Exhibit 10(c)11
Amendment
To
Service Agreement
The parties hereto do hereby stipulated and agree that the
SERVICE AGREEMENT entered into by and between them under date of
April 1, 1963, and as heretofore amended on January 1, 1972,
April 27, 1984, August 1, 1988, and January 28, 1991, be and the
same hereby is further amended by substituting for Exhibit II to
the SERVICE AGREEMENT, the attached revised Exhibit II. The
effective date of this amendment is January 1, 1992.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed this 23rd day of April, 1992.
ENTERGY SERVICES, INC.
By: /s/ Lee W. Randall
Title: Vice President
CLIENT COMPANY
ARKANSAS POWER & LIGHT COMPANY
By: /s/ R. D. Keith
Title: President and COO
EXHIBIT II
METHODS OF ALLOCATING COSTS AMONG CLIENT COMPANIES RECEIVING
SERVICE UNDER THIS AND SIMILAR SERVICE AGREEMENTS WITH
ENTERGY SERVICES, INC. (SERVICES)
(January 1, 1992)
1. The costs of rendering service by Services will include all costs
of doing business including interest on debt but excluding a
return for the use of Services' initial equity capital amounting
to $20,000.
2. (a) Services will maintain a separate record of the expenses
of each department. The expenses of each department
will include:
(i) those expenses that are directly attributable to such
department, and
(ii) an appropriate portion of those office and housekeeping
expenses that are not directly attributable to a department
but which are necessary to the operation of such department.
(b) Expenses of the department will include salaries and wages
of employees, including social security taxes, vacations,
paid absences, sickness, employee disability expenses, and
other employee welfare expenses, rent and utilities,
materials and supplies, depreciation, and all other expenses
attributable to the department.
(c) Departmental expenses will be categorized into one of two classes:
(i) those expenses which are directly attributable to specific
services rendered to a Client Company or group of Client
Companies (Departmental Direct Costs), and
(ii) those expenses which are attributable to the overall operation
of the department and not to a specific service provided to
Client Companies (Departmental Indirect Costs).
Departmental Indirect Costs include:
(1) Administrative labor costs associated with office and general
service employees described in Section 3(a). This would
include not only the salaries and wages of these employees
but also other related employment costs described in
Section 2(b) above.
(2) Occupancy costs including rent and utilities.
(3) Depreciation.
(4) Materials and supplies, telephone use, postage, etc.
(5) Other costs attributable to a department.
(d) The indirect expenses of the department will not include:
(i) those incremental out-of-pocket expenses that are incurred
for the direct benefit and convenience of a Client Company
or a group of Client Companies and are to be directly
charged to such Client Company or group of Client Companies;
and
(ii) Services' overhead expenses that are attributable to
maintaining the corporate existence of Services, franchise
and other general taxes, and all other incidental overhead
expenses including those auditing fees and accounting
department expenses attributable to Services (Indirect
Corporate Costs).
(e) Services will establish annual budgets for controlling the
expenses of each service department and those expenses outlined
above in Section 2(d) which are not department specific.
3. (a) Employees in each department will be divided into two classes:
A. Those employees rendered service to Client Companies
(Class A), and
B. Those office and general service employees, such as
secretaries, stenographers, telephone operators and file
clerks, who generally assist employees in Class A or
render other house-keeping services and who are not
engaged directly in rendering service to a Client Company
or a group of Client Companies. In the event that any
such office or general service employees are assigned
to functions that are attributable to services being
performed for Client Companies, such employees shall be
reclassified as Class A employees.
(b) Expenses set forth in Section 2 above will be separated to show:
(i) salaries and wages of Class A employees, and
(ii) all other expenses of the department.
(c) Class A employees in each department will maintain a record
of the time they are employed in rendering service to
each Client Company or group of Client Companies. The hourly
rate for each Class A employee will be determined each month.
4. (a) The charge to Client Company or a group of Client
Companies for a particular service will be the sum of the
figures derived by multiplying the hours reported by each
Class A employee in rendering such service by the hourly rate
applicable to such employee and other direct allocated expenses.
(b) Departmental Indirect Costs as defined in Section 2(c)(ii)
will be allocated in proportion to the direct salaries and
wages charged.
5. Those expenses of Services that are not included in the expense
of a department under Section 2 above will be charged to Client
Companies receiving service as follows:
(a) Incremental out-of-pocket costs incurred for the direct
benefit and convenience of a Client Company or a group of
Client Companies will be charged directly to such company or
group of companies.
