File No. 70-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-l
___________________________________
APPLICATION-DECLARATION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________________
Entergy Gulf States, Inc.
350 Pine Street
Beaumont, Texas 77701
(Name of company filing this statement and address
of principal executive offices)
___________________________________
Entergy Corporation
(Name of top registered holding company parent of each
applicant or declarant)
___________________________________
William J. Regan, Jr.
Vice President and Treasurer
Entergy Gulf States, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
(Names and addresses of agents for service)
___________________________________
The Commission is also requested to send copies of any
communications in connection with this matter to:
Laurence M. Hamric, Esq.
Ann G. Roy, Esq.
Entergy Services, Inc.
639 Loyola Avenue
New Orleans, LA 70113
<PAGE>
Item 1. Description of Proposed Transaction
1.1 Entergy Gulf States, Inc. ("Entergy Gulf States"),
a subsidiary of Entergy Corporation ("Entergy") which is a
regulated holding Company under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), provides retail
electric service in Louisiana and Texas and furnishes
natural gas utility services in and around Baton Rouge,
Louisiana. Entergy Gulf States submits this
Application/Declaration seeking authority to acquire two
high-voltage transmission lines and related assets from the
bankruptcy estate of Cajun Electric Power Cooperative, Inc.
("Cajun"). The acquisition of these assets is a part of a
comprehensive settlement agreement among the Chapter 11
Trustee of Cajun, Entergy, Entergy Gulf States, and the
Rural Utilities Services of the Department of Agriculture
(the "Settlement Agreement") resolving numerous disputes
between Entergy and Entergy Gulf States (formerly Gulf
States Utilities Company) on the one hand, and Cajun, on the
other hand, which are currently pending before the
bankruptcy court adjudicating Cajun's bankruptcy, the
Commission, and federal district courts. On April 26, 1996,
the Bankruptcy Court approved the Settlement Agreement which
requires the parties to close the transaction no later than
June 1, 1997.
1.2 Entergy Gulf States owns and operates an
integrated transmission system covering a 28,000 square-mile
area in southeast Texas and south central Louisiana,
extending a distance of approximately 350 miles in these
states, principally in the coastal area. The system
consists of a backbone 500 kv system across south Louisiana
into east Texas, with an underlying network of 230 kv and
138 kv lines. The system is extensively interconnected to
other utility systems, including the transmission facilities
of other Entergy operating companies. Among other uses,
Entergy Gulf States' transmission facilities are used for
the transmission of electric energy in interstate commerce
and the sale of electric energy at wholesale in interstate
commerce.
1.3 The utility assets proposed to be transferred to
Entergy Gulf States consist of two 500 kv transmission lines
designated as lines 745 and 746, and related towers, support
facilities, and rights-of-way, (collectively, the
"Facilities") and presently are part of the integrated
transmission system over which Entergy Gulf States and Cajun
transfer electric energy to serve their respective
customers. After the transfer, the Facilities will continue
to be used as part of Entergy Gulf States' integrated
transmission system. The two transmission lines serve only
to interconnect certain Cajun and Entergy Gulf States
facilities and do not interconnect with any other entities.
The Entergy operating companies already provide service over
these transmission lines under Entergy's open-access
transmission tariff and, after the transfer of the lines to
Entergy Gulf States, Entergy will continue to provide
service over the transmission lines under its open-access
tariff.
1.4 In December, 1981, Cajun purchased the two
transmission lines from Entergy Gulf States to permit Cajun
to own a portion of the Entergy Gulf States transmission
system in accordance with Service Schedule CTOC to the
Entergy Gulf States-Cajun Transmission arrangements.
Service Schedule CTOC and the related Entergy Gulf States
and Cajun transmission Service Agreements have engendered
numerous disputes and protracted litigation<FN1>, and will be
terminated as result of the transfer and the related
agreements set forth in the Settlement Agreement. Effective
upon the transfer of the Facilities, Cajun will begin to
take service under the open-access tariffs of the Entergy
operating companies.
1.5 The Facilities already are part of the integrated
transmission system used by Entergy to provide transmission
services to others by virtue of the service schedule CTOC to
the Entergy Gulf States-Cajun Power Interconnection
Agreement. As a result, the costs of the two lines already
are included in the cost of service used to establish
Entergy's open-access transmission rates and no adverse
effect on cost and rates will result from the transfer of
the two transmission lines.
1.6 The original cost of the Facilities to Cajun in
1981 was $14,570,408. As of December 31, 1997, the net book
value of the investment (as reduced by accumulated
depreciation) at that date was $8,649,000.
Item 2. Fees, Commissions and Expenses
The fees, commissions and expenses are not expected
to exceed the following:
Fees of Entergy Services, Inc. $20,000
Miscellaneous Fees $10,000
TOTAL $30,000
Item 3. Applicable Statutory Provisions
The Company believes that the above described
transaction may be subject to Sections 9(a) of the
Act, and to Rules 23 and 24 thereunder. In the event
that the Commission deems any other section of the
Act or rules thereunder to be applicable, the Company
requests that the Commission's order or orders herein
also be issued under and with respect to such other
section or rule.
Regulatory Approval
The Company believes that no Federal or State
commission or regulatory body has jurisdiction over
the proposed transactions set forth in Item 1 hereof
except the Federal Energy Regulatory Commission.
Entergy Gulf States filed Application for such
approval on March 18, 1997.
Item 5. Procedure
1. The Company requests that the Commission's
notice of proposed transactions published pursuant to
Rule 23(e) be issued by April 11, 1997, or as soon
thereafter as practicable. The Company further
requests that the Commission's order authorizing the
transactions proposed in this proceeding be entered
by May 16, 1997, or as soon thereafter as
practicable. The terms of the Settlement Agreement
as approved by the Bankruptcy Court require the
transaction to close no later than June 1, 1997.
2. The Company hereby waives a recommended decision
by a hearing officer or any other responsible officer
of the Commission; consents that the Division of
Investment Management may assist in the preparation
of the Commission's decisions and/or order in this
matter; and requests no waiting period between the
issuance of the Commission's order and the date it is
to become effective.
Item 6. Exhibits and Financial Statements
Section A. Exhibits
B. Order and Judgment approving settlement
by and among Cajun Electric Power
Cooperative, Inc., Entergy Gulf States,
Inc., Entergy Corporation, the Rural
Utilities Service of the Department of
Agriculture (see in Exhibit H of
Exhibit D filed herewith.
D. Application to Federal Energy
Regulatory Commission filed on March
18, 1997.
E. Map of properties described in Item 1.
(Exhibit I of Exhibit D filed pursuant
to Form S-E.)
F. Opinion of Counsel.
G. Financial Data Schedule.
H. Proposed Form of Notice.
Section B. Financial Statements
Financial Statements of Entergy Gulf States (reference
is made to Exhibit G hereto).
Financial Statements of Entergy and subsidiaries,
consolidated as of December 31, 1996.
Notes to Financial Statements of Entergy and Entergy
Gulf States included in the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 (filed in File No.
1-11299 and File No. 1-2703), respectively, and
incorporated by reference).
Except as reflected in the Financial Statements, no
material changes not in the ordinary course of
business have occurred since December 31, 1996.
Reference is made to Exhibit G hereto for a statement
of the proposed accounting treatment of the
transactions herein contemplated.
Item 7. Information as to Environmental Effects.
(a) As more fully described in Item 1, the
proposed transaction, subject to the jurisdiction of
the Commission, involves an acquisition of already
existing utility assets from Cajun by Entergy Gulf
States, and does not involve a major federal action
having a significant impact on the human environment.
(b) Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company
has duly caused this Application/Declaration to be
signed on its behalf by the undersigned thereunto
duly authorized.
ENTERGY CORPORATION
By: /s/ William J. Regan, Jr.
William J. Regan, Jr.
Vice President and Treasurer
ENTERGY GULF STATES, INC.
By: /s/ William J. Regan, Jr.
William J. Regan, Jr.
Vice President and Treasurer
Dated: March 31, 1997
_______________________________
<FN1> See, e.g., Cajun Elec. Power Coop. Inc. v. Gulf States
Utils. Co., 47 FERC 63,024 at 65,053 (1989), a'ffd in part
and rev'd in part, 59 FERC 61,041 (1992), rev'd Gulf
States Utils. Co. v. F.E.R.C., 1 F.3d 288 (5th Cir. 1993),
reh'g pending on other issues, on remand, 71 FERC 63,009,
aff'd 72 FERC 61,157 (1995), appeals pending Gulf States
v. F.E.R.C., Nos. 95-60357 and 95-60626 (5th Cir. motion for
stay granted Dec. 13, 1996). Cajun v. F.E.R.C., No. 96-60554
(5th Cir. motion for stay granted Nov. 5, 1996). Other
substantial non-jurisdictional disputes, involving hundreds
of millions of dollars, also are resolved by the settlement.
Exhibit D
[Letterhead of Wright & Talisman, P.C.]
March 18, 1997
By Hand Delivery
Lois D. Cashell
Secretary
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
Re: Entergy Gulf States, Inc.,
Docket No. EC97-
(Application for acquisition of facilities)
Dear Ms.Cashell:
In accordance with section 203 of the Federal Power Act, 16 U.S.C.
824b, and Part 33 of the Commission's Regulations, 18 C.F.R. Part
33, Entergy Gulf States, Inc. ("Entergy Gulf States") submits this
application for authority to acquire two high-voltage transmission
lines from the bankruptcy estate of Cajun Electric Power
Cooperative, Inc. ("Cajun"). As described below, the acquisition of
facilities is part of a comprehensive settlement agreement among
the Chapter 11 Trustee of Cajun, Entergy Corporation (the parent
corporation of Entergy Gulf States), and Entergy Gulf States. <FN1>
Furthermore, the Bankruptcy Court adjudicating the Cajun bankruptcy
has approved the settlement.
Under the settlement agreement and the Bankruptcy Court's order
approving it, the parties are to close the transaction by June 1,
1997. Therefore, Entergy Gulf States is
______________________
<FN1> The settlement agreement was executed by Gulf States Utilities
Company, which subsequently changed its corporate name to Entergy
Gulf States, Inc.
<PAGE>
Lois D. Cashell
March 18, 1997
Page 2
requesting the Commission to act on this application on an
expedited basis. <FN2>
Reason for application
Under section 203 of the Federal Power Act, no "public utility" may
dispose of facilities subject to the jurisdiction of the
Commission, without first obtaining Commission authorization.
Because Cajun is a generation and transmission cooperative financed
by the Rural Utilities Service of the Department of Agriculture,
its facilities are not subject to the Commission's jurisdiction.
Cajun, the only party disposing of facilities in this transaction,
is not a "public utility" as that term is defined in the Federal
Power Act and, therefore, is not subject to section 203.
