utility plant - net 948,800 874,200
---------- ----------
Other Property and Investments:
Investment in subsidiary company - at equity 5,531 5,531
Other 4,754 4,760
---------- ----------
Total 10,285 10,291
---------- ----------
Current Assets:
Cash 9,107 7,999
Notes receivable 6,216 7,118
Accounts receivable:
Customer (less allowance for doubtful accounts of
$2.1 million in 1994 and $2.5 million in 1993) 52,803 33,155
Associated companies 7,348 7,342
Other 3,975 3,672
Accrued unbilled revenues 50,049 57,414
Fuel inventory - at average cost 3,594 8,652
Materials and supplies - at average cost 20,236 20,886
Rate deferrals 99,538 96,935
Prepayments and other 7,268 13,763
---------- ----------
Total 260,134 256,936
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 409,690 504,428
Notes receivable 5,463 9,951
Other 29,196 20,931
---------- ----------
Total 444,349 535,310
---------- ----------
TOTAL $1,663,568 $1,676,737
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
15,000,000 shares; issued and outstanding
8,666,357 shares in 1994 and 1993 $199,326 $199,326
Capital stock expense and other (1,762) (1,864)
Retained earnings 241,330 236,337
---------- ----------
Total common shareholder's equity 438,894 433,799
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 31,770 46,770
Long-term debt 490,187 516,156
---------- ----------
Total 1,018,732 1,054,606
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 589 686
Other 11,377 6,231
---------- ----------
Total 11,966 6,917
---------- ----------
Current Liabilities:
Currently maturing long-term debt 50,965 48,250
Notes payable:
Associated companies - 11,568
Other 30,000 -
Accounts payable:
Associated companies 25,555 29,181
Other 33,296 12,157
Customer deposits 22,290 21,474
Taxes accrued 33,613 24,252
Accumulated deferred income taxes 44,975 41,758
Interest accrued 11,958 23,171
Dividends declared 1,797 1,985
Other 8,843 17,303
---------- ----------
Total 263,292 231,099
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 304,884 311,616
Accumulated deferred investment tax credits 35,818 37,193
SFAS 109 regulatory liability - net 18,851 23,626
Other 10,025 11,680
---------- ----------
Total 369,578 384,115
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,663,568 $1,676,737
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues $234,274 $264,419 $651,481 $673,392
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 53,097 62,435 117,710 103,784
Purchased power 59,155 66,810 182,035 213,493
Other operation and maintenance 41,327 39,018 118,543 111,018
Depreciation and amortization 9,513 8,011 27,270 24,009
Taxes other than income taxes 11,275 10,157 32,011 29,991
Income taxes 11,427 20,504 23,280 35,831
Amortization of rate deferrals 24,805 17,588 74,414 52,765
-------- -------- -------- --------
Total 210,599 224,523 575,263 570,891
-------- -------- -------- --------
Operating Income 23,675 39,896 76,218 102,501
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 365 237 1,386 632
Miscellaneous - net (337) 703 (85) 1,258
Income taxes 129 (274) 32 (481)
-------- -------- -------- --------
Total 157 666 1,333 1,409
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 11,461 13,028 34,657 39,749
Other interest - net 1,751 782 5,025 2,276
Allowance for borrowed funds used
during construction (236) (169) (889) (451)
-------- -------- -------- --------
Total 12,976 13,641 38,793 41,574
-------- -------- -------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 10,856 26,921 38,758 62,336
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $19,456) - - - 32,706
-------- -------- -------- --------
Net Income 10,856 26,921 38,758 95,042
Preferred Stock Dividend Requirements
and Other 1,797 2,216 5,827 6,985
-------- -------- -------- --------
Earnings Applicable to Common Stock $9,059 $24,705 $32,931 $88,057
======== ======== ======== ========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $38,758 $95,042
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (32,706)
Change in rate deferrals 92,135 60,650
Depreciation and amortization 27,270 24,009
Deferred income taxes and investment tax credits (22,092) (16,423)
Allowance for equity funds used during construction (1,386) (632)
Changes in working capital:
Receivables (12,592) (30,788)
Fuel inventory 5,058 2,964
Accounts payable 17,513 (3,320)
Taxes accrued 9,361 17,789
Interest accrued (11,213) (7,664)
Other working capital accounts 428 (5,935)
Other 11,129 6,818
--------- --------
Net cash flow provided by operating activities 154,369 109,804
--------- --------
Investing Activities:
Construction expenditures (100,369) (39,148)
Allowance for equity funds used during construction 1,386 632
--------- --------
Net cash flow used in investing activities (98,983) (38,516)
--------- --------
Financing Activities:
Proceeds from issuance of:
General and refunding bonds 24,534 185,000
Other long-term debt 15,652 -
Retirement of:
First mortgage bonds (18,000) (137,672)
General and refunding bonds (30,000) (55,000)
Other long-term debt (16,045) (230)
Redemption of preferred stock (15,000) (15,000)
Dividends paid:
Common stock (28,000) (34,100)
Preferred stock (5,851) (7,122)
Changes in short-term borrowings 18,432 -
--------- --------
Net cash flow used in financing activities (54,278) (64,124)
--------- --------
Net increase in cash and cash equivalents 1,108 7,164
Cash and cash equivalents at beginning of period 7,999 34,008
--------- --------
Cash and cash equivalents at end of period $9,107 $41,172
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $48,664 $48,211
Income taxes $19,007 $31,169
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 115.7 $ 126.4 ($ 10.7) (8)
Commercial 78.1 78.1 0.0 -
Industrial 47.9 47.7 0.2 -
Governmental 7.4 8.2 (0.8) (10)
------- ------- -------
Total retail 249.1 260.4 (11.3) (4)
Sales for resale 14.1 25.0 (10.9) (44)
Other (28.9) (21.0) (7.9) (38)
------- ------- -------
Total $ 234.3 $ 264.4 ($ 30.1) (11)
======= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,363 1,442 (79) (5)
Commercial 977 928 49 5
Industrial 795 735 60 8
Governmental 90 99 (9) (9)
------- ------- -------
Total retail 3,225 3,204 21 1
Sales for resale 397 724 (327) (45)
------- ------- -------
Total 3,622 3,928 (306) (8)
======= ======= =======
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 266.8 $ 266.6 $ 0.2 -
Commercial 198.4 189.0 9.4 5
Industrial 137.0 130.0 7.0 5
Governmental 21.3 21.4 (0.1) -
------- ------- -------
Total retail 623.5 607.0 16.5 3
Sales for resale 37.7 43.5 (5.8) (13)
Other (9.7) 22.9 (32.6) (142)
------- ------- -------
Total $ 651.5 $ 673.4 ($ 21.9) (3)
======= ======= =======
Billed Electric Energy
Sales (Millions of KWH):
Residential 3,208 3,105 103 3
Commercial 2,409 2,208 201 9
Industrial 2,200 2,009 191 10
Governmental 254 250 4 2
------- ------- -------
Total retail 8,071 7,572 499 7
Sales for resale 970 1,090 (120) (11)
------- ------- -------
Total 9,041 8,662 379 4
======= ======= =======
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $488,098 $476,976
Natural gas 118,256 113,666
Construction work in progress 8,065 15,205
---------- ----------
Total 614,419 605,847
Less - accumulated depreciation and amortization 338,597 330,268
---------- ----------
Utility plant - net 275,822 275,579
---------- ----------
Other Investments:
Investment in subsidiary company - at equity 3,259 3,259
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 2,841 1,176
Temporary cash investments - at cost,
which approximates market:
Associated companies 7,950 10,034
Other 45,385 32,107
---------- ----------
Total cash and cash equivalents 56,176 43,317
Accounts receivable:
Customer (less allowance for doubtful
accounts of $0.8 million in 1994 and 1993) 33,964 35,801
Associated companies 1,346 1,378
Other 697 876
Accrued unbilled revenues 19,734 19,643
Deferred electric fuel and resale gas costs 2,639 6,323
Materials and supplies - at average cost 10,969 11,885
Rate deferrals 29,824 24,587
Prepayments and other 6,140 2,994
---------- ----------
Total 161,489 146,804
---------- ----------
Deferred Debits and Other Assets:
Rate deferrals 181,454 204,190
SFAS 109 regulatory asset - net 9,725 9,004
Other 9,666 8,769
---------- ----------
Total 200,845 221,963
---------- ----------
TOTAL $641,415 $647,605
========== ==========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABLITIES
Capitalization:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares in 1994 and 1993 $33,744 $33,744
Paid-in capital 36,201 36,156
Retained earnings subsequent to the elimination
of the accumulated deficit of $13.9 million on
November 30, 1988 112,507 100,556
---------- ----------
Total common shareholder's equity 182,452 170,456
Preferred stock:
Without sinking fund 19,780 19,780
With sinking fund 3,450 4,950
Long-term debt 164,148 188,312
---------- ----------
Total 369,830 383,498
---------- ----------
Other Noncurrent Liabilities:
Accumulated provision for losses 17,491 18,062
Other 7,864 3,351
---------- ----------
Total 25,355 21,413
---------- ----------
Current Liabilities:
Currently maturing long-term debt 24,200 15,000
Accounts payable:
Associated companies 20,228 23,080
Other 21,145 22,011
Customer deposits 17,362 16,617
Accumulated deferred income taxes 2,728 4,968
Taxes accrued 6,838 5,161
Interest accrued 4,512 5,472
Other 18,644 7,367
---------- ----------
Total 115,657 99,676
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 92,895 105,096
Accumulated deferred investment tax credits 11,034 11,592
Other 26,644 26,330
---------- ----------
Total 130,573 143,018
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $641,415 $647,605
========== ==========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues:
Electric $120,354 $140,666 $306,826 $321,650
Natural gas 13,220 13,944 68,238 61,708
-------- -------- -------- --------
Total 133,574 154,610 375,064 383,358
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses
and gas purchased for resale 23,814 27,158 83,773 73,967
Purchased power 42,999 47,016 115,940 123,479
Other operation and maintenance 23,444 21,242 63,404 63,809
Depreciation and amortization 4,903 4,290 14,356 12,884
Taxes other than income taxes 7,206 7,344 21,137 20,352
Income taxes 8,829 15,076 17,003 23,203
Rate deferrals:
Rate deferrals - (25) - (1,651)
Amortization of rate deferrals 6,438 2,861 19,171 11,050
-------- -------- -------- --------
Total 117,633 124,962 334,784 327,093
-------- -------- -------- --------
Operating Income 15,941 29,648 40,280 56,265
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 60 40 297 74
Miscellaneous - net 499 385 1,483 1,523
Income taxes (192) (156) (901) (140)
-------- -------- -------- --------
Total 367 269 879 1,457
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 3,959 4,707 12,423 15,109
Other interest - net 461 403 1,399 1,143
Allowance for borrowed funds used
during construction (45) (36) (221) (69)
-------- -------- -------- --------
Total 4,375 5,074 13,601 16,183
-------- -------- -------- --------
Income before Cumulative Effect of
a Change in Accounting Principle 11,933 24,843 27,558 41,539
Cumulative Effect to January 1, 1993
of Accruing Unbilled Revenues (net
of income taxes of $6,592) - - - 10,948
-------- -------- -------- --------
Net Income 11,933 24,843 27,558 52,487
Preferred Stock Dividend Requirements
and Other 329 432 1,162 1,335
-------- -------- -------- --------
Earnings Applicable to Common Stock $11,604 $24,411 $26,396 $51,152
======== ======== ======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $27,558 $52,487
Noncash items included in net income:
Cumulative effect of a change in accounting principle - (10,948)
Change in rate deferrals 17,499 10,456
Depreciation and amortization 14,356 12,884
Deferred income taxes and investment tax credits (15,705) 78
Allowance for equity funds used during construction (297) (74)
Net pension expense - 3,260
Changes in working capital:
Receivables 1,957 (15,645)
Accounts payable (3,718) (5,719)
Taxes accrued 1,677 3,594
Interest accrued (960) (898)
Other working capital accounts 13,534 (29,502)
Other 5,050 1,585
--------- --------
Net cash flow provided by operating activities 60,951 21,558
--------- --------
Investing Activities:
Construction expenditures (16,269) (13,320)
Allowance for equity funds used during construction 297 74
--------- --------
Net cash flow used in investing activities (15,972) (13,246)
--------- --------
Financing Activities:
Proceeds from the issuance of general
and refunding bonds - 100,000
Retirement of:
First mortgage bonds - (41,135)
General and refunding bonds (15,000) (44,400)
Redemption of preferred stock (1,500) (1,500)
Dividends paid:
Common stock (14,400) (11,700)
Preferred stock (1,220) (1,393)
--------- --------
Net cash flow used in financing activities (32,120) (128)
--------- --------
Net increase in cash and cash equivalents 12,859 8,184
Cash and cash equivalents at beginning of period 43,317 46,070
--------- --------
Cash and cash equivalents at end of period $56,176 $54,254
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $14,213 $17,372
Income taxes $32,115 $17,954
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
SELECTED OPERATING RESULTS
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 51.4 $ 60.2 ($ 8.8) (15)
Commercial 44.3 48.1 (3.8) (8)
Industrial 6.6 6.8 (0.2) (3)
Governmental 15.8 18.5 (2.7) (15)
------ ------ ------
Total retail 118.1 133.6 (15.5) (12)
Sales for resale 2.2 3.5 (1.3) (37)
Other 0.1 3.6 (3.5) (97)
------ ------ ------
Total $120.4 $140.7 ($20.3) (14)
====== ====== ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 688 759 (71) (9)
Commercial 580 593 (13) (2)
Industrial 138 130 8 6
Governmental 268 270 (2) (1)
------ ------ ------
Total retail 1,674 1,752 (78) (4)
Sales for resale 61 96 (35) (36)
------ ------ ------
Total 1,735 1,848 (113) (6)
====== ====== ======
Nine Months Ended Increase/
Description 1994 1993 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 113.0 $ 114.2 ($ 1.2) (1)
Commercial 124.4 122.9 1.5 1
Industrial 19.7 18.8 0.9 5
Governmental 44.8 45.9 (1.1) (2)
------ ------ ------
Total retail 301.9 301.8 0.1 -
Sales for resale 6.7 9.3 (2.6) (28)
Other (1.8) 10.6 (12.4) (117)
------ ------ ------
Total $306.8 $321.7 ($14.9) (5)
====== ====== ======
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,488 1,473 15 1
Commercial 1,535 1,499 36 2
Industrial 392 367 25 7
Governmental 713 690 23 3
------ ------ ------
Total retail 4,128 4,029 99 2
Sales for resale 191 281 (90) (32)
------ ------ ------
Total 4,319 4,310 9 -
====== ====== ======
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
ASSETS
Utility Plant:
Electric $3,036,792 $3,027,537
Electric plant under lease 439,184 437,941
Construction work in progress 39,472 41,442
Nuclear fuel under capital lease 55,838 79,625
---------- ----------
Total 3,571,286 3,586,545
Less - accumulated depreciation 741,534 669,666
---------- ----------
Utility plant - net 2,829,752 2,916,879
---------- ----------
Other Investments:
Decommissioning trust fund 30,333 24,787
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash - 2,424
Temporary cash investments - at cost,
which approximates market:
Associated companies 32,635 46,601
Other 186,303 147,107
---------- ----------
Total cash and cash equivalents 218,938 196,132
Accounts receivable:
Associated companies 59,750 57,216
Other 3,517 2,057
Materials and supplies - at average cost 70,802 69,765
Recoverable income taxes 53,000 63,400
Prepayments and other 4,297 4,835
---------- ----------
Total 410,304 393,405
---------- ----------
Deferred Debits and Other Assets:
Recoverable income taxes 6,749 29,289
SFAS 109 regulatory asset - net 386,553 384,317
Unamortized loss on reacquired debt 55,647 17,258
Other 133,652 125,131
---------- ----------
Total 582,601 555,995
---------- ----------
TOTAL $3,852,990 $3,891,066
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
1994 1993
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares in 1994 and 1993 $789,350 $789,350
Paid-in capital 7 7
Retained earnings 175,969 228,574
---------- ----------
Total common shareholder's equity 965,326 1,017,931
Long-term debt 1,543,037 1,511,914
---------- ----------
Total 2,508,363 2,529,845
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 838 24,679
Other 18,050 18,229
---------- ----------
Total 18,888 42,908
---------- ----------
Current Liabilities:
Currently maturing long-term debt 200,000 230,000
Accounts payable:
Associated companies 6,071 1,928
Other 22,603 18,223
Taxes accrued 25,722 20,952
Interest accrued 47,472 48,929
Obligations under capital leases 55,000 55,000
Other 1,830 2,805
---------- ----------
Total 358,698 377,837
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 791,276 775,630
Accumulated deferred investment tax credits 111,242 113,849
Other 64,523 50,997
---------- ----------
Total 967,041 940,476
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,852,990 $3,891,066
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
1994 1993 1994 1993
(In Thousands)
Operating Revenues $150,949 $155,071 $450,015 $473,228
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 11,440 10,081 35,661 40,423
Other operation and maintenance 26,829 33,525 74,320 80,880
Depreciation and decommissioning 23,026 22,749 68,993 68,167
Taxes other than income taxes 5,637 6,768 19,155 19,648
Income taxes 18,148 17,956 55,896 58,248
-------- -------- -------- --------
Total 85,080 91,079 254,025 267,366
-------- -------- -------- --------
Operating Income 65,869 63,992 195,990 205,862
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 101 245 735 506
Miscellaneous - net 2,025 1,519 4,641 4,565
Income taxes 569 4,069 (470) 6,359
-------- -------- -------- --------
Total 2,695 5,833 4,906 11,430
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 42,076 45,780 123,950 138,176
Other interest - net 1,732 1,131 6,189 3,337
Allowance for borrowed funds used
during construction (178) (128) (938) (313)
-------- -------- -------- --------
Total 43,630 46,783 129,201 141,200
-------- -------- -------- --------
Net Income $24,934 $23,042 $71,695 $76,092
======== ======== ======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1994 and 1993
(Unaudited)
1994 1993
(In Thousands)
Operating Activities:
Net income $71,695 $76,092
Noncash items included in net income:
Depreciation and decommissioning 68,993 68,167
Deferred income taxes and investment tax credits 16,535 16,375
Allowance for equity funds used during construction (735) (506)
Amortization of debt discount 3,388 3,358
Amortization of loss on reacquired debt 1,750 -
Changes in working capital:
Receivables (3,994) 5,069
Accounts payable 8,469 (8,195)
Taxes accrued 4,770 8,083
Interest accrued (1,457) 324
Other working capital accounts (1,474) (1,410)
Recoverable income taxes 32,940 61,771
Decommissioning trust contributions (3,764) (3,679)
Provision for estimated losses and reserves - 29,403
Other 9,755 (1,438)
--------- --------
Net cash flow provided by operating activities 206,871 253,414
--------- --------
Investing Activities:
Construction expenditures (12,254) (10,646)
Allowance for equity funds used during construction 735 506
Nuclear fuel purchases (54) (32,230)
Proceeds from sale/leaseback of nuclear fuel - 32,230
--------- --------
Net cash flow used in investing activities (11,573) (10,140)
--------- --------
Financing Activities:
Proceeds from the issuance of first mortgage bonds 59,410 60,000
Retirement of first mortgage bonds (60,000) (60,000)
Premium and expenses paid on refinancing sale/leaseback bonds (47,602) -
Common stock dividends paid (124,300) (210,100)
--------- --------
Net cash flow used in financing activities (172,492) (210,100)
--------- --------
Net increase in cash and cash equivalents 22,806 33,174
Cash and cash equivalents at beginning of period 196,132 181,795
--------- --------
Cash and cash equivalents at end of period $218,938 $214,969
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest - net of amount capitalized $125,519 $137,517
Income taxes (refund) ($3,477) ($36,534)
Noncash investing and financing activities:
Capital lease obligations incurred - $32,230
Excess of fair value of decommissioning trust
assets over amount invested $212 -
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend
Entergy Corporation and GSU
GSU has significant business relationships with Cajun Electric
Power Cooperative, Inc. (Cajun), including co-ownership of River
Bend and Big Cajun 2 Unit 3. GSU and Cajun own 70% and 30%
undivided interests in River Bend, respectively, and 42% and 58%
undivided interests in Big Cajun 2 Unit 3, respectively.
