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 June 30, 1995
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 of Principal Executive Identification No.
Offices and Telephone Number
1-11299 ENTERGY CORPORATION 13-5550175
(a Delaware corporation)
639 Loyola Avenue
New Orleans, Louisiana 70113
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 70113
Telephone (504) 529-5262
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 70113
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 July 31, 1995
Entergy Corporation ($0.01 par value) 227,749,167
ENTERGY CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1995
Page
Number
Definitions 1
Financial Statements:
Entergy Corporation and Subsidiaries:
Statements of Consolidated Income 3
Statements of Consolidated Cash Flows 4
Consolidated Balance Sheets 6
Arkansas Power & Light Company:
Statements of Income 8
Statements of Cash Flows 9
Balance Sheets 10
Gulf States Utilities Company:
Statements of Income 12
Statements of Cash Flows 13
Balance Sheets 14
Louisiana Power & Light Company:
Statements of Income 16
Statements of Cash Flows 17
Balance Sheets 18
Mississippi Power & Light Company:
Statements of Income 20
Statements of Cash Flows 21
Balance Sheets 22
New Orleans Public Service Inc.:
Statements of Income 24
Statements of Cash Flows 25
Balance Sheets 26
System Energy Resources, Inc.:
Statements of Income 28
Statements of Cash Flows 29
Balance Sheets 30
Notes to Financial Statements 32
Management's Financial Discussion and Analysis 45
Part II:
Item 1. Legal Proceedings 69
Item 4. Submission of Matters to a Vote of
Security Holders 70
Item 5. Other Information 71
Item 6. Exhibits and Reports on Form 8-K 75
Experts 77
Signature 78
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, and no company makes any 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, 1994, and the Form 10-Q for the quarter ended
March 31, 1995, 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 1 Unit No. 1 of ANO
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
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
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, 1995,
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, 1994, 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 (nuclear)
Grand Gulf 1 Unit No. 1 of the Grand Gulf Station
(nuclear)
GSU Gulf States Utilities Company (including
wholly owned subsidiaries - Varibus
Corporation, GSG&T, Inc., Prudential Oil
& Gas, Inc., and Southern Gulf Railway
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
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
PCB Polychlorinated biphenyls
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
Revised Plan MP&L's Grand Gulf 1-related rate
phase-in plan, originally approved by
the MPSC in the Final Order on
Rehearing, as modified by the MPSC order
issued September 29, 1988, to bring such
plan into compliance with the
requirements of SFAS 92
River Bend River Bend Steam Electric Generating
Station (nuclear), owned 70% by GSU
RUS Rural Utility Services (formerly the
Rural Electrification Administration or
"REA")
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting
Standards as promulgated by the
Financial Accounting Standards Board
System Agreement Agreement, effective January 1, 1983, as
modified, 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
Waterford 3 Unit No. 3 of the Waterford Steam
Electric Generating Station (nuclear)
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands, Except Share Data)
Operating Revenues:
Electric $1,539,160 $1,551,673 $2,833,926 $2,891,925
Natural gas 20,118 22,766 60,788 76,845
Steam products 12,791 11,859 23,423 23,567
---------- ---------- ---------- ----------
Total 1,572,069 1,586,298 2,918,137 2,992,337
---------- ---------- ---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 312,803 357,711 601,507 672,439
Purchased power 92,433 109,833 177,992 234,629
Nuclear refueling outage expenses 34,167 15,474 50,963 31,219
Other operation and maintenance 353,860 367,993 696,895 704,005
Depreciation, amortization, and decommissioning 169,557 160,856 339,101 321,665
Taxes other than income taxes 73,872 70,067 150,468 142,919
Income taxes 111,967 89,753 147,104 123,306
Amortization of rate deferrals 89,585 88,676 184,374 182,350
---------- ---------- ---------- ----------
Total 1,238,244 1,260,363 2,348,404 2,412,532
---------- ---------- ---------- ----------
Operating Income 333,825 325,935 569,733 579,805
---------- ---------- ---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 2,353 3,135 4,847 6,670
Miscellaneous - net 9,108 6,659 16,278 17,892
Income taxes 1,164 (3,183) (809) (11,380)
---------- ---------- ---------- ----------
Total 12,625 6,611 20,316 13,182
---------- ---------- ---------- ----------
Interest Charges:
Interest on long-term debt 161,042 165,816 321,673 333,519
Other interest - net 5,662 4,494 14,652 8,197
Allowance for borrowed funds used
during construction (2,007) (2,527) (4,204) (5,169)
Preferred and preference dividend requirements of
subsidiaries and other 19,050 20,426 38,900 41,368
---------- ---------- ---------- ----------
Total 183,747 188,209 371,021 377,915
---------- ---------- ---------- ----------
Net Income $162,703 $144,337 $219,028 $215,072
========== ========== ========== ==========
Earnings per average common share $0.71 $0.63 $0.96 $0.94
Dividends declared per common share - - $0.90 $0.90
Average number of common shares
outstanding 227,747,609 229,440,707 227,582,228 230,010,476
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $219,028 $215,072
Noncash items included in net income:
Change in rate deferrals/excess capacity-net 162,963 164,750
Depreciation, amortization, and decommissioning 339,101 321,665
Deferred income taxes and investment tax credits (1,221) 13,690
Allowance for equity funds used during construction (4,847) (6,670)
Amortization of deferred revenues - (14,632)
Changes in working capital:
Receivables (91,462) (62,170)
Fuel inventory (37,175) 29,723
Accounts payable (74,712) (50,684)
Taxes accrued 77,924 27,880
Interest accrued (7,924) (15,542)
Reserve for rate refund 9,971 -
Other working capital accounts (150,287) (143,630)
Decommissioning trust contributions (12,653) (11,742)
Provision for estimated losses and reserves 6,480 (4,523)
Other 14,561 45,014
-------- --------
Net cash flow provided by operating activities 449,747 508,201
-------- --------
Investing Activities:
Construction/capital expenditures (243,061) (327,154)
Allowance for equity funds used during construction 4,847 6,670
Nuclear fuel purchases (177,776) (44,994)
Proceeds from sale/leaseback of nuclear fuel 210,265 16,144
Investment in nonregulated/nonutility properties (46,243) (113)
-------- --------
Net cash flow used in investing activities (251,968) (349,447)
-------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 59,410
General and refunding mortgage bonds 109,285 -
Other long-term debt 43,538 43,644
Retirement of:
First mortgage bonds (96,025) (85,600)
General and refunding mortgage bonds (44,200) (45,000)
Other long-term debt (45,404) (16,108)
Premium and expense on refinancing sale/leaseback bonds - (47,602)
Repurchase of common stock - (88,796)
Redemption of preferred stock (26,250) (26,259)
Changes in short-term borrowings (103,534) 106,200
Common stock dividends paid (204,267) (207,149)
-------- --------
Net cash flow used in financing activities (366,857) (307,260)
-------- --------
Net decrease in cash and cash equivalents (169,078) (148,506)
Cash and cash equivalents at beginning of period 613,907 563,749
-------- --------
Cash and cash equivalents at end of period $444,829 $415,243
======== ========
ENTERGY CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $323,218 $336,230
Income taxes $86,327 $79,097
Noncash investing and financing activities:
Capital lease obligations incurred - $24,303
Change in unrealized appreciation/depreciation of
decommissioning trust assets $17,521 $7,477
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $21,350,820 $21,184,013
Plant acquisition adjustment - GSU 479,822 487,955
Electric plant under leases 668,843 668,846
Property under capital leases - electric 155,067 161,950
Natural gas 166,109 164,013
Steam products 77,307 77,307
Construction work in progress 529,091 476,816
Nuclear fuel under capital leases 330,238 265,520
Nuclear fuel 37,463 70,147
----------- -----------
Total 23,794,760 23,556,567
Less - accumulated depreciation and amortization 7,958,011 7,639,549
----------- -----------
Utility plant - net 15,836,749 15,917,018
----------- -----------
Other Property and Investments:
Decommissioning trust funds 242,805 207,395
Other 295,445 240,745
----------- -----------
Total 538,250 448,140
----------- -----------
Current Assets:
Cash and cash equivalents:
Cash 116,109 87,700
Temporary cash investments - at cost,
which approximates market 328,720 526,207
----------- -----------
Total cash and cash equivalents 444,829 613,907
Special deposits 17,447 8,074
Notes receivable 15,929 14,446
Accounts receivable:
Customer (less allowance for doubtful accounts of
$6.7 million in 1995 and 1994) 336,931 336,887
Other 47,970 66,651
Accrued unbilled revenues 350,709 240,610
Deferred fuel 28,662 -
Fuel inventory 130,386 93,211
Materials and supplies - at average cost 380,654 365,956
Rate deferrals 398,281 380,612
Prepayments and other 123,526 98,811
----------- -----------
Total 2,275,324 2,219,165
----------- -----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 1,275,634 1,451,926
SFAS 109 regulatory asset - net 1,417,996 1,417,646
Unamortized loss on reacquired debt 228,878 232,420
Other regulatory assets 320,630 316,878
Long-term receivables 277,446 271,097
Other 339,760 339,201
----------- -----------
Total 3,860,344 4,029,168
----------- -----------
TOTAL $22,510,667 $22,613,491
=========== ===========
See Notes to Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value, authorized 500,000,000
shares; issued 230,017,485 shares in 1995 and 1994 $2,300 $2,300
Paid-in capital 4,199,643 4,202,134
Retained earnings 2,236,785 2,223,739
Less - treasury stock (2,268,318 shares in 1995 and
2,608,908 in 1994) 67,270 77,378
----------- -----------
Total common shareholders' equity 6,371,458 6,350,795
Subsidiary's preference stock 150,000 150,000
Subsidiaries' preferred stock:
Without sinking fund 550,955 550,955
With sinking fund 273,698 299,946
Long-term debt 7,023,655 7,093,473
----------- -----------
Total 14,369,766 14,445,169
----------- -----------
Other Noncurrent Liabilities:
Obligations under capital leases 330,548 273,947
Other 320,000 310,977
----------- -----------
Total 650,548 584,924
----------- -----------
Current Liabilities:
Currently maturing long-term debt 403,060 349,085
Notes payable 68,333 171,867
Accounts payable 396,408 471,120
Customer deposits 138,775 134,478
Taxes accrued 170,502 92,578
Accumulated deferred income taxes 41,342 40,313
Interest accrued 187,715 195,639
Dividends declared 12,883 13,599
Deferred fuel cost - 27,066
Obligations under capital leases 152,730 151,904
Reserve for rate refund 66,943 56,972
Other 278,743 327,330
----------- -----------
Total 1,917,434 2,031,951
----------- -----------
Deferred Credits:
Accumulated deferred income taxes 3,891,164 3,915,138
Accumulated deferred investment tax credits 667,289 649,898
Other 1,014,466 986,411
----------- -----------
Total 5,572,919 5,551,447
----------- -----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $22,510,667 $22,613,491
=========== ===========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues $412,164 $414,901 $751,760 $785,992
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 63,639 67,759 104,806 131,233
Purchased power 84,176 93,427 165,923 184,609
Nuclear refueling outage expenses 7,903 8,839 14,870 17,473
Other operation and maintenance 85,786 89,372 179,444 169,898
Depreciation, amortization, and decommissioning 39,602 36,540 78,954 72,258
Taxes other than income taxes 9,984 8,508 20,095 17,623
Income taxes 23,813 17,323 21,344 14,918
Amortization of rate deferrals 29,894 33,552 67,927 73,725
-------- -------- -------- --------
Total 344,797 355,320 653,363 681,737
-------- -------- -------- --------
Operating Income 67,367 59,581 98,397 104,255
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 691 896 1,606 2,050
Miscellaneous - net 10,820 11,997 26,352 24,561
Income taxes (4,241) (3,913) (10,338) (9,684)
-------- -------- -------- --------
Total 7,270 8,980 17,620 16,927
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 26,611 26,351 53,544 52,695
Other interest - net 624 1,294 3,740 2,003
Allowance for borrowed funds used
during construction (442) (847) (1,173) (1,667)
-------- -------- -------- --------
Total 26,793 26,798 56,111 53,031
-------- -------- -------- --------
Net Income 47,844 41,763 59,906 68,151
Preferred Stock Dividend Requirements
and Other 4,545 4,866 9,106 9,749
-------- -------- -------- --------
Earnings Applicable to Common Stock $43,299 $36,897 $50,800 $58,402
======== ======== ======== ========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $59,906 $68,151
Noncash items included in net income:
Change in rate deferrals/excess capacity-net 61,207 51,782
Depreciation, amortization, and decommissioning 78,954 72,258
Deferred income taxes and investment tax credits (10,135) (20,012)
Allowance for equity funds used during construction (1,606) (2,050)
Changes in working capital:
Receivables (41,124) (36,401)
Fuel inventory (34,626) 27,345
Accounts payable 33,684 (31,606)
Taxes accrued 28,691 15,628
Interest accrued (759) (92)
Other working capital accounts (9,331) (38,907)
Decommissioning trust contributions (6,071) (5,288)
Provision for estimated losses and reserves 3,522 (8,224)
Other (21,032) (12,839)
-------- -------
Net cash flow provided by operating activities 141,280 79,745
-------- -------
Investing Activities:
Construction expenditures (78,692) (74,778)
Allowance for equity funds used during construction 1,606 2,050
Nuclear fuel purchases (32,874) -
Proceeds from sale/leaseback of nuclear fuel 32,831 -
-------- -------
Net cash flow used in investing activities (77,129) (72,728)
-------- -------
Financing Activities:
Proceeds from issuance of other long-term debt - 27,992
Retirement of first mortgage bonds (25,600) (600)
Redemption of preferred stock (7,000) (7,000)
Changes in short-term borrowings (34,000) 30,246
Dividends paid:
Common stock (40,300) (39,400)
Preferred stock (9,321) (9,915)
-------- -------
Net cash flow provided by (used in) financing activities (116,221) 1,323
-------- -------
Net increase (decrease) in cash and cash equivalents (52,070) 8,340
Cash and cash equivalents at beginning of period 80,756 1,825
-------- -------
Cash and cash equivalents at end of period $28,686 $10,165
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $51,392 $49,205
Income taxes $13,843 $28,677
Noncash investing and financing activities:
Capital lease obligations incurred - $14,626
Change in unrealized appreciation/depreciation of
decommissioning trust assets $11,347 $7,210
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $4,352,381 $4,293,097
Property under capital leases 53,412 56,135
Construction work in progress 144,723 136,701
Nuclear fuel under capital lease 108,967 94,628
---------- ----------
Total 4,659,483 4,580,561
Less - accumulated depreciation and amortization 1,781,356 1,710,216
---------- ----------
Utility plant - net 2,878,127 2,870,345
---------- ----------
Other Property and Investments:
Investment in subsidiary companies - at equity 11,215 11,215
Decommissioning trust fund 149,969 127,136
Other - at cost (less accumulated depreciation) 7,487 4,628
---------- ----------
Total 168,671 142,979
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 10,683 3,737
Temporary cash investments - at cost,
which approximates market:
Associated companies 2,936 4,713
Other 15,067 72,306
---------- ----------
Total cash and cash equivalents 28,686 80,756
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.0 million in 1995 and 1994) 61,741 53,781
Associated companies 31,119 28,506
Other 8,130 11,181
Accrued unbilled revenues 117,465 83,863
Fuel inventory - at average cost 69,187 34,561
Materials and supplies - at average cost 80,837 79,886
Rate deferrals 122,632 113,630
Deferred excess capacity 8,392 8,414
Prepayments and other 16,223 23,867
---------- ----------
Total 544,412 518,445
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 294,627 360,496
Deferred excess capacity 15,742 20,060
SFAS 109 regulatory asset - net 219,689 227,068
Unamortized loss on reacquired debt 55,679 57,344
Other regulatory assets 77,411 68,813
Other 28,540 26,665
---------- ----------
Total 691,688 760,446
---------- ----------
TOTAL $4,282,898 $4,292,215
========== ==========
See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(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 1995 and 1994 $470 $470
Paid-in capital 590,844 590,844
Retained earnings 502,299 491,799
---------- ----------
Total common shareholder's equity 1,093,613 1,083,113
Preferred stock:
Without sinking fund 176,350 176,350
With sinking fund 51,527 58,527
Long-term debt 1,278,691 1,293,879
---------- ----------
Total 2,600,181 2,611,869
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 105,426 94,534
Other 71,757 68,235
---------- ----------
Total 177,183 162,769
---------- ----------
Current Liabilities:
Currently maturing long-term debt 28,175 28,175
Notes payable 667 34,667
Accounts payable:
Associated companies 41,587 17,345
Other 98,771 89,329
Customer deposits 18,074 17,113
Taxes accrued 73,930 45,239
Accumulated deferred income taxes 34,381 25,043
Interest accrued 30,305 31,064
Dividends declared 4,512 4,727
Co-owner advances 42,144 20,639
Deferred fuel cost 14,267 20,254
Nuclear refueling reserve 29,118 37,954
Obligations under capital leases 56,909 56,154
Other 21,965 45,632
---------- ----------
Total 494,805 473,335
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 836,175 859,558
Accumulated deferred investment tax credits 115,685 118,548
Other 58,869 66,136
---------- ----------
Total 1,010,729 1,044,242
---------- ----------
Commitments and Contingencies (Note 1)
TOTAL $4,282,898 $4,292,215
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30,1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues:
Electric $462,297 $439,015 $841,088 $841,119
Natural gas 4,521 5,981 14,444 21,827
Steam products 12,791 11,859 23,423 23,567
-------- -------- -------- --------
Total 479,609 456,855 878,955 886,513
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 126,908 119,341 241,829 238,359
Purchased power 41,117 54,839 84,724 115,059
Nuclear refueling outage expenses 2,743 2,520 5,774 5,040
Other operation and maintenance 105,273 103,512 203,627 205,562
Depreciation, amortization, and decommissioning 50,392 49,209 100,731 97,076
Taxes other than income taxes 24,752 9,664 50,131 34,010
Income taxes 23,140 17,573 22,978 16,752
Amortization of rate deferrals 16,506 16,840 33,012 32,737
-------- -------- -------- --------
Total 390,831 373,498 742,806 744,595
-------- -------- -------- --------
Operating Income 88,778 83,357 136,149 141,918
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 266 379 517 639
Miscellaneous - net 5,696 4,085 11,610 8,233
Income taxes (2,164) (2,211) (3,029) (4,183)
-------- -------- -------- --------
Total 3,798 2,253 9,098 4,689
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 48,357 48,770 96,627 97,750
Other interest - net 1,083 4,057 2,093 5,237
Allowance for borrowed funds used
during construction (217) (301) (461) (507)
-------- -------- -------- --------
Total 49,223 52,526 98,259 102,480
-------- -------- -------- --------
Net Income 43,353 33,084 46,988 44,127
Preferred and Preference Stock
Dividend Requirements and Other 7,426 7,529 15,016 14,936
-------- -------- -------- --------
Earnings Applicable to Common Stock $35,927 $25,555 $31,972 $29,191
======== ======== ======== ========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $46,988 $44,127
Noncash items included in net income:
Change in rate deferrals 33,012 32,737
Depreciation, amortization, and decommissioning 101,113 97,076
Deferred income taxes and investment tax credits 25,403 19,454
Allowance for equity funds used during construction (517) (639)
Changes in working capital:
Receivables (7,940) (29,924)
Fuel inventory (1,894) (4,484)
Accounts payable (34,007) 10,436
Taxes accrued 24,832 8,655
Interest accrued (9,334) (3,044)
Reserve for rate refund 2,381 -
Other working capital accounts (87,395) (37,366)
Decommissioning trust contributions (1,478) (1,478)
Other 9,186 3,127
-------- --------
Net cash flow provided by operating activities 100,350 138,677
-------- --------
Investing Activities:
Construction expenditures (53,779) (68,109)
Allowance for equity funds used during construction 517 639
Nuclear fuel purchases - (16,145)
Proceeds from sale/leaseback of nuclear fuel - 16,145
-------- --------
Net cash flow used in investing activities (53,262) (67,470)
-------- --------
Financing Activities:
Proceeds from the issuance of other long-term debt 2,277 -
Redemption of preferred stock (2,250) (2,250)
Dividends paid:
Common stock - (183,600)
Preferred and preference stock (14,917) (14,831)
-------- --------
Net cash flow used in financing activities (14,890) (200,681)
-------- --------
Net increase (decrease) in cash and cash equivalents 32,198 (129,474)
Cash and cash equivalents at beginning of period 104,644 261,349
-------- --------
Cash and cash equivalents at end of period $136,842 $131,875
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $102,618 $96,470
Income taxes $77 $7,573
Noncash investing and financing activities:
Capital lease obligations incurred - $16,145
Change in unrealized appreciation/depreciation of
decommissioning trust assets $1,651 ($244)
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $6,886,116 $6,842,726
Natural gas 44,505 44,505
Steam products 77,307 77,307
Property under capital leases 80,977 82,914
Construction work in progress 107,934 96,176
Nuclear fuel under capital leases 61,225 80,042
---------- ----------
Total 7,258,064 7,223,670
Less - accumulated depreciation and amortization 2,597,889 2,504,826
---------- ----------
Utility plant - net 4,660,175 4,718,844
---------- ----------
Other Property and Investments:
Decommissioning trust fund 25,051 21,309
Other - at cost (less accumulated depreciation) 36,625 29,315
---------- ----------
Total 61,676 50,624
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 8,454 8,063
Temporary cash investments - at cost,
which approximates market:
Associated companies 18,674 5,085
Other 109,714 91,496
---------- ----------
Total cash and cash equivalents 136,842 104,644
Special deposits 50,784 332
Accounts receivable:
Customer (less allowance for doubtful accounts
of $0.7 million in 1995 and 1994) 136,858 167,745
Associated companies 8,196 12,732
Other 17,399 20,706
Accrued unbilled revenues 86,140 39,470
Deferred fuel costs 20,659 6,314
Accumulated deferred income taxes 50,448 49,457
Fuel inventory 27,678 25,784
Materials and supplies - at average cost 101,390 90,054
Rate deferrals 93,774 100,478
Prepayments and other 16,524 13,422
---------- ----------
Total 746,692 631,138
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 468,486 506,974
SFAS 109 regulatory asset - net 436,502 426,358
Unamortized loss on reacquired debt 64,736 63,994
Other regulatory assets 31,486 35,168
Long-term receivables 277,446 264,752
Other 147,750 145,609
---------- ----------
Total 1,426,406 1,442,855
---------- ----------
TOTAL $6,894,949 $6,843,461
========== ==========
See Notes to Financial Statements.