Although Cajun is not subject to the Commission's jurisdiction,
section 33.1(a)(2) of the Commission's regulations, 18 C.F.R.
33.1(a)(2), also requires an application for "the acquisition by a
public utility of electric facilities used for the transmission or
sale at wholesale of electric energy in interstate commerce which,
except for ownership, would be subject to [the] Commission's
jurisdiction." <FN3> Entergy Gulf States, a public utility, is
acquiring facilities which, except for ownership by Cajun, would be
subject to the Commission's jurisdiction. Accordingly, Entergy Gulf
States is submitting this application.
Date of acquisition and request for expedited decision
As noted, the parties and the Bankruptcy Court's order approving
the settlement anticipate that the transfer of the transmission
lines will occur by June 1, 1997. In order that the parties can
accomplish this closing date, Entergy Gulf States requests that the
Commission grant this application within 45 days. See 18 C.F.R.
33.10 (action on applications under Part 33 ordinarily will require
45 days).
<FN2> The Cajun bankruptcy proceeding itself will not end on June 1,
1997, but all of the plans of reorganization being considered by
the Bankruptcy Court incorporate and depend upon the implementation
of the settlement between Cajun and Entergy Gulf States.
<FN3> See Duke Power Company v. F.P.C., 401 F.2d 930 (D.C. Cir.
1968).
<PAGE>
Lois D. Cashell
March 18, 1997
Page 3
Information required by the Commission's regulations
In accordance with Part 33 of the Commission's regulations, Entergy
Gulf States provides the following information in connection with
this application:
33.3
a) Name and address of Applicant
The exact name and address of the principal business office of the
applicant is:
Entergy Gulf States, Inc.
350 Pine Street
Beaumont, Texas 77704
b) Persons authorized to receive communications
The names and addresses of the persons authorized to receive
notices and communications regarding this application are:
Barry S. Spector Kimberly Despeaux
Wright & Talisman, P.C. Director, Federal
Suite 600 Regulatory Affairs
1200 G Street N.W. Entergy Services, Inc.
Washington, D.C. 20005 P.O. Box 61000
(202) 393-1200 New Orleans, LA 70161
(504) 576-4867
Entergy Gulf States also requests that the above individuals be
included on the official service list in this proceeding.
At the request of counsel for Ralph R. Mabey, the Chapter 11
Trustee for Cajun Electric Power Cooperative, Inc., Entergy Gulf
States also requests that the following be included on the official
service list and that communications and pleadings also be sent to:
Larry G. Acker
Mary A. Murphy
LeBoeuff, Lamb, Greene & McRae, L.L.P
1875 Connecticut Avenue, N.W.
Suite 1200
Washington, D.C. 20009-5728
<PAGE>
Lois D. Cashell
March 18, 1997
Page 4
c) Territories served
The counties and states served by Entergy Gulf States are set
forth in Attachment A.
d) Description of Entergy Gulf States facilities
Entergy Gulf States owns and operates an integrated transmission
system covering a 28,000 square-mile area in southeast Texas and
south central Louisiana, extending a distance of approximately 350
miles in these states, principally in the coastal area. The system
consists of a backbone 500 kV system across south Louisiana into
east Texas, with an underlying network of 230 kV and 138 kV lines.
The system is extensively interconnected to other utility systems,
including the transmission facilities of other Entergy operating
companies. Among other uses, Entergy Gulf States' transmission
facilities are used for the transmission of electric energy in
interstate commerce and the sale of electric energy at wholesale
in interstate commerce.
e) Description of acquisition
This application involves Cajun's transfer of two 500kv
transmission lines to Entergy Gulf States. The transfer is one
part of a comprehensive settlement agreement resolving numerous
disputes between Entergy Corporation and Entergy Gulf States, on
the one hand, and Cajun, on the other hand, which are currently
pending before the Bankruptcy Court adjudicating Cajun's
bankruptcy, the Commission, federal district courts, and the
courts of appeals. Aside from the mutual resolution of disputes
and related agreements set forth in the settlement agreement,
there is no other consideration being paid for the subject
transmission facilities.
f) Description of facilities being transferred
The facilities being transferred to Entergy Gulf States consist of
two 500-kV transmission lines and related towers, support
facilities, and rights-of-way, which Entergy Gulf States
previously owned and sold to Cajun in December 1981. The lines are
designated as Lines 745 and 746. See Generally Caiun Elec. Power
Coop., Inc. v. Gulf States Utils. Co., 47 FERC paragraph 63,024 at
65,048-49, 65,053 (1989), a'ffd in rel. part, 59 FERC paragraph
61,041 (1992), rev'd on other grounds, Gulf States Utils. Co. v.
F.E.R.C., paragraph F.3d 288 (5th Cir. 1993). The two transmission
lines were sold to Cajun in 1981 to permit Cajun to own a portion
of the Gulf States transmission system in accordance with Service
Schedule CTOC to the Gulf States-Cajun transmission arrangements.
See id. Service Schedule CTOC, which has engendered numerous
<PAGE>
Lois D. Cashell
March 18, 1997
Page 5
disputes and protracted litigation, <FN4> will be terminated as a
result of the settlement agreement.
The facilities being transferred presently are part of, and are
used as part of, the integrated transmission system over which
Entergy Gulf States and Cajun transfer electric energy to serve
their respective customers. See 47 FERC at 65,048. After the
transfer, the facilities will continue to be used as part of
Entergy Gulf States's integrated transmission system.
The transferred facilities do not constitute all of the operating
facilities of Cajun.
g) Original cost of facilities
The original cost to Cajun of the facilities involved in the
transfer is $14,570,408.
h) Effect on other contracts
The transfer of facilities does not affect any contract for the
purchase, sale, or interchange of electric energy. However, as a
result of the transfer and the related agreements set forth in the
settlement agreement, transmission service agreements between
Entergy Gulf States and Cajun will be terminated and Cajun will
begin to take service under the open access tariffs of the Entergy
operating companies.
Contemporaneously with the commencement of service to Cajun under
Entergy's open-access transmission tariffs, Entergy Gulf States
separately will file appropriate notices of termination of service
regarding existing transmission arrangements between Entergy Gulf
States and Cajun. At that time, Entergy also will make any
necessary filings of appropriate service agreements with Cajun
under Entergy's open-access tariff.
i) Other applications
An application with respect to the transfer of the transmission
lines is being filed with the Securities and Exchange Commission
("SEC") under the Public Utility Holding Company Act of 1935.
j) Public interest
As noted, the transfer of the two transmission lines from Cajun to
Entergy Gulf States is one part of a comprehensive
<FN4> See note 6, infra.
<PAGE>
Lois D. Cashell
March 18, 1997
Page 6
settlement agreement resolving numerous disputes currently pending
before the Bankruptcy Court adjudicating Cajun's bankruptcy, the
Commission, federal district courts, and the courts of appeals. "As
a general matter, Commission policy supports consensual resolutions
of this kind." Metropolitan Dade County Florida v. Eneray Systems
Division of Thermo Electron Corp., 76 FERC paragraph 61,283 at
62,456 (1996). <FN5> As in Metropolitan Dade County, the settlement
agreement which gives rise to the transfer of the transmission
lines "puts an end to years of protracted litigation." Id. at 1. <FN6>
The court adjudicating Cajun's bankruptcy has already approved the
settlement agreement. See Exhibit H. Particularly in the context
of aiding the resolution of a bankruptcy proceeding, it is in the
public interest for the Commission to grant the necessary
authorizations to allow the parties to resolve their differences
consensually. <FN7>
The transfer of the two transmission lines does not give rise to
any concerns under section 203 of the Federal Power Act. No market
power issues are involved. The two transmission lines serve only to
interconnect certain Cajun and Entergy Gulf States facilities. The
lines do not interconnect with any other entities. The Entergy
operating companies already provide
<FN5> See also Transcontinental Gas Pipeline, 77 FERC 61,118 at
61,457 (1996) ("The Commission's policy is to encourage
settlements wherever possible"); Northeast Utils. Serv. Co.,
59 FERC 61,089 at 61,332 (1992) ("Commission policy and
public policy generally support consensual resolutions");
Amerada Hess Pipeline, 53 FERC 61,266 at 62,053 (1990)
("It has long been the Commission's policy to encourage
settlements").
<FN6> See, e.c;, Cajun Elec. Power Coop. Inc. v. Gulf States Utils.
Co., 47 FERC 63,024 at 65,053 (1989), a'ffd in part and rev'd in
part, 59 FERC 61,041 (1992), rev'd Gulf States Utils. Co. v.
F.E.R.C., 1 F.3d 288 (5th Cir. l993), reh'g pending on other
issues, on remand, 71 FERC 63,009, aff'd 72 FERC 61,157 (1995),
appeals pending Gulf States v. F.E.R.C., Nos. 95-60357 and 95-60626
(5th Cir. motion for stay granted Dec. 13, l996), Cajun v.
F.E.R.C., No. 96-60554 (5th Cir. motion for stay granted Nov. 5,
l996). Other substantial non-jurisdictional disputes, involving
hundreds of millions of dollars, also are resolved by the
settlement.
<FN7> See Columbia Gas Transportation Corp., 69 FERC 61,330 at
62,249 (1995) (Commission seeks to avoid the possibility of
conflicting orders from the Commission and the Bankruptcy
Court).
<PAGE>
Lois D. Cashell
March 18, 1997
Page 7
service over these transmission facilities under Entergy's open
access transmission tariff, <FN8> and Entergy will continue to provide
service over the transmission lines under its open-access tariff
after the transfer of the lines to Entergy Gulf States.<FN9> No
generation assets are being transferred in this transaction.
There will be no adverse effect on costs and rates as a result of
the transfer of the two transmission lines. By virtue of Service
Schedule CTOC to the Gulf States-Cajun Power Interconnection
Agreement, the two lines already are part of the integrated
transmission system used by Entergy to provide transmission service
to others. As a result, the costs of the two lines already are
included in the cost of service used to establish Entergy's
open-access transmission rates.
Finally, as one of the elements of the settlement is the
termination of the existing transmission service agreements between
Entergy Gulf States and Cajun, the Commission's regulation will be
facilitated inasmuch as the Commission will no longer have to
resolve disputes under these agreements. In the past, these
disputes have consumed much time of the parties and the Commission.
See note 6, supra.
k) Franchises held
The franchises held by Entergy Gulf States are set forth in
Attachment B. l) Federal Register notice
A form of notice suitable for publication in the Federal Register
is attached as Attachment C. Also enclosed is a copy of the notice
in electronic format.
<FN8> Under Service Schedule CTOC of the Power Interconnection
Agreement between Entergy Gulf States and Cajun, the two
transmission lines are facilities which Entergy Gulf States uses to
provide transmission service to others. See 47 FERC at 65,048.