In June 1989, Cajun filed a civil action against GSU in the
United States District Court for the Middle District of Louisiana
(District Court). Cajun stated in its complaint that the object
of the suit is to annul, rescind, terminate, and/or dissolve the
Joint Ownership Participation and Operating Agreement entered
into on August 28, 1979 (Operating Agreement) relating to River
Bend. Cajun alleges fraud and error by GSU, breach of its
fiduciary duties owed to Cajun, and/or GSU's repudiation,
renunciation, abandonment, or dissolution of its core obligations
under the Operating Agreement, as well as the lack or failure of
cause and/or consideration for Cajun's performance under the
Operating Agreement. The suit seeks to recover Cajun's alleged
$1.6 billion investment in the unit as damages, plus attorneys'
fees, interest, and costs. Two member cooperatives of Cajun
have brought an independent action to declare the Operating
Agreement void, based upon failure to get prior LPSC approval
alleged to be necessary. GSU believes the suits are without
merit and is contesting them vigorously.
A trial without jury on the portion of the suit by Cajun to
rescind the Operating Agreement began on April 12, 1994, and is
continuing. No assurance can be given as to the outcome of this
litigation. If GSU were ultimately unsuccessful in this
litigation and were required to make substantial payments, GSU
would probably be unable to make such payments and would probably
have to seek relief from its creditors under the Bankruptcy Code.
If GSU prevails in this litigation, no assurance can be provided
that Cajun's weak financial condition will allow funding of all
required costs of Cajun's ownership in River Bend.
During 1992, Cajun notified GSU that it would not fund its
full share of costs related to the fourth refueling outage at
River Bend, completed in September 1992. Cajun has also not
funded its full share of the costs associated with certain
additional repairs and improvements at River Bend completed
during that refueling outage. GSU has paid the costs associated
with such repairs and improvements without waiving any rights
against Cajun. GSU believes that Cajun is obligated to pay its
share of such costs under the terms of the applicable contract.
Cajun has filed a suit seeking a declaration that it does not owe
such funds and seeking injunctive relief against GSU. GSU is
contesting such suit.
In September 1992, GSU received a letter from Cajun alleging
that the operating and maintenance costs for River Bend are "far
in excess of industry averages" and that "it would be imprudent
for Cajun to fund these excessive costs." Cajun further stated
that until it is satisfied it would fund a maximum of $700,000
per week under protest during the remainder of 1992. In a
December 1992 letter, Cajun stated that it would also withhold
costs associated with certain additional repairs, the majority of
which were incurred during the fifth refueling outage completed
in July 1994.
In a letter dated October 21, 1994, and at a subsequent
meeting, Cajun representatives advised Entergy Corporation and
GSU that on October 25, 1994, Cajun would exhaust its 1994 budget
for operating and maintenance expenses for River Bend, and that
it would not make any further payments to GSU in 1994 for River
Bend operating, maintenance or capital costs. Cajun also advised
that it does not expect the Rural Electrification Administration
(which provided funding to Cajun for its investment in River
Bend) to permit it to budget funds in 1995 to pay its share of
operating and maintenance expenses or capital costs for River
Bend. However, Cajun stated that it will continue to fund its
share of the nuclear decommissioning trust payments for River
Bend, as well as insurance and safety-related expenses. GSU
estimates that the unpaid portion of Cajun's River Bend
operating, maintenance, and capital costs for the remainder of
1994 will aggregate approximately $10 million. Cajun's share of
River Bend annual operating (including nuclear fuel) and
maintenance expenses and capital costs was approximately $69
million in 1993.
In view of Cajun's stated expectation that it will fund only a
limited portion of its share of River Bend related operating,
maintenance, and capital costs in 1994 and for the foreseeable
future, GSU has notified Cajun that it will (i) credit GSU's
share of expenses for Big Cajun 2, Unit 3 against amounts due
from Cajun to GSU and (ii) seek to market Cajun's share of the
power from River Bend and apply the proceeds to the amounts due
from Cajun to GSU. On November 2, 1994, Cajun discontinued GSU's
entitlement of energy from Big Cajun 2, Unit 3. In response, on
November 3, 1994, GSU filed pleadings in District Court seeking
an order requiring Cajun to provide GSU with the energy from Big
Cajun 2, Unit 3 to which GSU is entitled, and holding that GSU is
entitled to credit amounts due from GSU to Cajun for Big Cajun 2,
Unit 3 against amounts due from Cajun to GSU with respect to
River Bend. The District Court held a hearing on this motion on
November 7, 1994. The matter is pending.
During the period in which Cajun is not paying its share of
River Bend costs, GSU intends to fund all costs necessary for the
safe, continuing operation of the unit. The responsibilities of
Entergy Operations as the licensed operator of River Bend, for
safely operating and maintaining the unit are not affected by
Cajun's actions.
The total resulting from Cajun's failure to fund repair
projects, Cajun's funding limitation on refueling outages, and
the weekly funding limitation by Cajun was $36.6 million as of
September 30, 1994, compared with $33.3 million as of December
31, 1993. These amounts are reflected in long-term receivables
with an offsetting reserve in other deferred credits. Cajun's
weak financial condition may affect the ultimate collectibility
of the amounts owed to GSU, including any amounts that may be
awarded in litigation.
GSU has been informed that Cajun has serious financial
problems including a finding during 1994 of imprudence by the
LPSC on Cajun's participation in the River Bend nuclear project.
Cajun's weak financial condition could have a material adverse
effect on GSU, including the possibility of an NRC action with
respect to the operation of River Bend and a need to bear
additional costs associated with the co-owned facilities.
In September 1994, in connection with Entergy Corporation's
analysis of certain preacquisition contingencies, Entergy
Corporation increased its acquisition adjustment and GSU recorded
a loss provision associated with the River Bend litigation
between GSU and Cajun and certain underpayments by Cajun of River
Bend costs, in accordance with SFAS No. 5, "Accounting for
Contingencies." See Note 8 for additional information on
provisions for preacquisition contingencies recorded during the
third quarter of 1994.
Cajun - Transmission Service
Entergy Corporation and GSU
GSU and Cajun are parties to FERC proceedings related to
transmission service charge disputes. In April 1992, FERC issued
a final order. In May 1992, GSU and Cajun filed motions for
rehearings which are pending consideration by FERC. In June
1992, GSU filed a petition for review in the United States Court
of Appeals regarding certain of the issues decided by FERC. In
August 1993, the United States Court of Appeals rendered an
opinion reversing the FERC order regarding the portion of such
disputes relating to the calculations of certain credits and
equalization charges under GSU's service schedules with Cajun.
The opinion remanded the issues to FERC for further proceedings
consistent with its opinion. In January 1994, FERC denied GSU's
request to collect a surcharge while FERC considers the court's
remand, which GSU has appealed.
GSU interprets the FERC order and the United States Court of
Appeals' decision to mean that Cajun would owe GSU approximately
$91 million as of September 30, 1994. GSU further estimates that
if it prevails in its May 1992 motion for rehearing, Cajun would
owe GSU approximately $127 million as of September 30, 1994. If
Cajun were to prevail in its May 1992 motion for rehearing to
FERC, and if GSU were not to prevail in its May 1992 motion for
rehearing to FERC, and if FERC does not implement the court's
remand as GSU contends is required, GSU estimates it would owe
Cajun approximately $83 million as of September 30, 1994. The
above amounts are exclusive of a $7.3 million payment by Cajun on
December 31, 1990, which the parties agreed to apply to the
disputed transmission service charges. GSU and Cajun further
agreed that their positions at FERC would remain unaffected by
the $7.3 million payment. Pending FERC's ruling on the May 1992
motions for rehearing, GSU has continued to bill Cajun utilizing
the historical billing methodology and has booked underpaid
transmission charges, including interest, in the amount of $156
million as of September 30, 1994. This amount is reflected in
long-term receivables with an offsetting reserve in other
deferred credits.
Financial Condition
GSU
Although GSU received partial rate relief relating to River
Bend, GSU's financial position was strained from 1986 to 1990 by
its inability to earn a return on and fully recover its
investment and other costs associated with River Bend. Issues to
be finally resolved in PUCT rate proceedings and appeals thereof,
as discussed in Note 2, combined with the application of
accounting standards, may result in substantial write-offs and
charges that could result in substantial net losses being
reported in 1994, and subsequent periods, with resulting
substantial adverse adjustments to common shareholder's equity.
Future earnings will continue to be adversely affected by the
lack of full recovery and return on the investment and other
costs associated with River Bend.
Capital Requirements and Financing
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Construction expenditures (excluding nuclear fuel) for the
years 1994, 1995, and 1996, and long-term debt and preferred
stock maturities and cash sinking fund requirements for the
period 1994-1996, are estimated to total (in millions):
Long-term Debt and
Construction Expenditures Preferred Stock
Maturities and Cash
Sinking Fund
Requirements
1994 1995 1996 1994-1996
Entergy $614 $560 $550 $1,414
AP&L $177 $172 $175 $ 112
GSU $135 $128 $119 $ 214
LP&L $142 $143 $142 $ 165
MP&L $116 $ 63 $ 63 $ 228
NOPSI $ 24 $ 26 $ 26 $ 81
System $ 18 $ 22 $ 23 $ 615
Energy
The System plans to meet the above requirements with
internally generated funds, including collections under the
System operating companies' rate phase-in plans, and cash on
hand, supplemented by the issuance of long-term debt and
preferred stock. See pages 130-131, 205-206, 240-241, 271-272,
and 301 of the Form 10-K and Notes 4 and 5 for information on the
possible issuance of preferred stock, common stock, and long-term
debt, and the possible retirement, redemption, purchase, or other
acquisition of outstanding securities by the System operating
companies and System Energy.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
Entergy Corporation, AP&L, GSU, LP&L, and System Energy
See pages 96-97, 133-134, 174-175, 208, and 304 of the
Form 10-K for information on nuclear liability, property and
replacement power insurance, and related NRC regulations.
See pages 97-98, 134, 175, 208-209, and 304-305 of the Form
10-K for information on the disposal of spent nuclear fuel, other
high-level radioactive waste, and decommissioning costs
associated with ANO, River Bend, Waterford 3, and Grand Gulf 1.
Decommissioning costs for ANO, Waterford 3, and Grand Gulf 1 have
been recently revised to be approximately $806.3 million, $320.1
million, and $365.9 million, respectively. In March 1994, AP&L
filed with the APSC an interim update of the ANO cost study,
which reflected significant increases in costs of low-level
radioactive waste disposal. On October 5, 1994, the APSC issued
an order approving AP&L's updated decommissioning costs to be
included in rates through a rate rider. As of January 1994, LP&L
began funding $4.8 million annually to fund the increased
estimated costs for decommissioning Waterford 3. In August 1994,
LP&L filed its recently revised cost study in connection with the
LPSC's investigation of LP&L's rates (see Note 2). In October
1994, GSU presented the 1991 update to the 1985 original
decommissioning cost study in the current Texas Cities rate
proceeding.
The staff of the SEC has questioned certain of the current
accounting practices of the electric utility industry, regarding
the recognition, measurement, and classification of
decommissioning costs for nuclear generating stations in the
financial statements of electric utilities. In response to these
questions, the Financial Accounting Standards Board has agreed to
review the accounting for removal costs, including
decommissioning. If current electric utility industry accounting
practices for such decommissioning are changed, annual provisions
for decommissioning could increase, the estimated cost for
decommissioning could be recorded as a liability rather than as
accumulated depreciation, and trust fund income from the external
decommissioning trusts could be reported as investment income
rather than as a reduction to decommissioning expense.
ANO Matters
Entergy Corporation and AP&L
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations, and additional repairs were
made. Entergy Operations operated ANO 2 with no further steam
generator inspections until the refueling outage that was
completed on April 23, 1994. Inspections during the outage
revealed additional cracks; however, most were smaller than those
seen in earlier inspections, except for one relatively large
crack. Based upon results of these inspections and an
inconclusive pressure test, Entergy Operations plans to inspect
the steam generator tubes during a mid-cycle outage tentatively
scheduled for January 1995. The operations and power output of
the unit have not been materially adversely affected.
Environmental Issues
GSU
GSU has been notified by the U. S. Environmental Protection
Agency (EPA) that it has been designated as a potentially
responsible party for the cleanup of sites on which GSU and
others have or have been alleged to have disposed of material
designated as hazardous waste. GSU is currently negotiating with
the EPA and state authorities regarding the cleanup of some of
these sites. Several class action and other suits have been
filed in state and federal courts seeking relief from GSU and
others for damages caused by the disposal of hazardous waste and
for asbestos-related disease allegedly resulting from exposure on
GSU premises. While the amounts at issue in the cleanup efforts
and suits may be substantial, GSU believes that its results of
operations and financial condition will not be materially
affected by the outcome of the suits.
As of September 30, 1994, GSU has accrued cumulative amounts
related to the cleanup of six sites at which GSU has been
designated a potentially responsible party, totaling $27.7
million since 1990. Through September 30, 1994, GSU has expended
$7.3 million cumulatively on the cleanup, resulting in a
remaining recorded liability of $20.4 million as of September 30,
1994.
LP&L
In 1993, the Louisiana Department of Environmental Quality
issued new rules for solid waste regulation, including waste
water impoundments. LP&L has determined that certain of its
power plant waste water sites are affected by these regulations
and has chosen to close them rather than retrofit and permit
them. In September 1994, LP&L recorded a liability of $9.7
million for costs related to the closure of these waste water
sites.
Waterford 3 Lease Obligations
LP&L
In September 1989, LP&L entered into three substantially
identical, but entirely separate, transactions for the sale and
leaseback of three undivided portions (aggregating approximately
9.3%) of its 100% ownership interest in Waterford 3. See pages
210-211 of the Form 10-K and Note 5 below for further
information.
Upon the occurrence of certain events, LP&L may be obligated
to pay amounts sufficient to permit the Owner Participants to
withdraw from the lease transactions, and LP&L may be required to
assume the outstanding bonds issued by the Owner Trustee to
finance, in part, its acquisition of the undivided interests in
Waterford 3. These events include failure, at specified dates,
to maintain equity capital of at least 30% of adjusted
capitalization and a fixed charge coverage ratio of at least
1.50. As of September 30, 1994, LP&L's total equity capital was
49.34% of adjusted capitalization, and its fixed charge coverage
ratio was 3.01.