GULF STATES UTILITIES COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares in 1995 and 1994 $114,055 $114,055
Paid-in capital 1,152,419 1,152,336
Retained earnings 296,400 264,626
---------- ----------
Total common shareholder's equity 1,562,874 1,531,017
Preference stock 150,000 150,000
Preferred stock:
Without sinking fund 136,444 136,444
With sinking fund 92,687 94,934
Long-term debt 2,300,795 2,318,417
---------- ----------
Total 4,242,800 4,230,812
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 104,959 125,691
Other 72,985 68,753
---------- ----------
Total 177,944 194,444
---------- ----------
Current Liabilities:
Currently maturing long-term debt 70,425 50,425
Accounts payable:
Associated companies 33,189 31,722
Other 105,501 140,975
Customer deposits 22,901 22,216
Taxes accrued 37,310 12,478
Interest accrued 45,993 55,327
Nuclear refueling reserve 18,132 10,117
Obligations under capital leases 37,234 37,265
Reserve for rate refund 59,353 56,972
Other 95,103 111,963
---------- ----------
Total 525,141 529,460
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 1,113,402 1,100,396
Accumulated deferred investment tax credits 225,442 199,428
Deferred River Bend finance charges 70,226 82,406
Other 539,994 506,515
---------- ----------
Total 1,949,064 1,888,745
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $6,894,949 $6,843,461
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues $406,110 $441,643 $759,106 $825,469
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 59,551 85,518 111,601 143,626
Purchased power 93,478 101,841 168,473 205,337
Nuclear refueling outage expenses 4,516 4,885 9,033 9,476
Other operation and maintenance 72,800 86,143 145,338 159,775
Depreciation, amortization, and decommissioning 38,910 37,451 77,417 74,843
Taxes other than income taxes 14,332 13,919 30,048 28,356
Income taxes 29,667 24,313 48,363 41,156
Amortization of rate deferrals 6,886 6,887 13,546 13,546
-------- -------- -------- --------
Total 320,140 360,957 603,819 676,115
-------- -------- -------- --------
Operating Income 85,970 80,686 155,287 149,354
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 539 978 1,103 2,089
Miscellaneous - net 209 130 581 441
Income taxes 37 50 12 40
-------- -------- -------- --------
Total 785 1,158 1,696 2,570
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 32,512 32,377 65,084 64,850
Other interest - net 1,660 1,763 3,745 3,075
Allowance for borrowed funds used
during construction (499) (649) (990) (1,450)
-------- -------- -------- --------
Total 33,673 33,491 67,839 66,475
-------- -------- -------- --------
Net Income 53,082 48,353 89,144 85,449
Preferred Stock Dividend Requirements
and Other 5,219 5,701 10,810 11,820
-------- -------- -------- --------
Earnings Applicable to Common Stock $47,863 $42,652 $78,334 $73,629
======== ======== ======== ========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $89,144 $85,449
Noncash items included in net income:
Change in rate deferrals 13,546 13,546
Depreciation, amortization, and decommissioning 77,417 74,843
Deferred income taxes and investment tax credits (10,535) 25,253
Allowance for equity funds used during construction (1,103) (2,089)
Amortization of deferred revenues - (14,632)
Changes in working capital:
Receivables (7,873) (10,807)
Accounts payable 5,084 (15,689)
Taxes accrued 27,686 8,960
Interest accrued (2,216) (1,061)
Other working capital accounts (30,279) (15,707)
Decommissioning trust contributions (2,408) (2,408)
Other 1,264 1,464
-------- --------
Net cash flow provided by operating activities 159,727 147,122
-------- --------
Investing Activities:
Construction expenditures (43,559) (78,552)
Allowance for equity funds used during construction 1,103 2,089
Nuclear fuel purchases (40,493) -
Proceeds from sale/seaseback of nuclear fuel 40,493 -
-------- --------
Net cash flow used in investing activities (42,456) (76,463)
-------- --------
Financing Activities:
Retirement of:
First mortgage bonds - (25,000)
Other long-term debt (69) (63)
Redemption of preferred stock (7,500) (7,509)
Changes in short-term borrowings (9,344) 22,113
Dividends paid:
Common stock (86,200) (48,300)
Preferred stock (10,743) (11,638)
-------- --------
Net cash flow used in financing activities (113,856) (70,397)
-------- --------
Net increase in cash and cash equivalents 3,415 262
Cash and cash equivalents at beginning of period 28,718 33,489
-------- --------
Cash and cash equivalents at end of period $32,133 $33,751
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $67,432 $64,396
Income taxes $43,623 $18,219
Noncash investing and financing activities:
Capital lease obligations incurred - $9,677
Change in unrealized appreciation/depreciation of
decommissioning trust assets $1,934 $220
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $4,809,009 $4,778,126
Electric plant under lease 229,468 229,468
Construction work in progress 96,859 94,791
Nuclear fuel under capital lease 70,650 44,238
Nuclear fuel 6,346 6,420
---------- ----------
Total 5,212,332 5,153,043
Less - accumulated depreciation and amortization 1,666,260 1,600,510
---------- ----------
Utility plant - net 3,546,072 3,552,533
---------- ----------
Other Property and Investments:
Nonutility property 20,060 20,060
Decommissioning trust fund 32,238 27,076
Investment in subsidiary company - at equity 14,230 14,230
Other 1,080 1,078
---------- ----------
Total 67,608 62,444
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 2,569 -
Temporary cash investments - at cost,
which approximates market 29,564 28,718
---------- ----------
Total cash and cash equivalents 32,133 28,718
Special deposits 6,503 3,237
Accounts receivable:
Customer (less allowance for doubtful accounts of
$1.2 million in 1995 and 1994) 63,093 58,858
Associated companies - 9,827
Other 13,691 11,609
Accrued unbilled revenues 74,492 63,109
Deferred fuel cost 15,278 -
Accumulated deferred income taxes 312 3,702
Materials and supplies - at average cost 92,906 89,692
Rate deferrals 28,422 28,422
Prepayments and other 19,584 25,291
---------- ----------
Total 346,414 322,465
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 12,063 25,609
SFAS 109 regulatory asset - net 374,743 379,263
Unamortized loss on reacquired debt 41,557 43,656
Other regulatory assets 24,385 25,736
Other 25,206 23,733
---------- ----------
Total 477,954 497,997
---------- ----------
TOTAL $4,438,048 $4,435,439
========== ==========
See Notes to Financial Statements.
LOUISIANA POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
250,000,000 shares; issued and outstanding
165,173,180 shares in 1995 and 1994 $1,088,900 $1,088,900
Capital stock expense and other (5,029) (5,367)
Retained earnings 105,554 113,420
---------- ----------
Total common shareholder's equity 1,189,425 1,196,953
Preferred stock:
Without sinking fund 160,500 160,500
With sinking fund 103,765 111,265
Long-term debt 1,368,399 1,403,055
---------- ----------
Total 2,822,089 2,871,773
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 42,650 16,238
Other 54,038 54,216
---------- ----------
Total 96,688 70,454
---------- ----------
Current Liabilities:
Currently maturing long-term debt 110,245 75,320
Notes payable:
Associated companies 144 7,954
Other 17,666 19,200
Accounts payable:
Associated companies 41,400 20,793
Other 66,680 82,203
Customer deposits 55,947 54,934
Taxes accrued 25,826 (1,860)
Interest accrued 40,771 42,987
Dividends declared 5,217 5,489
Deferred fuel cost - 13,983
Obligations under capital leases 28,000 28,000
Other 18,898 20,156
---------- ----------
Total 410,794 369,159
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 869,019 883,945
Accumulated deferred investment tax credits 148,404 151,259
Deferred interest - Waterford 3 lease obligation 26,345 26,000
Other 64,709 62,849
---------- ----------
Total 1,108,477 1,124,053
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $4,438,048 $4,435,439
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues $240,310 $229,790 $433,634 $417,207
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 37,741 41,818 67,874 64,613
Purchased power 70,966 58,558 128,010 122,880
Other operation and maintenance 39,937 40,643 72,155 77,216
Depreciation and amortization 9,338 9,051 18,735 17,757
Taxes other than income taxes 10,494 10,460 21,083 20,736
Income taxes 10,731 10,628 14,094 11,853
Amortization of rate deferrals 28,311 24,804 56,621 49,609
-------- -------- -------- --------
Total 207,518 195,962 378,572 364,664
-------- -------- -------- --------
Operating Income 32,792 33,828 55,062 52,543
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 269 445 528 1,021
Miscellaneous - net 796 158 857 252
Income taxes (305) (61) (328) (97)
-------- -------- -------- --------
Total 760 542 1,057 1,176
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 11,856 11,614 22,948 24,117
Other interest - net 1,352 1,389 3,258 2,353
Allowance for borrowed funds used
during construction (234) (286) (439) (653)
-------- -------- -------- --------
Total 12,974 12,717 25,767 25,817
-------- -------- -------- --------
Net Income 20,578 21,653 30,352 27,902
Preferred Stock Dividend Requirements
and Other 1,544 1,955 3,251 4,030
-------- -------- -------- --------
Earnings Applicable to Common Stock $19,034 $19,698 $27,101 $23,872
======== ======== ======== ========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $30,352 $27,902
Noncash items included in net income:
Change in rate deferrals 29,566 44,127
Depreciation and amortization 18,735 17,757
Deferred income taxes and investment tax credits (7,196) (7,288)
Allowance for equity funds used during construction (528) (1,021)
Changes in working capital:
Receivables (19,922) (12,733)
Fuel inventory (4,448) 4,110
Accounts payable 23,540 13,367
Taxes accrued (4,239) (239)
Interest accrued 903 (4,217)
Other working capital accounts (3,864) (4,002)
Other 11,856 (4,311)
-------- --------
Net cash flow provided by operating activities 74,755 73,452
-------- --------
Investing Activities:
Construction expenditures (34,388) (80,224)
Allowance for equity funds used during construction 528 1,021
-------- --------
Net cash flow used in investing activities (33,860) (79,203)
-------- --------
Financing Activities:
Proceeds from the issuance of:
General and refunding bonds 79,480 -
Other long-term debt - 15,652
Retirement of:
General and refunding bonds (20,000) (30,000)
First mortgage bonds (20,000) -
Other long-term debt (15) (16,045)
Redemption of preferred stock (8,000) (8,000)
Changes in short-term borrowings (30,000) 49,354
Dividends paid:
Common stock (16,400) (8,800)
Preferred stock (3,343) (4,054)
-------- --------
Net cash flow used in financing activities (18,278) (1,893)
-------- --------
Net increase (decrease) in cash and cash equivalents 22,617 (7,644)
Cash and cash equivalents at beginning of period 9,598 7,999
-------- --------
Cash and cash equivalents at end of period $32,215 $355
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $24,066 $29,113
Income taxes $15,431 $8,577
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $1,496,932 $1,475,322
Construction work in progress 78,495 67,119
---------- ----------
Total 1,575,427 1,542,441
Less - accumulated depreciation and amortization 599,463 582,514
---------- ----------
Utility plant - net 975,964 959,927
---------- ----------
Other Property and Investments:
Investment in subsidiary company - at equity 5,531 5,531
Other 5,619 5,624
---------- ----------
Total 11,150 11,155
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 3,434 5,080
Temporary cash investments - at cost,
which approximates market
Associated companies 4,694 276
Other 24,087 4,242
---------- ----------
Total cash and cash equivalents 32,215 9,598
Accounts receivable:
Customer (less allowance for doubtful accounts of
$2.1 million in 1995 and 1994) 46,335 37,501
Associated companies 2,390 4,680
Other 1,852 2,789
Accrued unbilled revenues 54,187 39,873
Fuel inventory - at average cost 9,228 4,780
Materials and supplies - at average cost 22,814 20,642
Rate deferrals 119,637 106,538
Prepayments and other 15,657 10,672
---------- ----------
Total 304,315 237,073
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 343,055 385,720
Unamortized loss on reacquired debt 9,868 10,488
Other regulatory assets 9,097 10,168
Long-term receivable - 6,345
Other 7,075 8,569
---------- ----------
Total 369,095 421,290
---------- ----------
TOTAL $1,660,524 $1,629,445
========== ==========
See Notes to Financial Statements.