<FN9> See IES Utilities. Inc., 78 FERC 61,023 (1997) slip op. at
13 (open access tariff mitigates any transmission market
power).
<PAGE>
Lois D. Cashell
March 18, 1997
Page 8
33.3: Required exhibits
A. Attached as Exhibit A is a certified copy of the resolution of
the board of directors of Entergy authorizing the transaction.
B. Attached as Exhibit B is a statement of ownership and control.
C. Attached as Exhibit C are balance sheets and supporting plant
schedules for the most recent 12-month period on an actual basis
and on a pro forma basis.
D. Attached as Exhibit D is a statement of contingent liabilities
as set forth in Entergy Corporation's Form 10-K for 1996, filed
with the SEC in March 1997.
E. Attached as Exhibit E is an income statement for the most recent
12-month period on an actual and pro forma basis.
F. Attached as Exhibit F is an analysis of the retained earnings
for the period covered by the income statements in Exhibit E.
G. An application will be filed with the SEC in connection with the
transfer of the transmission lines. That filing has not yet been
made.
H. Attached as Exhibit H is the "Order and Judgment Approving
Settlement By and Among Cajun Electric Power Cooperative, Inc.,
Entergy Gulf States, Inc., Entergy Corporation, and the Rural
Utilities Service of the Department of Agriculture," filed August
27, 1996, in the United States Bankruptcy Court for the Middle
District of Louisiana. The Order and Judgment includes the
Settlement Term Sheet between Entergy Corporation, Entergy Gulf
States, and Cajun, dated as of May 1, l996 (Exhibit A to the
Order), which, in paragraph 2(d), sets forth the agreement
regarding the transfer of the two transmission lines.
I. Attached as Exhibit I is a map showing the properties of Entergy
Gulf States as well as the properties to be acquired.
Copies and Service
In accordance with 18 C.F.R. 33.6, an original and five copies of
this application, plus one copy for each State affected (Louisiana
and Texas), accompanies this filing.
<PAGE>
Lois D. Cashell
March 18, 1997
Page 9
In order to expedite the processing of this application, Entergy
Gulf States is serving this application, by overnight delivery, on
each of the state commissions that regulates the Entergy operating
companies and each party to the Cajun bankruptcy proceeding.
Verification
Attachment D contains the verification required by 18 C.F.R.
33.7.
Conclusion
Upon consideration of the above information, the Commission should
find that the above-described transfer of transmission facilities
is consistent with the public interest and authorize the transfer
of facilities under section 203 of the Federal Power Act.
Respectfully submitted,
Barry S. Spector
WRIGHT & TALISMAN, P.C.
Suite 600
1200 G Street, N.W.
Washington, D.C. 20005
Counsel for Entergy Gulf States, Inc.
<PAGE>
ATTACHMENT A
Entergy Gulf States, Inc.
Serves The Following
Louisiana Parishes and Texas Counties
Louisiana Parishes Texas Counties
Acadia Brazos
Ascension Burleson
Calcasieu Chambers
Cameron Falls
E. Baton Rouge Galveston
E. Feliciana Grimes
Iberia Hardin
Iberville Harris
Jefferson Davis Jasper
Lafayette Jefferson
Livingston Leon
Pointe Coupee Liberty
St. Landry Limestone
St. Martin Madison
Vermilion Milam
W. Baton Rouge Montgomery
W. Feliciana Newton
Orange
Polk
Robertson
San Jacinto
Trinity
Tyler
Walker
Washington
<PAGE>
ATTACHMENT B
ATTACHMENT B
LOCATION EXPIRES
Mermentau, Village of 09/30/32
Morganza, Village of 11/02/32
Morse, Village of 09/30/32
Norwood, Village of 10/12/32
Opelousas, City of 10/08/46
Parks, Village of 01/01/33
Point Coupee, Parish of 12/15/24
Port Allen, City of 10/26/32
Port Barre, Village of 09/30/32
Port Vincent, Village of 10/26/32
Rosedale, Village of 11/18/32
Scott, Village of 09/30/32
Slaughter, Town of 11/08/32
Sorrento, Village of 10/03/32
St. Francisville, Town of 11/09/32
St. Landry, Parish of 05/31/33
St. Martinville, Parish of 06/30/33
Sulphur, Town of 08/31/32
Sunset, Village of 09/30/32
Vermilion, Parish of 11/14/33
Walker, Town of 10/02/32
West Baton Rouge, Parish of 04/07/24
West Feliciana, Parish of 03/20/27
Westlake, Town of 08/31/32
Wilson, Village of 10/11/32
Youngsville, Village of 09/30/32
Zachary, Town of 10/25/32
TEXAS FRANCHISES
LOCATION EXPIRES
Ames, City of 08/21/22
Anahuac, City of 08/10/08
Beaumont, City of 02/14/18
Bevil Oaks, Town of 03/16/14
Bremond, City of 12/02/07
Bridge City, City of 11/01/20
Calvert, City of 02/11/08
Chateau Woods, Village of 07/21/26
Chester, City of 03/24/18
China, City of 11/05/22
Cleveland, City of 09/08/08
Coldspring, Town of 11/30/19
Colmesneil, City of 01/11/21
Conroe, City of 04/07/08
Corrigan, City of 12/11/07
Crystal Beach, Town of 02/25/21
Cut & Shoot, Town of 10/22/19
<PAGE>
ATTACHMENT B
LOCATION EXPIRES
Daisetta, City of 11/13/11
Dayton, City of 12/03/07
Franklin, City of 01/08/08
Groves, City of 08/12/09
Groveton, City of 01/05/08
Hardin, City of 06/13/21
Houston, City of 07/31/09
Huntsville, City of 01/09/08
Kosse, City of 11/26/07
Kountze, City of 07/08/08
Liberty, City of 09/11/13
Lumberton, City of 04/17/28
Madisonville, City of 12/01/07
Midway, City of 10/26/36
Montgomery, Town of 06/30/22
Navasota, City of 11/04/58
Nederland, City of 09/16/09
New Waverly, City of 12/01/07
Newton, County of 05/26/93
Nome, City of 09/04/22
Normangee, City of 12/04/07
North Cleveland, City of 10/31/10
Oak Ridge North, Town of 07/09/29
Orange, City of 04/07/10
Panorama, Village of 08/27/22
Patton Village, Village of 11/18/16
Pine Forest, Town of 10/03/10
Pinehurst, City of 05/26/08
Plum Grove, Town of 03/08/26
Port Arthur, City of 07/31/14
Port Neches, City of 07/31/08
Riverside, Town of 07/18/18
Roman Forest, Town of 11/05/25
Rose City, City of 05/28/23
Rose Hill Acres, Town of 03/08/14
Shenandoah, Town of 05/29/24
Shepherd, City of 11/15/17
Silsbee, City of 02/23/08
Somerville, City of 12/04/07
Sour Lake, City of 01/21/08
Spendora, Town of 06/04/17
Trinity, City of 12/11/07
Vidor, City of 08/24/10
West Orange, City of 05/24/10
Willis, City of 03/11/08
Woodbranch, Village of 10/02/17
Woodloch, Town of 01/01/24
Woodville, City of 05/13/08
In 1943, the County of Newton, Texas, granted to Gulf States a
franchise, although there is no obligation to have a franchise from
this or any other county in Texas. Gulf States pays no fee for the
Newton County franchise.
<PAGE>
ATTACHMENT C
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Entergy Gulf States, Inc. ) Docket No. EC97
NOTICE
( )
Take notice that Entergy Gulf States, Inc., on March 18, 1997, filed an
application under section 203 of the Federal Power Act and Part 33 of the
Commission's regulations regarding the acquisition of two high-voltage
transmission lines from the bankruptcy estate of Cajun Electric Power
Cooperative, Inc.
Entergy Gulf States requests that the Commission approve the acquisition within
45 days.
Copies of the application were served upon each of the state commissions that
regulates the Entergy operating companies and each party to the Cajun
bankruptcy proceeding.
Any person desiring to be heard or to protest said application should file a
petition to intervene or protest with the Federal Energy Regulatory Commission,
888 First Street, N.E., Washington, D.C. 20426, in accordance with 385.211
and 385.214 of the Commission's Rules of Practice and Procedure, 18 C.F.R.
385.211 and 385.214.
All such petitions or protests should be filed on or before . Protests will be
considered by the Commission in determining the appropriate action to be taken,
but will not serve to make the protestants parties to the proceeding. Any
person wishing to become a party must file a petition to intervene.
Copies of this application are on file with the Commission and are available
for public inspection.
Lois D. Cashell
Secretary
<PAGE>
ATTACHMENT D
VERIFICATION
I, Kimberly H. Despeaux, have knowledge of the matters set forth
in the application of Entergy Gulf States, Inc., to acquire
transmission facilities, and I hereby verify that the matters
set forth in the application are true and correct to the best of
my knowledge and belief.
Name \
Director, Federal Regulatory Affairs
Title
Notary Public
<PAGE>
EXHIBIT A
Entergy Corporation
Certificate
I, Christopher T. Screen, Assistant Secretary of Entergy
Corporation, a corporation organized under the laws of the State
of Delaware, do hereby certify that the following is a true and
correct copy of a resolution duly adopted by the Board of
Directors of said Corporation at a meeting held on May 16, 1996;
that said resolution has not been altered, amended or repealed
and is in full force and effect on the date hereof
"RESOLVED, That the Cajun Settlement, as presented to this
meeting, be, and it hereby is, approved."
IN WITNESS WHEREOF, I have set my hand and affixed the seal of
said Corporation this 9th day of January, 1997.
Assistant Secretary
<PAGE>
EXHIBIT B
EXHIBIT B
STATEMENT OF OWNERSHIP AND CONTROL
There is no control or ownership exercised by or over Entergy
Gulf States as to any public utility, bank, trust company,
banking association, or firm that is authorized by law to
underwrite or participate in the marketing of securities of a
public utility or any company supplying electric equipment to
Entergy Gulf States.
Entergy Gulf States is wholly-owned by Entergy Corporation, a
registered holding company under the Public Utility Holding
Company Act.
There are no common officers or directors of Entergy Gulf States
and Cajun.