LP&L did not exercise its option to repurchase the undivided
interests in Waterford 3 on the fifth anniversary (September
1994) of the closing date of the sale and leaseback transactions.
As a result, LP&L was required to provide collateral to the Owner
Participants for the equity portion of certain amounts payable by
LP&L under the lease. Such collateral was in the form of a new
series of first mortgage bonds in the aggregate principal amount
of $208.2 million issued by LP&L in September 1994, under its
first mortgage bond indenture.
Reimbursement Agreement
System Energy
Under the provisions of the Reimbursement Agreement, as
amended, and letters of credit related to the Grand Gulf 1 sale
and leaseback transactions, System Energy has agreed to a number
of covenants relating to the maintenance of equity at not less
than 33%, and common equity at not less than 29%, of adjusted
capitalization, and a fixed charge coverage ratio of at least
1.60. As of September 30, 1994, System Energy's equity and
common equity, in each case, approximated 34% of its adjusted
capitalization, and its fixed charge coverage ratio was 1.96.
Failure by System Energy to perform its covenants under the
Reimbursement Agreement could give rise to a draw under the
letters of credit and/or an early termination of the letters of
credit. If such letters of credit were not replaced in a timely
manner, a default under System Energy's related leases could
result.
See Note 2, "FERC Audit - Proposed Settlement," for
information on a proposed settlement, which, if ultimately
sustained and implemented, would cause System Energy to fall
below the required equity and fixed charge coverage covenant
levels. System Energy has obtained the consent of the banks
(parties to the Reimbursement Agreement) to waive these covenants
for the 12-month period beginning with the earlier of a write-off
or the first refund, if such write-off or refund occurs prior to
December 31, 1994. System Energy believes the conditions
included in the proposed settlement are covered by the waiver.
The waiver is conditioned upon System Energy not paying any
common stock dividends to Entergy Corporation until the equity
ratio covenant is once again met. If the proposed settlement had
been in effect as of September 30, 1994, System Energy's common
equity would have been approximately 32% of its adjusted
capitalization, and its fixed charge coverage ratio would have
been approximately 1.27. System Energy expects that after the 12-
month waiver period, it will be in compliance with the equity and
fixed charge covenants. Also, see pages 296-297 of the Form 10-K
for further information.
System Fuels
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 133, 207, 242-243, 274, and 305 of the Form 10-K
for information on certain commitments and contingencies of
System Fuels, and related commitments and contingencies of AP&L,
LP&L, MP&L, NOPSI, and System Energy, respectively, in connection
with System Fuels' fuel procurement programs.
Internal Revenue Service Tax Audit
Entergy
In August 1994, Entergy received an IRS report covering the
federal income tax audit of Entergy Corporation and subsidiaries
for the years 1988 - 1990. The report asserts an $80 million tax
deficiency for the 1990 consolidated federal income tax returns
related primarily to the application of accelerated investment
tax credits associated with Waterford 3 and Grand Gulf nuclear
plants. Entergy believes there is no tax deficiency and is
vigorously contesting the proposed assessment.
Other
Entergy Corporation and System Energy
See pages 96 and 302 of the Form 10-K for information on
Entergy Corporation's commitments to System Energy under the
Capital Funds Agreement.
AP&L, LP&L, MP&L, NOPSI, and System Energy
See pages 302-303 of the Form 10-K for information on System
Energy relating to the Unit Power Sales, Availability, and
Reallocation Agreements. See also pages 132-133, 206-207, 242,
and 273-274 of the Form 10-K for information on commitments and
potential liabilities of AP&L, LP&L, MP&L, and NOPSI,
respectively, relating to these agreements.
NOTE 2. RATE AND REGULATORY MATTERS
River Bend
Entergy Corporation and GSU
In May 1988, the PUCT granted GSU a permanent increase in
annual revenues of $59.9 million resulting from the inclusion in
rate base of approximately $1.6 billion of company-wide River
Bend plant investment and approximately $182 million of related
Texas retail jurisdiction deferred River Bend costs (Allowed
Deferrals). In addition, the PUCT disallowed as imprudent $63.5
million of company-wide River Bend plant costs and placed in
abeyance, with no finding of prudence, approximately $1.4 billion
of company-wide River Bend plant investment and approximately
$157 million of Texas retail jurisdiction deferred River Bend
operating and carrying costs. The PUCT affirmed that the
ultimate rate treatment of such amounts would be subject to
future demonstration of the prudence of such costs. GSU and
intervening parties appealed this order (Rate Appeal) and GSU
filed a separate rate case asking that the abeyed River Bend
plant costs be found prudent (Separate Rate Case). Intervening
parties filed suit in a Texas district court to prohibit the
Separate Rate Case. The district court's decision was ultimately
appealed to the Texas Supreme Court, which ruled in 1990 that the
prudence of the purported abeyed costs could not be relitigated
in a separate rate proceeding. The Texas Supreme Court's
decision stated that all issues relating to the merits of the
original PUCT order, including the prudence of all River Bend-
related costs, should be addressed in the Rate Appeal.
In October 1991, the Texas district court in the Rate Appeal
issued an order holding that, while it was clear the PUCT made an
error in assuming it could set aside $1.4 billion of the total
costs of River Bend and consider them in a later proceeding, the
PUCT, nevertheless, found that GSU had not met its burden of
proof related to the amounts placed in abeyance. The court also
ruled that the Allowed Deferrals should not be included in rate
base under a 1991 decision regarding El Paso Electric Company's
similar deferred costs. The court further stated that the PUCT
had erred in reducing GSU's deferred costs by $1.50 for each
$1.00 of revenue collected under the interim rate increases
authorized in 1987 and 1988. The court remanded the case to the
PUCT with instructions as to the proper handling of the Allowed
Deferrals. GSU's motion for rehearing was denied and, in
December 1991, GSU filed an appeal of the October 1991 district
court order. The PUCT also appealed the October 1991 district
court order, which served to supersede the district court's
judgment, rendering it unenforceable under Texas law.
In September 1993, the Texas Third District Court of Appeals
(the Appellate Court) remanded the October 1991 district court
decision to the PUCT "to reexamine the record evidence to
whatever extent necessary to render a final order supported by
substantial evidence and not inconsistent with our opinion." The
Appellate Court held that the PUCT's failure to include the
company-wide $1.4 billion of River Bend construction costs in
rate base was not based on substantial evidence. The Appellate
Court also held that GSU's deferred operating and maintenance
costs associated with the allowed portion of River Bend should be
included in rate base, but that its deferred River Bend carrying
costs should not be included in rate base.
In May 1994, the Appellate Court withdrew its September 1993
opinion and entered a substitute opinion. In August 1994, the
Appellate Court issued a third opinion in the Rate Appeal,
further revising its September 1993 opinion. In the August 1994
opinion, the Appellate Court affirmed the district court's
decision that there was substantial evidence to support the
PUCT's 1988 decision not to include the abeyed construction costs
in GSU's rate base. While acknowledging that the PUCT had
exceeded its authority when it attempted to defer a decision on
the inclusion of those costs in rate base in order to allow GSU a
further opportunity to demonstrate the prudence of those costs in
a subsequent proceeding, the Appellate Court found that GSU had
suffered no harm or lack of due process as a result of the PUCT's
error. Accordingly, the Appellate Court held that the PUCT's
action had the effect of disallowing the company-wide $1.4
billion of River Bend construction costs for ratemaking purposes.
In its August 1994 opinion, the Appellate Court repeated its
earlier decision that GSU's deferred operating and maintenance
costs associated with the allowed portion of River Bend should be
included in rate base and changed that order to provide that
GSU's deferred River Bend carrying costs included in the Allowed
Deferrals should also be included in rate base. The Appellate
Court's August 1994 opinion affirmed the PUCT's original order in
this case.
The Appellate Court's August 1994 opinion was entered by two
judges, with a third judge dissenting. The dissenting opinion
states that the result of the majority opinion is, among other
things, to deprive GSU of due process at the PUCT because the
PUCT never reached a finding on the $1.4 billion of construction
costs.
In October 1994, the Appellate Court denied GSU's motion for
rehearing on the August 1994 opinion as to the $1.4 billion in
River Bend construction costs and other matters. GSU plans to
appeal the Appellate Court's decision to the Texas Supreme Court.
As of September 30, 1994, the River Bend plant costs
disallowed for retail ratemaking purposes in Texas, the River
Bend plant costs held in abeyance, and the related operating and
carrying cost deferrals totaled (net of taxes) approximately $14
million, $297 million (both net of depreciation), and $170
million, respectively. Allowed Deferrals were approximately $90
million, net of taxes and amortization, as of September 30, 1994.
GSU estimates it has collected approximately $153 million of
revenues as of September 30, 1994, as a result of the originally
ordered rate treatment by the PUCT of these deferred costs. If
recovery of the Allowed Deferrals is not upheld, future revenues
based upon those allowed deferrals could also be lost, and no
assurance can be given as to whether or not refunds of revenue
received based upon such deferred costs previously recorded will
be required.
No assurance can be given as to the timing or outcome of the
remands or appeals described above. Pending further developments
in these cases, GSU has made no write-offs or reserves for the
River Bend-related costs. Management believes, based on advice
from Clark, Thomas & Winters, a Professional Corporation, legal
counsel of record in the Rate Appeal, that it is reasonably
possible that the case will be remanded to the PUCT, and the PUCT
will be allowed to rule on the prudence of the abeyed River Bend
plant costs. Rate Caps imposed by the PUCT's regulatory approval
of the Merger could result in GSU being unable to use the full
amount of a favorable decision to immediately increase rates;
however, a favorable decision could permit some increases and/or
limit or prevent decreases during the period the Rate Caps are in
effect. At this time, management and legal counsel are unable to
predict the amount, if any, of the abeyed and previously
disallowed River Bend plant costs that ultimately may be
disallowed by the PUCT. A net of tax write-off as of September
30, 1994, of up to $311 million could be required based on an
ultimate adverse ruling by the PUCT on the abeyed and disallowed
costs.
In prior proceedings, the PUCT has held that the original
cost of nuclear power plants will be included in rates to the
extent those costs were prudently incurred. Based upon the
PUCT's prior decisions, management believes that its River Bend
construction costs were prudently incurred and that it is
reasonably possible that it will recover in rate base, or
otherwise through means such as a deregulated asset plan, all or
substantially all of the abeyed River Bend plant costs. However,
management also recognizes that it is reasonably possible that
not all of the abeyed River Bend plant costs may ultimately be
recovered.
As part of its direct case in the Separate Rate Case, GSU
filed a cost reconciliation study prepared by Sandlin Associates,
management consultants with expertise in the cost analysis of
nuclear power plants, which supports the reasonableness of the
River Bend costs held in abeyance by the PUCT. This
reconciliation study determined that approximately 82% of the
River Bend cost increase above the amount included by the PUCT in
rate base was a result of changes in federal nuclear safety
requirements and provided other support for the remainder of the
abeyed amounts.
There have been four other rate proceedings in Texas
involving nuclear power plants. Investment in the plants
ultimately disallowed ranged from 0% to 15%. Each case was
unique, and the disallowances in each were made on a case-by-case
basis for different reasons. Appeals of most, if not all, of
these PUCT decisions are currently pending.
The following factors support management's position that a
loss contingency requiring accrual has not occurred, and its
belief that all, or substantially all, of the abeyed plant costs
will ultimately be recovered:
1. The $1.4 billion of abeyed River Bend plant costs have
never been ruled imprudent and disallowed by the PUCT.
2. Sandlin Associates' analysis which supports the prudence
of substantially all of the abeyed construction costs.
3. Historical inclusion by the PUCT of prudent construction
costs in rate base.
4. The analysis of GSU's internal legal staff, which has
considerable experience in Texas rate case litigation.
Additionally, management believes, based on advice from
Clark, Thomas, & Winters, a Professional Corporation, legal
counsel of record in the Rate Appeal, that it is reasonably
possible that the Allowed Deferrals will continue to be recovered
in rates. Management also believes, based on advice from Clark,
Thomas, & Winters, a Professional Corporation, legal counsel of
record in the Rate Appeal, that it is reasonably possible that
the deferred costs related to the $1.4 billion of abeyed River
Bend plant costs will be recovered in rates to the extent that
the $1.4 billion of abeyed River Bend plant is recovered.
However, a net of tax write-off of the $170 million of deferred
costs related to the $1.4 billion of abeyed River Bend plant
costs would be required if they are not allowed to be recovered
in rates.
See pages 103 and 180 of the Form 10-K for the accounting
treatment of preacquisition contingencies, including any River
Bend write-down.
FERC Audit - Proposed Settlement
Entergy Corporation and System Energy
In December 1990, FERC Division of Audits issued an audit
report for System Energy for the years 1986 through 1988. The
report recommended that System Energy (1) write off, and not
recover in rates, approximately $95 million of Grand Gulf 1 costs
included in utility plant related to certain System income tax
allocation procedures alleged to be inconsistent with FERC's
accounting requirements, and (2) compute refunds for the years
1987 to date to correct for resulting overcollections from AP&L,
LP&L, MP&L, and NOPSI.
In August 1992, FERC issued an opinion and order (August 4
Order) which found that System Energy overstated its Grand Gulf 1
utility plant account by approximately $95 million as indicated
in FERC's report. The order required System Energy to make
adjusting accounting entries and refunds, with interest, to AP&L,
LP&L, MP&L, and NOPSI within 90 days from the date of the order.
System Energy filed a request for rehearing, and in October 1992,
FERC issued an order allowing additional time for its
consideration of the request. In addition, it deferred System
Energy's refund obligation until 30 days after FERC issues an
order on rehearing.
In June 1994, System Energy, AP&L, LP&L, MP&L, and NOPSI
reached a tentative settlement with the FERC staff and other
parties. The proposed settlement was filed with FERC on October
7, 1994. FERC has not approved the proposed settlement, and
therefore, the effects of the settlement have not been recorded.
The proposed settlement would require System Energy to refund or
credit approximately $61.7 million to AP&L, LP&L, MP&L, and
NOPSI, which would in turn make refunds or credits to their
customers (except for those portions attributable to AP&L's and
LP&L's retained share of Grand Gulf 1 costs). Additionally,
System Energy would refund or credit a total of approximately $62
million, plus interest, to AP&L, LP&L, MP&L, and NOPSI over the
period through June 2004. The proposed settlement would also
require the write-off of certain related unamortized balances of
deferred investment tax credits by AP&L, LP&L, MP&L, and NOPSI.
Had the proposed settlement been effective in the third quarter
of 1994, it would have reduced Entergy Corporation's consolidated
net income for the quarter and nine months ended September 30,
1994, by approximately $68.2 million, offset by the write-off of
the unamortized balances of related deferred investment tax
credits of approximately $69.4 million ($2.9 million for Entergy
Corporation; $27.3 million for AP&L; $31.5 million for LP&L; $6
million for MP&L; and $1.7 million for NOPSI). Pursuant to the
proposed settlement, System Energy would also reclassify from
utility plant to other deferred debits approximately $81 million
of other Grand Gulf 1 costs. Although excluded from rate base,
System Energy would be permitted to recover such costs over a 10
year period. Interest on the $62 million refund and the loss of
the return on the $81 million of other Grand Gulf 1 costs will
reduce Entergy's and System Energy's net income by approximately
$10 million annually over the next 10 years. There can be no
assurance that FERC will ultimately approve the settlement in its
current form.
As a result of the charges associated with the refunds,
System Energy requires the consent of certain banks (parties to
the Reimbursement Agreements) to waive temporarily the fixed
charge coverage and equity ratio covenants in the letters of
credit and Reimbursement Agreement related to the Grand Gulf 1
sale and leaseback transaction. System Energy has obtained the
consent of the banks to waive these covenants, for the 12-month
period beginning with the earlier of a write-off or the first
refund, if such refund occurs prior to December 31, 1994. System
Energy believes the conditions included in the proposed
settlement are covered by the waiver. The waiver is conditioned
upon System Energy not paying any common stock dividends to
Entergy Corporation until the equity ratio covenant is once again
met. Absent a waiver, System Energy's failure to perform these
covenants could cause a draw under the letters of credit and/or
early termination of the letters of credit. If the letters of
credit were not replaced in a timely manner, a default or early
termination of System Energy's leases could result.
Texas Cities Rate Settlement
Entergy Corporation and GSU
In June 1993, 13 cities within GSU's Texas service area
instituted an investigation to determine whether GSU's current
rates were justified. In October 1993, the general counsel of
the PUCT instituted an inquiry into the reasonableness of GSU's
rates. In November 1993, a settlement agreement was filed with
the PUCT which provided for an initial reduction in GSU's annual
retail base revenues in Texas of approximately $22.5 million
effective for electric usage on or after November 1, 1993, and a
second reduction of $20 million effective September 1994.
Pursuant to the settlement, GSU reduced rates with a $20 million
one-time bill credit in December 1993, and refunded approximately
$3 million to Texas retail customers on bills rendered in
December 1993. The PUCT approved the settlement agreement on
July 21, 1994. The cities' rate inquiries were settled earlier
on the same terms.
Filings with the PUCT and Texas Cities
Entergy Corporation and GSU
In March 1994, the Texas Office of Public Utility Counsel
and certain cities served by GSU instituted a second
investigation of the reasonableness of GSU's rates. In June
1994, GSU provided the cities with information that GSU believes
supports the current rate level. GSU filed the same information
with the PUCT in June 1994, pursuant to provisions of the Merger.