(b) The Indirect Corporate Costs of Services referred to above
in Section 2(d)(ii) will be allocated among the Client
Companies in the same proportion as the charges to the Client
Companies, excluding Indirect Corporate Costs.
(c) If the method of allocation of Departmental Indirect Costs
(Section 4(b)), or Indirect Corporate Costs (Section 5(b)),
would result in an inequity because of a change in operations
or organization of the Client Companies, then Services may
adjust the basis to effect an equitable distribution. Any
such change in allocation shall be made only after first
giving to the Commission written notice of such proposed
change not less than 60 days prior to the proposed
effectiveness of any such change.
6. On the basis of the foregoing, monthly bills will be rendered to
Client Companies. Billing procedures and amounts will be open to
audit by Client Company and by any regulatory authority having
jurisdiction in respect of the Client Company.
7. When services are rendered to a group of Client Companies, costs
of such service shall be allocated equitably among the Companies
based on the nature and scope of the service rendered according
to the formulas outlined in Exhibit II, Supplement.
Exhibit II, Supplement
ALLOCATION FORMULAS FOR
GROUPS OF CLIENT COMPANIES
Note: Each allocation formula is based on data relevant to the participating
Client Companies.
Energy Sales
Based on total kilowatt-hours of energy sold to Residential, Commercial,
Industrial, Government and Municipal consumers.
Customers
Based on a twelve month average of Residential, Commercial,
Industrial, Government and Municipal general business customers.
Employees
Based on the number of full time employees at year-end.
Capability/Responsibility Ratio
The Capability/Responsibility Ratio of a company is the System
capability multiplied by the ratio obtained by dividing a company's
peak load by the System peak load. The company's peak load is the
average of the twelve monthly highest clock hour demands in kilowatts
of the Company's interconnected system, occurring each month
coincident with the System peak load, during the twelve month period
ending with the current month.
Composite - Energy Sales, Customers, Employees and
Capability/Responsibility Ratio
Based on four components with equal weighting to each: kilowatt-hour
energy sales, average customers, number of employees and capability
responsibility ratio.
Composite - Energy Sales, Customers and DCS Employees
Based on three components of equal weighting: kilowatt-hour energy
sales, average customers and number of Distribution and Customer
Service employees.
Transmission Line Miles
Based on the number of miles of transmission lines, weighted for
design voltage.
(Voltage < 500kv = 1, Voltage > 500kv = 2)
Composite - Transmission Line Miles/Substations
Based on two components: transmission line miles with a 30% weighting
and the number of high voltage substations with a 70% weighting.
Aircraft Ridership
Based on employee use of company aircraft.
Disaster Recovery Applications
Based on the number of software applications that require alternate
mainframe processing support for business continuity during a computer
center disaster.
Equity/Capitalization Ratio
This ratio is computed for Entergy Corporation and the Client
Companies as follows:
- Entergy Corporation's allocation is the ratio of common
shareholders equity to total capitalization;
- the Client Companies allocation is the ratio of preferred stock
plus long term debt to total capitalization.
Final Bill Processing
Based on the total number of final bills processed for collection.
Gas Consumption
Based on the volume of natural gas consumed annually by all gas fired
generating units within the Entergy System.
Income and Deduction Ratio
Based on the previous years federal income tax return, total income
plus total deductions.
Level of Service
Based on Entergy Services' total billings to each Client Company
excluding corporate overhead.
Money Pool Transactions
Based on each company's use of the money pool, weighted 75% on
frequency of transactions, and 25% on dollar amount of the
transaction.
Nuclear and Casualty/Property Insurance Premiums
Based on total Client Company costs for the previous year's insurance premium.
Participants in Plans
Several formulas are based on the number of participants in various
Client Company plans and programs, such as:
- Savings Plan
- Flexible Benefits Programs
- Master Trust Plan
- ESOP
- Student/Parent Loan Program
- Systemwide Welfare Plans
- Benefits Plus Flexible Spending Account
- Non-Qualified Defined Contribution Restoration Plan
- Personal Effects Floater Plan
- Personal Property and Casualty Benefits
Preferred Stockholders
Based on total number of preferred stockholders at year-end.
Revenues
Based on total general business revenues from energy sales to
Residential, Commercial, Industrial, Government and Municipal
consumers.
System Capacity
Based on the power level, rated in kilowatts, that could be achieved
if all generating units were operating at maximum capability
simultaneously.