<PAGE>
EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1996
ASSETS AND OTHER DEBITS
Line
No. Pro Forma Adjustments
1 UTILITY PLANT As Recorded Debit Credit As Adjusted
<S> <C> <C> <C> <C>
2 Utility Plant (101-106, 114) $ 7,312,006,831 $ 14,583,738 $ $ 7,326,590,569
3 Construction Work in Progress (107) 112,136,841 112,136,841
4 TOTAL UTILITY PLANT 7,424,143,672 14,583,738 7,438,727,410
5 (Less) Accum. Prov. for Depr. Amort. Depl. (108, 1 2,846,083,381 6,342,839 2,852,426,220
6 Net Utility Plant (line 4 less line 5) 4,578,060,291 14,583,738 6,342,839 4,586,301,190
7 Nuclear Fuel (120.1-120.4, 120.6) 328,578,965 328,578,965
8 (Less) Accum. Prov. for Amort. of Nucl. Assemblies 278,745,485 278,745,485
9 Net Nuclear Fuel (Line 7 less line 8) 49,833,480 49,833,480
10 Net Utility Plant (line 6 plus line 9) 4,627,893,771 14,583,738 6,342,839 4,636,134,670
11 OTHER PROPERTY AND INVESTMENTS
12 Nonutility Property (121) -
13 (Less) Accum. Prov. for Depr. and Amort. (122) 31,386,408 31,386,408
14 Investments in Associated Companies (123) 15,163,698 15,163,698
15 Investment in Subsidiary Companies (123.1) - -
16 Other Investments (124) 36,530,172 36,530,172
17 Special Funds (125-128) 10,430,546 10,430,546
18 TOTAL Other Property and Investments (Total of line 42,066,155 42,066,155
19 105,249,583 105,249,583
20 CURRENT AND ACCRUED ASSETS
21 Cash (131) 4,569,572 4,569,572
22 Special Deposits(132-34) 2,868,834 2,868,834
23 Working Fund (135) 99,694 99,694
24 Temporary Cash Investments (136) 55,117,289 55,117,289
25 Notes Receivable (141) 837,467 837,467
26 Customer Accounts Receivable (142) 228,856,268 8,649,244 220,207,024
27 Other Accounts Receivable (143) 107,546,064 107,546,064
28 (Less) Accum. Prov. for Uncollectible Acct. - Credi 1,997,000 1,997,000
29 Notes Receivable from Associated Companies (145) 45,234,000 45,234,000
30 Accounts Receivable from Assoc. Companies (146) 6,213,625 6,213,625
31 Fuel Stock (151) 45,009,126 45,009,126
32 Fuel Stock Expenses Undistributed (152) - -
33 Plant Materials and Operating Supplies (154) 81,191,940 81,191,940
34 Stores Expense Undistributed (163) 4,964,800 4,964,800
35 Prepayments (165) 8,464,307 8,464,307
36 Interest and Dividends Receivable (171) 1,287,851 1,287,851
37 Rents Receivable (172) 34,682 34,682
38 Accrued Utility Revenues (173) 75,351,000 75,351,000
39 Miscellaneous Current and Accrued Assets (174) 2,827,566 2,827,566
40 TOTAL Current and Accrued Assets (Total of lines 21 668,477,085 8,649,244 659,827,841
41 DEFERRED DEBITS
42 Unamortized Debt Expense (181) 14,898,745 14,898,745
43 Extraordinary Property Losses (182.1) - -
44 Unrecovered Plant and Regulatory Study Costs (182.2 14,391,619 14,391,619
45 Other Regulatory Assets (182.3) 1,000,738,202 1,000,738,202
46 Prelim. Survey and Investigation Charges (Electric) - -
47 Clearing Accounts (184) 6,715 6,715
48 Miscellaneous Deferred Debits (186) 30,186,130 30,186,130
49 Unamortized Loss On Reacquired Debt (189) 54,761,002 54,761,002
50 Accumulated Deferred Income Taxes (190) 285,813,824 176,213 3,484,458 282,505,579
51 TOTAL Deferred Debits (Total of lines 41-49) 1,400,796,237 176,213 3,484,458 1,397,487,992
52
53 TOTAL Assets and other Debits (Total of Lines 10,18, 39
and 50) $ 6,802,416,676 $ 14,759,951 $ 18,476,541 $ 6,798,700,086
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1996
LIABILITIES AND OTHER CREDITS
Line
No. Pro Forma Adjustments
1 PROPRIETARY CAPITAL As Recorded Debit Credit As Adjusted
<S> <C> <C> <C> <C> <C>
2 Common Stock Issued (201) $ 114,055,065 $ $ $ 114,055,065
3 Preferred Stock Issued (204) 363,903,300 363,903,300
4 Premium on Capital Stock (207) 405,685 405,685
5 Other Paid-in Capital (208-211) 1,164,718,776 1,164,718,776
6 (Less) Capital Stock Expense (214) 12,435,496 12,435,496
7 Retained Earnings (215,215.1, 216) 381,309,886 4,920,922 386,230,808
8 Unappropriated Undistributed Subsidiary Earnings (216.1)(55,998,111) (55,998,111)
9 TOTAL Propietary Capital (Total of lines 2-8) 1,955,959,105 4,920,922 1,960,880,027
10 LONG-TERM DEBT
11 Bonds (221) 2,071,360,000 2,071,360,000
12 Other Long-Term Debt (224) 9,937,719 9,937,719
13 Unamortized Premium on Long-Term Debt (225) 29,551 29,551
14 (Less) Unamortized Discount on Long-Term Debt-Debit 5,116,279 5,116,279
15 TOTAL Long-Term Debt (Total of lines 11-14) 2,076,210,991 2,076,210,991
16 OTHER NONCURRENT LIABILITIES
17 Obligations Under Capital Leases - Noncurrent (227) 83,523,942 83,523,942
18 Accumulated Provision of Property Insurance (228.1) 17,003,211 17,003,211
19 Accumulated Provisions for Injuries and Damages (228.2) 9,594,898 9,594,898
20 Accumulated Provision for Pensions and Benefits (228.3) 18,278,982 18,278,982
21 Accumulated Miscellaneous Operating Provisions (228.4) 10,398,613 10,398,613
22 TOTAL Other Noncurrent Liabilities (Total of lines 138,799,646 138,799,646
23 CURRENT AND ACRRUED LIABILITIES
24 Accounts Payable (232) 85,451,535 85,451,535
25 Accounts Payable to Associated Companies (234) 56,326,339 56,326,339
26 Customer Deposits (235) 25,571,529 25,571,529
27 Taxes Accrued (236) 36,146,935 36,146,935
28 Interest Accrued (237) 49,650,990 49,650,990
29 Dividends Declared (238) 1,203,924 1,203,924
30 Tax Collections Payable (241) 3,491,349 3,491,349
31 Miscellaneous Current and Accrued Liabilities (242) 47,227,452 47,227,452
32 Obligations under Capital Leases-Current (243) 39,109,748 39,109,748
33 TOTAL Current and Accrued Liabilities (Total of lin 344,179,801 344,179,801
34 DEFERRED CREDITS
35 Customer Advances for Construction (252) 98,105 98,105
36 Accumulated Deferred Investment Tax Credits (255) 80,408,832 80,408,832
37 Other Deferred Credits (253) 315,989,326 8,649,244 307,340,082
38 Other Regulatory Liabilities (254) 311,819,479 311,819,479
39 Unamortized Gain on Reacquired Debt (257) 185,673 185,673
40 Accumulated Deferred Income Taxes (281-283) 1,578,765,718 11,732 1,578,777,450
41 TOTAL Deferred Credits (Total of lines 35-40) 2,287,267,133 8,649,244 11,732 2,278,629,621
42 TOTAL Liabilities and Other Credits (Total of lines 9, 15, 22,
33 and 41) $ 6,802,416,676 $ 8,649,244 $ 4,932,654 $ 6,798,700,086
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
SUMMARY OF UTILITY PLANT AND ACCUMULATED PROVISIONS
FOR DEPRECIATION, AMORTIZATION AND DEPLETION
AS OF DECEMBER 31, 1996
Line
No. Pro Forma
1 UTILITY PLANT As Recorded Adjustments As Adjusted
<S> <C> <C> <C> <C>
2 In Service
3 Plant in Service (Classified) $ 7,168,806,852 $ 14,583,738 $ 7,183,390,590
4 Property Under Capital Leases 72,800,210 72,800,210
5 TOTAL (Total of Lines 3 and 4) 7,241,607,062 14,583,738 7,256,190,800
6 Held for Future Use 70,399,769 70,399,769
7 Construction Work in Progress 112,136,841 112,136,841
8 TOTAL Utility Plant (Total of Lines 5 thru 7) 7,424,143,672 14,583,738 7,438,727,410
9 Accum. Prov. for Depr., Amort., & Depl. 2,846,083,381 6,342,839 2,852,426,220
10 Net Utility Plant (Line 8 Less Line 9) $ 4,578,060,291 $ 8,240,899 $ 4,586,301,190
11 DETAIL OF ACCUMULATED PROVISIONS FOR DEPRECIATION,
12 AMORTIZATION AND DEPLETION
13 In Service
14 Depreciation $ 2,802,880,542 $ 6,342,839 $ 2,809,223,381
15 Held for Future Use
16 Depreciation 43,202,839 43,202,839
17 TOTAL Accumulated Provisions (Line 14 and Line 16) $ 2,846,083,381 $ 6,342,839 $ 2,852,426,220
<PAGE>
ENTERGY GULF STATES, INC.
PRO FORMA ENTRIES
TO RECORD RECEIPT
OF LINES 745 AND 746 FROM
CAJUN ELECTRIC POWER COOPERATIVE, INC.
LINES 745 AND 746 BALANCE
AS OF DECEMBER 31, 1996
(1) (2) (3)
Original Accumltd Net Book
Cost Deprectn Value
Line 745 $9,726,827 $3,966,872 $5,759,955
Line 746 4,856,911 1,967,622 2,889,289
TOTAL $14,583,738 $5,934,494 $8,649,244
Transmission Depreciation Rate 2.80%
Annual Depreciation Expense on $ 408,345
Lines 745 & 746
Pro Forma Entries
Entry 1
Debit: FERC Account 101, Electric Plant In $14,583,738
Credit: FERC Account 108, Accumulated Provision for
Depreciation of Electric Utility Plant $ 5,934,494
FERC Account 142, Customer Accounts
Receivable 8,649,244
To record the receipt of Transmission Lines 745 and 746 from
Cajun Electric Power Cooperative and a portion of the
Transmission Revenue receivable from Cajun as a result of the
settlement between Entergy Gulf States and Cajun of a
number of outstanding legal disputes between the two parties
Entry 2
Debit: FERC Account 253, Other Deferred Cre $ 8,649,244
Credit: FERC 449.1, Provision for Rate Refunds $6,343,813
FERC Account 456, Other Electric
Revenues 2,305,431
To record the reversal of a portion of the provision for
the uncollectability of the Cajun Transmission Revenue
receivable and recognition of the associated revenue
as a result of the settlement
PRO FORMA ENTRIES
TO RECORD RECEIPT
OF LINES 745 AND 746 FROM
CAJUN ELECTRIC POWER COOPERATIVE, INC.