In August 1994, the cities' consultants issued a report that
indicated GSU's current rates were approximately $40 to $50
million in excess of current requirements. GSU can provide no
assurance as to the ultimate outcome in this matter, and any
resulting rate reduction could be applied retroactively to March
31, 1994, in accordance with the Merger agreement.
In September 1994, various cities adopted ordinances
directing GSU to reduce its Texas retail rates by $45.9 million.
GSU has appealed the cities' ordinances to the PUCT where the
reasonableness of GSU's rates will be reviewed. Hearings are
scheduled to begin in November 1994.
LPSC Investigation
Entergy Corporation, GSU, and LP&L
In May 1994, GSU made the required first post-Merger
earnings analysis filing with the LPSC, which indicated a revenue
deficiency of $46.4 million. On September 22, 1994, LPSC
consultants recommended that GSU base rates be reduced by $30
million. On November 7, 1994, LPSC consultants filed additional
testimony which recommended lowering GSU's rate reduction to
$10.8 million from the previously recommended $30 million rate
reduction. Hearings are scheduled to begin on November 14, 1994.
Recognizing that LP&L was subject to a rate freeze until
March 1994, the LPSC requested LP&L to explain its "relatively
high cost of debt" compared to other electric utilities subject
to LPSC jurisdiction. LP&L responded to this request, and in an
August 1993 report to the LPSC, the LPSC's legal consultants
acknowledged LP&L's rationale for its cost of debt in comparison
to two other utilities subject to the LPSC's jurisdiction. In
October 1993, the LPSC approved a schedule to conduct a review of
LP&L's rates and rate structure upon the expiration of LP&L's
rate freeze. Discovery is currently underway and hearings are
scheduled to begin in December 1994. In August 1994, LP&L filed
a performance-based formula rate plan with the LPSC. The
proposed formula rate plan would continue existing LP&L rates at
current levels, while providing financial incentive to reduce
costs and maintain high levels of customer satisfaction and
system reliability. A performance rating adjustment feature of
the plan would allow LP&L the opportunity to earn a higher rate
of return if it improves performance over time. Conversely, if
performance declines, the rate of return LP&L could earn would be
lowered. This provides financial incentive for LP&L to maintain
continuous improvement in all three performance categories
(customer price, customer satisfaction, and customer
reliability). Under the proposed plan, if LP&L's earnings fall
within a bandwidth around a benchmark rate of return, there would
be no adjustment in rates. If LP&L's earnings are above the
bandwidth, the proposed plan would automatically reduce LP&L's
base rates. Alternatively, if LP&L's earnings are below the
bandwidth, the proposed plan would automatically increase LP&L's
base rates. The reduction or increase in base rates would be an
amount representing 50% of the difference between the earned rate
of return and the nearest limit of the bandwidth. In no event
would the annual adjustment in rates exceed 2% of LP&L's retail
revenues. Hearings are scheduled to begin in February 1995.
February 1994 Ice Storm
Entergy Corporation, AP&L, and MP&L
In early February 1994, an ice storm left more than 221,000
Entergy customers without electric power across the System's four-
state service area. The storm was the most severe natural
disaster ever to affect the System, causing damage to
transmission and distribution lines, equipment, poles, and
facilities in certain areas, primarily in Mississippi. Repair
costs totaled approximately $110.3 million, $28.6 million, and
$73.8 million for the System, AP&L, and MP&L, respectively, with
$79.8 million, $17.0 million, and $61.0 million of these amounts
capitalized as plant-related costs. The remaining balances have
been charged against the respective companies' regulatory storm
damage reserves, except for MP&L which recorded a deferred debit.
Estimated construction expenditures (see Note 1) reflect the
above amounts. On April 15, 1994, MP&L filed for rate recovery
of costs related to the ice storm. MP&L's filing, as
subsequently amended, requested recovery of the revenue
requirement associated with MP&L's ice storm costs recorded
through April 30, 1994, representing approximately 86% of the
total estimated ice storm costs. MP&L intends to make another
ice storm rate filing with the MPSC by early 1995 to recover ice
storm costs recorded by MP&L after April 30, 1994. In August
1994, MP&L and the MPSC's Public Utilities Staff (MPUS) entered
into a stipulation with respect to the recovery of ice storm
costs recorded through April 30, 1994, and in September 1994, the
MPSC approved the stipulation. Under the stipulation, MP&L will
implement for five years, an ice storm rider schedule, which
went into effect on September 29, 1994, that will increase rates
approximately $8 million annually. At the end of the five year
period, the revenue requirement associated with the undepreciated
ice storm capitalized costs will be included in MP&L's base rates
to the extent that this revenue requirement does not result in
MP&L's rate of return on rate base being above the benchmark rate
of return under MP&L's formula rate plan.
NOPSI Rate Reduction/Credit
Entergy Corporation and NOPSI
See pages 27 and 266-268 of the Form 10-K for information
regarding the 1991 NOPSI Settlement and a 1992 gas rate
settlement. Under the terms of the 1991 NOPSI Settlement and a
1992 gas rate settlement, NOPSI agreed that during the period
October 1, 1992 through October 31, 1996, the Council will have
the right to investigate the appropriateness of NOPSI's rates if
NOPSI's return on equity on its operations (calculated in
accordance with the applicable provisions of the 1991 NOPSI
Settlement and a 1992 gas rate settlement) for twelve month
periods subsequent to September 30, 1992, were to exceed 13.76%,
and after rate hearing(s), to impose a credit on NOPSI's
customers' bills over the ensuing twelve month period in an
amount that would have allowed NOPSI, during the relevant test
year, to earn a return on equity incident to its operations of no
less than 12.76%.
On July 7, 1994, NOPSI and the Council agreed that, based on
the test year ended September 30, 1993, NOPSI's earnings exceeded
its revenue requirement by $24.95 million and in accordance with
the terms of the 1991 NOPSI Settlement and a 1992 gas rate
settlement, there would be a prospective base rate reduction for
twelve months commencing July 14, 1994. The reduction, because
of a rate freeze, will be accomplished by means of a credit (to
be expressed on a per KWH basis) to customers' bills. The per
kilowatt hour credit will be calculated by dividing test year
overearnings by test year KWH consumption and applied to kilowatt
hour usage during the period ending July 13, 1995. In the first
quarter of 1994, NOPSI recorded a $14.3 million reserve for the
anticipated revenue reduction, which reduced net income by $8.8
million (net of tax). The reserve has been and will continue to
be reduced by the actual credits prospectively applied to
customers bills in accordance with the terms of the July 7, 1994
agreement.
Management believes that any rate investigation by the
Council in accordance with the 1991 settlement agreement and a
1992 gas rate settlement which may propose a base rate reduction
to be in effect after the expiration of the rate freeze should
reflect, as an offset, any rate reduction credit then in effect
as a result of overearnings during the rate freeze period. NOPSI
can provide no assurance as to the level of return on common
equity that will be achieved from operations, nor the amount of
rate reduction/credit, if any, prior to or after the end of the
rate freeze. On November 1, 1994, NOPSI filed with the Council
an analysis of its earnings for the test year ended September 30,
1994, which indicated a rate reduction/credit of approximately
$24 million is required. The Council is expected to order a
hearing in the fourth quarter of 1994 to render a final decision
on the actual amount, method, and timing of the credit.
LPSC Fuel Cost Review
GSU
In November 1993, the LPSC ordered a review of GSU's fuel
costs. The LPSC stated that fuel costs for the period October
1988 through September 1991 (Phase 1) would be reviewed based on
the number of outages at River Bend and the findings in the June
1993 PUCT fuel reconciliation case. In July 1994, the LPSC made
a decision in the Phase 1 fuel review case and ordered GSU to
refund approximately $27 million to its customers. Under the
order, a refund of $13.1 million, which was not contested under a
recent Louisiana Supreme Court decision as discussed below, was
made through a billing credit on August bills. In August 1994,
GSU appealed the remaining portion of the LPSC ordered refund to
the district court. GSU has made no reserve for the remaining
portion, pending outcome of the district court appeal.
In February 1990, the LPSC disallowed the pass-through to
ratepayers for the portion of GSU's cost to purchase power from
Nelson Industrial Steam Company (NISCO) representing the excess
of NISCO's purchase price of the units over GSU's depreciated
cost of the units. GSU appealed the 1990 order. In March 1994,
the Louisiana Supreme Court ruled in favor of the LPSC. GSU
recorded an estimated refund provision of $13.1 million, before
related income taxes of $5.3 million.
PUCT Fuel Cost Review
GSU
For information on the June 1993 PUCT fuel reconciliation
case, see page 164 of the Form 10-K. In June 1994, GSU filed a
petition with the PUCT for the reconciliation of over- and under-
recovery of fuel and purchased power expenses for the period
October 1, 1991, through December 31, 1993, in accordance with
the Texas Merger settlement agreement. GSU is required to
reconcile its fuel costs from the end of the period of its last
fuel reconciliation through the Merger closing date to reflect
the fuel and purchased power costs GSU incurred as a stand-alone
company. GSU believes there was a net under-recovery of
approximately $4.6 million for the period but has indicated that
it does not propose to surcharge the under-recovery at this time.
A prehearing conference was held on July 18, 1994, at which time
a procedural schedule was adopted which provides for hearings to
begin on January 9, 1995.
NOTE 3. LINES OF CREDIT AND RELATED BORROWINGS
See pages 89, 129, 169, 203, 239, 270, and 300 of the Form
10-K for information on Entergy Corporation's, the System
operating companies', and System Energy's short-term borrowing
authorizations, including the Money Pool, and certain limitations
thereon, and lines of credit with banks. On March 25, 1994,
GSU received SEC authorization to participate in the Money Pool.
GSU is authorized to effect short-term borrowings of up to $125
million, subject to increase to as much as $455 million after
further SEC approval. On April 21, 1994, AP&L, LP&L, and MP&L
received SEC approval to increase their short-term borrowing
limits to $200 million (from $125 million), $200 million (from
$125 million), and $113 million (from $100 million),
respectively. As of September 30, 1994, the System operating
companies and System Energy had no outstanding borrowings from
the Money Pool. As of September 30, 1994, Entergy Corporation,
the System operating companies, and System Energy had outstanding
short-term borrowings from banks as follows (in millions):
Company Banks
Entergy Corporation -
AP&L $34.0
GSU -
LP&L $19.2
MP&L $30.0
NOPSI -
System Energy -
As of September 30, 1994, GSU had unused lines of credit for
short-term borrowings of $5.0 million.
NOTE 4. PREFERRED AND COMMON STOCK
Entergy Corporation
Entergy Corporation periodically repurchases shares of its
outstanding common stock either on the open market or through
negotiated purchases or tender offers. Stock repurchases are
made from time to time depending upon market conditions and
authorization of the Entergy Corporation Board of Directors.
During the first nine months of 1994, 4,035,000 shares of common
stock were repurchased and were accounted for as treasury stock
using the average cost method at a cost of $119.5 million. In
August 1994, 1,230,000 shares of the common stock repurchased
were retired.
AP&L
During the first nine months of 1994, AP&L redeemed the
following series of preferred stock pursuant to sinking fund
requirements:
Redemption Date Series Par Value Shares
1/1/94 13.28% Series $25 200,000
6/1/94 9.92% Series $25 80,000
7/1/94 10.60% Series $100 20,000
On November 1, 1994, AP&L redeemed, pursuant to sinking fund
requirements, 25,000 shares of its 8.52% Series Preferred Stock,
$100 par value.
GSU
GSU has requested, but not yet received, SEC authorization
to issue and sell, through December 31, 1995, up to $700 million
aggregate principal amount of preferred stock and/or first
mortgage bonds and medium term notes. The proceeds will be used
for general corporate purposes and the repayment and/or
redemption of certain outstanding securities. On March 15, 1994,
GSU redeemed, pursuant to sinking fund requirements, 22,500
shares of its Adjustable Rate Series B Preferred Stock, $100 par
value.
LP&L
During the first nine months of 1994, LP&L redeemed the
following series of preferred stock pursuant to sinking fund
requirements:
Redemption Date Series Par Value Shares
2/1/94 12.64% Series $25 300,000
5/2/94 14.72% Series $25 416
7/1/94 10.72% Series $25 240,000
On October 1, 1994, LP&L redeemed, pursuant to sinking fund
requirements, 61,121 shares of its 13.12% Series Preferred Stock,
$25 par value, which represented the remaining outstanding shares
of this series.
MP&L
During the first nine months of 1994, MP&L redeemed the
following series of preferred stock pursuant to sinking fund
requirements:
Redemption Date Series Par Value Shares
Date
1/1/94 9.76% Series $100 70,000
3/1/94 12.00% Series $100 10,000
7/1/94 9.00% Series $100 70,000
NOPSI
On March 1, 1994, NOPSI redeemed 15,000 shares of its 15.44%
Series Preferred Stock, $100 par value.
NOTE 5. LONG-TERM DEBT
AP&L
AP&L has SEC authorization to enter into arrangements for
the issuance and sale, through December 31, 1996, of up to $200
million aggregate principal amount of tax-exempt bonds. The
proceeds have been or will be used to acquire and construct
certain pollution control or sewage and solid waste disposal
facilities at AP&L's generating plants or to refinance
outstanding tax-exempt bonds issued for that purpose. On June
22, 1994, AP&L entered into arrangements with Pope County,
Arkansas, and Jefferson County, Arkansas, for the issuance and
sale of $19.5 million of 6.30% Pollution Control Revenue
Refunding Bonds (Pope Bonds) due 2016 and $9.2 million of 6.30%
Pollution Control Revenue Refunding Bonds (Jefferson Bonds) due
2018, respectively. Funds provided by the issuance of the Pope
Bonds and Jefferson Bonds were used on July 15, 1994, to redeem
$16.6 million of Pope County, Arkansas Pollution Control Revenue
Bonds 7.375% due 2006, $2.9 million of Pope County, Arkansas
Pollution Control Revenue Bonds 7.25% due 2008, and $9.2 million
of Jefferson County, Arkansas Pollution Control Revenue Bonds
7.25% due 2008. During the first nine months of 1994, AP&L
redeemed the following first mortgage bonds pursuant to sinking
fund requirements:
Redemption Date Series Principal
(in thousands)
2/1/94 8.75% Series Due 1998 $400
5/1/94 6.25% Series Due 1996 $200
8/1/94 9.75% Series Due 2000 $200
GSU
GSU has requested, but not yet received, SEC authorization
to issue and sell, through December 31, 1995, up to $700 million
aggregate principal amount of its first mortgage bonds, medium
term notes and/or preferred stock. The proceeds will be used for
general corporate purposes and the repayment or redemption of
certain outstanding securities. GSU has also requested, but not
yet received, SEC authorization to enter into arrangements for
the issuance and sale, through December 31, 1995, of up to $250
million aggregate principal amount of tax-exempt bonds for the
financing or refinancing of certain sewage and/or solid waste
disposal facilities. The proceeds from the sale of tax-exempt
bonds will be used to finance certain sewage and/or solid waste
disposal or pollution control facilities or to refinance
outstanding tax-exempt bonds issued for that purpose. In
addition, GSU has requested, but has not yet received, SEC
authorization to purchase or otherwise acquire its outstanding
pollution control revenue bonds and/or industrial development
revenue bonds through December 31, 1995. On July 1, 1994, GSU
redeemed, pursuant to sinking fund requirements, $0.425 million
of Iberville Parish 7.0% Series Pollution Control Revenue Bonds.
LP&L
LP&L has requested, but not yet received, SEC authorization
to undertake the refunding of approximately $310 million of
intermediate-term and long-term bonds issued by the Owner Trustee
to acquire interests in Waterford 3 in 1989. Such bonds became
optionally redeemable in July 1994. On July 20, 1994, LP&L
entered into arrangements with the Parish of St. Charles,
Louisiana, for the issuance of $20.4 million of its 6-7/8%
Environmental Revenue Bonds due 2024. During the first nine
months of 1994, LP&L redeemed, pursuant to sinking fund
requirements, $0.2 million of various series of its pollution
control and industrial revenue bond obligations. On June 1,
1994, LP&L retired $25 million of its 4.625% Series First
Mortgage Bonds upon maturity.
MP&L
On April 1, 1994, MP&L retired $30 million of its 9.9%
Series G&R Bonds upon maturity. On April 20, 1994, MP&L entered
into arrangements with Warren County, Mississippi and Washington
County, Mississippi for the issuance of $16.0 million principal
amount of 7% Pollution Control Revenue Refunding Bonds due 2022,
the proceeds of which were used to redeem $8.1 million principal
amount of 8.5% Warren County Pollution Control Revenue Bonds and
$7.9 million principal amount of 7.5% Washington County Pollution
Control Revenue Bonds on May 13, 1994. On July 14, 1994, MP&L
issued $25 million of its 8.25% Series G&R Bonds due 2004. A
portion of the net proceeds from the issuance and sale of these
G&R Bonds was used on July 15, 1994, to retire $18 million of
MP&L's 11.11% Series G&R Bonds upon maturity.
NOPSI
On May 2, 1994, NOPSI redeemed, pursuant to sinking fund
requirements, $15 million of its 10.95% Series G&R Bonds.