MISSISSIPPI POWER & LIGHT COMPANY
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
15,000,000 shares; issued and outstanding
8,666,357 shares in 1995 and 1994 $199,326 $199,326
Capital stock expense and other (1,661) (1,762)
Retained earnings 242,712 232,011
---------- ----------
Total common shareholder's equity 440,377 429,575
Preferred stock:
Without sinking fund 57,881 57,881
With sinking fund 23,770 31,770
Long-term debt 530,311 475,233
---------- ----------
Total 1,052,339 994,459
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 485 552
Other 11,522 8,984
---------- ----------
Total 12,007 9,536
---------- ----------
Current Liabilities:
Currently maturing long-term debt 50,965 65,965
Notes payable - 30,000
Accounts payable:
Associated companies 25,207 2,350
Other 30,888 30,205
Customer deposits 23,812 22,793
Taxes accrued 16,582 20,821
Accumulated deferred income taxes 52,249 47,515
Interest accrued 21,280 20,377
Dividends declared 1,433 1,626
Other 30,965 28,692
---------- ----------
Total 253,381 270,344
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 292,018 301,288
Accumulated deferred investment tax credits 28,753 29,528
SFAS 109 regulatory liability - net 11,213 13,099
Other 10,813 11,191
---------- ----------
Total 342,797 355,106
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $1,660,524 $1,629,445
========== ==========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues:
Electric $97,070 $107,617 $175,210 $186,472
Natural gas 15,596 16,785 46,342 55,018
------- -------- -------- --------
Total 112,666 124,402 221,552 241,490
------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 14,461 26,044 45,439 59,959
Purchased power 44,245 35,209 73,927 72,941
Other operation and maintenance 17,162 20,289 33,915 39,960
Depreciation and amortization 4,786 4,743 9,614 9,453
Taxes other than income taxes 6,607 6,877 13,834 13,931
Income taxes 4,920 7,555 8,195 8,174
Amortization of rate deferrals 7,985 5,805 13,265 12,733
------- -------- -------- --------
Total 100,166 106,522 198,189 217,151
------- -------- -------- --------
Operating Income 12,500 17,880 23,363 24,339
------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 35 124 61 237
Miscellaneous - net 73 474 489 984
Income taxes (28) (184) (188) (709)
------- -------- -------- --------
Total 80 414 362 512
------- -------- -------- --------
Interest Charges:
Interest on long-term debt 3,544 4,268 7,873 8,809
Other interest - net 375 306 967 593
Allowance for borrowed funds used
during construction (27) (92) (48) (176)
------- -------- -------- --------
Total 3,892 4,482 8,792 9,226
------- -------- -------- --------
Net Income 8,688 13,812 14,933 15,625
Preferred Stock Dividend Requirements
and Other 317 375 717 833
------- -------- -------- --------
Earnings Applicable to Common Stock $8,371 $13,437 $14,216 $14,792
======= ======== ======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $14,933 $15,625
Noncash items included in net income:
Change in rate deferrals 13,452 10,379
Depreciation and amortization 9,614 9,453
Deferred income taxes and investment tax credits (1,202) (10,899)
Allowance for equity funds used during construction (61) (237)
Changes in working capital:
Receivables (7,972) 2,842
Accounts payable 13,145 (3,801)
Taxes accrued (999) 7,173
Interest accrued (594) (679)
Income tax refund 704 -
Other working capital accounts (16,015) 8,180
Other (10,465) 3,752
------- -------
Net cash flow provided by operating activities 14,540 41,788
------- -------
Investing Activities:
Construction expenditures (8,738) (10,855)
Allowance for equity funds used during construction 61 237
------- -------
Net cash flow used in investing activities (8,677) (10,618)
------- -------
Financing Activities:
Proceeds from the issuance of general
and refunding bonds 29,805 -
Retirement of general and refunding bonds (24,200) (15,000)
Redemption of preferred stock (1,500) (1,500)
Dividends paid:
Common stock (5,800) (1,400)
Preferred stock (775) (845)
------- -------
Net cash flow used in financing activities (2,470) (18,745)
------- -------
Net increase in cash and cash equivalents 3,393 12,425
Cash and cash equivalents at beginning of period 8,031 43,317
------- -------
Cash and cash equivalents at end of period $11,424 $55,742
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $9,056 $9,663
Income taxes $10,465 $12,671
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $474,746 $470,560
Natural gas 121,604 119,508
Construction work in progress 9,761 7,284
-------- --------
Total 606,111 597,352
Less - accumulated depreciation and amortization 326,669 319,576
-------- --------
Utility plant - net 279,442 277,776
-------- --------
Other Investments:
Investment in subsidiary company - at equity 3,259 3,259
-------- --------
Current Assets:
Cash and cash equivalents:
Cash 1,815 849
Temporary cash investments - at cost,
which approximates market:
Associated companies 1,567 2,472
Other 8,042 4,710
-------- --------
Total cash and cash equivalents 11,424 8,031
Accounts receivable:
Customer (less allowance for doubtful accounts of
$0.8 million in 1995 and 1994) 28,903 23,938
Associated companies 2,844 3,503
Other 136 600
Accrued unbilled revenues 18,425 14,295
Deferred electric fuel and resale gas costs 6,992 856
Materials and supplies - at average cost 9,836 9,676
Rate deferrals 33,815 31,544
Income tax receivable 19,468 20,172
Prepayments and other 11,013 5,636
-------- --------
Total 142,856 118,251
-------- --------
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 157,404 173,127
SFAS 109 regulatory asset - net 9,281 8,792
Unamortized loss on reacquired debt 2,147 2,361
Other regulatory assets 5,647 5,647
Other 3,833 3,681
-------- --------
Total 178,312 193,608
-------- --------
TOTAL $603,869 $592,894
======== ========
See Notes to Financial Statements.
NEW ORLEANS PUBLIC SERVICE INC.
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $4 par value, authorized
10,000,000 shares; issued and outstanding
8,435,900 shares in 1995 and 1994 $33,744 $33,744
Paid-in capital 36,247 36,201
Retained earnings subsequent to the elimination of
the accumulated deficit on November 30, 1988 87,302 78,886
-------- --------
Total common shareholder's equity 157,293 148,831
Preferred stock:
Without sinking fund 19,780 19,780
With sinking fund 1,950 3,450
Long-term debt 155,935 164,160
-------- --------
Total 334,958 336,221
-------- --------
Other Noncurrent Liabilities:
Accumulated provision for losses 17,144 17,318
Other 171 1,745
-------- --------
Total 17,315 19,063
-------- --------
Current Liabilities:
Currently maturing long-term debt 38,250 24,200
Accounts payable:
Associated companies 15,830 6,456
Other 23,274 19,503
Customer deposits 18,041 17,422
Accumulated deferred income taxes 5,472 4,925
Taxes accrued 1,330 2,329
Interest accrued 4,648 5,242
Other 15,021 19,982
-------- --------
Total 121,866 100,059
-------- --------
Deferred Credits:
Accumulated deferred income taxes 88,304 89,246
Accumulated deferred investment tax credits 8,933 9,251
Other 32,493 39,054
-------- --------
Total 129,730 137,551
-------- --------
Commitments and Contingencies (Note 1)
TOTAL $603,869 $592,894
======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF INCOME
For the Three and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
1995 1994 1995 1994
(In Thousands)
Operating Revenues $158,632 $151,219 $310,296 $299,066
-------- -------- -------- --------
Operating Expenses:
Operation and maintenance:
Fuel and fuel-related expenses 3,561 12,234 15,896 24,221
Nuclear refueling outage expenses 19,005 - 21,286 -
Other operation and maintenance 23,803 25,951 48,902 47,491
Depreciation, amortization, and decommissioning 24,535 22,998 49,933 45,967
Taxes other than income taxes 7,024 6,645 14,198 13,518
Income taxes 19,414 17,612 38,719 37,748
-------- -------- -------- --------
Total 97,342 85,440 188,934 168,945
-------- -------- -------- --------
Operating Income 61,290 65,779 121,362 130,121
-------- -------- -------- --------
Other Income (Deductions):
Allowance for equity funds used
during construction 552 312 1,032 634
Miscellaneous - net 1,017 1,517 1,742 2,616
Income taxes 501 681 1,052 (1,039)
-------- -------- -------- --------
Total 2,070 2,510 3,826 2,211
-------- -------- -------- --------
Interest Charges:
Interest on long-term debt 38,162 40,045 75,596 82,907
Other interest - net 1,984 3,412 4,317 3,424
Allowance for borrowed funds used
during construction (588) (380) (1,092) (760)
-------- -------- -------- --------
Total 39,558 43,077 78,821 85,571
-------- -------- -------- --------
Net Income $23,802 $25,212 $46,367 $46,761
======== ======== ======== ========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
(In Thousands)
Operating Activities:
Net income $46,367 $46,761
Noncash items included in net income:
Depreciation, amortization, and decommissioning 49,933 45,967
Deferred income taxes and investment tax credits (7,335) 8,689
Allowance for equity funds used during construction (1,032) (634)
Changes in working capital:
Receivables (60,206) (15,093)
Accounts payable (181) 13,217
Taxes accrued 14,062 (10,920)
Interest accrued 3,127 (6,577)
Other working capital accounts (22,710) (5,279)
Recoverable income taxes - 26,948
Decommissioning trust contributions (2,696) (2,503)
Other 32,074 12,291
------- --------
Net cash flow provided by operating activities 51,403 112,867
------- --------
Investing Activities:
Construction expenditures (17,178) (4,280)
Allowance for equity funds used during construction 1,032 634
Nuclear fuel purchases (52,188) (54)
Proceeds from sale/leaseback of nuclear fuel 52,188 -
------- --------
Net cash flow used in investing activities (16,146) (3,700)
------- --------
Financing Activities:
Proceeds from the issuance of:
First mortgage bonds - 59,410
Other long-term debt 43,538 -
Retirement of:
First mortgage bonds - (60,000)
Other long-term debt (45,320) -
Premium and expenses paid on refinancing sale/leaseback bonds - (47,602)
Common stock dividends paid (47,600) (79,300)
------- --------
Net cash flow used in financing activities (49,382) (127,492)
------- --------
Net decrease in cash and cash equivalents (14,125) (18,325)
Cash and cash equivalents at beginning of period 89,703 196,132
------- --------
Cash and cash equivalents at end of period $75,578 $177,807
======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - net of amount capitalized $72,647 $88,723
Income taxes $23,659 $4,730
Noncash investing and financing activities:
Change in unrealized appreciation/depreciation of
decommissioning trust assets $2,589 $291
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
ASSETS
Utility Plant:
Electric $2,939,364 $2,939,384
Electric plant under lease 439,375 439,378
Construction work in progress 63,717 46,547
Nuclear fuel under capital lease 89,395 46,688
Nuclear fuel - 26,360
---------- ----------
Total 3,531,851 3,498,357
Less - accumulated depreciation and amortization 803,705 751,717
---------- ----------
Utility plant - net 2,728,146 2,746,640
---------- ----------
Other Investments:
Decommissioning trust fund 36,621 30,359
---------- ----------
Current Assets:
Cash and cash equivalents:
Cash 155 -
Temporary cash investments - at cost,
which approximates market:
Associated companies 8,252 5,489
Other 67,171 84,214
---------- ----------
Total cash and cash equivalents 75,578 89,703
Accounts receivable:
Associated companies 68,766 7,450
Other 2,302 3,412
Materials and supplies - at average cost 68,959 71,991
Prepayments and other 13,704 5,429
---------- ----------
Total 229,309 177,985
---------- ----------
Deferred Debits and Other Assets:
Regulatory assets:
SFAS 109 regulatory asset - net 388,995 389,264
Unamortized loss on reacquired debt 54,891 54,577
Other regulatory assets 197,157 199,080
Other 14,501 15,454
---------- ----------
Total 655,544 658,375
---------- ----------
TOTAL $3,649,620 $3,613,359
========== ==========
See Notes to Financial Statements.
SYSTEM ENERGY RESOURCES, INC.
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
1995 1994
(In Thousands)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, no par value, authorized
1,000,000 shares; issued and outstanding
789,350 shares in 1995 and 1994 $789,350 $789,350
Paid-in capital 7 7
Retained earnings 84,448 85,681
---------- ----------
Total common shareholder's equity 873,805 875,038
Long-term debt 1,439,526 1,438,305
---------- ----------
Total 2,313,331 2,313,343
---------- ----------
Other Noncurrent Liabilities:
Obligations under capital leases 61,395 18,688
Other 14,342 14,342
---------- ----------
Total 75,737 33,030
---------- ----------
Current Liabilities:
Currently maturing long-term debt 105,000 105,000
Accounts payable:
Associated companies 42,420 32,272
Other 12,875 23,204
Taxes accrued 49,444 35,382
Interest accrued 43,923 40,796
Obligations under capital leases 28,000 28,000
Other 2,327 19,794
---------- ----------
Total 283,989 284,448
---------- ----------
Deferred Credits:
Accumulated deferred income taxes 739,080 746,502
Accumulated deferred investment tax credits 108,846 110,584
FERC Settlement - refund obligation 58,673 60,388
Other 69,964 65,064
---------- ----------
Total 976,563 982,538
---------- ----------
Commitments and Contingencies (Notes 1 and 2)
TOTAL $3,649,620 $3,613,359
========== ==========
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,
respectively, own 70% and 30% undivided interests in River Bend
and 42% and 58% undivided interests in Big Cajun 2, Unit 3.
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's complaint seeks 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. The suit also seeks to
recover as damages Cajun's alleged $1.6 billion investment in the
unit 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 on the portion of the suit by Cajun to rescind the
Operating Agreement was completed in March 1995, and a ruling
from the District Court is pending. No assurance can be given as
to the outcome of this litigation. If GSU is ultimately
unsuccessful in this litigation and is required to pay
substantial damages, GSU would probably be unable to make such
payments and would probably have to seek relief from its
creditors under the United States Bankruptcy Code (Bankruptcy
Code).
Since 1992 Cajun has not paid its full share of capital
costs, operating and maintenance expenses and other costs for
repairs and improvements to River Bend. In addition, Cajun paid
certain costs and expenses under protest. These actions were
taken by Cajun based on its contentions that River Bend operating
and maintenance expenses were excessive and that the RUS
allegedly would not permit Cajun to pay such costs. Cajun has
continued to fund its share of the nuclear decommissioning trust
payments for River Bend, as well as insurance and safety-related
expenses. Cajun's unpaid portion of River Bend operating and
maintenance expenses (including nuclear fuel) and capital costs
for the first six months of 1995 was approximately $29.7 million.
Cajun's total share of River Bend annual operating and
maintenance expenses (including nuclear fuel) and capital costs
was approximately $76.1 million in 1994.
In view of Cajun's failure to fund its share of River Bend-
related operating, maintenance and capital costs, GSU has (i)
credited GSU's share of expenses for Big Cajun 2, Unit 3 against
amounts due from Cajun to GSU and (ii) sought to market Cajun's
share of the power from River Bend and apply the proceeds to the
amounts due from Cajun to GSU. As a result, on November 2, 1994,
Cajun discontinued supplying GSU with its share of energy from
Big Cajun 2, Unit 3. GSU requested an order from the District
Court requiring Cajun to supply GSU with this energy, and
allowing GSU to credit amounts due to Cajun for Big Cajun 2, Unit
3 energy against amounts Cajun owed to GSU for River Bend. In
December 1994, the District Court ordered Cajun to supply GSU
with its share of energy from Big Cajun 2, Unit 3 and ordered GSU
to make payments for its share of Big Cajun 2, Unit 3 expenses to
the registry of the District Court.
On December 21, 1994, Cajun filed a petition in the United
States Bankruptcy Court for the Middle District of Louisiana
seeking relief under Chapter 11 of the Bankruptcy Code. Cajun's
bankruptcy could have a material adverse effect on GSU. GSU is
taking steps to protect its interests and its claims against
Cajun arising from the co-ownership of River Bend and Big Cajun
2, Unit 3. On December 31, 1994, the District Court issued an
order lifting an automatic stay as to certain proceedings, with
the result that the December 1994 order of the District Court
referred to above, remains in effect. Cajun filed a Notice of
Appeal on January 18, 1995, to the United States Fifth Circuit
Court of Appeals seeking a reversal of the District Court's
order. No hearing date has been set on Cajun's appeal.
In the bankruptcy proceedings, Cajun filed a motion to
reject the Operating Agreement as a burdensome executory
contract. GSU responded on January 10, 1995, with a memorandum
opposing Cajun's motion. If the District Court were to grant
Cajun's motion to reject the Operating Agreement, Cajun would be
relieved of its financial obligations under the contract, while
GSU would likely have a substantial damage claim arising from any
such rejection. Although GSU believes that Cajun's motion to
reject the Operating Agreement is without merit, it is not
possible to predict the outcome or ultimate impact of these
proceedings.
During the period in which Cajun is not paying its share of
River Bend-related 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 net amount resulting from Cajun's failure to pay its
full share of River Bend-related costs, reduced by the proceeds
from the sale of Cajun's share of River Bend power, was $60.6
million as of June 30, 1995, compared with $49 million as of
December 31, 1994. These amounts are reflected in long-term
receivables with an offsetting reserve in other deferred credits.
Cajun's bankruptcy may affect the ultimate collectibility of the
amounts owed to GSU, including any amounts that may be awarded in
litigation.
Cajun - Transmission Service
Entergy Corporation and GSU
GSU and Cajun are parties to FERC proceedings relating to
transmission service charge disputes. In April 1992, FERC issued
an order. In May 1992, GSU and Cajun filed motions for rehearing
which are pending at FERC. In June 1992, GSU filed a petition
for review in the United States Fifth Circuit Court of Appeals
(Court of Appeals) regarding certain of the issues decided by
FERC. In August 1993, the Court of Appeals rendered a decision
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 Court of
Appeals opinion remanded these issues to FERC for further pro
ceedings consistent with its opinion. In February 1995, FERC
clarified its order, eliminating an issue that GSU believes the
Court of Appeals directed FERC to reconsider. In April 1995, the
ALJ issued a ruling in the remanded portion of the proceeding,
which the FERC affirmed in an order issued on August 3, 1995.