Entry 3
Debit: FERC Account 410.1, Provision for Deferred
Income Taxes, Utility
Operating Income $ 3,484,458
Credit: FERC 190, Accumulated Deferred Income
Taxes $ 3,484,458
To record the income tax impact of the revenue recognized as
a result of the receipt of the transmission lines
Entry 4
Debit: FERC Account 403, Depreciation Expen $ 408,345
Credit: FERC Account 108, Accumulated Provision for
Depreciation of Electric Utility Plant $ 408,345
To record the annual depreciation expense on the
transmission lines
Entry 5
Debit: FERC 190, Accumulated Deferred Incom $ 176,213
Taxes
Credit: FERC Account 411.1, Provision for Deferred
Income Taxes-Credit, Utility
Operating Income $ 164,481
FERC Account 282, Accumulated Deferred
Income Taxes - Other Property 11,732
To record the full-year (Year 2 of tax depreciation
life) tax impact for the tax depreciation of the
transmission lines
Entry 6
Debit: FERC Account 433, Balance Transferre $ 4,920,922
Income
Credit: FERC Account 216, Unappropriated Retained
Earnings $ 4,920,922
To record the transfer to Retained Earnings of the net
income impact of the receipt of the transmission lines
<PAGE
Exhibit D
<PAGE>
NOTE 9. COMMITMENTS AND CONTINGENCIES
Cajun - River Bend (Entergy Corporation and Entergy Gulf States)
Entergy Gulf States and Cajun, respectively, own 70% and 30%
undivided interests in River Bend (operated by Entergy Gulf
States), and 42% and 58% undivided interests in Big Cajun 2, Unit
3 (operated by Cajun). These relationships have spawned a number
of long-standing disputes and claims between the parties. An
agreement setting forth terms for the resolution of all such
disputes has been reached by Entergy Gulf States, the Cajun
bankruptcy trustee, and the RUS, and approved by the United
States District Court for the Middle District of Louisiana
(District Court) on August 26, 1996 (Cajun Settlement). On
September 6, 1996, the Committee of Unsecured Creditors in the
Cajun bankruptcy proceeding filed a Notice of Appeal to the
United States Court of Appeals for the Fifth Circuit (Fifth
Circuit), objecting that the order approving the Cajun Settlement
was separate from the approval of a plan of reorganization and,
therefore, improper. The Cajun Settlement is subject to this
appeal and approvals by the appropriate regulatory agencies.
Entergy Gulf States expects to make filings with FERC and the SEC
seeking approval for the transfer of certain Cajun transmission
assets to Entergy Gulf States. Management believes that it is
probable that the Cajun Settlement will ultimately be approved
and consummated.
The Cajun Settlement resolves Cajun's civil action against
Entergy Gulf States, in which Cajun sought to rescind or
terminate the Joint Ownership Participation and Operating
Agreement (Operating Agreement) entered into on August 28, 1979,
relating to River Bend. In that suit, Cajun also sought to
recover its alleged $1.6 billion investment in the unit plus
attorneys' fees, interest, and costs. A trial on the portion of
the suit by Cajun to rescind the Operating Agreement was
completed in March 1995. On October 24, 1995, the District Court
issued a memorandum opinion rejecting Cajun's fraud claims and
denying rescission. An appeal to the Fifth Circuit by the Cajun
bankruptcy trustee was stayed pending the Court's trial of the
breach of contract phase of the case. The Cajun Settlement
resolves both the issues on appeal and the breach of contract
claims, which have not been tried.
In 1992, two member cooperatives of Cajun brought an
additional independent action to declare the Operating Agreement
null and void, based upon Entergy Gulf States' failure to get
prior LPSC approval which was alleged to be necessary. Prior to
its bankruptcy proceedings, Cajun intervened as a plaintiff in
this action. Entergy Gulf States believes the suits are without
merit and believes Cajun's claim is mooted by the Cajun
Settlement.
The Cajun Settlement, agreed to in principle on April 26,
1996, by Entergy Gulf States, the Cajun bankruptcy trustee, and
the RUS, Cajun's largest creditor, was approved by the District
Court on August 26, 1996. The terms include, but are not limited
to, the following: (i) Cajun's interest in River Bend will be
turned over to the RUS, which will have the option to retain the
interest, sell it to a third party, or transfer it to Entergy
Gulf States at no cost; (ii) Cajun will set aside a total of $125
million for its share of the decommissioning costs of River Bend;
(iii) Cajun will transfer certain transmission assets to Entergy
Gulf States; (iv) Cajun will settle transmission disputes and be
released from claims for payment under transmission arrangements
with Entergy Gulf States as discussed under "Cajun - Transmission
Service" below; (v) all funds paid by Entergy Gulf States into
the registry of the District Court will be returned to Entergy
Gulf States; (vi) Cajun will be released from its unpaid past,
present, and future liability for River Bend costs and expenses;
and (vii) all litigation between Cajun and Entergy Gulf States
will be dismissed. Based on the District Court's approval of the
Cajun Settlement, the litigation accrual established in 1994 for
possible losses associated with the Cajun-River Bend litigation
was reversed in September 1996.
Cajun has not paid its full share of capital costs,
operating and maintenance expenses, and other costs for repairs
and improvements to River Bend since 1992. In view of Cajun's
failure to fund its share of River Bend-related operating,
maintenance, and capital costs, Entergy Gulf States has (i)
credited Entergy Gulf States' share of expenses for Big Cajun 2,
Unit 3 against amounts due from Cajun to Entergy Gulf States, and
(ii) sought to market Cajun's share of power from River Bend and
apply proceeds to the amounts due from Cajun to Entergy Gulf
States. As a result, on November 2, 1994, Cajun discontinued
supplying Entergy Gulf States with its share of power from Big
Cajun 2, Unit 3. Entergy Gulf States requested an order from the
District Court requiring Cajun to supply Entergy Gulf States with
this energy and allowing Entergy Gulf States to credit amounts
due to Cajun for Big Cajun 2, Unit 3 energy against amounts Cajun
owed to Entergy Gulf States for River Bend. In December 1994, by
means of a preliminary injunction, the District Court ordered
Cajun to supply Entergy Gulf States with its share of energy from
Big Cajun 2, Unit 3 and ordered Entergy Gulf States to make
payments for its share of Big Cajun 2, Unit 3 expenses to the
registry of the District Court. In October 1995, the Fifth
Circuit affirmed the District Court's preliminary injunction. As
of December 31, 1996, $70.4 million had been paid by Entergy Gulf
States into the registry of the District Court. Cajun's unpaid
portion of River Bend operating and maintenance expenses
(including nuclear fuel) and capital costs for 1996 was
approximately $55 million. The cumulative cost to Entergy Gulf
States resulting from Cajun's failure to pay its full share of
River Bend-related costs, reduced by the proceeds from the sale
by Entergy Gulf States of Cajun's share of River Bend power and
payments into the registry of the District Court for Entergy Gulf
States' portion of expenses for Big Cajun 2, Unit 3, was $4.9
million as of December 31, 1996. Cajun's unpaid portion of the
River Bend-related costs is reflected in long-term receivables
with an offsetting reserve in other deferred credits. As
discussed above, the Cajun Settlement will conclude all disputes
regarding the non-payment by Cajun of operating and maintenance
expenses. Cajun continues to pay its share of decommissioning
costs for River Bend.
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. In its
bankruptcy proceedings, Cajun filed a motion on January 10, 1995,
to reject the Operating Agreement as a burdensome executory
contract. Entergy Gulf States responded on January 10, 1995, with
a memorandum opposing Cajun's motion. As discussed above, this
matter will be ended as a result of the Cajun Settlement.
Proponents of all of the plans of reorganization submitted to the
Bankruptcy Court have incorporated the Cajun Settlement as an
integral condition to the effectiveness of their plan. The timing
and completion of the reorganization plan depends on Bankruptcy
Court approval and any required regulatory approvals. The
Bankruptcy Court has approved proposals by three groups seeking
to acquire the non-nuclear assets of Cajun and has signed an
order that establishes rules for how Cajun's creditors will vote
on the three plans. On December 16, 1996, the Bankruptcy Court
began hearings on the balloting and the plan that will be
adopted.
Cajun - Transmission Service (Entergy Corporation and Entergy
Gulf States)
Entergy Gulf States and Cajun are parties to FERC
proceedings relating to transmission service charge disputes. In
April 1992, FERC issued a final order in these disputes. In May
1992, Entergy Gulf States and Cajun filed motions for rehearings
on certain portions of the order, which are still pending at
FERC. In June 1992, Entergy Gulf States filed a petition for
review in the United States Court of Appeals for the District of
Columbia Circuit regarding certain of the other issues decided by
FERC. In August 1993, the Court of Appeals rendered an opinion
reversing FERC's order regarding the portion of such disputes
relating to the calculations of certain credits and equalization
charges under Entergy Gulf States' service schedules with Cajun.
The opinion remanded the issues to FERC for further proceedings
consistent with its opinion. In February 1995, FERC eliminated
an issue from the remand that Entergy Gulf States believes the
Court of Appeals directed FERC to reconsider. In orders issued
on August 3, 1995, and October 2, 1995, FERC affirmed an April
1995 ruling by an ALJ in the remanded portion of Entergy Gulf
States' and Cajun's ongoing transmission service charge disputes
before FERC. Both Entergy Gulf States and Cajun have petitioned
for appeal. The Court of Appeals has stayed the appellate
proceeding pending implementation of the Cajun Settlement (see
Cajun - River Bend above, for a further discussion of the Cajun
Settlement).
Under Entergy Gulf States' interpretation of a 1992 FERC
order, as modified by FERC's orders issued on August 3, 1995, and
October 2, 1995, and as agreed to by the Cajun bankruptcy
trustee, Cajun would owe Entergy Gulf States approximately $70.2
million as of December 31, 1996. Entergy Gulf States further
estimates that if it were to prevail in its May 1992 motion for
rehearing and on certain other issues decided adversely to
Entergy Gulf States in the February 1995, August 1995, and
October 1995 FERC orders, which Entergy Gulf States has appealed,
Cajun would owe Entergy Gulf States approximately $157.3 million
as of December 31, 1996. If Cajun were to prevail in its May
1992 motion for rehearing to FERC, and if Entergy Gulf States
were not to prevail in its May 1992 motion for rehearing to FERC,
and if Cajun were to prevail in appealing FERC's August and
October 1995 orders, Entergy Gulf States estimates it would owe
Cajun approximately $110.9 million as of December 31, 1996. 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, Entergy Gulf States has
continued to bill Cajun utilizing the historical billing
methodology and has recorded underpaid transmission charges,
including interest, in the amount of $144 million as of December
31, 1996. This amount is reflected in long-term receivables with
an offsetting reserve in other deferred credits. FERC has
determined that the collection of the pre-petition debt of Cajun
is an issue properly decided in the bankruptcy proceeding. Refer
to "Cajun - River Bend" above for a discussion of the Cajun
Settlement.