System Energy
On January 11, 1994, System Energy refinanced $435 million
aggregate principal amount of secured lease obligation bonds
originally issued as part of the financing for the sale and
leaseback of undivided portions of Grand Gulf 1. The secured
lease obligation bonds of $356 million, 7.43% series due 2011 and
$79 million, 8.2% series due 2014 are indirectly secured by liens
on, and a security interest in, certain ownership interests and
the respective leases relating to Grand Gulf 1. On April 28,
1994, System Energy issued $60 million of its 7-5/8% Series First
Mortgage Bonds due 1999. On May 2, 1994, System Energy redeemed,
pursuant to mandatory and optional sinking fund requirements, $60
million of its 11% Series First Mortgage Bonds due 2000.
NOTE 6. RETAINED EARNINGS
On October 28, 1994, Entergy Corporation's Board of
Directors declared a common stock dividend of 45 cents per share
payable on December 1, 1994.
NOTE 7. NEW ACCOUNTING STANDARDS
SFAS 115
The System adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," effective January 1, 1994. As a result, as of
September 30, 1994, the System has recorded on the balance sheet
an additional $9.1 million in decommissioning trust funds,
representing the amount by which the fair value of the securities
held in such funds exceeds the amounts recovered in rates and
deposited in the funds and the related earnings on the amounts
deposited. Due to the regulatory treatment for decommissioning
trust funds, the System recorded an offsetting amount in
unrealized gains on investment securities as a regulatory
liability in other deferred credits.
SFAS 116
In the third quarter of 1994, the System adopted the
provisions of SFAS No. 116, "Accounting for Contributions
Received and Contributions Made." As a result, the System
recorded a liability of approximately $10.8 million for
contribution commitments.
NOTE 8. PREACQUISITION CONTINGENCIES
Entergy Corporation and GSU
See pages 103 and 180 of the Form 10-K for a discussion of
accounting for preacquisition contingencies in connection with
the Merger. Entergy Corporation has completed its analyses with
respect to certain GSU preacquisition contingencies and has
revised the allocation of the purchase price for a number of
preacquisition contingencies. In September 1994, GSU wrote-off
assets or recorded liabilities totaling approximately $67.8
million net of tax for the Cajun-River Bend litigation, unfunded
Cajun-River Bend costs, environmental cleanup costs, obsolete
spare parts, and Louisiana River Bend rate deferrals previously
disallowed by the LPSC (see pages 86 and 165 of the Form 10-K).
Entergy Corporation is continuing its analyses of certain other
preacquisition contingencies and additional adjustments to the
allocation of the purchase price may occur in the fourth quarter
of 1994.
NOTE 9. RESTRUCTURING COSTS
Entergy, AP&L, GSU, LP&L, MP&L, and NOPSI
During the third quarter of 1994, Entergy announced a
restructuring program related to certain of its operating units.
The program is designed to reduce costs, improve operating
efficiencies, and increase shareholder value in order to enable
Entergy to become a low-cost producer. The program includes
reductions in the number of employees and the consolidation of
offices and facilities. In the third quarter of 1994, AP&L, GSU,
LP&L, MP&L, and NOPSI recorded restructuring charges of $7.9
million, $6.1 million, $3.3 million, $2.2 million, and $2.8
million respectively. These charges primarily include employee
severance costs related to the expected termination of
approximately 1,084 employees. As of September 30, 1994, no
employees have been terminated and no termination benefits have
been paid under this restructuring program.
Additionally, GSU recorded $23.8 million in the third quarter
of 1994 for remaining severance and augmented retirement benefits
related to the Merger.
__________________________________________
In the opinion of Entergy Corporation, AP&L, GSU, LP&L,
MP&L, NOPSI, and System Energy, the accompanying unaudited
condensed financial statements contain all adjustments
(consisting primarily of normal recurring accruals and
reclassifying previously reported amounts to conform to current
classifications) necessary for a fair statement of the results
for the interim periods presented. However, the business of
AP&L, GSU, LP&L, MP&L, and NOPSI is subject to seasonal
fluctuations with the peak period occurring during the summer
months. The results for the interim periods presented should not
be used as a basis for estimating results of operations for a
full year.
In accordance with the purchase method of accounting, the
1993 third quarter and first nine months results of operations
for Entergy Corporation reported in its Statements of
Consolidated Income and Cash Flows do not include GSU's results
of operations. However, the Results of Operations discussion in
"Management's Financial Discussion & Analysis" is presented with
GSU's 1993 results of operations included for comparative
purposes. This information is not necessarily indicative of the
results of operations that would have occurred had the Merger
been consummated for the period for which it is being given
effect, nor is it necessarily indicative of future operating
results.
ENTERGY CORPORATION AND SUBSIDIARIES
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
MANAGEMENT'S FINANCIAL DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
Liquidity is important to Entergy due to the capital
intensive nature of its business, which requires large
investments in long-lived assets. While large capital
expenditures for the construction of new generating capacity are
not currently planned, the System does require significant
capital resources for the periodic maturity of certain series of
debt and preferred stock and ongoing construction expenditures.
See Note 1 for additional information on the System's capital and
refinancing requirements in 1994 - 1996. Net cash flow from
operations for Entergy, the System operating companies, and
System Energy for the nine months ended September 30, 1994 and
1993, was as follows (in millions):
Nine Months Nine Months
Company Ended 9/30/94 Ended 9/30/93
Entergy * $1,120.6 $776.4
AP&L $ 256.8 $269.5
GSU $ 278.3 $173.2
LP&L $ 304.5 $225.4
MP&L $ 154.4 $109.8
NOPSI $ 61.0 $ 21.6
System Energy $ 206.9 $253.4
* Entergy's net cash flow from operations for the nine months
ended September 30, 1993, excludes GSU because the Merger
was not yet consummated.
In the first nine months of 1994, as in recent years, cash
from operations, supplemented by cash on hand, was sufficient to
meet substantially all investing and financing requirements,
including capital expenditures, dividends, and debt/preferred
stock maturities. (However, MP&L substantially increased its
short-term borrowings because of unexpected costs incurred as a
result of an ice storm.) Entergy's ability to fund most of its
capital requirements with cash from operations results, in part,
from continued efforts to streamline operations and reduce costs
as well as collections under the Grand Gulf 1 rate phase-in
plans, which exceed current cash requirements for Grand Gulf 1-
related costs. (In the income statement, these revenue
collections are offset by the amortization of previously deferred
costs; therefore, there is no effect on net income.) The System
operating companies and System Energy have the ability, subject
to regulatory approval, to meet capital requirements through
future debt or preferred stock issuances, as discussed below.
Also, to the extent current market interest and dividend rates
allow, the System operating companies and System Energy may
continue to refinance high-cost debt and preferred stock prior to
maturity.
Productive investment of excess funds is necessary to
enhance the long-term value of Entergy Corporation's common
stock. Entergy Corporation expects to invest approximately $150
million per year in nonregulated and nonutility businesses. See
"Significant Factors and Known Trends - Nonregulated Investments"
for additional information. In October 1994, Entergy Corporation
invested $50 million in the Hub River Company which is
constructing a generating station near Karachi, Pakistan.
Entergy Corporation's current primary capital requirements
are to periodically invest in, or make loans to, its
subsidiaries. Entergy Corporation expects to meet these
requirements in 1994 - 1996 with internally generated funds and
cash on hand. Entergy Corporation also pays dividends on its
common stock, which aggregated $309.5 million in the first nine
months of 1994. Declarations of dividends on common stock are
made at the discretion of Entergy Corporation's Board of
Directors (Board). Management will recommend future dividend
increases to the Board only if such increases are justified by
sustained earnings growth of Entergy Corporation and its
subsidiaries. Entergy Corporation receives funds through
dividend payments from its subsidiaries. During the first nine
months of 1994, these common stock dividend payments totaled
$621.2 million. Certain restrictions may limit the amount of
these distributions (see page 94 of the Form 10-K and Note 2).
Entergy Corporation has a program to repurchase shares of
its outstanding common stock. The timing and amount of such
repurchases depend upon market conditions and authorization from
the Board. See Note 4 for additional information. Entergy
Corporation has requested, but not yet received, SEC
authorization for a $300 million bank line of credit, the
proceeds of which are expected to be used for common stock
repurchases, investments in nonregulated and nonutility
businesses, and other activities. Certain parties have
intervened in this proceeding, and the application is pending.
Earnings coverage tests, bondable property additions, and
equity ratio requirements (in the case of System Energy) limit
the amount of mortgage bonds and preferred stock that can be
issued by each of the System operating companies and System
Energy. Based on the most restrictive applicable tests as of
September 30, 1994, and an assumed annual interest or dividend
rate of 9.25%, each of the System operating companies and System
Energy could have issued bonds or preferred stock in the
following amounts (in millions):
Company Bonds Preferred
Stock
AP&L $239 $348
GSU $ - $ -
LP&L $ 87 $513
MP&L $246 $ 81
NOPSI $ 88 $ 88
System $295 *
Energy
* System Energy's charter does not provide for the issuance of
preferred stock.
In addition, the System operating companies and System
Energy have the conditional ability to issue bonds against the
retirement of bonds, in some cases without meeting an earnings
coverage test. As a result of the charges recorded in the third
quarter of 1994 as discussed in Notes 8 and 9, GSU is currently
precluded from issuing first mortgage bonds under its earnings
coverage test. However, GSU has the ability to issue up to
approximately $526 million of first mortgage bonds against
previously retired bonds. AP&L may also issue preferred stock to
refund outstanding preferred stock without meeting an earnings
coverage test. GSU has no earnings coverage limitations on the
issuance of preference stock. For information on the System
operating companies' and System Energy's regulatory
authorizations to issue and acquire securities, see Notes 4 and
5, and pages 90-94, 129-131, 170-172, 204-206, 239-241, 271-272,
and 301 of the Form 10-K. See Note 3 for information on the
System's short-term borrowings.
Entergy Corporation and GSU
In September 1994, Entergy Corporation completed its
analyses with respect to certain preacquisition contingencies and
revised the allocation of the purchase price for a number of
preacquisition contingencies. In accordance with the purchase
method of accounting, Entergy Corporation increased its
acquisition adjustment and GSU reduced net income by
approximately $67.8 million net of tax. See Notes 2 and 8 for
additional information on provisions for preacquisition
contingencies recorded in September 1994.
See Notes 1 and 2, and Part II, Item 1. "Legal
Proceedings," regarding litigation with Cajun and River Bend rate
appeals. Substantial write-offs or charges resulting from
adverse rulings in these matters could result in substantial
additional net losses being reported by GSU in 1994, and
subsequent periods, with resulting substantial adverse
adjustments to common shareholder's equity. Also, adverse
resolution of these matters could adversely affect GSU's ability
to continue to pay dividends and obtain financing, which could in
turn affect GSU's liquidity.
Entergy Corporation and System Energy
In connection with the financing of Grand Gulf 1, Entergy
Corporation has undertaken to provide System Energy with
sufficient capital to (1) maintain System Energy's equity capital
at an amount equal to at least 35% of System Energy's total
capitalization (excluding short-term debt), (2) permit the
continuation of commercial operation of Grand Gulf 1, and (3)
enable System Energy to pay in full all borrowings of System
Energy, whether at maturity, on prepayment, on acceleration or
otherwise. In addition, Entergy Corporation has agreed to make
certain cash capital contributions, if required, to enable System
Energy to make payments when due on its long-term debt.
System Energy
The financial condition of System Energy significantly
depends on the continued commercial operation of Grand Gulf 1 and
on the receipt of payments from AP&L, LP&L, MP&L, and NOPSI.
Such payments are System Energy's only source of operating
revenues.
In addition, System Energy's financial condition could be
affected by the outcome of a pending FERC audit matter. As
discussed in Note 2, FERC Division of Audits issued a report in
December 1990 that recommended that System Energy write off and
not recover in rates approximately $95 million of Grand Gulf 1
costs included in utility plant, and compute refunds for
overcollections from AP&L, LP&L, MP&L, and NOPSI.
In June 1994, System Energy, AP&L, LP&L, MP&L, and NOPSI
reached a tentative settlement with the FERC staff and certain
other parties. The proposed settlement was filed with FERC on
October 7, 1994. FERC has not approved the proposed settlement,
and therefore, the effects of the settlement have not been
recorded. The proposed settlement, which is subject to approval
by FERC, would require System Energy to refund or credit
approximately $61.7 million to AP&L, LP&L, MP&L, and NOPSI, which
would in turn make refunds or credits to their customers (except
for those portions attributable to AP&L's and LP&L's retained
share of Grand Gulf 1 costs). Additionally, System Energy would
refund or credit a total of approximately $62 million, plus
interest, to AP&L, LP&L, MP&L, and NOPSI over the period through
June 2004. Interest on the $62 million refund and loss of the
return on certain Grand Gulf 1 costs will reduce Entergy's and
System Energy's net income by approximately $10 million annually
over the next 10 years. However, there can be no assurance that
FERC will ultimately approve the settlement in its current form.
See Note 2 for additional information. Also, see Note 1 for
certain restrictions on the payment of common dividends by System
Energy in connection with the proposed settlement.
NOPSI
As discussed in Note 2, under the terms of the 1991 NOPSI
Settlement and a 1992 gas rate settlement, the Council has the
right to review NOPSI's return on equity annually through October
31, 1996. Also, NOPSI is currently operating under electric and
gas base rate freezes through October 31, 1996.
On July 7, 1994, NOPSI and the Council agreed that, based on
the test year ended September 30, 1993, NOPSI's earnings exceeded
its revenue requirement by $24.95 million and in accordance with
the terms of the 1991 NOPSI Settlement and a 1992 gas rate
settlement, there would be a prospective base rate reduction for
twelve months commencing July 14, 1994. The reduction, because of
a rate freeze, will be accomplished by means of a credit (to be
expressed on a per KWH basis) to customers' bills.
On November 1, 1994, NOPSI filed with the Council an
analysis of its earnings for the test year ended September 30,
1994, which indicated a rate reduction/credit of approximately
$24 million is required.
RESULTS OF OPERATIONS
ENTERGY
On December 31, 1993, GSU became a subsidiary of Entergy
Corporation. In accordance with the purchase method of
accounting, the nine months ended September 1993 results of
operations for Entergy Corporation and subsidiaries reported in
its Statements of Consolidated Income and Cash Flows do not
include GSU's results of operations. However, the following
discussion is presented with GSU's 1993 results of operations
included for comparative purposes.
In the third quarter of 1994, Entergy recorded certain one-
time, non-recurring charges which significantly affected results
of operations as discussed below. These one-time charges
included, among other things, Merger related costs and
restructuring costs (see Note 9).
Net Income
Consolidated net income decreased $151.5 million in the
third quarter of 1994 due primarily to decreased revenues,
increased merger-related costs, certain restructuring costs, and
decreased miscellaneous income - net, partially offset by a
decrease in interest expense as explained below.
Consolidated net income decreased in the first nine months
of 1994 due primarily to the one-time recording in 1993 of the
cumulative effect of the change in accounting principle for
unbilled revenues for AP&L, MP&L, GSU, and NOPSI. Excluding the
effect of the change in accounting principle, net income
decreased in the first nine months of 1994 by approximately
$150.2 million. This resulted from a decrease in retail
revenues, increased merger related costs, certain restructuring
costs, and decreased miscellaneous income - net, partially offset
by a decrease in interest on long-term debt and preferred
dividend requirements as a result of continued debt refinancing
and stock redemption activities.
Significant factors affecting the results of operations and
causing variances between the third quarter and first nine months
of 1994 and 1993 are discussed under "Revenues and Sales,"
"Expenses," and "Other" below.
Revenues and Sales
See Entergy's "Selected Operating Results" for information
on operating revenues by source and KWH sales.
Electric operating revenues decreased $178.5 million in the
third quarter due primarily to lower retail energy sales and
decreased unbilled revenues resulting from cooler than normal
summer weather as compared to 1993. Additionally, revenues were
lower due to decreased fuel adjustment revenues and rate
reductions at GSU and MP&L, and decreased fuel adjustment
revenues at NOPSI. Electric operating revenues decreased $31.0
million in the first nine months of 1994 due primarily to rate
reductions at GSU, MP&L, and NOPSI, and decreased unbilled
revenues, partially offset by increased retail energy sales.
Gas operating revenues increased $8.9 million in the first
nine months of 1994 due primarily to increased retail sales
resulting from colder than normal winter weather, partially
offset by lower gas sales in the third quarter of 1994 due to a
warmer than normal spring.
Expenses
Fuel for electric generation and fuel-related expenses
decreased $60.3 million in the third quarter of 1994 due
primarily to decreased energy sales as discussed in "Revenues and
Sales" above.
Purchased power decreased $27.0 million in the third quarter
of 1994 due primarily to decreased power purchases from
nonassociated utilities due to changes in generation requirements
for the System operating companies resulting primarily from
decreased energy sales and fuel-related costs.
Other operation and maintenance expenses increased in the
third quarter of 1994 due primarily to increased GSU merger
related costs, as discussed in Note 9, increased storm damage
costs and environmental reserves, and recognition of certain
restructuring costs.
Nuclear refueling outage expenses decreased $5.9 million in
the first nine months of 1994 due primarily due to Grand Gulf
outage expenses incurred in the third quarter of 1993 and lower
outage expense accruals at River Bend.
Income taxes decreased in the third quarter and first nine
months of 1994 due primarily to lower pre-tax book income.