Under GSU's interpretation of the 1992 FERC order, as
modified by its August 3, 1995 order, Cajun would owe GSU
approximately $62.1 million as of June 30, 1995. GSU further
estimates that if it were to prevail in its May 1992 motion for
rehearing and on certain other issues decided adversely to GSU in
the February 1995 and the August 1995 FERC orders, which GSU may
appeal, Cajun would owe GSU approximately $137.2 million as of
June 30, 1995. 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 Cajun were to appeal
the FERC's August 1995 order and prevail, GSU estimates it would
owe Cajun approximately $90.4 million as of June 30, 1995. 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. Pending FERC's ruling on
the May 1992 motions for rehearing, GSU has continued to bill
Cajun utilizing the historical billing methodology and has
recorded underpaid transmission charges, including interest, in
the amount of $167.3 million as of June 30, 1995. 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 severely 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 by Entergy Corporation and GSU in 1995, and subsequent
periods, with resulting substantial adverse adjustments to common
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.
Nonregulated Investments
Entergy Corporation
On March 31, 1995, Entergy Corporation, through its
subsidiary, Entergy Power Development Company (EPDC), entered
into an agreement with Enron Power Development Corporation, a
subsidiary of Enron Corporation, to acquire a 20% interest in the
Dabhol Power Project (Project), a 695 megawatt combined cycle
facility located in the State of Maharashtra, India. Pursuant to
an agreement, EPDC has placed approximately $20.5 million in an
escrow account. If EPDC becomes a participant in the Project,
its estimated investment in the first phase of the Project would
be approximately $90 million. At that time, EPDC would also have
an obligation to cover a pro-rata share of the cost overruns up
to approximately $30 million.
Subsequent to entering into the agreement with Enron Power
Development Corporation, the newly-elected Maharashtra state
government investigated the Project and its related cost of
power. On August 3, 1995, the Chief Minister of Maharashtra
stated that the government of Maharashtra has decided to suspend
the first phase of the Project, the 695 megawatt facility and
"scrap" the second phase of the Project, a 1,320 megawatt
facility, and indicated that orders to stop work would be
issued. In view of these developments, Entergy is uncertain
as to the future of the project and is considering its options.
Capital Requirements and Financing
Entergy, AP&L, GSU, LP&L, MP&L, NOPSI, and System Energy
See pages 109, 146-148, 189-191, 194, 228-230, 266-268, 299-
301, and 332 of the Form 10-K for information on the System
operating companies' and System Energy's construction
expenditures (excluding nuclear fuel) for the years 1995, 1996,
and 1997, and long-term debt and preferred stock maturities and
cash sinking fund requirements for the period 1995-1999.
Nuclear Insurance, Spent Nuclear Fuel, and Decommissioning Costs
Entergy Corporation, AP&L, GSU, LP&L, and System Energy
See pages 110, 149-150, 194-195, 231-232, and 334-335 of the
Form 10-K for information on nuclear liability, property and
replacement power insurance, and related NRC regulations.
See pages 110-112, 150-151, 195-196, 232-233, and 335-336 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.
The staff of the SEC has questioned certain of the financial
accounting practices of the electric utility industry regarding
the recognition, measurement, and classification of
decommissioning costs for nuclear generating stations in the
financial statements of electric utilities. In response to these
questions, the Financial Accounting Standards Board (FASB) is
reviewing the accounting for decommissioning. In June 1995, the
FASB reaffirmed its tentative conclusions on measurement issues
in accounting for the liability for the decommissioning of
nuclear power plants. The FASB supports measurement of the
liability based on discounted future cash flows. Those future
cash flows should be determined by estimating current costs and
adjusting for inflation, efficiencies that may be gained from
experience with similar activities, and consideration of
reasonable future advances in technology. The FASB also agreed
that changes in the decommissioning liability that result from
changes in assumptions should be recognized with a corresponding
adjustment to the plant asset and depreciation should be revised
prospectively. In addition, the FASB agreed that the asset
recognized as a result of recognizing the decommissioning
liability should be presented with other costs of the plant on
the financial statements because the cost of decommissioning the
plant is recognized as part of the total cost of the plant asset.
If current electric utility industry accounting practices
with respect to nuclear decommissioning are changed, among other
things, 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 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 31, 83, 112, and 138 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.
Further inspections and repairs were conducted at subsequent
refueling and mid-cycle outages in September 1992, May 1993,
April 1994, and January 1995. AP&L's budgeted maintenance
expenditures were adequate to cover the cost of such repairs.
Beginning in January 1995, ANO 2's output was reduced 15
megawatts or 1.6% due to secondary side fouling, tube plugging,
and reduction of primary temperature. Entergy Operations is
taking steps at ANO 2 to reduce the number and severity of
future tube cracks. However, the unit may be approaching the
limit for the number of steam generator tubes that can be plugged
with the unit in operation. If the currently established limit
is reached, it could require Entergy Operations to insert sleeves
in some of the steam generator tubes during future outages.
Currently, Entergy Operations is in the process of gathering
information and assessing various options for the repair or the
replacement of ANO 2's steam generator. Certain of these options
could, in the future, require significant capital expenditures
and result in additional outages. In addition, Entergy Operations
periodically meets with the NRC to discuss such steps and results
of inspections of the generator tubes, as well as the timing of
future inspections. Additional inspections are planned for the
normal refueling outage scheduled for October 1995.
Environmental Issues
AP&L
See pages 34-35 of the Form 10-K for information on PCB
contamination at former Reynolds Metals Company (Reynolds) plant
sites in Arkansas to which AP&L had supplied power. In May 1995,
AP&L was named as a defendant in a suit by Reynolds, seeking to
recover a share of the costs associated with the clean up of
hazardous substances at a site south of Arkadelphia, Arkansas.
Reynolds alleges that it has spent $11.2 million to cleanup the
site, and that the site was contaminated in part with PCBs for
which AP&L bears some responsibility. AP&L, voluntarily, at its
expense, has already completed remediation at a nearby substation
site, and believes that it has no liability for contamination at
the site that is subject to the Reynolds suit and will contest
the lawsuit. Regardless of the outcome, AP&L does not believe
this matter would have a materially adverse effect on its
financial condition or results of operations.
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 certain hazardous waste
disposal sites. 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
adversely affected by the outcome of the suits.
Through June 30, 1995, $7.7 million has been expended on the
cleanup. As of June 30, 1995, a remaining recorded liability of
$20.7 million existed relating to the cleanup of six sites at
which GSU has been designated a potentially responsible party.
See pages 35-36, 39-40, and 196-197 of the Form 10-K for
additional discussion of the sites where GSU has been designated
as a potentially responsible party by the EPA.
LP&L
During 1993, the Louisiana Department of Environmental
Quality issued new rules for solid waste regulation, including
waste water impoundments. LP&L determined that certain of its
power plant waste water impoundments were affected by these
regulations and has chosen to upgrade or close them. As a
result, a remaining recorded liability in the amount of $13.8
million existed at June 30, 1995, for waste water upgrades and
closures to be completed by 1996. Cumulative expenditures
relating to the upgrades and closures of waste water impoundments
were $2.3 million as of June 30, 1995. See pages 37 and 233 of
the Form 10-K for additional discussions of LP&L's waste water
impoundment upgrades and closures.
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 undivided interests (aggregating approximately 9.3%)
in Waterford 3. See pages 234-235 of the Form 10-K 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 would include a 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
times earnings. As of June 30, 1995, LP&L's total equity capital
was 48.23% of adjusted capitalization, and its fixed charge
coverage ratio was 3.07.
Reimbursement Agreement
System Energy
Under the provisions of the Reimbursement Agreement, as
amended, System Energy has agreed to a number of covenants
relating to the maintenance of certain capitalization and fixed
charge coverage ratios. System Energy agreed, during the term of
the Reimbursement Agreement, to maintain its equity at not less
than 33% of its adjusted capitalization (as defined in the
Reimbursement Agreement to include certain amounts not included
in capitalization for financial statement purposes). In
addition, System Energy must maintain, with respect to each
fiscal quarter during the term of the Reimbursement Agreement, a
ratio of adjusted net income to interest expense (calculated, in
each case, as specified in the Reimbursement Agreement) of at
least 1.60 times earnings. As of June 30, 1995, System Energy's
equity approximated 33.57% of its adjusted capitalization, and
its fixed charge coverage ratio was 1.23.
As a result of charges recorded in the fourth quarter of
1994 related to an agreement with FERC which settled a long-
standing dispute involving income tax allocation procedures,
System Energy has obtained the consent of certain banks to waive
temporarily the fixed charge coverage covenant in the letters of
credit and Reimbursement Agreement until November 30, 1995. (See
pages 92-93 and 327 of the Form 10-K for information on the FERC
Settlement.) System Energy expects that upon expiration of the
waiver period, it will be in compliance with the fixed charge
coverage covenant. Absent a waiver, System Energy's failure to
satisfy this covenant could cause a draw under and/or early
termination of the letters of credit. If the letters of credit
are not replaced in a timely manner, a default or early
termination of System Energy's leases could result. Draws under
the letters of credit must be repaid by System Energy within 5
days (or in some cases, 90 days) following the date of the
drawing. See page 334 of the Form 10-K for further information
on the Reimbursement Agreement.
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 as to 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 a
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 the PUCT had erred in assuming it
could set aside $1.4 billion of the total costs of River Bend and
consider them in a later proceeding, and that the PUCT had
effectively found that GSU had not met its burden of proof
related to the amounts placed in abeyance. The court ruled that
the Allowed Deferrals should not be included in rate base, and
further held that the PUCT had erred in reducing GSU's deferred
costs by $1.50 for each $1.00 of revenue collected under the
interim rate increases authorized in 1987 and 1988. The court
remanded the case to the PUCT with instructions as to the proper
handling of the Allowed Deferrals. GSU's motion for rehearing
was denied and, in December 1991, GSU filed an appeal of the
October 1991 district court order. The PUCT also appealed the
October 1991 district court order, which served to supersede the
district court's judgment, rendering it unenforceable under Texas
law.
In August 1994, the Texas Third District Court of Appeals
(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 deferred 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 also held that GSU's deferred
operating and maintenance costs associated with the allowed
portion of River Bend should be included in rate base and 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
stated that the result of the majority opinion was, among other
things, to deprive GSU of due process at the PUCT because the
PUCT had never made 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 appealed
the Appellate Court's decision to the Texas Supreme Court. The
Texas Supreme Court has not yet accepted the appeal, and no date
for oral argument has been set.
As of June 30, 1995, 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 $13 million,
$280 million (both net of depreciation), and $170 million,
respectively. Allowed Deferrals were approximately $86 million,
net of taxes and amortization, as of June 30, 1995. GSU
estimates it has recorded approximately $169 million of revenues
as of June 30, 1995, 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 to customers of revenue
received based upon such deferred costs will be required.
No assurance can be given as to the timing or outcome of the
remands or appeals described above. 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's inability
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. Management and legal counsel are unable
to predict the amount, if any, of abeyed and previously
disallowed River Bend plant costs that ultimately may be
disallowed by the PUCT. As of June 30, 1995, a net of tax write-
off of up to $293 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 these
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 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 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. Disallowed investment in the
plants 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 two of these PUCT decisions are
currently pending.
The following factors support management's position that a
loss contingency requiring accrual has not occurred, and 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; and
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, and 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.
The adoption of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," (SFAS 121) which will become effective January 1, 1996, will
require the write-off of the $170 million of rate deferrals
discussed above, unless there are favorable regulatory or court
actions related to these costs prior to adoption. The standard
describes circumstances which may result in assets being impaired
and provides criteria for recognition and measurement of asset
impairment. See Note 7 for further information regarding SFAS
121.
Filings with the PUCT and Texas Cities
Entergy Corporation and GSU
In connection with the PUCT's investigation of the
reasonableness of GSU's rates, on March 20, 1995 the PUCT ordered
a $72.9 million annual base rate reduction for the period
March 31, 1994 through September 1, 1994, decreasing to an annual
base rate reduction of $52.9 million after September 1, 1994. In
accordance with the Merger agreement, the rate reduction was
applied retroactively to March 31, 1994. As a result, in 1994
GSU recorded a $57 million reserve for rate refund and a $12.8
million reserve for franchise taxes to be refunded.
`
On May 26, 1995, the PUCT amended its previously issued
March 20, 1995 rate order, reducing the annual base rate
reduction by $16.4 million to an annual level of $36.5 million.
The PUCT's action was based upon a recent Texas Supreme Court
decision not to require a utility to use the prospective tax
benefits generated by disallowed expenses to reduce rates. The
PUCT's May 26, 1995 amended order no longer requires GSU to pass
such prospective tax benefits on to its customers. Therefore,
in June 1995, GSU reduced the reserve for rate refund by $18.1
million based on the annual $36.5 million rate reduction. At
June 30, 1995, the reserve for rate refund balance was $59.4
million. GSU intends to appeal the PUCT order and no assurance
can be given to the timing or outcome of the appeal.
Filings with the LPSC
Entergy Corporation and GSU
In May 1994, GSU made the first required post-Merger
earnings analysis filing with the LPSC. On December 14, 1994,
the LPSC ordered a $12.7 million annual rate reduction for GSU
effective January 1995. The rate order included, among other
things, a reduction in GSU's Louisiana jurisdictional authorized
return on equity from 12.75% to 10.95% and the amortization for
the benefit of the customers of $8.3 million of previously
deferred unbilled revenue, representing one-half of the total
resulting from a change in accounting for unbilled revenue. In
December 1994, GSU received a preliminary injunction from the
District Court regarding $8.3 million of the reduction. On
January 1, 1995, GSU reduced rates by $4.4 million. GSU filed an
appeal of the entire $12.7 million rate reduction with the
District Court. In July 1995, the District Court denied the
appeal. GSU has appealed the order to the Louisiana Supreme
Court; however, no assurance can be given as to the timing or
outcome of the appeal. The preliminary injunction relating to
$8.3 million of the reduction, will remain in effect during the
appeal.
On May 31, 1995, GSU filed the second required post-Merger
earning analysis filing with the LPSC.
Entergy Corporation and LP&L
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. 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 a financial incentive for LP&L to maintain
continuous improvement in all three performance categories
(price, customer satisfaction, and service reliability).
As a result of the LPSC's base rate review, on June 2, 1995,
a $49.4 million reduction in base rates was ordered. This
included $10.5 million of rates previously reduced through fuel
clause reductions. Therefore, the net effect of the LPSC order
was to reduce rates by $38.9 million. The LPSC approved LP&L's
proposed formula rate plan with the following modifications. An
earnings band will be established with a range from 10.4% to 12%
for return on equity. If LP&L's earnings fall within the
bandwidth, no adjustment in rates occurs. If LP&L's earnings
are above a 12% return on equity, a 60/40 sharing with customers
occurs and customers receive 60% of earnings in excess of the 12%
through prospective rate reductions. Alternatively, if LP&L's
earnings are below a 10.4% return on equity, customers pay 60% of
the difference between the realized return on equity and a 10.4%
return on equity through prospective rate increases. The LPSC
also reduced LP&L's authorized rate of return from 12.76% to
11.2%. The LPSC rate order is retroactive to April 27, 1995. As
of June 30, 1995, LP&L had recorded a $7.6 million reserve for
rate refund.
On June 9, 1995, LP&L appealed the $49.4 million rate
reduction. On the same date LP&L also filed a petition for
injunctive relief from implementation of $14.7 million of the
$49.4 million rate reduction. The $14.7 million of the rate
reduction represents revenue made available to LP&L through a
previous LPSC order, which in turn allowed LP&L to provide
reduced rates to three industrial customers. Subsequently, a
request for a $14.7 million rate increase was filed by LP&L. On
July 13, 1995, LP&L was granted a preliminary injunction on $14.7
million of the rate reduction by the District Court pending a
final LPSC order. No assurance can be given as to the timing or
outcome of the appeal or the requested rate increase.
Proposed Rate Increase
System Energy
In May 1995, System Energy filed an application with FERC
for a $65.5 million rate increase. The request seeks changes to
the System Energy rate schedule, including increases in the
revenue requirement associated with decommissioning costs, the
depreciation accrual rate, and rate of return on common equity.
System Energy requested that the proposed rate increase become
effective subject to refund within 60 days after the filing date,
but the effective date was suspended until December 1995.
MP&L
MP&L's allocation of the proposed wholesale rate increase is
$21.6 million. In July 1995, MP&L filed a schedule with the MPSC
which will defer and later recover the amount of the System
Energy rate increase that is approved by the FERC. The deferral,
which must be approved by the MPSC, will begin in September 1995
and will end after the new wholesale rates approved by the FERC
go into affect. Beginning in 1998, MP&L will collect through its
rates the deferral balance and carrying charges.
February 1994 Ice Storm/Rate Rider
Entergy Corporation and MP&L
As discussed on pages 26, 95, and 262 of the Form 10-K, the
MPSC approved a stipulation in September 1994, with respect to
the recovery of ice storm costs recorded through April 30, 1994.
Under the stipulation, MP&L implemented an ice storm rate rider,
which increased rates approximately $8 million for a period of
five years beginning on September 29, 1994. This stipulation
also stated that 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.
In July 1995, MP&L and the MPSC Staff entered into a joint
stipulation which allows for a $2.5 million rate increase for a
period of four years beginning September 28, 1995, to recover
costs related to the ice storm that were recorded after April 30,
1994. The stipulation also allows for undepreciated ice storm
capital costs recorded after April 30, 1994 to be treated as
described above.