Capital Requirements and Financing (Entergy Corporation, Entergy
Arkansas, Entergy Gulf States, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Construction expenditures (excluding nuclear fuel) for the
domestic utility companies and System Entergy for the years 1997,
1998, and 1999 are estimated to total, $510 million,
$547 million, and $565 million, respectively. Entergy will also
require $986 million during the period 1997-1999 to meet long-
term debt and preferred stock maturities and cash sinking fund
requirements. Entergy plans to meet the above requirements
primarily with internally generated funds and cash on hand,
supplemented by the issuance of debt and company-obligated
mandatorily redeemable preferred securities and the use of
outstanding credit facilities. Certain domestic utility
companies and System Energy may also continue with the
acquisition or refinancing of all or a portion of certain
outstanding series of preferred stock and long-term debt. See
Notes 5, 6, and 7 for further information.
Grand Gulf 1-Related Agreements
Capital Funds Agreement (Entergy Corporation and System Energy)
Entergy Corporation has agreed to supply System Energy with
sufficient capital to (i) maintain System Energy's equity capital
at an amount equal to a minimum of 35% of its total
capitalization (excluding short-term debt), and (ii) permit the
continued commercial operation of Grand Gulf 1 and pay in full
all indebtedness for borrowed money of System Energy when due
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 to enable System
Energy to make payments on such debt when due.
System Energy has entered into various agreements with
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans whereby they are obligated to purchase their
respective entitlements of capacity and energy from System
Energy's 90% ownership and leasehold interest in Grand Gulf 1,
and to make payments that, together with other available funds,
are adequate to cover System Energy's operating expenses. System
Energy would have to secure funds from other sources, including
Entergy Corporation's obligations under the Capital Funds
Agreement, to cover any shortfalls from payments received from
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, and
Entergy New Orleans under these agreements.
Unit Power Sales Agreement (Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy has agreed to sell all of its 90% owned and
leased share of capacity and energy from Grand Gulf 1 to Entergy
Arkansas, Entergy Louisiana, Entergy Mississippi, and Entergy New
Orleans in accordance with specified percentages (Entergy
Arkansas-36%, Entergy Louisiana-14%, Entergy Mississippi-33% and
Entergy New Orleans-17%) as ordered by FERC. Charges under this
agreement are paid in consideration for the purchasing companies'
respective entitlement to receive capacity and energy and are
payable irrespective of the quantity of energy delivered so long
as the unit remains in commercial operation. The agreement will
remain in effect until terminated by the parties and approved by
FERC, most likely upon Grand Gulf 1's retirement from service.
Monthly obligations for payments, including the rate increase
which was placed into effect in December 1995, subject to refund,
under the agreement are approximately $21 million, $8 million,
$19 million, and $10 million for Entergy Arkansas, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans,
respectively.
Availability Agreement (Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans are individually obligated to make
payments or subordinated advances to System Energy in accordance
with stated percentages (Entergy Arkansas-17.1%, Entergy
Louisiana-26.9%, Entergy Mississippi-31.3%, and Entergy New
Orleans-24.7%) in amounts that when added to amounts received
under the Unit Power Sales Agreement or otherwise, are adequate
to cover all of System Energy's operating expenses as defined,
including an amount sufficient to amortize Grand Gulf 2 over 27
years. (See Reallocation Agreement terms below.) System Energy
has assigned its rights to payments and advances to certain
creditors as security for certain obligations. Since commercial
operation of Grand Gulf 1, payments under the Unit Power Sales
Agreement have exceeded the amounts payable under the
Availability Agreement. Accordingly, no payments have ever been
required. If Entergy Arkansas or Entergy Mississippi fails to
make its Unit Power Sales Agreement payments, and System Energy
is unable to obtain funds from other sources, Entergy Louisiana
and Entergy New Orleans could become subject to claims or demands
by System Energy or its creditors for payments or advances under
the Availability Agreement (or the assignments thereof) equal to
the difference between their required Unit Power Sales Agreement
payments and their required Availability Agreement payments.
Reallocation Agreement (Entergy Arkansas, Entergy Louisiana,
Entergy Mississippi, Entergy New Orleans, and System Energy)
System Energy, Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans entered into the
Reallocation Agreement relating to the sale of capacity and
energy from Grand Gulf and the related costs, in which Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans agreed to
assume all of Entergy Arkansas' responsibilities and obligations
with respect to Grand Gulf under the Availability Agreement.
FERC's decision allocating a portion of Grand Gulf 1 capacity and
energy to Entergy Arkansas supersedes the Reallocation Agreement
as it relates to Grand Gulf 1. Responsibility for any Grand Gulf
2 amortization amounts has been individually allocated (Entergy
Louisiana-26.23%, Entergy Mississippi-43.97%, and Entergy New
Orleans-29.80%) under the terms of the Reallocation Agreement.
However, the Reallocation Agreement does not affect Entergy
Arkansas' obligation to System Energy's lenders under the
assignments referred to in the preceding paragraph. Entergy
Arkansas would be liable for its share of such amounts if Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans were
unable to meet their contractual obligations. No payments of any
amortization amounts will be required as long as amounts paid to
System Energy under the Unit Power Sales Agreement, including
other funds available to System Energy, exceed amounts required
under the Availability Agreement, which is expected to be the
case for the foreseeable future.
Reimbursement Agreement (System Energy)
In December 1988, System Energy entered into two entirely
separate, but identical, arrangements for the sales and
leasebacks of an approximate aggregate 11.5% ownership interest
in Grand Gulf 1 (see Note 10). In connection with the equity
funding of the sale and leaseback arrangements, letters of credit
are required to be maintained to secure certain amounts payable
for the benefit of the equity investors by System Energy under
the leases. The current letters of credit are effective until
January 15, 2000.
Under the provisions of a bank letter of credit
reimbursement agreement, System Energy has agreed to a number of
covenants relating to the maintenance of certain capitalization
and fixed charge coverage ratios. System Energy agreed, during
the term of the reimbursement agreement, to maintain its equity
at not less than 33% of its adjusted capitalization (defined in
the reimbursement agreement to include certain amounts not
included in capitalization for financial statement purposes). In
addition, System Energy must maintain, with respect to each
fiscal quarter during the term of the reimbursement agreement, a
ratio of adjusted net income to interest expense (calculated, in
each case, as specified in the reimbursement agreement) of at
least 1.60 times earnings. As of December 31, 1996, System
Energy's equity approximated 34.79% of its adjusted
capitalization, and its fixed charge coverage ratio was 2.25.
Fuel Purchase Agreements
(Entergy Arkansas and Entergy Mississippi)
Entergy Arkansas has long-term contracts with mines in the
State of Wyoming for the supply of low-sulfur coal for the White
Bluff Steam Electric Generating Station and Independence (which
is 25% owned by Entergy Mississippi). These contracts, which
expire in 2002 and 2011, provide for approximately 85% of Entergy
Arkansas' expected annual coal requirements. Additional
requirements are satisfied by annual spot market purchases.
(Entergy Gulf States)
Entergy Gulf States has a contract for a supply of low-
sulfur Wyoming coal for Nelson Unit 6, which should be sufficient
to satisfy the fuel requirements at Nelson Unit 6 through 2010.
Cajun has advised Entergy Gulf States that Cajun has contracts
that should provide an adequate supply of coal until 1999 for the
operation of Big Cajun 2, Unit 3.
Entergy Gulf States has long-term gas contracts, which will
satisfy approximately 50% of its annual requirements. Such
contracts generally require Entergy Gulf States to purchase in
the range of 20% of expected total gas needs. Additional gas
requirements are satisfied under less expensive short-term
contracts. Entergy Gulf States has a transportation service
agreement with a gas supplier that provides flexible natural gas
service to the Sabine and Lewis Creek generating stations. This
service is provided by the supplier's pipeline and salt dome gas
storage facility, which has a present capacity of 12.7 billion
cubic feet of natural gas.
(Entergy Louisiana)
In June 1992, Entergy Louisiana agreed to a renegotiated
20-year natural gas supply contract. Entergy Louisiana agreed to
purchase natural gas in annual amounts equal to approximately
one-third of its projected annual fuel requirements for certain
generating units. Annual demand charges associated with this
contract are estimated to be $8.6 million through 1997, and a
total of $116.6 million for the years 1998 through 2012. Entergy
Louisiana recovers the cost of fuel consumed during the
generation of electricity through its fuel adjustment clause.
Sales Agreements/Power Purchases
(Entergy Gulf States)
In 1988, Entergy Gulf States entered into a joint venture
with a primary term of 20 years with Conoco, Inc., Citgo
Petroleum Corporation, and Vista Chemical Company (Industrial
Participants) whereby Entergy Gulf States' Nelson Units 1 and 2
were sold to a partnership (NISCO) consisting of the Industrial
Participants and Entergy Gulf States. The Industrial
Participants supply the fuel for the units, while Entergy Gulf
States operates the units at the discretion of the Industrial
Participants and purchases the electricity produced by the units.
Entergy Gulf States is continuing to sell electricity to the
Industrial Participants. For the years ended December 31, 1996,
1995, and 1994, the purchases by Entergy Gulf States of
electricity from the joint venture totaled $62.0 million, $58.5
million, and $59.4 million, respectively.
(Entergy Louisiana)
Entergy Louisiana has an agreement extending through the
year 2031 to purchase energy generated by a hydroelectric
facility. During 1996, 1995, and 1994, Entergy Louisiana made
payments under the contract of approximately $56.3 million,
$55.7 million, and $56.3 million, respectively. If the maximum
percentage (94%) of the energy is made available to Entergy
Louisiana, current production projections would require estimated
payments of approximately $54 million in 1997, and a total of
$3.5 billion for the years 1998 through 2031. Entergy Louisiana
recovers the costs of purchased energy through its fuel
adjustment clause.
System Fuels (Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, Entergy New Orleans, and System Energy)
Entergy Arkansas, Entergy Louisiana, Entergy Mississippi,
and Entergy New Orleans have interests in System Fuels of 35%,
33%, 19%, and 13%, respectively. The parent companies of System
Fuels agreed to make loans to System Fuels to finance its fuel
procurement, delivery, and storage activities. As of
December 31, 1996, Entergy Arkansas, Entergy Louisiana, Entergy
Mississippi, and Entergy New Orleans had, respectively,
approximately $11 million, $14.2 million, $5.5 million, and $3.3
million in loans outstanding to System Fuels which mature in
2008.