The amortization of rate deferrals increased $33.6 million
in the first nine months of 1994 due primarily to collection of
more Grand Gulf 1-related costs from customers in 1994 as
compared to 1993.
Interest expense decreased $7.7 million in the third quarter
and $31.5 million for in the first nine months of 1994 due
primarily to the refinancing of high cost debt.
Preferred dividend requirements decreased $1.6 million in
the third quarter and $9.4 million for the first nine months of
1994 due primarily to stock redemption activities.
Other
Miscellaneous income - net decreased $22.6 million in the
third quarter and $43.9 million in the first nine months of 1994
due primarily to amortization of plant acquisition adjustments
related to the Merger, the early adoption of SFAS No. 116, as
discussed in Note 7, and reduced Grand Gulf 1 carrying charges at
AP&L.
AP&L
Net Income
Net income decreased in the third quarter of 1994 due
primarily to decreased operating revenues and increased operating
and maintenance expenses.
Net income decreased in the first nine months of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues. Excluding the effect of the change in
accounting principle, net income decreased $27.4 million. This
decrease is due primarily to increased operation and maintenance
expense as a result of restructuring costs and storm damage
activity in the second and third quarters of 1994.
Significant factors affecting the results of operations and
causing variances between the third quarters and first nine
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See AP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues decreased in the third quarter
of 1994 due to lower retail energy sales. Electric operating
revenues also decreased due to decreased collections of Grand
Gulf 1-related costs and lower fuel adjustment revenues, which do
not impact net income. Total sales increased in the third
quarter due primarily to increased sales for resale to associated
companies, caused by changes in generation availability and
requirements among the System operating companies, partially
offset by lower retail sales due to a cooler summer than prior
year.
Electric operating revenues and sales increased in the first
nine months of 1994 due primarily to an increase in sales for
resale to associated companies caused by changes in generation
availability and requirements among the System operating
companies, and increased commercial and industrial sales,
partially offset by decreased collections of Grand Gulf 1-related
costs and decreased recovery of fuel-related costs, which do not
impact net income.
Expenses
Purchased power decreased in the third quarter of 1994 as a
result of lower prices, partially offset by an increase in the
amount of power purchased. Other operation and maintenance
expense increased in the third quarter and first nine months of
1994 due primarily to storm damage costs and restructuring costs
as discussed in Note 9. Depreciation and decommissioning expense
increased in the third quarter and first nine months of 1994 due
primarily to additions and upgrades to the ANO isometric drawing
and financial management systems, and to additions and
replacements to the ANO steam generator and plant monitoring
systems. The amortization of rate deferrals decreased in the
third quarter of 1994 due primarily to reduced Grand Gulf 1
carrying charges.
Total income taxes decreased in the third quarter and first
nine months of 1994 due to lower pretax income.
Other
Miscellaneous income - net decreased in the third quarter of
1994 due primarily to reduced Grand Gulf 1 carrying charges.
GSU
Net Income
Net income decreased in the third quarter and first nine
months of 1994 primarily due to write-offs associated with
certain preacquisition contingencies as discussed in Note 8, and
additional merger related costs, and restructuring costs as
discussed in Note 9.
Significant factors affecting the results of operations and
causing variances between the third quarter and first nine months
of 1994 and 1993 are discussed under "Revenues and Sales" and
"Expenses" below.
Revenue and Sales
See GSU's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Operating revenues decreased in the third quarter of 1994
due primarily to lower retail revenues partially offset by
increased sales for resale. The decrease in electric operating
revenues was primarily due to a decrease in fuel recovery
revenue, current and prior year rate reductions in Texas and a
cooler summer than the prior year, which offset the increase in
wholesale revenues. Energy sales increased due to higher sales
for resale as a result of GSU's participation in the System power
pool.
Operating revenues increased slightly in the first nine
months of 1994 due primarily to increased wholesale revenues
associated with higher sales for resale partially offset by lower
retail revenues. The decrease in retail revenues is primarily due
to a decrease in fuel recovery revenue and a November 1993 rate
reduction in Texas, partially offset by favorable weather in the
first and second quarters as compared to the prior year. Sales
for resale increased as a result of GSU's participation in the
System power pool.
Expenses
Purchased power increased in the third quarter and first
nine months of 1994 due to GSU's participation in joint
dispatching through the System power pool resulting from
increased energy sales as discussed above. In addition, the
increase in purchased power expense for the first nine months of
1994 was also due to the recording of a provision for refund of
disallowed purchased power costs resulting from a Louisiana
Supreme Court ruling in the second quarter as discussed in Note
2. Fuel, fuel-related expenses and gas purchased for resale
decreased in the third quarter of 1994 primarily due to lower gas
prices. Operation and maintenance expenses increased in the third
quarter and first nine months of 1994 due primarily to charges
associated with certain preacquisition contingencies as discussed
in Note 8, additional merger related costs, and restructuring
costs as discussed in Note 9.
Income taxes decreased in the third quarter and first nine
months of 1994 due primarily to lower pretax income.
Taxes other than income taxes decreased in the first nine
months of 1994 due to a $15.1 million franchise tax refund.
Other
Miscellaneous income - net decreased in the third quarter
and first nine months of 1994 due primarily to certain
preacquisition contingencies as discussed in Note 8, including
Cajun River Bend litigation, the write-off of previously
disallowed rate deferrals, and obsolete spare parts.
Income taxes decreased in the third quarter and first nine
months of 1994 due primarily to the charges discussed above.
LP&L
Net Income
Net income decreased in the third quarter of 1994 due
primarily to decreased operating revenues and increased other
operation and maintenance expenses. For the first nine months of
1994 net income decreased primarily due to higher operation and
maintenance expenses.
Significant factors affecting the results of operations and
causing variances between the third quarters and first nine
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See LP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues were lower in the third quarter
of 1994 primarily due to decreased retail and wholesale revenues.
The decrease in retail energy sales is primarily due to a cooler
summer than the prior year which reduced sales to residential and
commercial customers partially offset by higher industrial sales.
Lower sales for resale to associated and nonassociated companies
also contributed to the decrease in electric operating revenues
for the third quarter of 1994. In addition, completion of the
amortization of the proceeds resulting from litigation with a gas
supplier resulted in decreased other operating revenues for the
third quarter and first nine months of 1994.
Electric operating revenues were slightly higher during the
first nine months of 1994 primarily due to higher fuel adjustment
revenues, which do not affect net income, and increased retail
energy sales, partially offset by lower wholesale and other
operating revenues.
Expenses
Operating expenses decreased for the third quarter of 1994
primarily due to lower purchased power and income tax expense
partially offset by higher other operation and maintenance
expenses. Other operation and maintenance expense increased
primarily due to the impact of expenses related to restructuring
costs as discussed in Note 9 and power plant waste water site
closures as discussed in Note 1. Purchased power decreased
primarily due to lower cost. The decrease in income tax expense
reflects lower pretax book income for the third quarter of 1994.
Operating expenses increased slightly for the first nine
months of 1994 primarily due to higher fuel and other operation
and maintenance expense partially offset by lower income tax
expense. The increase in fuel expense for the first nine months
of 1994 is primarily due to an increase in deferred fuel expense
related to the over-recovery of fuel cost in the current period.
Other operation and maintenance expense increased for the first
nine months of 1994 primarily due to third quarter expenses
related to restructuring costs as discussed in Note 9, and power
plant waste water site closures as discussed in Note 1. The
decrease in income tax expense reflects lower pretax book income
for the first nine months of 1994.
MP&L
Net Income
Net income decreased in the third quarter of 1994 due
primarily to decreased electric operating revenues.
Net income decreased in the first nine months of 1994 due
primarily to the one-time recording in the first quarter of 1993
of the cumulative effect of the change in accounting principle
for unbilled revenues. Excluding the effect of the change in
accounting principle, net income decreased by $23.6 million. This
decrease for the first nine months of 1994 is primarily due to
decreased electric operating revenues.
Significant factors affecting the results of operations and
causing variances between the third quarters and first nine
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See MP&L's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues decreased in the third quarter
primarily due to the impact of the incentive rate plan that went
into effect in March 1994, a cooler summer than the prior year
period, and lower wholesale revenues. During the first nine
months of 1994, electric operating revenues decreased primarily
due to the second quarter incentive rate plan, partially offset
by higher energy sales and higher fuel adjustment revenues that
do not effect net income. In addition to the factors cited above
for revenues, accrued unbilled revenues decreased due to a change
in the cycle billing dates offset by an increase in billed
revenues. This decrease was partially offset by increased retail
energy sales resulting from increased commercial and industrial
sales.
Expenses
Fuel for electric generation and fuel-related expenses
decreased in the third quarter of 1994 due primarily to improved
generating efficiency at certain MP&L plants. Fuel for electric
generation and fuel-related expenses increased in the first nine
months of 1994 due primarily to an increase in generation
requirements resulting primarily from increased energy sales as
discussed in "Revenues and Sales" above.
Purchased power expense decreased in the third quarter and
first nine months of 1994 due primarily to changes in generation
availability and requirements among the System operating
companies. A lower per unit price for power purchased also
contributed to the decrease in purchased power in the third
quarter of 1994.
The amortization of rate deferrals increase in the third
quarter and first nine months of 1994 reflected the fact that
MP&L, based on the Revised Plan, collected more Grand
Gulf 1-related costs from its customers in the third quarter and
first nine months of 1994 than it recovered in the same period in
1993.
Income taxes decreased in the first nine months due
primarily to lower pretax income.
NOPSI
Net Income
Net income decreased in the third quarter of 1994 due
primarily to lower operating revenues partially offset by lower
operating expenses.
Net income decreased for the first nine months of 1994 due
primarily to the one-time recording of the cumulative effect of
the change in accounting principle for unbilled revenues in 1993.
Excluding the effect of the change in accounting principle, net
income decreased for the first nine months of 1994 by $14
million. This decrease is due primarily to the recording of a
reserve for revenue reduction as a result of a review of NOPSI's
return on equity in accordance with the 1991 NOPSI Settlement and
a 1992 gas rate settlement.
Significant factors affecting the results of operations and
causing variances between the third quarters and first nine
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
See NOPSI's "Selected Operating Results" for information on
operating revenues by source and KWH sales.
Electric operating revenues decreased in the third quarter
due primarily to a decrease in energy sales and lower fuel
adjustment revenues. The decrease in electric operating revenues
in the first nine months of 1994 was due primarily to the
recording of a reserve as discussed in "Net Income" above.
Electric energy sales decreased in the third quarter due
primarily to a decrease in residential sales resulting from a
cooler summer than the prior year. Electric energy sales were
flat for the first nine months of 1994 due primarily to a slight
increase in retail sales resulting from a colder winter and
warmer spring weather than in the previous year, offset by a
decrease in sales for resale.
For the first nine months of 1994, gas operating revenues
increased due primarily to increased gas sales in the first
quarter as a result of a colder winter than the prior year,
partially offset by lower second and third quarter gas sales.
Expenses
Fuel for electric generation and fuel-related expenses
decreased in the third quarter of 1994 due primarily to a
decrease in energy sales as discussed in "Revenue and Sales"
above, and lower gas fuel costs. The decrease in fuel price for
the third quarter of 1994 was partially offset by an increase in
deferred fuel expense due to the over-recovery of fuel costs in
the current period. For the first nine months of 1994 fuel for
electric generation and fuel-related expenses increased due to
higher deferred fuel expense partially offset by lower fuel costs
relating to a change in the fuel mix from oil in the prior year
to gas in the current period.
Purchased power expense decreased in the third quarter and
first nine months of 1994 due primarily to changes in generation
requirements among the System operating companies and lower
costs.
Gas purchased for resale decreased for the third quarter of
1994 due to decreased gas sales.
Income taxes decreased in the third quarter and first nine
months due primarily to lower pretax income.
The increase in the amortization of rate deferrals in the
third quarter and the first nine months of 1994 is primarily a
result of the collection of larger amounts of previously deferred
costs under the 1991 NOPSI Settlement.
SYSTEM ENERGY
Net Income
Net income increased in the third quarter of 1994 due
primarily to an adjustment in the third quarter of 1993 related
to the recording of a reserve for revenues in the third quarter
of 1993 as a result of a FERC investigation of the return on
equity of System Energy's formula wholesale rates and a reduction
in interest expense due to the refinancing of high-cost debt.
Net income decreased in the first nine months of 1994 due
primarily to a lower rate of return on System Energy's decreasing
investment in Grand Gulf 1, partially offset by a decrease in
interest expense due to refinancing of high-cost long-term debt.
Significant factors affecting the results of operations and
causing variances between the third quarters and first nine
months of 1994 and 1993 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues
Operating revenues recover operating expenses, depreciation
and capital costs attributable to Grand Gulf 1. The capital
costs are computed by allowing a return on System Energy's common
equity funds allocable to its net investment in Grand Gulf 1 and
adding to such amount System Energy's effective interest cost for
its debt allocable to its investment in Grand Gulf 1.
Operating revenues decreased in the third quarter of 1994
due primarily to a lower return on System Energy's decreasing
investment in Grand Gulf 1 (caused by depreciation of the unit)
and increased expenses in connection with Grand Gulf 1 refueling
outage in the third quarter of 1993.
Operating revenues decreased in the first nine months due
primarily to a lower return on System Energy's decreasing
investment in Grand Gulf 1 and a decrease in fuel expenses.
Expenses
Fuel for electric generation and fuel-related expenses
increased in the third quarter primarily due to per unit price.
Fuel for electric generation and fuel-related expenses
decreased in the first nine months primarily due to a lower per
unit cost for nuclear fuel as a result of a favorable market for
uranium.
Income taxes decreased in the first nine months due
primarily to lower pretax income and adjustments to the SFAS 109
deferred tax balances.
Interest expense decreased in the first nine months of 1994
due primarily to the refinancing of high-cost long-term debt.
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy Corporation and GSU
Entergy Corporation-GSU Merger
On December 31, 1993, Entergy completed the Merger and
became one of the nation's largest electric utilities. With GSU
as its fifth retail operating company, Entergy gained size,
expanded market area, economies of scale, an additional nuclear
unit (River Bend), and a more price-competitive fuel mix. As a
result of the Merger, Entergy estimates $850 million in fuel cost
savings and $670 million in operation and maintenance expense
savings over the next decade. It is possible that common
shareholders may experience some dilution in earnings in the
short term as a result of the Merger. However, Entergy
Corporation believes that the Merger will be beneficial to common
shareholders over the longer term, both in terms of the strategic
benefits and the economies and efficiencies expected to be
produced. For further information, see pages 103-104 and 180 of
the Form 10-K and "Litigation and Regulatory Proceedings" below.
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI
Competition
Entergy welcomes competition in the electric energy business
and believes that a more competitive environment should benefit
our shareholders, customers, and employees. However, competition
presents Entergy with many challenges. The following have been
identified by Entergy as its major competitive challenges.
Retail and Wholesale Rate Issues
Increasing competition in the utility industry brings an
increased need to stabilize or reduce retail rates. The retail
regulatory environment is shifting from traditional rate-base
regulation to incentive rate regulation. Incentive and
performance-based rate plans encourage efficiencies and
productivity while permitting utilities and their customers to
share in the results. Retail wheeling, which requires utilities
to "wheel" or move power from third parties to their own retail
customers, is evolving. As a result, the retail market is
expected to become more competitive. In the wholesale rate area,
FERC approved in 1992, with certain modifications, the proposal
of AP&L, LP&L, MP&L, NOPSI, and Entergy Power to sell wholesale
power at market-based rates and to provide to electric utilities
"open access" to the System's transmission system (subject to
certain requirements). GSU was later added to this filing.
Various intervenors in the proceeding filed petitions for review
with the D.C. Circuit. See Part II, Item 1. "Legal
Proceedings," for information on a ruling by the D.C. Circuit
regarding Entergy's open access transmission rates. Open access
and market pricing, once it takes effect, will increase marketing
opportunities for the System, but will also expose the System to
the risk of loss of load or reduced revenues due to competition
with alternative suppliers.
In connection with the Merger, AP&L agreed with the APSC not
to request any general retail rate increases that would take
effect before November 1998, with certain exceptions. For
further information, see pages 82-83 and 125-126 of the Form 10-
K.
On March 31, 1994, North Little Rock, Arkansas, awarded AP&L
a wholesale electric contract that will provide estimated
revenues of $347 million over 11 years. Under the contract, the
price per KWH was reduced 18%, retroactive to March 1, 1994, with
increases in price through the year 2004. AP&L, which has been
serving North Little Rock for over 40 years, was awarded the
contract after intense bidding with several competitors. FERC
accepted the contract, but one of AP&L's competitors has
requested a rehearing and has filed complaints against AP&L and
North Little Rock challenging the contract.
In connection with the Merger, GSU agreed with the LPSC and
PUCT to a five-year Rate Cap on retail electric rates, and to
pass through to retail customers the fuel savings and a certain
percentage of the nonfuel savings created by the Merger. Under
the terms of their respective Merger agreements, the LPSC and
PUCT will review GSU's base rates during the first post-Merger
earnings analysis for reasonableness of its return on equity. In
May 1994 and June 1994, GSU made its first post-Merger earnings
analysis filings with the LPSC and PUCT, respectively, which GSU
believes support the current levels of rates. For further
information, see pages 82-83 and 163-164 of the Form 10-K. See
Note 2 for information on recent filings by certain Texas cities
seeking a reduction in GSU's rates.