LPSC Fuel Cost Review
GSU
In November 1993, the LPSC ordered a review of GSU's fuel
costs for the period October 1988 through September 1991 (Phase
1) 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 ruled in the Phase 1 case that GSU should refund
approximately $27 million to its customers. Under the order, a
refund of $13.1 million was made through a billing credit on
August 1994 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 the
outcome of the district court appeal, and no assurance can be
given as to the timing or outcome of the appeal.
The LPSC is currently conducting Phase II of its review of
GSU's fuel costs for the period October 1991 through December
1994. On June 30, 1995, the LPSC consultants filed testimony
recommending a disallowance of $38.7 million of Phase II fuel
costs. Hearings are scheduled to begin in September 1995. No
assurance can be given to the timing or the outcome of the
review.
PUCT Fuel Cost Review
GSU
For information on the PUCT Fuel Cost Review for the period
December 1, 1986 through September 30, 1991, see pages 183-184 of
the Form 10-K.
On January 9, 1995, GSU and various parties reached an
agreement 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 the fourth quarter of 1994, GSU
recorded a reserve of $7.6 million as a result of this
settlement. On April 17, 1995, the PUCT issued a final order
approving the settlement.
NOTE 3. 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 depend
upon market conditions and authorization by the Entergy
Corporation Board of Directors. During the first six months of
1995, no shares of common stock were repurchased.
During the first six months of 1995, Entergy Corporation
issued 340,590 shares of its previously repurchased common stock,
reducing the amount held as treasury stock by $10.1 million.
Entergy Corporation issued these shares to meet the requirements
of its various stock plans. For further information on Entergy
Corporation's stock plans, see pages 103-104 of the Form 10-K.
NOTE 4. LONG-TERM DEBT
GSU
On July 1, 1995, GSU redeemed, pursuant to sinking fund
requirements, $50 million of its 9.72% Series Debentures due 1998
and $0.425 million of its 7.00% Series Pollution Control Revenue
Bonds due 2006.
NOTE 5. RETAINED EARNINGS
On July 28, 1995, Entergy Corporation's Board of Directors
declared a common stock dividend of 45 cents per share payable
on September 1, 1995.
NOTE 6. RESTRUCTURING COSTS
Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and Entergy
Services
The restructuring programs announced by Entergy in the third
quarter of 1994 included anticipated reductions in the number of
employees and the consolidation of offices and facilities.
Restructuring charges associated with these programs recorded in
1994 and the first six months of 1995 are shown below by company
together with actual termination benefits paid under the program.
Restructuring Restructuring
Liability Additional Liability
Company December 31, Accruals Payments June 30, 1995
1994
(In Millions)
AP&L $ 12.2 $ 9.0 $(12.0) $ 9.2
GSU 6.5 7.2 (7.0) 6.7
LP&L 6.8 5.0 (7.9) 3.9
MP&L 6.2 1.1 (4.9) 2.4
NOPSI 3.4 - (1.7) 1.7
Entergy Services - 6.0 (1.5) 4.5
------- ------ ------ --------
Total $ 35.1 $ 28.3 $(35.0) $ 28.4
======= ====== ====== ========
The restructuring charges shown above primarily included
employee severance costs related to the expected termination of
approximately 2,150 employees. In June 1995, the System recorded
$24.7 million of additional restructuring costs. As of June 30,
1995, 1,683 employees have either been terminated or accepted
voluntary separation under the restructuring plan.
Additionally, the System recorded $24.3 million in 1994 (of
which $23.8 million was recorded by GSU) for remaining severance
and augmented retirement benefits related to the Merger. Actual
termination benefits paid under the program during the first six
months of 1995 amounted to $17.1 million. During that same period
additional accruals of $5.0 million were recorded and adjustments
to the allocation of the total liability were made among the
System companies. At June 30, 1995 the total remaining System
liability of $12.2 million for expected future merger-related
outlays was comprised principally of GSU and Entergy Services'
liabilities of $8.0 million and $3.0 million, respectively.
NOTE 7. ACCOUNTING ISSUES
New Accounting Standard - In March 1995, the FASB issued SFAS
121, effective January 1, 1996. This standard describes
circumstances which may result in assets (including goodwill such
as the Merger acquisition adjustment, see pages 87-88 of the Form
10-K) being impaired and provides criteria for recognition and
measurement of asset impairment. Note 2 describes regulatory
assets of $170 million (net of tax) related to Texas retail
deferred River Bend operating and carrying costs. Management
believes these deferred costs will be required to be written off
under the provisions of SFAS 121 unless there are favorable
regulatory or court actions related to these costs prior to the
adoption of the new standard by Entergy.
Certain other assets and operations of Entergy totaling
approximately $1.8 billion (pre-tax) are most potentially
affected by the requirements of SFAS 121. Those assets include
AP&L's and LP&L's retained shares of Grand Gulf 1, Entergy
Power's investments in the Independence and Ritchie power plants,
GSU's Louisiana deregulated asset plan, and Texas jurisdiction
abeyed portion of the River Bend plant, in addition to the FERC
jurisdiction and steam department operations of GSU. As
discussed in the Form 10-K, GSU has previously discontinued the
application of SFAS 71 for the Louisiana deregulated asset plan,
and operations of the FERC jurisdiction and steam department.
Entergy will continually review these assets and operations in
order to determine if the carrying value of such assets will be
recovered. In most cases this determination will be based on the
net cash flows expected to result from such operations and
assets. Projected net cash flows will depend on the future
operating costs associated with the assets, the efficiency and
availability of the assets/generating units, and the future
market/price for energy over the remaining life of the assets.
__________________________________________
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.
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.
Net cash flow from operations for Entergy Corporation, the System
operating companies, and System Energy for the six months ended
June 30, 1995 and 1994, was as follows (in millions):
Six Months Six Months
Company Ended 6/30/95 Ended 6/30/94
Entergy Corporation $449.7 $508.2
AP&L $141.3 $ 79.7
GSU $100.4 $138.7
LP&L $159.7 $147.1
MP&L $ 74.8 $ 73.5
NOPSI $ 14.5 $ 41.8
System Energy $ 51.4 $112.9
For the six months ended June 30, 1995, AP&L's net cash flow
from operations increased due primarily to reduced billings from
System Energy resulting from a FERC audit settlement in 1994 and
increased other working capital. Partially offsetting this
increase in net cash flow at AP&L was a higher fuel inventory
level due to the depletion of coal inventory in the first six
months of 1994 when spring flooding disrupted the normal coal
delivery schedule. GSU's net cash flow from operations decreased
for the six months ended June 30, 1995, due primarily to cash
required for an upcoming debt retirement, and to reduced working
capital. NOPSI's net cash flow from operations decreased for the
six months ended June 30, 1995, due primarily to reduced working
capital and to refunds associated with the 1994 NOPSI Settlement.
System Energy's net cash flow from operations decreased for the
six months ended June 30, 1995, due primarily to refunds to
associated companies resulting from a FERC audit settlement in
1994.
In the first six months of 1995, 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. Entergy's ability to fund most of its capital
requirements with cash from operations results from continued
efforts to streamline operations and to reduce costs, as well as
from collections under the rate phase-in plans, which exceed
current cash requirements for the related costs. (In the income
statement, these revenue collections are offset by the
amortization of previously deferred costs so that 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.
Entergy Corporation will consider investing up to
approximately $150 million per year for the next several years in
nonregulated business opportunities. See Part II for additional
discussion of Entergy Corporation's current and future
investments in nonregulated businesses. As discussed in Note 1
and "Significant Factors and Known Trends - Nonregulated
Investments", as of June 30, 1995, EPDC has made an initial
investment in the Dabhol Power Project by depositing $20.5
million in an escrow account.
Certain agreements and restrictions limit the amount of
mortgage bonds and preferred stock that can be issued by each of
the System operating companies and System Energy. Based on the
most restrictive applicable tests as of June 30, 1995, and
assumed annual interest or dividend rates of 8% for bonds and
8.75% for preferred stock, 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 $274 $462
GSU $ - $ -
LP&L $ 61 $867
MP&L $187 $ 81
NOPSI $ 20 $ 13
System Energy $ 44 *
* System Energy's charter does not provide for the issuance of
preferred stock.
In addition, the System operating companies and System
Energy have the ability, subject to certain conditions, to issue
bonds against retired bonds, in some cases without meeting an
earnings coverage test. As a result of the charges recorded in
1994, GSU is currently precluded from issuing first mortgage
bonds under its earnings coverage test. However, GSU has the
ability to issue up to approximately $578 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 3 and 4, and pages 102-105, 146-148, 189-
191, 228-230, 266-268, 299-301, and 332 of the Form 10-K.
The System operating companies and System Energy have SEC
authorization to effect short-term borrowings. As of June 30,
1995, GSU has unused lines of credit for short-term borrowings
totaling $5.0 million. See pages 101, 145, 188, 227, 265, 299,
and 331 of the Form 10-K for information on the System operating
companies', System Energy's and Entergy Services' short-term
borrowing authorizations and bank lines of credit. At June 30,
1995, the System operating companies, Entergy Services and System
Fuels had outstanding short-term borrowings from the Money Pool
and/or from banks as follows (in millions):
Company Money Pool Banks
LP&L $ 0.1 $17.7
Entergy Operations $10.6 $ -
Entergy Services $36.4 $35.0
System Fuels $ - $15.0
On July 27, 1995, Entergy Corporation received SEC
authorization for a $300 million bank line of credit and
negotiations with a group of banks to provide up to $300 million
in loans to Entergy Corporation are currently proceeding.
Proceeds from this bank line of credit are expected to be used
for common stock repurchases, investments in nonregulated and
nonutility businesses, and other general corporate activities.
Entergy Corporation's current primary capital requirements
are to invest periodically in, or make loans to, its
subsidiaries. Entergy Corporation expects to meet these
requirements in 1995 - 1997 with internally generated funds and
cash on hand. Entergy Corporation also pays dividends on its
common stock, which aggregated $204 million in the first six
months of 1995. Declarations of dividends on common stock are
made at the discretion of the Board. It is anticipated that
management will not recommend future dividend increases to the
Board unless 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 six months of 1995, these common
stock dividend payments totaled $196 million. Certain
restrictions may limit the amount of these distributions. See
page 106 of the Form 10-K for additional information. GSU did
not make common stock dividend payments to Entergy Corporation in
the first six months of 1995.
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 Board
authorization. See Note 3 for additional information.
Recent rate reductions, as discussed in Note 2, as well as
any future rate reductions, have increased the need for Entergy
to stabilize and reduce costs in order to meet the increasing
competition in the utility industry as well as develop additional
sources of income.
Entergy Corporation and GSU
See Notes 1 and 2 regarding litigation with Cajun and River
Bend rate appeals. Write-offs or charges resulting from adverse
rulings in these matters, or ultimately required by the
application of SFAS 121 (see Note 7) could result in additional
net losses being reported by Entergy Corporation and GSU in 1995
and subsequent periods, with resulting adverse adjustments to
common equity of Entergy Corporation and GSU. 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
Under the Capital Funds Agreement, Entergy Corporation has
agreed to supply to System Energy sufficient capital to maintain
System Energy's equity capital at an amount equal to a minimum of
35% of its total capitalization (excluding short-term debt), and
to permit the continuation of commercial operation of Grand Gulf
1 and to pay in full all indebtedness for borrowed money of
System Energy when due under any circumstances. In addition,
under supplements to the Capital Funds Agreement assigning System
Energy's rights as security for specific debt of System Energy,
Entergy Corporation has agreed to make cash capital
contributions, if required, to enable System Energy to make
payments on such debt when due. The Capital Funds Agreement can
be terminated by the parties thereto, subject to the receipt of
consents of certain creditors.
RESULTS OF OPERATIONS
ENTERGY
Net Income
Consolidated net income increased for the three months ended
June 30, 1995 due primarily to increased wholesale revenues from
customers outside of Entergy's service area, a reduction of the
provision for a GSU rate refund associated with a 1995 PUCT rate
order, and a decrease in interest charges. Consolidated net
income increased slightly for the six months ended June 30, 1995
due primarily to an increase in other income and a decrease in
interest charges.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended
June 30, 1995 and 1994 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
Detailed below are Entergy's electric revenues by source and
KWH sales.
Three Months Ended Increase
Description 1995 1994 (Decrease)
(In Millions)
Electric Operating Revenues:
Residential $ 480.0 $ 489.1 $(9.1) (2)
Commercial 357.3 372.2 (14.9) (4)
Industrial 433.0 461.5 (28.5) (6)
Governmental 37.5 40.7 (3.2) (8)
------------------------
Total retail 1,307.8 1,363.5 (55.7) (4)
Sales for resale 82.7 76.3 6.4 8
Other 148.7 111.9 36.8 33
-------------------------
Total $1,539.2 $1,551.7 $(12.5) (1)
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 6,047 5,806 241 4
Commercial 4,958 4,813 145 3
Industrial 10,325 10,106 219 2
Governmental 564 553 11 2
-----------------------
Total retail 21,894 21,278 616 3
Sales for resale 2,406 2,035 371 18
-----------------------
Total 24,300 23,313 987 4
=======================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 921.5 $ 965.1 $(43.6) (5)
Commercial 682.0 711.3 (29.3) (4)
Industrial 847.0 897.6 (50.6) (6)
Governmental 72.7 79.6 (6.9) (9)
--------------------------
Total retail 2,523.2 2,653.6 (130.4) (5)
Sales for resale 157.2 145.7 11.5 8
Other 153.5 92.6 60.9 66
--------------------------
Total $2,833.9 $2,891.9 $(58.0) (2)
==========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 11,907 11,868 39 -
Commercial 9,431 9,219 212 2
Industrial 20,360 19,833 527 3
Governmental 1,103 1,079 24 2
------------------------
Total retail 42,801 41,999 802 2
Sales for resale 4,283 3,771 512 14
------------------------
Total 47,084 45,770 1,314 3
========================
Electric operating revenues decreased for the three months
and six months ended June 30, 1995 due primarily to decreased
fuel adjustment revenues, partially offset by a reduction of the
provision of a GSU rate refund associated with a 1995 PUCT rate
order, increased weather-related sales, an increase in wholesale
revenues from outside Entergy's service area, and increased other
revenues. The decrease in fuel adjustment revenues reflects a
decrease in fuel prices. Other revenues increased primarily due
to the Grand Gulf over/under recovery, which does not affect net
income.
The changes in electric operating revenue for the three
months and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $(8.1) $(22.4)
Rate riders (5.1) (12.5)
Fuel cost recovery (62.7) (108.8)
Sales volume/weather 25.5 26.2
Other revenue (including unbilled) 31.5 48.0
Sales for resale 6.4 11.5
------ ------
Total $(12.5) $(58.0)
====== ======
Gas operating revenues decreased in the first six months of
1995 due primarily to milder than normal winter weather,
decreased fuel adjustment revenues and gas rate reductions agreed
to in the 1994 NOPSI Settlement.
Expenses
Operating expenses decreased for three months and six months
ended June 30, 1995 due primarily to decreased fuel and purchased
power expenses, partially offset by increased nuclear outage
expenses and income taxes. Fuel for electric generation and fuel-
related expenses decreased due primarily to lower fuel costs.
Purchased power decreased due primarily to decreased power
purchases from non-associated utilities due to changes in
generation requirements for the System operating companies.
Nuclear refueling outage expense increased due primarily to a
Grand Gulf 1 refueling outage at System Energy. Income taxes
increased due primarily to higher pretax income, a decrease in
tax depreciation at LP&L's Waterford 3 and GSU's River Bend
plants, and decreased amortization of investment tax credits
related to the 1994 FERC Settlement.
Interest charges decreased for the three months and six
months ended June 30, 1995 due primarily to retirement and
refinancing of high-cost long-term debt, partially offset by
carrying charges related to the System Energy 1994 FERC
Settlement.
AP&L
Net Income
Net income increased in the second quarter of 1995 due
primarily to higher retail non-fuel revenues and lower other
operation and maintenance expenses partially offset by lower
sales for resale and higher income tax expense.
Net income decreased in the first six months of 1995 due
primarily to decreased sales for resale and higher other
operation and maintenance, depreciation, and income tax expenses.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended
June 30, 1995 and 1994 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
Detailed below are AP&L's operating revenues by source and
KWH sales for the three months and six months ended June 30, 1995
and 1994:
Three Months Ended Increase
Description 1995 1994 (Decrease) %
(In millions)
Electric Operating Revenues:
Residential $ 109.0 $ 108.3 $ 0.7 1
Commercial 73.9 74.8 (0.9) (1)
Industrial 84.9 80.6 4.3 5
Governmental 4.0 4.1 (0.1) (2)
------------------------
Total retail 271.8 267.8 4.0 1
Sales for resale
Associated companies 51.2 60.4 (9.2) (15)
Non-associated companies 40.5 42.5 (2.0) (5)
Other 48.7 44.2 4.5 10
------------------------
Total $ 412.2 $ 414.9 $(2.7) (1)
========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,149 1,141 8 1
Commercial 976 986 (10) (1)
Industrial 1,515 1,441 74 5
Governmental 66 57 9 16
----------------------
Total retail 3,706 3,625 81 2
Sales for resale
Associated companies 2,396 2,988 (592) (20)
Non-associated companies 1,156 1,065 91 9
----------------------
Total 7,258 7,678 (420) (5)
======================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 233.2 $ 231.6 $ 1.6 1
Commercial 142.2 141.1 1.1 1
Industrial 162.5 153.4 9.1 6
Governmental 8.0 8.2 (0.2) (2)
-------------------------
Total retail 545.9 534.3 11.6 2
Sales for resale
Associated companies 80.3 127.0 (46.7) (37)
Non-associated companies 79.1 86.8 (7.7) (9)
Other 46.5 37.9 8.6 23
-------------------------
Total $ 751.8 $ 786.0 $(34.2) (4)
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 2,576 2,579 (3) -
Commercial 1,923 1,917 6 -
Industrial 2,954 2,805 149 5
Governmental 119 115 4 3
-------------------------
Total retail 7,572 7,416 156 2
Sales for resale
Associated companies 3,755 6,238 (2,483) (40)
Non-associated companies 2,029 2,269 (240) (11)
-------------------------
Total 13,356 15,923 (2,567) (16)
=========================
Electric operating revenues decreased in the second quarter
and first six months of 1995 due primarily to lower sales for
resale to associated companies caused by changes in generation
availability and requirements among the System operating
companies. This decrease was partially offset by higher retail
sales due primarily to an increase in customers and power usage.