In addition, System Fuels entered into a revolving credit
agreement with a bank that provides $45 million in borrowings to
finance System Fuels' nuclear materials and services inventory.
Should System Fuels default on its obligations under its credit
agreement, Entergy Arkansas, Entergy Louisiana, and System Energy
have agreed to purchase nuclear materials and services financed
under the agreement.
Nuclear Insurance (Entergy Corporation, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, Entergy Mississippi,
Entergy New Orleans, and System Energy)
The Price-Anderson Act limits public liability for a single
nuclear incident to approximately $8.92 billion. Protection for
this liability is provided through a combination of private
insurance (currently $200 million each for Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy) and an
industry assessment program. Under the assessment program, the
maximum payment requirement for each nuclear incident would be
$79.3 million per reactor, payable at a rate of $10 million per
licensed reactor per incident per year. Entergy has five
licensed reactors. As a co-licensee of Grand Gulf 1 with System
Energy, SMEPA would share 10% of this obligation. With respect to
River Bend, any assessments pertaining to this program are
allocated in accordance with the respective ownership interests
of Entergy Gulf States and Cajun. In addition, each
owner/licensee of Entergy's five nuclear units participates in a
private insurance program which provides coverage for worker tort
claims filed for bodily injury caused by radiation exposure. The
program provides for a maximum assessment of approximately
$16 million for the five nuclear units in the event losses exceed
accumulated reserve funds.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy are also members of certain insurance programs that
provide coverage for property damage, including decontamination
and premature decommissioning expense, to members' nuclear
generating plants. As of December 31, 1996, Entergy Arkansas,
Entergy Gulf States, Entergy Louisiana, and System Energy each
was insured against such losses up to $2.75 billion. In
addition, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, Entergy Mississippi, and Entergy New Orleans are
members of an insurance program that covers certain replacement
power and business interruption costs incurred due to prolonged
nuclear unit outages. Under the property damage and replacement
power/business interruption insurance programs, these Entergy
subsidiaries could be subject to assessments if losses exceed the
accumulated funds available to the insurers. As of December 31,
1996, the maximum amounts of such possible assessments were:
Entergy Arkansas - $31.1 million; Entergy Gulf States - $11.5
million; Entergy Louisiana - $24.8 million; Entergy Mississippi -
$0.7 million; Entergy New Orleans - $0.4 million; and System
Energy - $21.3 million. Under its agreement with System Energy,
SMEPA would share in System Energy's obligation. Cajun has no
share of Entergy Gulf States' obligation.
The amount of property insurance maintained for each Entergy
nuclear unit exceeds the NRC's minimum requirement for nuclear
power plant licensees of $1.06 billion per site. NRC regulations
provide that the proceeds of this insurance must be used, first,
to place and maintain the reactor in a safe and stable condition
and, second, to complete decontamination operations. Only after
proceeds are dedicated for such use and regulatory approval is
secured would any remaining proceeds be made available for the
benefit of plant owners or their creditors.
Spent Nuclear Fuel and Decommissioning Costs (Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and System Energy)
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
and System Energy provide for estimated future disposal costs for
spent nuclear fuel in accordance with the Nuclear Waste Policy
Act of 1982. The affected Entergy companies entered into
contracts with the DOE, whereby the DOE will furnish disposal
service at a cost of one mill per net kWh generated and sold
after April 7, 1983, plus a onetime fee for generation prior to
that date. Entergy Arkansas, the only Entergy company that
generated electricity with nuclear fuel prior to that date,
elected to pay the onetime fee plus accrued interest, no earlier
than 1998, and has recorded a liability as of December 31, 1996,
of approximately $117 million for generation subsequent to 1983.
The fees payable to the DOE may be adjusted in the future to
assure full recovery. Entergy considers all costs incurred or to
be incurred, except accrued interest, for the disposal of spent
nuclear fuel to be proper components of nuclear fuel expense, and
provisions to recover such costs have been or will be made in
applications to regulatory authorities.
Delays have occurred in the DOE's program for the acceptance
and disposal of spent nuclear fuel at a permanent repository. In
a statement released February 17, 1993, the DOE asserted that it
does not have a legal obligation to accept spent nuclear fuel
without an operational repository for which it has not yet
arranged. Entergy Operations and System Fuels joined in lawsuits
against the DOE, seeking clarification of the DOE's
responsibility to receive spent nuclear fuel beginning in 1998.
The original suits, filed June 20, 1994, asked for a ruling
stating that the Nuclear Waste Policy Act requires the DOE to
begin taking title to the spent fuel and to start removing it
from nuclear power plants in 1998, a mandate for the DOE's
nuclear waste management program to begin accepting fuel in 1998
and court monitoring of the program, and the potential for escrow
of payments to a nuclear waste fund instead of directly to the
DOE. Argument in the case before a three-judge panel of the U.S.
Court of Appeals was made on January 17, 1996. On July 23, 1996,
the court reversed the DOE's interpretation of the 1998
obligation and unanimously ruled that the Nuclear Waste Policy
Act creates an unconditional obligation to begin acceptance of
spent fuel by 1998, but did not make a ruling on the remedies.
On December 17, 1996, the DOE notified contract holders that
it anticipates it will not be able to begin such acceptance until
after that date. Subsequently, on January 31, 1997, Entergy
Operations and a coalition of 36 electric utilities and 46 state
agencies filed lawsuits to suspend payments to the Nuclear Waste
Fund. The lawsuits ask the court to (i) find that the December
17, 1996 DOE letter demonstrates breach of contract on the part
of the DOE; (ii) order utilities to place the Nuclear Waste Fund
payments in an escrow account and not provide the funds to the
DOE until it fulfills its obligation, (iii) prevent the DOE from
taking adverse action against utilities that withhold payments;
and (iv) order the DOE to submit a plan to the court describing
how the agency intends to fulfill its obligation on an ongoing
basis.
In the meantime, all Entergy companies are responsible for
their spent fuel storage. Current on-site spent fuel storage
capacity at River Bend, Waterford 3, and Grand Gulf 1 is
estimated to be sufficient until 2003, 2000, and 2004,
respectively. Thereafter, the affected companies will provide
additional storage. Current on-site spent fuel storage capacity
at ANO is estimated to be sufficient until 2000. An ANO storage
facility using dry casks began operation in 1996. This facility
may be expanded further as required. The initial cost of
providing the additional on-site spent fuel storage capability
required at ANO, River Bend, Waterford 3, and Grand Gulf 1 is
expected to be approximately $5 million to $10 million per unit.
In addition, about $3 million to $5 million per unit will be
required every two to three years subsequent to 2000 for ANO and
every four to five years subsequent to 2003, 2000, and 2004 for
River Bend, Waterford 3, and Grand Gulf 1, respectively, until
the DOE's repository or storage facility begins accepting such
units' spent fuel.
Total decommissioning costs at December 31, 1996, for the
Entergy nuclear power plants, excluding co-owner shares, have
been estimated as follows:
</TABLE>
<TABLE>
<CAPTION> Total Estimated
Decommissioning Costs
(In Millions)
<S> <C>
ANO 1 and ANO 2 (based on a 1994 interim update to the 1992 cost study $ 806.3
River Bend (based on a 1996 cost study reflecting 1996 dollars) 293.3
Waterford 3 (based on a 1994 updated study in 1993 dollars) 320.1
Grand Gulf 1 (based on a 1994 cost study using 1993 dollars) 365.9
--------
$1,785.6
========
</TABLE>
Entergy Arkansas and Entergy Louisiana are authorized to
recover in rates amounts that, when added to estimated investment
income, should be sufficient to meet the above estimated
decommissioning costs for ANO and Waterford 3, respectively. In
the Texas retail jurisdiction, Entergy Gulf States is recovering
in rates River Bend decommissioning costs (based on the 1991 cost
study that totaled $267.8 million) that, with adjustments, total
$204.9 million. In the Louisiana retail jurisdiction, Entergy
Gulf States is currently recovering in rates decommissioning
costs (based on a 1985 cost study) which total $141 million.
Entergy Gulf States included decommissioning costs (based on the
1991 study) in the LPSC rate review filed in May 1995. In
October 1996, the LPSC approved Entergy Gulf States rates that
include decommissioning costs based on the 1991 study. The
October 1996 LPSC order has been appealed and the decommissioning
costs based on the 1991 study have not yet been implemented.
Entergy Gulf States included decommissioning costs, based on the
1996 study, in the LPSC rate review filed in May 1996 and in the
PUCT rate review filed in November 1996. Those reviews are still
ongoing. System Energy was previously recovering in rates
amounts sufficient to fund $198 million (in 1989 dollars) of its
Grand Gulf 1 decommissioning costs. System Energy included
decommissioning costs (based on the 1994 study) in its rate
increase filing with FERC. Rates requested in this proceeding
were placed into effect in December 1995, subject to refund.
FERC has not yet issued an order in the System Energy rate case.
Entergy Arkansas, Entergy Gulf States, Entergy Louisiana, and
System Energy periodically review and update estimated
decommissioning costs. Although Entergy is presently
underrecovering for Grand Gulf and River Bend based on the above
estimates, applications are periodically made to the appropriate
regulatory authorities to reflect in rates any future change in
projected decommissioning costs. The amounts recovered in rates
are deposited in trust funds and reported at market value as
quoted on nationally traded markets or as determined by widely
used pricing services. These trust fund assets largely offset
the accumulated decommissioning liability that is recorded as
accumulated depreciation for Entergy Arkansas, Entergy Gulf
States, and Entergy Louisiana, and as other deferred credits for
System Energy.
The cumulative liabilities and actual decommissioning
expenses recorded in 1996 by Entergy were as follows:
Cumulative 1996 Cumulative
Liabilities as of 1996 Trust Decommissioning Liabilities as of
December 31, 1995 Earnings Expenses December 31, 1996
ANO 1 and ANO 2 169.0 $11.5 $20.1 $200.6
River Bend 31.7 1.5 6.0 39.2
Waterford 3 37.4 2.8 8.8 49.0
Grand Gulf 1 39.4 2.3 19.0 60.7
------ ----- ----- ------
$277.5 $18.1 $53.9 $349.5
====== ===== ===== ======
In 1995 and 1994, ANO's decommissioning expense was $17.7
million, and $12.2 million, respectively; River Bend's
decommissioning expense was $8.1 million and $3.0 million,
respectively; Waterford 3's decommissioning expense was $7.5
million and $4.8 million, respectively; and Grand Gulf 1's
decommissioning expense was $5.4 million and $5.2 million,
respectively. The actual decommissioning costs may vary from the
estimates because of regulatory requirements, changes in
technology, and increased costs of labor, materials, and
equipment. Management believes that actual decommissioning costs
are likely to be higher than the estimated amounts presented
above.