Cogeneration projects developed or considered by certain of
GSU's industrial customers over the last several years have
resulted in GSU developing and securing approval of rates lower
than the rates previously approved by the PUCT and LPSC for such
industrial customers. Such rates are designed to retain such
customers, and to compete for and develop new loads, and do not
presently recover GSU's full cost of service. The pricing
agreements at non-full cost of service based rates fully recover
all related costs but provide only a minimal return.
Substantially all of such pricing agreements expire no later than
1997. During the first nine months of 1994, KWH sales to GSU's
industrial customers at less than full cost of service, which
make up approximately 28% of the total industrial class,
increased 15%. Sales to the remaining industrial customers
increased 1%.
LP&L's five year rate freeze expired in March 1994. At the
same time, approximately $46 million of annual rate relief that
was included in LP&L's retail rates also expired. In October
1993, the LPSC approved a schedule to conduct a review of LP&L's
rates and rate structure upon the expiration of LP&L's rate
freeze. Discovery is currently underway and hearings are
scheduled to begin in December 1994. In August 1994, LP&L
filed a performance-based formula rate plan with the LPSC. The
proposed formula rate plan would continue existing LP&L rates at
current levels, while providing financial incentive to reduce
costs and maintain high levels of customer satisfaction and
system reliability. Hearings are scheduled to begin in February
1995. See Note 2 for additional information.
In February 1994, the MPSC conducted a general review of
MP&L's current rates and in March 1994, the MPSC issued a final
order adopting a formula rate plan for MP&L that will allow for
periodic small adjustments in rates based on a comparison of
earned to benchmark returns and upon certain performance factors.
The order also adopted previously agreed-upon stipulations of a
required return on equity of 11% and certain accounting
adjustments that result in a 4.3% ($28.1 million) reduction in
MP&L's June 30, 1993, test-year operating revenues. Pursuant to
the MPSC's order, on March 18, 1994, MP&L filed rates designed to
provide for this reduction in operating revenues for the test
year. These rates are effective for service rendered on or after
March 25, 1994. See pages 83-84 and 235-236 of the Form 10-K for
further information.
In connection with the Merger, MP&L agreed with its retail
regulator not to request any general retail rate increases that
would take effect before November 1998, with certain exceptions.
For further information, see pages 82-83 and 236 of the Form 10-
K, and Part II, Item 1. "Legal Proceedings."
In light of the rate issues discussed above, Entergy is
aggressively reducing costs to avoid potential earnings erosions
that might result as well as to successfully compete by becoming
a low-cost producer.
In December 1992, AP&L, LP&L, MP&L, and NOPSI each filed a
Least Cost Plan with their respective retail regulators, and GSU
is currently working with the PUCT regarding integrated resource
planning. However, in response to an increasingly competitive
electric utility environment, AP&L, LP&L, MP&L, and NOPSI have
announced their intentions to revise their Least Cost Plan
activities. In this regard, AP&L, GSU, LP&L, MP&L, and NOPSI
intend to adopt the ratepayer impact measure test as their
primary economic criterion for DSM programs rather than the total
resource cost test that had been used in developing the initial
Least Cost Plans. Therefore, absent overriding customer,
strategic, or public interests, AP&L, GSU, LP&L, MP&L, and NOPSI
will propose those DSM programs that have the potential for lower
rates to all customers, rather than DSM programs that, while
providing direct benefits to participants, may result in higher
rates for everyone, including non-participants. In addition,
AP&L, GSU, LP&L (outside the city of New Orleans), and MP&L will
no longer seek a pre-approved cost recovery rider as a mechanism
for recovering program costs, lost contributions and incentives.
See Part II, Item 1. "Legal Proceedings," for information on
filings made by AP&L, LP&L, and MP&L with their respective
regulators in connection with proposed changes to their Least
Cost Plans. Notwithstanding the changes noted above, LP&L and
NOPSI intend to implement the DSM programs already approved by
the Council. However, LP&L and NOPSI intend to pursue
appropriate changes in the Council ordinance establishing the
Least Cost Plans framework and planning criteria.
The Energy Policy Act of 1992
The Energy Policy Act of 1992 (Energy Act) is changing the
business of transmitting and distributing electricity. The
Energy Act encourages competition and affords utilities the
opportunities, and the risks, associated with an open and more
competitive market environment. The Energy Act increases
competition in the wholesale energy market through the creation
of exempt wholesale generators (EWGs). Entergy is competing in
this market through its independent power subsidiary, Entergy
Power Development Corporation. The Energy Act also gives FERC
the authority to order investor-owned utilities to provide
transmission access to or for other utilities, including EWGs.
In addition, the Energy Act allows utilities to own and operate
foreign generation, transmission, and distribution facilities.
See "Nonregulated Investments" below for further information.
Entergy Corporation and GSU
Litigation and Regulatory Proceedings
See Note 1 and Part II, Item 1. "Legal Proceedings," for
information on litigation with Cajun concerning Cajun's ownership
interest in River Bend and the possible material adverse effects
on GSU's financial condition in the event that GSU is ultimately
unsuccessful in this litigation, including a possible filing
under the bankruptcy laws.
See Note 2 for information on the possibility of material
adverse effects on GSU's financial condition and results of
operations as a result of substantial write-offs and/or refunds
in connection with outstanding appeals and remands regarding
approximately $1.4 billion of abeyed company-wide River Bend
plant costs and approximately $187 million ($170 million net of
tax) of Texas retail jurisdiction deferred River Bend operating
and carrying costs.
System Energy
FERC Audit - Proposed Settlement
See Note 2 for information with respect to a proposed
settlement between System Energy and FERC in connection with a
decision issued by FERC in August 1992.
Entergy Corporation
Nonregulated Investments
Entergy Corporation continues to seek new opportunities to
expand its electric energy business, including expansion into
related nonutility businesses. These opportunities include new
domestic ventures such as Entergy Systems and Service, Inc.
(Entergy SASI), the region's only full-service provider of energy-
efficient lighting and related services, previously established
ventures in Argentina, and planned investments in Asia, Central
America and South America. Entergy Corporation expects to invest
approximately $150 million per year in nonregulated business
opportunities. Additional shareholder and/or regulatory
approvals may be required for such acquisitions to take place.
In the first nine months of 1994, Entergy Corporation's
nonregulated investments reduced consolidated net income by
approximately $19.3 million. In the near term, these investments
are not likely to have a positive effect on earnings; but
management believes that these investments could contribute to
future earnings growth.
Entergy Corporation and AP&L
ANO Matters
See pages 30, 77, and 123 of the Form 10-K for information
on leaks in certain steam generator tubes at ANO 2 that were
discovered and repaired during an outage in March 1992. During a
refueling outage in September 1992, a comprehensive inspection of
all steam generator tubing was conducted and necessary repairs
were made. During a mid-cycle outage in May 1993, a scheduled
special inspection of certain steam generator tubing was
conducted by Entergy Operations and additional repairs were made.
Entergy Operations operated ANO 2 with no further steam generator
inspections until the refueling outage which was completed on
April 23, 1994. Inspections during the outage revealed
additional cracks; however, most were smaller than those seen in
earlier inspections, except for one relatively large crack.
Based upon results of these inspections and an inconclusive
pressure test, Entergy Operations plans to inspect the steam
generator tubes during a mid-cycle outage tentatively scheduled
for January 1995. The operations and power output of the unit
have not been materially adversely affected.
GSU
Deregulated Portion of River Bend
As of September 30, 1994, GSU had not recovered a
significant amount of its investment in, or received any return
associated with, the portion of River Bend included in the
deregulated asset plan in Louisiana and the portion of River Bend
placed in abeyance as part of the Texas rate order which went
into effect in July 1988. See pages 157 and 165 of the Form 10-K
for further information. Future earnings will continue to be
limited as long as the limited recovery of the investment and
lack of return continues.
For the nine months ended September 30, 1994, GSU recorded
revenues resulting from the sale of electricity from the
deregulated asset plan of approximately $26.2 million. Operation
and maintenance expenses, including fuel, were approximately
$31.3 million, and depreciation expense associated with the
deregulated asset plan investment was approximately $12.3 million
for the nine months ended September 30, 1994. For the first nine
months of 1994, GSU recorded nonfuel revenue of $24.3 million
(included in the $26.2 million of total deregulated asset plan
revenue discussed above) which, absent the deregulated asset
plan, would not have been realized. The operation and
maintenance expenses and depreciation expense allocated to the
deregulated asset plan as detailed above would have been incurred
at River Bend with or without the deregulated asset plan. The
future impact of the deregulated asset plan on GSU's results of
operations and financial position will depend on River Bend's
future operating costs, the unit's efficiency and availability,
and the future market for energy over the remaining life of the
unit. Based on current estimates of the factors discussed above,
GSU anticipates that future revenues from the deregulated asset
plan will fully recover all related costs.
LPSC Fuel Cost Review
In November 1993, the LPSC ordered a review of GSU's fuel
costs. The LPSC stated that fuel costs for the period October
1988 through September 1991 (Phase 1) would be reviewed based on
the number of outages at River Bend and the findings in the June
1993 PUCT fuel reconciliation case. In July 1994, the LPSC made
a decision in the GSU/Louisiana Phase 1 fuel review case and
ordered GSU to refund approximately $27 million to its
customers. Under the order, a refund of $13.1 million, which was
not contested under a recent Louisiana Supreme Court decision as
discussed in Note 2, was made through a billing credit on August
bills. In August 1994, GSU appealed the remaining portion of the
LPSC ordered refund to the district court. GSU has made no
reserve for the remaining portion, pending outcome of the
district court appeal.
Accounting for Decommissioning Costs
The Financial Accounting Standards Board has agreed to
review the accounting for removal costs, which includes the
accounting for decommissioning of nuclear plants. This project
could possibly change the System's, as well as the entire utility
industry's, accounting for such costs.
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
River Bend
Entergy Corporation and GSU
See Note 2 and also see pages 20-22, 80-82, and 160-163 of
the Form 10-K, pages 44-46 of the First Quarter Form 10-Q, and
pages 44-47 and 70-71 of the Second Quarter Form 10-Q, for a
discussion of outstanding appeals and remands regarding
approximately $1.4 billion of abeyed company-wide River Bend
plant costs and approximately $157 million of Texas retail
jurisdiction deferred River Bend operating and carrying costs.
See Note 1 and also see pages 40-42, 94-95, and 172-173 of
the Form 10-K, pages 39-40 and 70 of the First Quarter Form 10-Q,
and pages 39-40 of the Second Quarter Form 10-Q, for a discussion
of proceedings between GSU and Cajun.
LPSC Fuel Cost Review
GSU
See pages 23 and 165 of the Form 10-K, page 49 of the First
Quarter Form 10-Q, and pages 50 and 71 of the Second Quarter Form
10-Q, for a discussion of an LPSC ordered refund to GSU
customers. In August 1994, GSU appealed the contested portion of
the LPSC ordered refund to the district court.
Cajun/Jefferson Davis
GSU
See page 40 of the Form 10-K for a discussion of a suit
brought against GSU by Cajun and Jefferson Davis for failing to
provide transmission services. On March 21, 1994, FERC issued an
order affirming the ALJ and dismissing Cajun's complaint, finding
that GSU properly exercised its contractual right to refuse to
provide the service. On August 3, 1994, FERC denied rehearing.
On August 12, 1994, Cajun filed a petition for review of FERC's
orders in the United States Court of Appeals for the District of
Columbia Circuit. The matter is pending.
Least Cost Planning
AP&L, GSU, LP&L, MP&L, and NOPSI
See pages 8-9, 19, 23, 25-27, 76, 122, 197, 232, and 264 of
the Form 10-K, page 67 of the First Quarter Form 10-Q, and page
72 of the Second Quarter Form 10-Q, for a discussion of Least
Cost Planning. On July 1, 1994, AP&L filed a motion requesting
that the APSC approve the withdrawal of AP&L's Least Cost Plan
filed December 1, 1992, and July 1, 1993, and to rescind its
directive that AP&L file another Least Cost Plan in March 1995.
On October 5, 1994, the APSC issued an order that suspended the
individual dockets and established a new one. Hearings are
scheduled to begin in April 1995.
On September 28, 1994, LP&L and NOPSI filed a report with
the Council that discussed Entergy's Least Cost Plan activities
in other jurisdictions and described the motivations for these
activities. LP&L and NOPSI also filed a motion requesting that
the Council defer the filing of a new Least Cost Plan, which the
existing Least Cost Plan Ordinance required on December 1, 1994.
On October 6, 1994, the Council approved an amendment to the City
Code that rescinded the December 1, 1994 filing requirement and
allowed the Council to set a future date for a new filing. The
Council's actions also established that there would be a set of
hearings to consider a wide range of Least Cost Plan issues, and
that a new filing date would be established following these
hearings. These rulings do not affect the ongoing DSM programs
that LP&L and NOPSI are currently implementing in the City.
System Agreement
Entergy Corporation, AP&L, LP&L, MP&L, and NOPSI
See pages 67-68 of the First Quarter Form 10-Q, and page 73
of the Second Quarter Form 10-Q for a discussion related to
FERC's proceeding to consider whether the System Agreement
permits certain out-of-service generating units to be included in
reserve equalization calculations under Service Schedule MSS-1 of
that agreement. Entergy submitted testimony on September 23,
1994, describing the impacts (not including interest) on Service
Schedule MSS-1 calculations during the period 1987 through 1993.
LP&L and MP&L would have been overbilled by $10.6 and $8.8
million , respectively, and AP&L and NOPSI would have been
underbilled by $6.3 and $13.1 million, respectively.
Merger-Related Proceedings
Entergy Corporation and GSU
a) See pages 19, 83, and 163 of the Form 10-K, page 69 of
the First Quarter Form 10-Q, and page 74 of the Second Quarter
Form 10-Q, for information on a GSU cost-of-service study filed
with the PUCT and Texas Cities. In August 1994, the cities'
consultants issued a report that indicated GSU's current rates
were approximately $40 to $50 million in excess of current
requirements. In September 1994, various cities adopted
ordinances directing GSU to reduce its rates on a Texas retail
basis by $45.9 million. GSU has appealed the cities' ordinances
to the PUCT where the reasonableness of GSU's rates will be
reviewed. The PUCT has scheduled a hearing on the merits for
November 21, 1994. Final action by the PUCT is expected in March
1995. GSU can provide no assurance as to the ultimate outcome in
this matter; however, any rate reduction could be retroactive to
March 31, 1994.
b) See page 38 of the Form 10-K, page 69 of the First
Quarter Form 10-Q, and page 74 of the Second Quarter Form 10-Q,
for information on parties contesting FERC's order approving the
Merger.
On August 9, 1994, Cajun filed a motion for remand and
partial summary grant of its petition for review. Cajun argued
that FERC's orders approving the Merger relied on the Entergy
transmission service tariff and because of the D.C. Circuit's
opinion finding the transmission tariff to be flawed (see "Open
Access Transmission" below), the Court should summarily grant
Cajun's petition for review, in part, and remand these matters to
FERC for further proceedings. Entergy responded that judicial
economy would best be served by holding the case in abeyance
until FERC addresses the transmission tariff.
On September 6, 1994, Occidental Chemical Corporation (OCC)
and Arkansas Electric Energy Consumers (AEEC) filed a motion for
remand and partial summary disposition, to FERC for a full
evidentiary hearing on Merger competition issues. OCC and AEEC
opposed any delay of a remand by holding the proceedings in
abeyance because it would allegedly serve to prolong the present
potential for anticompetitive harm. Entergy opposed the OCC and
AEEC motion in a response filed on September 16, 1994, arguing
that OCC and AEEC provided no basis for FERC to hold an
evidentiary hearing on the competitive impacts of the Merger.
FERC also opposed the OCC and AEEC motion, requesting again that
the Court hold the proceedings in abeyance. The motions filed by
Cajun, OCC and AEEC are pending.
c) As discussed on page 38 of the Form 10-K, petitions for
review of the SEC order approving various aspects of the Merger
were filed with the D.C. Circuit in February 1994 by Houston
Industries Incorporated, Houston Lighting and Power Company, and
Cajun. These petitions have been consolidated. In September
1994, the SEC filed a motion with the D.C. Circuit seeking a
remand of the Merger proceedings to the SEC to permit the agency
to supplement or amend its findings and order regarding the
Merger's anti-competitive effects in light of the July 12, 1994,
opinion of the D.C. Circuit which overturned certain findings of
FERC regarding the Entergy System's "open access" transmission
tariff (see page 75 of the Second Quarter Form 10-Q). The matter
is pending before the D.C. Circuit.
d) See page 31 of the Form 10-K for information on Cajun's
suit claiming that the NRC erred by issuing two license
amendments for River Bend. On August 23, 1994, the NRC issued an
order disallowing GSU's appeal in the ASLB proceeding and
upholding the ASLB's January 27, 1994 order. A hearing on the
proceeding before the ASLB on Cajun's contention has been set for
May 9, 1995.
FERC Audit - Proposed Settlement
Entergy Corporation and System Energy
See Note 2 and also see pages 16, 84-85, and 296-297 of the
Form 10-K, pages 46-47 of the First Quarter Form 10-Q, and pages
47-48, and 75 of the Second Quarter Form 10-Q, for information on
a proposed settlement of a FERC audit of System Energy. On
October 7, 1994, System Energy filed with FERC for approval of
the proposed settlement.