The changes in electric operating revenue for the three
months and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $1.6 $ 2.6
Rate riders 1.4 1.7
Fuel cost recovery (0.6) 3.6
Sales volume/weather 1.7 3.8
Other revenue (including unbilled) 4.4 8.5
Sales for resale (11.2) (54.4)
----- ------
Total $(2.7) $(34.2)
===== ======
Expenses
Operating expenses decreased in the second quarter of 1995
due primarily to lower fuel and fuel-related expenses and
purchased power expenses partially offset by higher income tax
expense. Fuel and fuel-related expenses and purchased power
expenses decreased due to the lower sales for resale to
associated companies as noted in "Revenues and Sales" above. The
increase in income tax expense is primarily due to higher pretax
income.
Operating expenses decreased for the six months of 1995 due
primarily to lower fuel and fuel-related expenses and purchased
power expenses partially offset by higher other operation and
maintenance expenses and income tax expenses. Fuel and purchased
power expenses decreased for the reasons discussed above. The
increase in other operation and maintenance expenses is primarily
the result of additional work being performed and the use of
materials during ANO 1's scheduled refueling outage which began
in mid-February 1995 and was completed in early April 1995. In
addition, ANO 2 experienced a 30 day mid-cycle outage during the
first quarter of 1995 which also required additional work and
materials. Income tax expense increased primarily due to the
write-off in 1994 of the investment tax credit in accordance
with the FERC Settlement.
GSU
Net Income
Net income increased for the three months and six months
ended June 30, 1995 primarily due to a reduction of the provision
for rate refund associated with a 1995 PUCT rate order (see Note
2 for further information). This increase was partially offset
by an increase in taxes other than income taxes.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended
June 30, 1995 and 1994 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenue and Sales
Detailed below are GSU's operating revenues by source and
KWH sales for the three months and six months ended June 30, 1995
and 1994:
Three Months Ended Increase
Description 1995 1994 (Decrease) %
(In millions)
Electric Department Operating Revenues:
Residential $ 132.6 $ 132.7 $(0.1) -
Commercial 99.3 102.4 (3.1) (3)
Industrial 145.2 159.9 (14.7) (9)
Governmental 6.2 6.4 (0.2) (3)
--------------------------
Total retail 383.3 401.4 (18.1) (5)
Sales for resale
Associated companies 22.6 4.7 17.9 381
Non-associated companies 15.8 15.7 0.1 1
Other 40.6 17.2 23.4 136
--------------------------
Total Electric Department $ 462.3 $439.0 $ 23.3 5
==========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,754 1,672 82 5
Commercial 1,507 1,462 45 3
Industrial 3,677 3,811 (134) (4)
Governmental 63 74 (11) (15)
------------------------
Total retail 7,001 7,019 (18) -
Sales for resale
Associated companies 1,057 589 468 79
Non-associated companies 548 120 428 357
------------------------
Total Electric Department 8,606 7,728 878 11
Steam Department 452 421 31 7
------------------------
Total 9,058 8,149 909 11
========================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Department Operating Revenues:
Residential $ 249.1 $ 256.5 $(7.4) (3)
Commercial 191.6 197.1 (5.5) (3)
Industrial 287.5 312.9 (25.4) (8)
Governmental 12.4 12.7 (0.3) (2)
-------------------------
Total retail 740.6 779.2 (38.6) (5)
Sales for resale
Associated companies 32.8 14.0 18.8 134
Non-associated companies 30.6 24.8 5.8 23
Other 37.1 23.1 14.0 61
-------------------------
Total Electric Department $ 841.1 $841.1 - -
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 3,315 3,273 42 1
Commercial 2,849 2,769 80 3
Industrial 7,347 7,386 (39) (1)
Governmental 151 148 3 2
----------------------
Total retail 13,662 13,576 86 1
Sales for resale
Associated companies 1,558 987 571 58
Non-associated companies 1,021 263 758 288
----------------------
Total Electric Department 16,241 14,826 1,415 10
Steam Department 849 831 18 2
----------------------
Total 17,090 15,657 1,433 9
======================
Electric operating revenues increased in the three months
ended June 30, 1995 primarily due to a reduction of the provision
for rate refund associated with a 1995 PUCT rate order and an
increase in sales for resale. This increase was partially offset
by a decrease in fuel revenues.
Electric operating revenues were basically unchanged for the
first six months of 1995 primarily due to lower fuel revenues
which were offset by higher sales for resale. Sales for resale
increased as a result of an increase in sales to associated
companies caused by changes in generation availability and
requirements among the System operating companies.
Gas operating revenues decreased for the first six months of
1995 primarily due to a decrease in residential sales.
The changes in electric operating revenue for the three
months and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $12.2 $(6.6)
Fuel cost recovery (24.8) (38.9)
Sales volume/weather 3.5 6.1
Other revenue (including unbilled) 14.4 14.8
Sales for resale 18.0 24.6
----- -----
Total $23.3 $ -
===== =====
Expenses
Operating expenses increased for the three months ended June
30, 1995 primarily due to increased taxes other than income taxes
and income taxes, partially offset by lower purchased power
expense. Taxes other than income taxes increased primarily due
to a refund of franchise taxes in 1994. Income taxes increased
primarily due to a decrease in tax depreciation associated with
River Bend and higher pre-tax income for this period. Purchased
power expense decreased primarily due to the changes in
generation availability and requirements among the System
operating companies. This increase in generation was offset by a
decrease in the price of fuel.
Operating expenses remained relatively unchanged for the
first six months of 1995 primarily due to the same reasons as the
three months ended June 30, 1995 (discussed above). In addition,
other operation and maintenance expenses increased slightly
primarily due to additional restructuring charges which were
partially offset by the prior year severance charges related to
the merger.
Other interest - net decreased for the three months and six
months ended June 30, 1995 primarily due to the one time interest
charge associated with the March 1994 Louisiana Supreme Court
ruling requiring GSU to refund to ratepayers 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.
LP&L
Net Income
Net income increased for the three months and six months
ended June 30, 1995. This is due primarily to lower other
operating and maintenance expenses partially offset by higher
income tax expense.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended
June 30, 1995 and 1994 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
Detailed below are LP&L's operating revenues by source and
KWH sales for the three months and six months ended June 30, 1995
and 1994.
Three Months Ended Increase
Description 1995 1994 (Decrease) %
(In millions)
Electric Operating Revenues:
Residential $ 132.9 $ 139.4 $(6.5) (5)
Commercial 85.4 92.0 (6.6) (7)
Industrial 153.5 169.1 (15.6) (9)
Governmental 7.8 7.9 (0.1) (1)
------------------------
Total retail 379.6 408.4 (28.8) (7)
Sales for resale
Associated companies 0.2 0.1 0.1 100
Non-associated companies 13.6 8.7 4.9 56
Other 12.7 24.4 (11.7) (48)
------------------------
Total $ 406.1 $ 441.6 $(35.5) (8)
========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,787 1,691 96 6
Commercial 1,159 1,118 41 4
Industrial 4,247 3,979 268 7
Governmental 108 99 9 9
----------------------
Total retail 7,301 6,887 414 6
Sales for resale
Associated companies 9 1 8 80
Non-associated companies 360 216 144 67
----------------------
Total 7,670 7,104 566 8
======================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 244.8 $ 264.4 $(19.6) (7)
Commercial 161.4 172.8 (11.4) (7)
Industrial 302.4 329.0 (26.6) (8)
Governmental 15.5 15.8 (0.3) (2)
-------------------------
Total retail 724.1 782.0 (57.9) (7)
Sales for resale
Associated companies 0.4 0.2 0.2 100
Non-associated companies 23.6 15.5 8.1 52
Other 11.0 27.8 (16.8) (60)
-------------------------
Total $ 759.1 $ 825.5 $(66.4) (8)
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 3,374 3,371 3 -
Commercial 2,178 2,146 32 1
Industrial 8,326 7,956 370 5
Governmental 218 206 12 6
-----------------------
Total retail 14,096 13,679 417 3
Sales for resale
Associated companies 19 4 15 37
Non-associated companies 574 341 233 68
-----------------------
Total 14,689 14,024 665 5
=======================
Electric operating revenues were lower in the three months
and six months ended June 30, 1995 primarily due to lower fuel
adjustment revenues, which do not affect net income. In addition,
a reserve for rate refund was established (see Note 2 for further
information) and completion of the amortization of the proceeds
resulting from litigation with a gas supplier in the second
quarter of 1994 resulted in decreased other operating revenues
partially offset by higher sales to non-associated utilities.
The changes in electric operating revenue for the three
months and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $(10.4) $(9.7)
Fuel cost recovery (39.9) (66.2)
Sales volume/weather 13.8 10.5
Other revenue (including unbilled) (4.0) (9.3)
Sales for resale 5.0 8.3
------ ------
Total $(35.5) $(66.4)
====== ======
Expenses
Operating expenses decreased for the three months and six
months ended June 30, 1995 primarily due to lower fuel, purchased
power, and other operation and maintenance expenses partially
offset by higher income tax expense. Fuel expenses decreased
primarily due to lower deferred fuel cost. The decrease in
purchased power expense is primarily due to changes in generation
availability and requirements among the System operating
companies. Other operation and maintenance expenses decreased
primarily due to lower fossil and nuclear maintenance activities
and a court settlement reducing legal expense. Income taxes
increased primarily due to a decrease in tax depreciation
associated with Waterford 3 and higher pre-tax income.
MP&L
Net Income
Net income decreased slightly in the three months ended June
30, 1995 due primarily to decreased sales for resale.
Net income increased in the six months ended June 30, 1995
due primarily to a decrease in other operation and maintenance
expenses and an increase in sales. The increase in sales was
partially offset by lower retail revenues due to the effects of a
March 1994 rate reduction.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended
June 30, 1995 and 1994 are discussed under "Revenues and Sales"
and "Expenses" below.
Revenues and Sales
Detailed below are MP&L's operating revenues by source and
KWH sales for the three months and six months ended June 30, 1995
and 1994:
Three Months Ended Increase
Description 1995 1994 (Decrease) %
(In millions)
Electric Operating Revenues:
Residential $ 74.5 $ 75.0 $(0.5) (1)
Commercial 63.2 61.9 1.3 2
Industrial 43.7 45.0 (1.3) (3)
Governmental 6.8 7.3 (0.5) (7)
--------------------------
Total retail 188.2 189.2 (1.0) (1)
Sales for resale
Associated companies 6.0 11.0 (5.0) (45)
Non-associated companies 5.4 4.5 0.9 20
Other 40.7 25.1 15.6 62
--------------------------
Total $ 240.3 $ 229.8 $ 10.5 5
==========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 884 869 15 2
Commercial 794 749 45 6
Industrial 741 713 28 4
Governmental 80 87 (7) (8)
-----------------------
Total retail 2,499 2,418 81 3
Sales for resale
Associated companies 100 300 (200) (67)
Non-associated companies 176 141 35 25
-----------------------
Total 2,775 2,859 (84) (3)
=======================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 141.6 $ 151.1 $ (9.5) (6)
Commercial 118.8 120.3 (1.5) (1)
Industrial 83.9 89.1 (5.2) (6)
Governmental 13.3 13.9 (0.6) (4)
-------------------------
Total retail 357.6 374.4 (16.8) (4)
Sales for resale
Associated companies 12.6 16.1 (3.5) (22)
Non-associated companies 9.6 7.5 2.1 28
Other 53.8 19.2 34.6 180
-------------------------
Total $ 433.6 $ 417.2 $ 16.4 4
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 1,817 1,845 (28) (2)
Commercial 1,518 1,432 86 6
Industrial 1,464 1,405 59 4
Governmental 158 164 (6) (4)
----------------------
Total retail 4,957 4,846 111 2
Sales for resale
Associated companies 259 356 (97) (27)
Non-associated companies 316 217 99 46
----------------------
Total 5,532 5,419 113 2
======================
Electric operating revenues increased in the three months ended
June 30, 1995 due to an increase in other revenues, partially offset
by lower sales for resale. Other revenues increased primarily due to
Grand Gulf over/under recovery, which does not affect net income.
Sales for resale decreased primarily due to changes in generation
availability and requirements among the System operating companies.
Electric operating revenues increased in the six months ended
June 30, 1995 due to an increase in other revenues, partially offset
by lower retail revenues. Other revenues increased primarily due to
Grand Gulf over/under recovery, which does not affect net income.
Retail revenues decreased primarily due to the effects of a March
1994 rate reduction.
The changes in electric operating revenue for the three months
and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $(0.5) $(5.4)
Grand Gulf rate rider (6.4) (14.3)
Fuel cost recovery 3.9 (0.2)
Sales volume/weather 2.1 3.1
Other revenue (including unbilled) 15.6 34.6
Sales for resale (4.2) (1.4)
----- -----
Total $10.5 $16.4
===== =====
Expenses
Operating expenses increased for the three months and six months
ended June 30, 1995 primarily due to increased amortization of rate
deferrals and increased fuel and purchase power costs. In addition,
the increase in operating expenses for the six months ended June 30,
1995 was partially offset by a decrease in other operation and
maintenance expense. The amortization of rate deferrals increased in
the three months and six months ended June 30, 1995 reflecting the
fact that MP&L, based on the Revised Plan, collected more Grand Gulf
1-related costs from its customers in the three months and six months
ended June 30, 1995 than it recovered in the same period in 1994.
Purchased power increased for the three months ended June 30,
1995 primarily due to increased purchase power prices. Fuel and fuel-
related expenses and purchased power increased for the six months
ended June 30, 1995 due to increased generation requirements
resulting from increased energy sales. Other operation and
maintenance expenses decreased for the six months ended June 30, 1995
primarily due to increased maintenance incurred at various plant
sites during the three months ended March 31, 1994.
NOPSI
Net Income
Net income decreased in the three months and six months ended
June 30, 1995 due primarily to a permanent rate reduction that took
effect on January 1, 1995 partially offset by a decrease in other
operation and maintenance expenses.
Significant factors affecting the results of operations and
causing variances between the three months and six months ended June
30, 1995 and 1994 are discussed under "Revenues and Sales" and
"Expenses" below.
Revenues and Sales
Detailed below are NOPSI's operating revenues by source and KWH
sales for the three months and six months ended June 30, 1995 and
1994.
Three Months Ended Increase
Description 1995 1994 (Decrease) %
(In millions)
Electric Operating Revenues:
Residential $ 31.0 $ 33.6 $ (2.6) (8)
Commercial 35.4 41.1 (5.7) (14)
Industrial 5.6 6.8 (1.2) (18)
Governmental 12.8 15.1 (2.3) (15)
------------------------
Total retail 84.8 96.6 (11.8) (12)
Sales for resale
Associated companies 0.0 0.9 (0.9) (100)
Non-associated companies 2.4 2.2 0.2 9
Other 9.9 7.9 2.0 25
------------------------
Total $ 97.1 $ 107.6 $(10.5) (10)
========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 473 433 40 9
Commercial 522 498 24 5
Industrial 146 135 11 8
Governmental 248 234 14 6
-----------------------
Total retail 1,389 1,300 89 7
Sales for resale
Associated companies 2 34 (32) (94)
Non-associated companies 76 67 9 13
-----------------------
Total 1,467 1,401 66 5
=======================
Six Months Ended Increase
Description 1995 1994 (Decrease) %
(In Millions)
Electric Operating Revenues:
Residential $ 52.8 $ 61.6 $ (8.8) (14)
Commercial 67.9 80.1 (12.2) (15)
Industrial 10.7 13.1 (2.4) (18)
Governmental 23.5 29.0 (5.5) (19)
------------------------
Total retail 154.9 183.8 (28.9) (16)
Sales for resale
Associated companies 1.3 0.9 0.4 44
Non-associated companies 4.3 3.6 0.7 19
Other 14.7 (1.8) 16.5 (917)
-------------------------
Total $ 175.2 $ 186.5 $(11.3) (6)
=========================
Billed Electric Energy
Sales (Millions of KWH):
Residential 825 800 25 3
Commercial 962 955 7 1
Industrial 269 254 15 6
Governmental 458 445 13 3
-----------------------
Total retail 2,514 2,454 60 2
Sales for resale
Associated companies 68 36 32 8
Non-associated companies 136 94 42 4
-----------------------
Total 2,718 2,584 134 5
=======================
Electric operating revenues decreased in the three months
and six months ended June 30, 1995 due primarily to a decrease in
retail base revenues. This decrease was partially offset by a
reserve for revenue reduction recorded in the first quarter of
1994 and increased sales for resale to associated companies for
the six months ended June 30, 1995.
The changes in electric operating revenue for the three
months and six months ended June 30, 1995 are as follows:
Three Months Ended Six Months Ended
Description Increase/(Decrease) Increase/(Decrease)
(In Millions)
Change in base rates $(10.8) $(3.3)
Fuel cost recovery (1.4) (7.1)
Sales volume/weather 4.3 2.7
Other revenue (including unbilled) (1.9) (4.7)
Sales for resale (0.7) 1.1
------ ------
Total $(10.5) $(11.3)
====== ======
For the three months and six months ended June 30, 1995,
gas operating revenues decreased due primarily to decreased gas
sales, the rate reduction agreed to in the 1994 NOPSI Settlement
effective January 1, 1995, and a lower unit purchase price for
gas purchased for resale.
Expenses
Operating expenses decreased for the three months and six
months ended June 30, 1995 due primarily to lower fuel and other
operation and maintenance expenses.
The decrease in fuel and fuel-related expenses is partially
offset by an increase in purchased power expenses for the three
months ended June 30, 1995. Gas purchased for resale decreased
for the six months ended June 30, 1995 due primarily to decreased
gas sales and a lower unit purchase price. Purchased power
expenses increased in the three months and six months ended June
30, 1995 due primarily to changes in generation requirements
among the System operating companies and higher costs.
Other operation and maintenance expenses decreased primarily
due to a decrease in maintenance activity and lower payroll
expenses. The decrease in payroll expenses is the result of
restructuring and a decrease in the number of employees. Income
taxes decreased in the three months ended June 30, 1995 due
primarily to lower pre-tax income.
SYSTEM ENERGY
Net Income
Net income decreased for the three months ended June 30,
1995, due primarily to increased nuclear refueling outage
expenses, partially offset by an increase in revenues. Net
income for the six months ended June 30, 1995 was virtually
unchanged from the same period in 1994.
Significant factors affecting the results of operations and
causing variances between the second quarters and first six
months of 1995 and 1994 are discussed under "Revenues" 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 increased for the three months and six
months ended June 30, 1995, due primarily to increased expenses
in connection with a Grand Gulf 1 refueling outage and higher
depreciation, amortization, and decommissioning expense offset by
a lower return on System Energy's decreasing investment in Grand
Gulf 1 (caused by depreciation of the unit).
Expenses
Operation and maintenance expenses increased for the three
months and six months ended June 30, 1995, principally as a
result of a refueling outage which began April 15, 1995 and ended
June 9, 1995. Fuel expense decreased for the second quarter and
first six months of 1995 as a result of the refueling outage.
Depreciation, amortization, and decommissioning expense
increased for the three months and six months ended June 30, due
primarily to increases of $2 million and $5 million,
respectively, in amortization expense as a result of the
reclassification of $81 million of Grand Gulf 1 costs in
accordance with the November 1994 FERC Settlement. The increase
in amortization expense was partially offset by a decrease in
depreciation expense related to the reclassified costs.
Interest expense decreased in the second quarter and first
six months of 1995 due primarily to the retirement and
refinancing of high-cost long-term debt.
SIGNIFICANT FACTORS AND KNOWN TRENDS
Entergy Corporation, AP&L, GSU, LP&L, MP&L, NOPSI, and System
Energy
Competition and Industry Challenges
The electric utility industry, including Entergy, is
experiencing increased competitive pressures. Entergy is seeking
to continue as a leading competitor in the changing electric
energy business. Competition presents Entergy with many
challenges. The following have been identified by Entergy as its
major competitive challenges.
Entergy Retail and Wholesale Rate Issues
Increasing competition anticipated in the utility industry
as well as recent rate reductions increase the need for Entergy
to reduce its costs. The retail regulatory philosophy is
shifting in some jurisdictions from traditional cost-of-service
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. MP&L implemented an incentive-rate plan in
March 1994, and in June 1995, the LPSC approved a performance
based formula rate plan for LP&L. GSU agreed to shared-savings
plans as part of the Merger. Recognizing that many industrial
customers have energy alternatives, Entergy continues to work
with these customers to address their needs. In certain cases,
competitive prices are negotiated, using variable-rate designs.
As discussed on pages 23, 26, 27-28, 92, 94-95, 97, 183, 261
and 295 of the Form 10-K during the fiscal year 1994, GSU's
Louisiana jurisdiction, MP&L and NOPSI reduced rates in
accordance with regulatory orders. During the first six months
of 1995, GSU's Texas jurisdiction and LP&L were also required by
regulators to reduce rates. See Note 2 for additional discussion
of Entergy's rate activities.
In connection with the Merger, AP&L and MP&L agreed with
their respective retail regulators not to request any general
retail rate increases that would take effect before November
1998, with certain exceptions. MP&L also agreed that during this
period retail base rates under its formula rate plan would not be
increased above the level of rates in effect on November 1, 1993.
GSU agreed with the LPSC and PUCT to a five-year Rate Cap
(beginning January 1, 1994) 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.
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. On October 31, 1994, as
amended on January 25, 1995, Entergy Services filed with FERC
revised transmission tariffs intended to provide access to
transmission service on the same or comparable bases, terms, and
conditions as the System operating companies, and the tariffs
were subsequently approved. Open access and market pricing, once
they take 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 light of the rate issues discussed above, Entergy's
utility subsidiaries are aggressively reducing costs to avoid
potential earnings erosions that might result, as well as to
compete successfully by becoming a low-cost producer. In 1995,
Entergy implemented a restructuring program related to certain of
its operating units, designed to reduce costs and to improve
operating efficiencies. See pages 117, 155, 201, 238, and 306 of
the Form 10-K and Note 6 for further information. Also, in
response to an increasingly competitive environment, AP&L, LP&L,
MP&L, and NOPSI have announced intentions to revise their initial
least-cost planning activities, and GSU is continuing to work
with the LPSC and PUCT regarding integrated resource planning.
Potential Changes in the Electric Utility Industry
Retail wheeling, the transmission by an electric utility of
energy produced by another entity over the utility's transmission
and distribution system to a retail customer in the electric
utility's area of service, is also evolving. Over a dozen states
have been or are studying or experimenting with the concept of
retail competition. In April 1994, the state of Michigan
initiated a five-year experiment that would allow limited
competition among public utilities; however, it is currently
being challenged in the courts. In May 1995, the California
Public Utilities Commission adopted a preliminary proposal to
create a wholesale power pool (Poolco). Under the proposal the
FERC would have exclusive jurisdiction over the pool, while an
independent operator would manage the transmission network and
generation dispatch. Customers would access Poolco through
bilateral contracts at least two years after the pool begins
operation. The Rhode Island Public Utilities Commission has
adopted a proposal calling for, among other things, retail
wheeling and the unbundling of generation from transmission and
distribution services. The Massachusetts Department of Public
Utilities has also considered a similar proposal. These types of
proposals are indicative of the movement of the retail electric
market toward deregulation and increased competition. The retail
market for electricity is expected to become more competitive
with such moves toward deregulation and with greater focus on
customer choice.
The movement of the retail electric market toward
deregulation and increased competition is also prevalent in areas
of the country in which Entergy presently operates. On April 21,
1995, a newly incorporated entity, Crescent City Utilities, Inc.,
submitted to the Council a draft resolution intended to permit
the use of NOPSI's gas and electric transmission and distribution
facilities by any other franchised utility to supply electricity
and gas to retail customers in New Orleans. On April 27, 1995,
the Council issued a statement noting that the Council played no
role in the development of the resolution, that it had not
received the document formally and that no hearings had been
scheduled to address its merits. However, the Council later
stated its intention to schedule public hearings to consider
competition in the electric utility service industries and retail
electric industry. No schedule for such hearings has been
announced. The Texas legislature has recently revised the Public
Utility Regulatory Act, the law regulating electric utilities in
Texas. The revised law permits utility and non-utility exempt
wholesale generators and power marketers to sell wholesale power
in the state. The revised law also allows for flexible pricing
but does not change the current law governing retail wheeling or
treatment of federal income taxes. During the second quarter of
1995, the Louisiana legislature considered a bill permitting
local retail wheeling; however, the bill was defeated.
In some areas of the country, municipalities (or comparable
entities) whose residents are served at the retail level by an
investor-owned utility pursuant to a franchise, are exploring the
possibility of establishing new distribution systems in order to
serve retail customers, especially large industrial customers,
that currently receive service from an investor-owned utility.
These options depend on the terms of a utility's franchise as
well as on state law and regulation. In addition, FERC's
authority to order utilities to transmit for a new or expanding
municipal system is limited in certain respects. Where
successful, however, the establishment of a municipal system or
the acquisition by a municipal system of a utility's customers
could result in the inability of a utility to recover costs that
it has incurred in serving those customers.
In mid-1994, FERC issued a notice of proposed rulemaking
concerning a regulatory framework for dealing with recovery of
stranded costs, such as those associated with high-cost nuclear
generating units, which may be incurred by electric utilities as
a result of increased competition. In addition to addressing
recovery of stranded costs related to wholesale service, the
proposal requested comment as to recovery of retail stranded
costs in transmission rates where state regulatory authorities
failed to address the issue or were in conflict. On March 29,
1995, FERC issued a supplemental notice of proposed rulemaking in
this proceeding which would require public utilities to provide
non-discriminatory open access transmission service to wholesale
customers, and which would also provide guidance on the recovery
of wholesale and retail stranded costs. Under the proposal,
public utilities would be required to file transmission tariffs
for both point-to-point and network services. Model transmission
tariffs were included in the proposal. With regard to pending
proceedings, including Entergy's tariff proceeding, FERC directed
the parties to proceed with their cases while taking into account
FERC's views expressed in the proposed rule. Comments will be
filed in August 1995, with reply comments in October 1995. The
risk of exposure to stranded costs which may result from
competition in the industry will depend on the extent and timing
of retail competition, the resolution of jurisdictional issues
concerning stranded cost recovery, and the extent to which such
costs are recovered from departing or remaining customers, among
other matters.
Significant Industrial Cogeneration Effects
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 to 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 on
investments. Substantially all of such pricing agreements expire
no later than 1997. In the second quarter of 1995, KWH sales to
GSU's industrial customers at non-full cost of service rates made
up approximately 25% of GSU's total industrial class.
In March 1995, LP&L received notice from a large industrial
customer that the customer has decided to proceed with its
proposed cogeneration project for the purpose of fulfilling its
future electric energy needs. The customer will continue to
purchase its energy requirements until its cogeneration
facilities are completed, which is expected to be sometime after
1999. During 1994, this customer represented approximately 8% of
total LP&L industrial sales, and provided $19 million of base
revenue.
The Energy Policy Act of 1992
The Energy Policy Act of 1992 (EPAct) addresses a wide range
of energy issues and is altering the way Entergy and the rest of
the electric utility industry operate. The EPAct encourages
competition and affords utilities the opportunities and the risks
associated with an open and more competitive market environment.
The EPAct creates exemptions from regulation under the Public
Utility Holding Company Act of 1935 and creates a class of exempt
wholesale generators consisting of utility affiliates and
nonutilities that are owners and operators of facilities for the
generation and transmission of power for sales at wholesale. The
EPAct also gives FERC the authority to order investor-owned
utilities, including the System operating companies, to transmit
power and energy to or for wholesale purchasers and sellers. The
law creates the potential for electric utilities and other power
producers to gain increased access to the transmission systems of
other entities to facilitate wholesale sales. Both the System
operating companies and Entergy Power expect to compete in this
market. In addition, the EPAct allows utilities to own and
operate foreign generation, transmission, and distribution
facilities. See "Nonregulated Investments" below for further
information.
Public Utility Holding Company Act of 1935
Entergy, along with 10 other electric utility holding
companies, recently asked Congress to repeal the Public Utility
Holding Company Act of 1935 (HCA). The HCA requires detailed
oversight by the SEC of many business practices and activities of
utility holding companies and their subsidiaries including, among
other things, nonutility activities. In June 1995, the SEC
adopted a report proposing options for the repeal or the
significant modification of the HCA and proposed rule changes
that would reduce the regulations governing utility holding
companies. Entergy believes that the HCA inhibits its ability to
compete in the evolving electric energy marketplace, and largely
duplicates the oversight activities already performed by FERC and
state and local public service commissions. On June 30, 1995,
the SEC amended certain rules under the HCA to exempt the
requirement to receive prior authorization for all capital
contributions by a parent company to its subsidiary company.
Litigation and Regulatory Proceedings
See Note 1 for information on the bankruptcy proceedings of
Cajun and litigation with Cajun concerning Cajun's ownership
interest in River Bend and the related possible material adverse
effects on GSU's financial condition.
See Note 2 for information on the possible material adverse
effects on GSU's financial condition and results of operations
due to $463 million of potential net of tax write-offs, and $169
million in refunds of previously collected revenue. These
possible write-offs and refunds are in connection with
outstanding appeals and remands regarding the River Bend plant
and rate deferrals.
Entergy Corporation and GSU
The acquisition of GSU by Entergy Corporation was the
largest electric utility merger in United States history. Entergy
expects to achieve $850 million in fuel cost savings and $670
million in operation and maintenance expense savings over 10
years as a result of the Merger. Although common shareholders
experienced some dilution in earnings as a result of the Merger,
Entergy believes that the Merger will ultimately be beneficial to
common shareholders in terms of strategic benefits as well as
economies and efficiencies produced. For further information,
see pages 117-118 and 201 of the Form 10-K.
Nonregulated Investments
As discussed in Note 1 and on pages 3 and 4 of the Form 10-
K, Entergy Corporation continues to consider opportunities to
expand its utility and utility-related businesses that are not
regulated by state and local regulatory authorities (nonregulated
businesses). Entergy Corporation's investment strategy is to
invest in nonregulated business opportunities that have the
potential to earn a greater rate of return than its regulated
utility operations, and Entergy Corporation may invest up to
approximately $150 million per year for the next several years in
nonregulated businesses. See Part II for additional discussion
of Entergy Corporation's current and future investments in
nonregulated businesses. As of June 30, 1995, Entergy
Corporation's investment in nonregulated subsidiaries totaled
$506.1 million. In the near term, these investments are unlikely
to have a positive effect on earnings; however, management
believes that these investments will contribute to future
earnings growth. For the first six months of 1995, Entergy
Corporation's nonregulated investments reduced consolidated net
income by approximately $21.6 million.
On March 31, 1995, Entergy Corporation, through its
subsidiary, Entergy Power Development Company (EPDC), entered
into an agreement with Enron Power Development Corporation, a
subsidiary of Enron Corporation, to acquire a 20% interest in the
Dabhol Power Project (Project), a 695 megawatt combined cycle
facility located in the State of Maharashtra, India. Pursuant to
an agreement, EPDC has placed approximately $20.5 million in an
escrow account. If EPDC becomes a participant in the Project,
its estimated investment in the first phase of the Project would
be approximately $90 million. At that time, EPDC would also have
an obligation to cover a pro-rata share of the cost overruns up
to approximately $30 million. Subsequent to entering into the
agreement with Enron Power Development Corporation, the newly-
elected Maharashtra state government investigated the Project and
its related cost of power. On August 3, 1995, the Chief Minister
of Maharashtra stated that the government of Maharashtra has
decided to suspend the first phase of the Project, the 695
megawatt facility, and "scrap" the second phase of the Project,
a 1320 megawatt facility, and indicated that orders to stop work
would be issued. In view of these developments, Entergy is
uncertain as to the future of the project and is considering its
options.
As discussed on page 3 of the Form 10-K, Entergy Corporation
requested authorization from the SEC to convert the debt
obligation of Entergy Power into equity. On April 18, 1995,
Entergy Corporation received authorization from the SEC to
consummate this transaction and converted this debt obligation
into equity.
As discussed in Part II and on page 4 of the Form 10-K,
Entergy Corporation provided to Entergy SASI $72.3 million in
loans to fund Entergy SASI's installment sale agreements with its
customers. In June 1995, Entergy Corporation contributed $125
million in capital to Entergy SASI through Entergy Enterprises,
Inc. thus allowing Entergy SASI to convert its debt obligation to
Entergy Corporation into equity.
In June 1995, Entergy requested approval from the SEC to
form a new non-regulated subsidiary named Entergy Technologies
Company (ETC). ETC will offer bulk interstate telecommunications
service to telecommunications providers who will in turn market
that contracted capacity to third parties. ETC will allow
Entergy to take advantage of the rapidly expanding
telecommunications industry by marketing a portion of Entergy's
existing telecommunications system.
ANO Matters
Entergy Operations has made inspections and repairs from
time to time on ANO 2's steam generator. Currently, Entergy
Operations is in the process of gathering information and
assessing various options for the repair or the replacement of
ANO 2's steam generator. See Note 1 for additional information.
Deregulated Portion of River Bend
As of June 30, 1995, 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 Note 2 for further information. 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.
For the six months ended June 30, 1995, GSU recorded
revenues resulting from the sale of electricity from the
deregulated asset plan of approximately $16.5 million which,
absent the deregulated asset plan, would not have been realized.
Operation and maintenance expenses, including fuel, were
approximately $16.5 million, and depreciation expense associated
with the deregulated asset plan investment was approximately $9.2
million for the six months ended June 30, 1995. For the six
months ended June 30, 1995, GSU recorded nonfuel revenue of $0.2
million (included in the $16.5 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. In addition, the deregulated asset plan will be subject
to the requirements of SFAS 121 as discussed in Note 7 in
determining the recognition of any asset impairment.
Property Tax Exemptions
Exemptions from the payment of Louisiana local property
taxes on Waterford 3 and River Bend, which have been in effect
for 10 years for each of the plants, will expire in December 1995
and December 1996, respectively. LP&L and GSU are working with
tax authorities to determine the method for calculating the
amount of the property taxes to be paid when the exemptions
expire. LP&L believes that assessed property taxes will be
recovered from its customers through rates. GSU believes that
assessed property taxes allocated to its retail jurisdictions
will be recovered from those customers through rates.