Open Access Transmission
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI
See page 17 of the Form 10-K and page 75 of the Second
Quarter Form 10-Q for a discussion of various petitions filed
with the United States Court of Appeals for the District of
Columbia Circuit related to FERC's 1992 orders regarding open
access transmission and the sale of wholesale power at market-
based rates. On August 23, 1994, Entergy submitted a letter to
FERC in connection with the D.C. Circuit's remand. Entergy
committed to revise its transmission service tariff to facilitate
the expeditious resolution of the case and to provide
"comparability of service" over the Entergy transmission network.
Entergy further committed that the revised transmission service
tariff would withdraw the specific provisions regarding recovery
of stranded investment found problematic by the D.C. Circuit. To
date, Entergy has not sought recovery of stranded investment
costs in rates under the transmission tariffs and the remand to
FERC is not expected to result in refunds of any amounts that
have been collected pursuant to transmission tariffs.
LPSC Investigation/Formula Rate Plan
Entergy Corporation and LP&L
See Note 2 and pages 75, 84, and 199 of the Form 10-K, pages
48 and 71 of the First Quarter Form 10-Q, and pages 49 and 76 of
the Second Quarter Form 10-Q, for a discussion of an LPSC
investigation and a subsequent LP&L formula rate plan filing with
the LPSC.
Incentive Rate Plan
Entergy and MP&L
See pages 25-26, 83-84, and 235-236 of the Form 10-K and
page 76 of the Second Quarter Form 10-Q for a discussion of
MP&L's incentive rate plan approved by the MPSC. On October 6,
1994, Mississippi Valley Gas filed a motion with the Mississippi
Supreme Court to voluntarily dismiss its appeal.
February 1994 Ice Storm
Entergy Corporation, AP&L, and MP&L
See Note 2 for a discussion of MP&L's rate recovery of the
February 1994 ice storm damages.
NRC Fine
Entergy Corporation and LP&L
On August 19, 1994, the NRC notified Entergy Operations that
it will be fined $112,500 for violations at Waterford 3. Entergy
Operations discovered and reported the problems which would have
affected several engineered safety features related to the
ventilation and filtration systems following a loss of their
normal power supply. The problems were traced to a system design
change installed in various systems between October 1992 and
April 1993. Entergy Operations did not contest the fine.
Spent Nuclear Fuel
Entergy Corporation, AP&L, GSU, LP&L, and System Energy
See pages 29, 97-98, 134, 175, 208-209, and 304 of the Form
10-K for information regarding spent nuclear fuel. Entergy
Operations and System Fuels joined in lawsuits against the
Department of Energy (DOE), seeking clarification of the DOE's
responsibility to receive spent nuclear fuel beginning in 1998.
The original suits, filed June 20, 1994, asked for a ruling
that the Nuclear Waste Policy Act requires the DOE to begin
taking title to the spent fuel and start removing it from nuclear
power plants in 1998, a mandate for and court monitoring of DOE's
nuclear waste management program to enable fuel acceptance
beginning in 1998, and the potential for escrow of customer
payments to the Nuclear Waste Fund.
Municipalities
Entergy Corporation, LP&L and MP&L
On August 24, 1994, the Terrebonne Parish Council adopted an
ordinance authorizing the Terrebonne Parish Consolidated
Government (Government) to enter into negotiations with LP&L to
settle a pending lawsuit filed by LP&L on March 27, 1992, against
the Government and its Department of Utilities, pertaining to
alleged unlawful actions in usurping certain service locations of
LP&L. This ordinance also authorizes the Government to seek
court action to expropriate LP&L's facilities in the city of
Houma, but only in the event a settlement is not reached with
respect to the pending lawsuit. The matter is pending.
On October 11, 1994, twelve Mississippi cities filed a
complaint in state court against MP&L and eight electric power
associations seeking a judgment from the court declaring
unconstitutional certain Mississippi statutes that establish the
procedure that must be followed before a municipality can acquire
the facilities and certificate rights of a utility serving in the
municipality. Specifically, the suit requests that the court
declare unconstitutional certain 1987 amendments to the
Mississippi Public Utilities Act that require that the MPSC
cancel a utility's certificate to serve in the municipality
before a municipality may acquire a utility's facilities located
in the municipality. The suit also requests that the court find
that Mississippi municipalities can serve any consumer in the
boundaries of the municipality (and within one mile thereof).
Such a finding would be contrary to a number of Mississippi
Supreme Court decisions that have held that a municipality cannot
serve in another utility's service area even where the municipal
boundaries extend into such service area. The matter is pending.
Sales/Use Tax Issues
Entergy Corporation, GSU, LP&L, and NOPSI
The Louisiana Supreme Court (Court) recently issued an
opinion (in a case in which none of the System companies is a
party), holding, in part, that the Louisiana state legislature's
suspension of state sales and use tax exemptions also has the
effect of suspending exemptions from local sales and use taxes.
The Court has granted an application for rehearing on this issue
and, therefore, its decision is not yet final. However, if the
Court's decision is not changed, previously exempt sales of
electricity and gas, fuels and other items used to generate
electricity in Louisiana by GSU, LP&L, and NOPSI, as well as
other items exempt from sales and use taxes, could be subject to
local sales and use taxes. If the Court's decision were to have
retroactive application, GSU, LP&L, and NOPSI could be liable for
back sales and use taxes. The final outcome of this matter
cannot yet be determined, but a unfavorable result could have a
material adverse effect upon Entergy, GSU, LP&L, and NOPSI. The
matter is pending.
See page 43 of the Form 10-K and page 77 of the Second
Quarter Form 10-Q for a discussion of disputes and litigation
between LP&L and tax authorities in St. Charles Parish, Louisiana
(Parish), with respect to sales, use and lease taxes allegedly
applicable to nuclear fuel.
On October 13, 1994, Parish tax authorities sued LP&L and
Entergy in the Civil District Court of Orleans Parish, Louisiana,
claiming that $1.4 million of sales and use and lease taxes paid
under protest by LP&L with respect to newly acquired nuclear fuel
were not, in fact, paid under protest and should be disposed of
by Parish, and that unspecified additional taxes, interest, and
penalties are due. LP&L presently has a suit pending in Parish
seeking to recover the $1.4 million in taxes paid under protest,
and will contest the suit in Orleans Parish, which LP&L and
Entergy believes is without merit.
Item 5. Other Information
River Bend Unplanned Outage
Entergy Corporation and GSU
On September 8, 1994, River Bend automatically shut down due
to false high water signals. As River Bend was ready to begin
operations on October 10, 1994, seepage was detected from some
high pressure water lines. The lines were repaired and the unit
was placed back in service on October 21, 1994. On October 28,
1994, the unit was shut down because of water leakage from a
recirculating pump seal. The seal was repaired and the unit was
placed back in service on November 3, 1994.
Nonregulated Investments
Entergy Corporation
As discussed on page 3 of the Form 10-K and Page 75 of the
First Quarter Form 10-Q, Entergy continues to consider
opportunities to expand its business, including opportunities in
overseas power development. In October 1994, Entergy Corporation
invested $50 million in the Hub River Company which is
constructing a generating station near Karachi, Pakistan.
Common Stock Price Range and Dividends
Entergy Corporation
The shares of Entergy Corporation's common stock are listed
on the New York, Chicago, and Pacific Stock Exchanges. The high
and low sales prices of Entergy Corporation's common stock for
the third quarter of 1994, as reported by The Wall Street Journal
as composite transactions, were $26 1/4 and $22 5/8,
respectively, per share.
For the twelve months ended September 30, 1994, Entergy
Corporation paid common stock dividends in an aggregate amount of
$1.80 per share. As of September 30, 1994, the consolidated book
value of a share of Entergy Corporation's common stock was $28.46
and the last reported sale price of Entergy Corporation's common
stock on September 30, 1994, was $23 1/4 per share.
Earnings Ratios
AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
The System operating companies and System Energy have
calculated ratios of earnings to fixed charges and ratios of
earnings to combined fixed charges and preferred dividends
pursuant to Item 503 of Regulation S-K of the SEC as follows:
Twelve Months Ended
December 31, September 30,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Fixed Charges
(a)
AP&L 2.31 2.16 2.25 2.28 3.11(h) 2.37
GSU 1.16 .80(i) 1.56 1.72 1.54 .84(i)
LP&L 1.79 2.32 2.40 2.79 3.06 2.88
MP&L 1.04(e) 2.42 2.36 2.37 3.79(h) 2.26
NOPSI 1.89 2.73 5.66(g) 2.66 4.68(h) 3.18
System Energy -(f) 2.10 1.74 2.04 1.87 1.93
Twelve Months Ended
December 31, September 30,
1989 1990 1991 1992 1993 1994
Ratios of
Earnings to
Combined Fixed
Charges and
Preferred
Dividends
(a)(b)(c)
AP&L 1.88 1.81 1.87 1.86 2.54(h) 1.96
GSU (d) .66(i) .59(i) 1.19 1.37 1.21 .75(i)
LP&L 1.39 1.87 1.95 2.18 2.39 2.32
MP&L 1.00(e) 1.93 1.94 1.97 3.08(h) 1.86
NOPSI 1.62 2.36 4.97(g) 2.36 4.12(h) 2.76
(a) "Earnings," as defined by SEC Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3)
investment tax credit adjustments - net, and (4) fixed
charges. "Fixed Charges" include interest (whether expensed
or capitalized), related amortization, and interest
applicable to rentals charged to operating expenses.
(b) "Preferred Dividends," as defined by SEC Regulation S-K, are
computed by dividing the preferred dividend requirement by
one hundred percent (100%) minus the effective income tax
rate.
(c) System Energy's Amended and Restated Articles of
Incorporation do not currently provide for the issuance of
preferred stock.
(d) "Preferred Dividends" in the case of GSU also include
dividends on preference stock.
(e) Earnings for the twelve months ended December 31, 1989
include the impact of the write-off of $60 million of
deferred Grand Gulf 1-related costs pursuant to an agreement
between MP&L and the MPSC.
(f) Earnings for the year ended December 31, 1989 were
inadequate to cover fixed charges due to System Energy's
cancellation and write-off of its investment in Grand Gulf 2
in September 1989. The amount of the coverage deficiency
for fixed charges was $745.2 million.
(g) Earnings for the year ended December 31, 1991 include the
$90 million effect of the 1991 NOPSI Settlement.
(h) Earnings for the year ended December 31, 1993 include $81
million, $52 million, and $18 million for AP&L, MP&L, and
NOPSI, respectively, related to the change in accounting
principle to provide for the accrual of estimated unbilled
revenues.
(i) Earnings for the year ended December 31, 1990 for GSU were
not adequate to cover fixed charges by $60.6 million.
Earnings for the years ended December 31, 1990 and 1989,
were not adequate to cover fixed charges and preferred
dividends by $165.1 million and $190.8 million,
respectively. Earnings in 1990 include a $205 million
charge for the settlement of a purchase power dispute.
Earnings for the twelve months ended September 30, 1994 were
not adequate to cover fixed charges by $34.7 million.
Earnings for the twelve months ended September 30, 1994 were
not adequate to cover fixed charges and preferred dividends
by $64.5 million.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
3(a) - Articles of Amendment dated August 1, 1994 and
Restated Articles of Incorporation, as of December
21, 1983 of MP&L.
** 4(a) - Fiftieth Supplemental Indenture, dated as
of September 1, 1994, supplementing and amending
LP&L's Mortgage and Deed of Trust, dated as of April
1, 1994, as herefore supplemented and amended (filed
as Exhibit A-4(c) to Rule 24 Certificate dated
September 28, 1994 in File No. 70-7653).
23(a) - Consent of Friday, Eldredge & Clark.
23(b) - Consent of Monroe & Lemann (A Professional
Corporation).
23(c) - Consent of Wise Carter Child & Caraway, Professional
Association.
23(d) - Consent of Clark, Thomas & Winters.
23(e) - Consent of Sandlin Associates.
27(a) - Financial Data Schedule for Entergy Corporation and
Subsidiaries as of September 30, 1994.
27(b) - Financial Data Schedule for AP&L as of September 30,
1994.
27(c) - Financial Data Schedule for GSU as of September 30,
1994.
27(d) - Financial Data Schedule for LP&L as of September 30,
1994.
27(e) - Financial Data Schedule for MP&L as of September 30,
1994.
27(f) - Financial Data Schedule for NOPSI as of September 30,
1994.
27(g) - Financial Data Schedule for System Energy as of
September 30, 1994.
99(a) - AP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(b) - GSU's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(c) - LP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(d) - MP&L's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(e) - NOPSI's Computation of Ratios of Earnings to Fixed
Charges and of Earnings to Combined Fixed Charges and
Preferred Dividends, as defined.
99(f) - System Energy's Computation of Ratios of Earnings to
Fixed Charges, as defined.
**99(g) - Annual Reports on Form 10-K of Entergy
Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy for the fiscal year ended December 31, 1993,
portions of which are incorporated herein by
reference as described elsewhere in this document
(filed with the SEC in File Nos. 1-11299, 1-10764, 1-
2703, 1-8474, 0-320, 0-5807, and 1-9067,
respectively).
**99(h) - Quarterly Report on Form 10-Q of Entergy
Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy for the quarter ended March 31, 1994, portions
of which are incorporated herein by reference as
described elsewhere in this document (filed with the
SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-
320, 0-5807, and 1-9067, respectively).
**99(i) - Quarterly Report on Form 10-Q of Entergy
Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy for the quarter ended June 30, 1994, portions
of which are incorporated herein by reference as
described elsewhere in this document (filed with the
SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-
320, 0-5807, and 1-9067, respectively).
99(j) - Earnings statement of AP&L for the twelve month
period ended September 30, 1994, made generally
available to security holders pursuant to Section
11(a) of the Securities Act of 1933, as amended.
99(k) - Earnings statement of MP&L for the twelve month
period ended September 30, 1994, made generally
available to security holders pursuant to Section
11(a) of the Securities Act of 1933, as amended.
**99(l) - Opinion of Clark, Thomas & Winters, a
professional corporation, dated September 30, 1992
regarding the effect of the October 1, 1991 judgment
in GSU v. PUCT in the District Court of Travis
County, Texas (99-1 in Registration No. 33-48889).
**99(m) - Opinion of Clark, Thomas & Winters, a
professional corporation, dated August 8, 1994
regarding recovery of costs deferred pursuant to PUCT
order in Docket 6525 (filed as Exhibit 99(j) to
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1994 in File No. 1-2703).
99(n) - Opinion of Clark, Thomas & Winters, a professional
corporation, confirming its opinions dated September
30, 1992 and August 8, 1994.
___________________________
* Reference is made to a duplicate list of exhibits being
filed as a part of Form 10-Q for the quarter ended September
30, 1994, which list, prepared in accordance with Item 102
of Regulation S-T of the Securities and Exchange Commission,
immediately precedes the exhibits being filed with Form 10-Q
for the quarter ended September 30, 1994.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
Entergy
A current report on Form 8-K, dated October 21, 1994, was
filed with the SEC on October 28, 1994, reporting
information under Item 5. "Other Materially Important
Events."
GSU
A current report on Form 8-K, dated October 21, 1994, was
filed with the SEC on October 28, 1994, reporting
information under Item 5. "Other Materially Important
Events."
EXPERTS
All statements in Part II of this Quarterly Report on Form
10-Q as to matters of law and legal conclusions, based on the
belief or opinion of AP&L, LP&L, MP&L, NOPSI, and System Energy
or otherwise, pertaining to the titles to properties, franchises
and other operating rights of certain of the registrants filing
this Quarterly Report on Form 10-Q, and their subsidiaries, the
regulations to which they are subject and any legal proceedings
to which they are parties are made on the authority of Friday,
Eldredge & Clark, 2000 First Commercial Building, 400 West
Capitol, Little Rock, Arkansas, as to AP&L; Monroe & Lemann (A
Professional Corporation), 201 St. Charles Avenue, Suite 3300,
New Orleans, Louisiana, as to LP&L and NOPSI; and Wise Carter
Child & Caraway, Professional Association, Heritage Building,
Jackson, Mississippi, as to MP&L and System Energy.
The statements attributed to Clark, Thomas & Winters, a
professional corporation, as to legal conclusions with respect to
GSU's rate regulation in Texas in Note 2 to Entergy Corporation
and Subsidiaries Consolidated Financial Statements, "Rate and
Regulatory Matters," have been reviewed by such firm and are
included herein upon the authority of such firm as experts.
The statements attributed to Sandlin Associates regarding
the analysis of River Bend construction costs of GSU in Note 2 to
Entergy Corporation and Subsidiaries Consolidated Financial
Statements, "Rate and Regulatory Matters," have been reviewed by
such firm and are included herein upon the authority of such firm
as experts.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, each registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized. The
signature for each undersigned company shall be deemed to relate
only to matters having reference to such company or its
subsidiaries.
ENTERGY CORPORATION
ARKANSAS POWER & LIGHT COMPANY
GULF STATES UTILITIES COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
SYSTEM ENERGY RESOURCES, INC.
/s/ Lee W. Randall
Lee W. Randall
Vice President and
Chief Accounting Officer
(For each Registrant and for each as
Principal Accounting Officer)
Date: November 10, 1994