Environmental Issues
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 certain hazardous waste
disposal sites. 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
adversely affected by the outcome of the suits. Through June 30,
1995, $7.7 million has been expended on the cleanup. As of June
30, 1995, a remaining recorded liability of $20.7 million existed
relating to the cleanup of six sites where GSU has been
designated a potentially responsible party. See pages 35-36, 39-
40, and 196-197 of the Form 10-K and Note 1 for additional
discussion of the sites in which GSU has been designated as a
potentially responsible party by the EPA.
During 1993, the Louisiana Department of Environmental
Quality issued new rules for solid waste regulation, including
waste water impoundments. LP&L determined that certain of its
power plant waste water impoundments were affected by these
regulations and has chosen to upgrade or close them. As a
result, a remaining recorded liability in the amount of $13.8
million existed at June 30, 1995, for waste water upgrades and
closures to be completed by 1996. Cumulative expenditures
relating to the upgrades and closures of waste water impoundments
were $2.3 million as of June 30, 1995. See pages 37 and 233 of
the Form 10-K and Note 1 for additional discussions of LP&L's
waste water impoundment upgrades and closures.
Accounting Issues
New Accounting Standard - In March 1995, the FASB issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" (SFAS 121) effective
January 1, 1996. This standard describes circumstances which may
result in assets being impaired and provides criteria for
recognition and measurement of asset impairment. See Notes 2 and
7 for information regarding the potential impacts of the new
accounting standard on Entergy.
Continued Application of SFAS 71 - As a result of the EPAct
and actions of regulatory commissions, the electric utility
industry is moving toward a combination of competition and a
modified regulatory environment. The System's financial
statements currently reflect, for the most part, assets and costs
based on current cost-based ratemaking regulations, in accordance
with SFAS 71, "Accounting for the Effects of Certain Types of
Regulation." Continued applicability of SFAS 71 to the System's
financial statements requires that rates set by an independent
regulator on a cost-of-service basis can actually be charged to
and collected from customers.
In the event that either all or a portion of a utility's
operations cease to meet those criteria for various reasons,
including deregulation, a change in the method of regulation or a
change in the competitive environment for the utility's regulated
services, the utility should discontinue application of SFAS 71
for the relevant portion. That discontinuation should be
reported by elimination from the balance sheet of the effects of
any actions of regulators recorded as regulatory assets and
liabilities.
As of June 30, 1995, and for the foreseeable future, the
System's financial statements continue to follow SFAS 71, except
for certain portions of GSU's business (see page 88 of the Form
10-K for additional information).
Accounting for Decommissioning Costs - The staff of the SEC
has questioned certain of the financial accounting practices of
the electric utility industry regarding the recognition,
measurement, and classification of nuclear decommissioning costs
for nuclear generating stations in the financial statements of
electric utilities. See Note 1 for the FASB's tentative
conclusions regarding changes in the accounting for
decommissioning costs and the potential impact of these changes
on Entergy.
ENTERGY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
System Agreement
Entergy Corporation, AP&L, GSU, LP&L, MP&L, and NOPSI
In June 1995, the APSC filed a complaint with FERC alleging
that because of changed circumstances FERC's allocation of
nuclear decommissioning costs in the System is no longer just and
reasonable. The APSC proposes that the System Agreement be
amended to provide a new schedule that would equalize nuclear
decommissioning costs according to load responsibility among the
pre-merger operating companies.
See pages 16-17 of the Form 10-K for a discussion of the
LPSC's complaint filed with FERC alleging that the System
Agreement results in unjust and unreasonable rates. On April 24,
1995, Entergy filed a response to the LPSC's complaint. In April
1995, the LPSC filed an amended complaint with FERC. Entergy
filed a response to the LPSC's amended complaint in June 1995.
Merger-Related Proceedings
Entergy Corporation and GSU
See page 31 of the Form 10-K and page 71 of the First
Quarter Form 10-Q for information relating to the proceeding
pending before the NRC Atomic Safety and Licensing Board (ASLB),
which was instigated by Cajun and concerns the two Merger-related
NRC issued license amendments for River Bend. In June 1995, the
NRC affirmed its original findings that there had been no
significant antitrust changes in the positions of Cajun and GSU
as a result of the Merger; and therefore, reissued the license
amendments approving the Merger. The NRC has decided not to
petition the D.C. Circuit for a rehearing; however, it is
expected that Cajun will file a petition for review with the D.C.
Circuit. See pages 38-39 of the Form 10-K for information
regarding other merger-related suits.
Cajun - River Bend
Entergy Corporation and GSU
See Note 1, and also see pages 40 - 41, 106 - 108, and 191
- 193 of the Form 10-K; and pages 34 - 35 of the First Quarter
Form 10-Q for a discussion of the Cajun litigation. A hearing
was held on the pending Motions to Appoint a Trustee in the Cajun
bankruptcy case. An order was issued on August 1, 1995,
directing that the U.S. Trustee appoint a trustee in the Cajun
bankruptcy case within five dates from the date of the order. A
decision was also issued regarding the preemption dispute among
Cajun, the RUS, and the LPSC, the LPSC's ratemaking authority is
not preempted by the Federal law establishing the RUS.
Environmental Issues
AP&L
See Note 1 and pages 34 and 35 of the Form 10-K for
information on PCB contamination at former Reynolds Metals
Company (Reynolds) plant sites in Arkansas to which AP&L had
supplied power. In May 1995, AP&L was named as a defendant in a
suit by Reynolds, seeking to recover a share of the costs
associated with the cleanup of hazardous substances at a site
south of Arkadelphia, Arkansas. Reynolds alleges that it has
spent $11.2 million to clean up the site, and that the site was
contaminated in part with PCBs for which AP&L bears some
responsibility. AP&L, voluntarily, at its expense, has already
completed remediation at a nearby substation site, and believes
that it has no liability for contamination at the site that is
subject to the Reynolds suit and will contest the lawsuit.
Regardless of the outcome, AP&L does not believe this matter
would have a materially adverse effect on its financial condition
or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Election of Board of Directors
Entergy Corporation
The annual meeting of stockholders of Entergy Corporation
was held on May 26, 1995. The following matters were voted on
and received the specified number of votes for, abstentions,
votes withheld (against), and broker non-votes:
1. Election of Directors:
Votes Broker
Name of Nominee Votes For Abstentions Withheld Non-Votes
W. Frank Blount 195,996,179 N/A 1,910,038 N/A
John A. Cooper, Jr. 196,085,800 N/A 1,820,417 N/A
Lucie J. Fjeldstad 195,943,352 N/A 1,962,865 N/A
Norman C. Francis 195,727,190 N/A 2,179,027 N/A
Kaneaster Hodges, Jr. 196,007,250 N/A 1,898,967 N/A
Robert v. d. Luft 195,861,980 N/A 2,044,237 N/A
Edwin Lupberger 194,768,932 N/A 3,137,285 N/A
Kinnaird R. McKee 196,015,061 N/A 1,891,156 N/A
Paul W. Murrill 195,952,044 N/A 1,954,173 N/A
James R. Nichols 196,073,895 N/A 1,832,322 N/A
Eugene H. Owen 196,006,852 N/A 1,899,365 N/A
John N. Palmer, Sr. 196,147,203 N/A 1,759,014 N/A
Robert D. Pugh 196,031,905 N/A 1,874,312 N/A
H. Duke Shackelford 196,016,109 N/A 1,890,098 N/A
Wm. Clifford Smith 196,113,786 N/A 1,792,431 N/A
Bismark A. Steinhagen 196,109,636 N/A 1,796,581 N/A
2. Appointment of independent public accountants, Coopers &
Lybrand L.L.P., for the year 1995: 194,866,985 votes for;
2,145,346 votes against; 893,886 abstentions; and broker non-
votes are not applicable.
AP&L
A consent in lieu of the annual meeting of common
stockholders was executed on May 17, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of
AP&L: Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, R.
Drake Keith, Edwin Lupberger, Jerry L. Maulden, and Gerald D.
McInvale.
GSU
A consent in lieu of the annual meeting of common
stockholders was executed on May 17, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of GSU:
Michael B. Bemis, Frank F. Gallaher, Donald C. Hintz, Jerry D.
Jackson, Edwin Lupberger, Jerry L. Maulden, and Gerald D.
McInvale.
LP&L
A consent in lieu of the annual meeting of common
stockholders was executed on May 17, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of
LP&L: Michael B. Bemis, John J. Cordaro, Donald C. Hintz, Jerry
D. Jackson, Edwin Lupberger, Jerry L. Maulden, and Gerald D.
McInvale.
MP&L
A consent in lieu of the annual meeting of common
stockholders was executed on May 17, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of
MP&L: Michael B. Bemis, Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, Jerry L. Maulden, Gerald D. McInvale, and Donald E.
Meiners.
NOPSI
A consent in lieu of the annual meeting of common
stockholders was executed on May 17, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of
NOPSI: John J. Cordaro, Jerry D. Jackson, Edwin Lupberger, Jerry
L. Maulden, and Gerald D. McInvale.
System Energy
A consent in lieu of the annual meeting of common
stockholders was executed on April 14, 1995. The consent was
signed on behalf of Entergy Corporation, the holder of all
issued and outstanding shares of common stock. The common
stockholder, by such consent, elected the following individuals
to serve as directors constituting the Board of Directors of
System Energy: Donald C. Hintz, Jerry D. Jackson, Edwin
Lupberger, and Jerry L. Maulden.
Item 5. Other Information
Nonregulated Investments
Entergy Corporation and Entergy Power Development Company
As discussed on pages 3 and 4 of the Form 10-K, Entergy
Corporation continues to consider opportunities to expand its
business, including opportunities in overseas power development.
See Note 1 and pages 36, 48, 66, and 73 of the First Quarter Form
10-Q for a discussion of EPDC's agreement with Enron Power
Development Corporation to acquire a 20% investment in the
Project in the State of Maharashtra, India. Subsequent to
entering into the agreement with Enron Power Development
Corporation, the newly-elected Maharashtra state government
investigated the Project and its related cost of power. On
August 3, 1995, the Chief Minister of Maharashtra stated that the
government of Maharashtra has decided to suspend the first phase
of the Project, the 695 megawatt facility, and "scrap" the second
phase of the Project, a 1320 megawatt facility, and indicated
that orders to stop work would be issued. In view of these
developments, Entergy is uncertain as to the future of the
project and is considering its options.
Entergy Corporation and Entergy Technologies Company
In June 1995, Entergy requested approval from the SEC to
form a new non-regulated subsidiary named ETC. ETC will offer
bulk interstate telecommunications service to telecommunications
providers who will in turn market that contracted capacity to
third parties. ETC will allow Entergy to take advantage of the
rapidly expanding telecommunications industry by marketing a
portion of Entergy's existing telecommunications system.
Entergy Corporation, Entergy Enterprises, Inc., and Entergy
Systems and Service, Inc.
As discussed on page 4 of the Form 10-K, Entergy Enterprises
Inc.'s (Enterprises) subsidiary, Entergy Systems and Service,
Inc. (Entergy SASI), held an equity interest in Systems and
Service International, Inc. (SASI), a manufacturer of efficient
lighting products. In April 1995, Entergy SASI and SASI amended
their Distribution Agreement. As a result, Entergy SASI
liquidated its equity interest in SASI. The amended distribution
agreement provided for a reduction in SASI's profit margin on its
sale of products to Entergy SASI and transferred the rights to
certain of SASI's energy efficient technologies to Entergy SASI.
In exchange, among other things, Entergy SASI transferred to SASI
all of its equity ownership in SASI.
As discussed on page 4 of the Form 10-K, Entergy Corporation
provided to Entergy SASI $72.3 million in loans to fund Entergy
SASI's installment sale agreements with its customers. In June
1995, Entergy Corporation contributed $125 million in capital to
Entergy SASI through Entergy Enterprises, thus allowing Entergy
SASI to convert its debt obligation to Entergy Corporation into
equity.
Entergy Corporation and Entergy Enterprises, Inc.
In June 1995, the SEC authorized Entergy Corporation to
invest up to $350 million through December 31, 1997 in its
subsidiary, Enterprises. Such investments may take the form of
purchases of common stock, capital contributions, loans, and/or
guarantees of the indebtedness or other obligations of
Enterprises or certain of its associate companies. Subsequently,
the SEC amended Rule 45(b)(4) under the Holding Company Act to
exempt the requirement to receive prior authorization for all
capital contributions by a parent company to its subsidiary
company.
Labor Contract Negotiations
Entergy Corporation and GSU
As discussed on page 73 of the First Quarter Form 10-Q, the
labor union contract between GSU and the International
Brotherhood of Electrical Workers (IBEW) expired on June 24,
1995. The labor contract covers approximately 1,900 GSU
employees in Southeast Texas and Southwest Louisiana.
Negotiators for GSU and the IBEW have been unsuccessful in
negotiating a new agreement for the non River Bend portion of the
IBEW. A federal mediator was called in on July 9, 1995, to assist
the parties in resolving their differences, but the mediation
effort was unsuccessful. In subsequent meetings, the IBEW
voted to reject GSU's final settlement offer as well as a
contingent offer and authorized the union leadership to call a
strike if necessary. The IBEW employees continue to work
without a contract. If a strike should occur, GSU intends to
continue its operations with the assistance of management and
supervisory personnel and outside contractors. The River Bend
bargaining unit of the IBEW signed a new two year contract on
August 3, 1995.
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 second quarter of 1995, as reported by The Wall Street
Journal as composite transactions, were $25.375 and $21.00,
respectively, per share.
For the twelve months ended June 30, 1995, Entergy
Corporation paid common stock dividends in an aggregate amount of
$1.80 per share. As of June 30, 1995, the consolidated book
value of a share of Entergy Corporation's common stock was
$27.98, and the last reported sale price of Entergy Corporation's
common stock on June 30, 1995, was $24 1/8 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, June 30,
1990 1991 1992 1993 1994 1995
Ratios of
Earnings to
Fixed Charges
(a)
AP&L 2.16 2.25 2.28 3.11(f) 2.32 2.29
GSU .80(g) 1.56 1.72 1.54 .36(g) .38(g)
LP&L 2.32 2.40 2.79 3.06 2.91 2.95
MP&L 2.42 2.36 2.37 3.79(f) 2.12 2.21
NOPSI 2.73 5.66(e) 2.66 4.68(f) 1.91 1.86
System Energy 2.10 1.74 2.04 1.87 1.23 1.23
Twelve Months Ended
December 31, June 30,
1990 1991 1992 1993 1994 1995
Ratios of
Earnings to
Combined Fixed
Charges and
Preferred
Dividends
(a)(b)(c)
AP&L 1.81 1.87 1.86 2.54(f) 1.97 1.94
GSU (d) .59(g) 1.19 1.37 1.21 .29(g) .30(g) )
LP&L 1.87 1.95 2.18 2.39 2.43 2.47
MP&L 1.93 1.94 1.97 3.08(f) 1.81 1.91
NOPSI 2.36 4.97(e) 2.36 4.12(f) 1.73 1.70
(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 year ended December 31, 1991 include the
$90 million effect of the 1991 NOPSI Settlement.
(f) 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.
(g) Earnings for the years ended December 31, 1994 and 1990,
for GSU were not adequate to cover fixed charges by $144.8
million and $60.6 million, respectively. Earnings for the
years ended December 31, 1994 and 1990, for GSU were not
adequate to cover combined fixed charges and preferred
dividends by $197.1 million and $165.1 million,
respectively. Earnings for the twelve months ended June
30, 1995 for GSU were not adequate to cover fixed charges
by $136.6 million. Earnings for the twelve months ended
June 30, 1995 for GSU were not adequate to cover combined
fixed charges and preferred dividends by $187.8 million.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
3(a) Articles of Amendment, dated July 20, 1995 and
Restated Articles of Incorporation, as of December 21,
1983 of MP&L.
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 (A Professional
- Corporation).
23(e) Consent of Sandlin Associates.
-
27(a) Financial Data Schedule for Entergy Corporation and
- Subsidiaries as of June 30, 1995.
27(b) Financial Data Schedule for AP&L as of June 30, 1995.
-
27(c) Financial Data Schedule for GSU as of June 30, 1995.
-
27(d) Financial Data Schedule for LP&L as of June 30, 1995.
-
27(e) Financial Data Schedule for MP&L as of June 30, 1995.
-
27(f) Financial Data Schedule for NOPSI as of June 30, 1995.
-
27(g) Financial Data Schedule for System Energy as of June
- 30, 1995.
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, 1994, portions of
which are incorporated herein by reference as
described elsewhere in this document (filed with the
SEC in File Nos. 1-11299, 1-10764, 1-2703, 1-8474, 0-
320, 0-5807, and 1-9067, respectively).
** 99(h) 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, 1995, 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) Earnings statement of MP&L for the twelve month period
- ended June 30, 1995, made generally available to
security holders pursuant to Section 11(a) of the
Securities Act of 1933, as amended.
99(j) Earnings statement of System Energy for the twelve
- month period ended June 30, 1995, made generally
available to security holders pursuant to Section
11(a) of the Securities Act of 1933, as amended.
** 99(k) 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(l) 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(m) 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 June 30,
1995, 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 June 30, 1995.
** Incorporated herein by reference as indicated.
(b) Reports on Form 8-K
Entergy
A current report on Form 8-K, dated July 26, 1995,
was filed with the SEC on July 26, 1995, reporting
information under Item 5. "Other Events."
GSU
A current report on Form 8-K, dated July 26, 1995,
was filed with the SEC on July 26, 1995, reporting
information under Item 5. "Other 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/ Gerald D. McInvale
Gerald D. McInvale
Executive Vice President and
Chief Financial Officer
(For each Registrant and for each as
Principal Financial Officer)
Date: August 7, 1995