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 plants in the financial statements of electric
utilities. In response to these questions, the FASB has been
reviewing the accounting for decommissioning and has expanded the
scope of its review to include liabilities related to the closure
and removal of all long-lived assets. An exposure draft of the
proposed SFAS (which proposed a 1997 effective date) was issued
in February 1996. The proposed SFAS would require measurement
and recognition of the liability for closure and removal of long-
lived assets (including decommissioning) based on the amount of
discounted future cash flows related to closure and removal costs
at the time the liability was initially incurred. Those future
cash flows should be determined by estimating current costs for
closure and removal and adjusting for inflation, efficiencies
that may be gained from experience with similar activities, and
consideration of reasonable future advances in technology.
The initial liability would be offset by an asset that
should be presented with other plant costs on the financial
statements because the cost of decommissioning/closing the plant
would be recognized as part of the total cost of the plant asset.
Changes in the decommissioning/closure cost liability resulting
from changes in assumptions would be recognized with a
corresponding adjustment to the plant asset, and depreciation
revised prospectively. Additional increases to the liability
would be recognized to reflect the increase in the discounted
cash flows resulting from the passage of time. Such increases
would be offset by a regulatory asset, to the extent such costs
are deemed probable of future recovery.
After receiving comments on the exposure draft, the FASB has
decided that the effective date for the proposed SFAS will be
later than 1997, although a final effective date has not yet been
announced. The FASB is expected to issue an additional document
on this issue in the second quarter of 1997, although it has not
yet been decided if that document will be in the form of a final
accounting standard or a revised exposure draft. If current
electric utility industry accounting practices with respect to
nuclear decommissioning and other closure costs are changed,
annual provisions for such costs could increase, the estimated
cost for decommissioning/closure 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.
The EPAct has a provision that assesses domestic nuclear
utilities with fees for the decontamination and decommissioning
of the DOE's past uranium enrichment operations. The
decontamination and decommissioning assessments are being used to
set up a fund into which contributions from utilities and the
federal government will be placed. Entergy Arkansas, Entergy
Gulf States, Entergy Louisiana, and System Energy's annual
assessments, which will be adjusted annually for inflation, are
approximately $3.6 million, $0.9 million, $1.4 million, and $1.5
million (in 1996 dollars), respectively, for approximately 15
years. At December 31, 1996, Entergy Arkansas, Entergy Gulf
States, Entergy Louisiana, and System Energy had recorded
liabilities of $36.4 million, $6.3 million, $13.8 million, and
$13.6 million, respectively, for decontamination and
decommissioning fees in other current liabilities and other
noncurrent liabilities, and these liabilities were offset in the
consolidated financial statements by regulatory assets. FERC
requires that utilities treat these assessments as costs of fuel
as they are amortized and are recovered through rates in the same
manner as other fuel costs.
ANO Matters (Entergy Corporation and Entergy Arkansas)
Cracks in certain steam generator tubes at ANO 2 were
discovered and repaired during an outage in March 1992. Further
inspections and repairs were conducted at subsequent refueling
and mid-cycle outages, including the most recent forced outage in
November 1996. ANO 2's output has been reduced by 23 MW due to
steam generator fouling and tube plugging. The unit may be
approaching the current limit for the number of steam generator
tubes that can be plugged with the unit in operation. If the
established limit is reached during a future outage, Entergy
Operations could be required to insert sleeves in steam generator
tubes that were previously plugged. On October 25, 1996, Entergy
Corporation's Board of Directors authorized Entergy Operations to
negotiate a contract, with appropriate cancellation provisions,
for the fabrication and replacement of the steam generators at
ANO 2. Entergy estimates the cost of fabrication and replacement
of the steam generators to be approximately $150 million. A
letter of intent for the fabrication has been signed by Entergy
Operations, which includes a commitment for not more than $3.2
million, and a contract is expected to be entered into in 1997.
If a formal contract to purchase the steam generators is not
canceled, the steam generators will be installed during a planned
refueling outage in 2000. Entergy Operations periodically meets
with the NRC to discuss the results of inspections of the steam
generator tubes, as well as the timing of future inspections.
Environmental Issues
(Entergy Arkansas)
In May 1995, Entergy Arkansas was named as a defendant in a
suit by Reynolds Metals Company (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 clean-up the site, and
that the site was contaminated in part with PCBs for which
Entergy Arkansas bears some responsibility. Entergy Arkansas,
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 is contesting the lawsuit. An August 1997 trial date
has been tentatively scheduled. Regardless of the outcome,
Entergy Arkansas does not believe this matter would have a
materially adverse effect on its financial condition or results
of operations.
(Entergy Gulf States)
Entergy Gulf States has been designated as a PRP for the
clean-up of certain hazardous waste disposal sites. Entergy Gulf
States is currently negotiating with the EPA and state
authorities regarding the clean-up of these sites. Several class
action and other suits have been filed in state and federal
courts seeking relief from Entergy Gulf States and others for
damages caused by the disposal of hazardous waste and for
asbestos-related disease allegedly resulting from exposure on
Entergy Gulf States premises. While the amounts at issue in the
clean-up efforts and suits may be substantial, Entergy Gulf
States believes that its results of operations and financial
condition will not be materially adversely affected by the
outcome of the suits. As of December 31, 1996, a remaining
recorded liability of $21.4 million existed relating to the clean-
up of seven sites at which Entergy Gulf States has been
designated a PRP.
(Entergy Louisiana)
During 1993, the LDEQ issued new rules for solid waste
regulation, including regulation of wastewater impoundments.
Entergy Louisiana has determined that certain of its power plant
wastewater 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 $6.7 million existed at
December 31, 1996, for wastewater upgrades and closures to be
completed in 1997. Cumulative expenditures relating to the
upgrades and closures of wastewater impoundments were $7.1
million as of December 31, 1996.
City Franchise Ordinances (Entergy New Orleans)
Entergy New Orleans provides electric and gas service in the
City of New Orleans pursuant to City franchise ordinances that
state, among other things, the City has a continuing option to
purchase Entergy New Orleans' electric and gas utility
properties.
Employment Litigation
(Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and Entergy New Orleans)
Entergy Corporation, Entergy Arkansas, Entergy Gulf States,
Entergy Louisiana, and Entergy New Orleans are defendants in
numerous lawsuits described below that have been filed by former
employees asserting that they were wrongfully terminated and/or
discriminated against due to age, race, and/or sex. Entergy
Corporation, Entergy Arkansas, Entergy Gulf States, Entergy
Louisiana, and Entergy New Orleans are vigorously defending these
suits and deny any liability to the plaintiffs. However, no
assurance can be given as to the outcome of these cases.
(Entergy Corporation and Entergy Arkansas)
Entergy Corporation and Entergy Arkansas are defendants in
five suits filed in federal court on behalf of approximately 62
plaintiffs who claim they were illegally terminated from their
jobs due to discrimination on the basis of age or race. One of
these suits seeks class certification. A trial date is scheduled
in March 1997 for one suit comprised of approximately 29
plaintiffs, and a trial date is scheduled in May 1997 for another
suit comprised of approximately 18 plaintiffs. Trial dates have
not been set in the other suits.
(Entergy Corporation and Entergy Gulf States)
Entergy Corporation and Entergy Gulf States are defendants
in a lawsuit involving approximately 176 plaintiffs filed in
state court in Texas by former employees who claim that they lost
their jobs as a result of the Merger. The plaintiffs in these
cases have asserted various claims, including discrimination on
the basis of age, race, and/or sex. The court has preliminarily
ruled that each plaintiff's claim should be tried separately.
The first case is scheduled for trial in June 1997.
(Entergy Corporation, Entergy Gulf States, and Entergy Louisiana)
Entergy Corporation, Entergy Gulf States and Entergy
Louisiana are defendants in a suit filed in federal court in
Louisiana by approximately 39 plaintiffs who claim, among other
things, they were wrongfully discharged from their employment on
the basis of their age. No trial date has been set for this
case.
(Entergy Louisiana and Entergy New Orleans)
Entergy Louisiana and Entergy New Orleans are defendants in
a suit filed in state court in Louisiana by 110 plaintiffs who
seek to certify a class on behalf of all employees who allegedly
were terminated or required to resign on the basis of age. The
court has set a hearing for certification of the class for March
13, 1997; no trial date has been set. Entergy Louisiana and/or
Entergy New Orleans also are defendants in approximately 27 other
suits filed in federal or state court by plaintiffs who claim
they were wrongfully discharged on the basis of age, race, or
sex.
Financial Instruments
In accordance with the debt covenants included in the
financing provisions of the CitiPower acquisition, CitiPower must
hedge at least 80% of its energy purchases. CitiPower's current
strategy is to hedge approximately 100% of its forecasted energy
purchases through contracts entered into with certain generators.
These contracts mature through the year 2000.
<PAGE>
EXHIBIT E
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
Line Pro Forma Adjustments
No. As Recorded Debit Credit As Adjusted
<S><C> <C> <C> <C> <C>
1 UTILITY OPERATING INCOME
2 Operating Revenues (400)
3 Electric $1,956,854,455 $ $8,649,244 $1,965,503,699
4 Gas 34,048,921 34,048,921
5 Steam 59,142,668 59,142,668
6 TOTAL Operating Revenues (Total of Lines 3-5) 2,050,046,044 8,649,244 2,058,695,288
7 Operating Expenses
8 Operation Expenses (401) 1,151,060,545 1,151,060,545
9 Maintenance Expenses (402) 107,230,629 107,230,629
10 Depreciation Expense (403) 200,273,616 408,345 200,681,961
11 Amort. & Depl. of Utility Plant (404-405) 21,373 21,373
12 Amort. of Property Losses, Unrecovered Plant and (14,668,620) (14,668,620)
13 Regulatory Study Costs (407)
14 Regulatory Debits (407.3) 96,458,965 96,458,965
15 (Less) Regulatory Credits (407.4) 4,376,018 4,376,018
16 Taxes Other Than Income Taxes (408.1) 102,170,295 102,170,295
17 Income Taxes - Federal (409.1) 6,247,253 6,247,253
18 - Other (409.1) 201,402 201,402
19 Provision for Deferred Income Taxes (410.1) 229,525,506 3,484,458 233,009,964
20 (Less) Provision for Deferred Income Taxes - Cr. (411.1) 135,391,962 164,481 135,556,443
21 Investment Tax Credit Adj. - Net (411.4) (4,618,270) (4,618,270)
22 (Less) Gains from Disposition of Allowances (411.8) 23,200 23,200
23 TOTAL Utility Operating Expenses (Total of Lines 8-22) 1,734,111,514 3,892,803 164,481 1,737,839,836
24 Net Utility Operating Income '(Line 6 less 23) 315,934,530 3,892,803 8,813,725 320,855,452
25 Other Income
26 Nonutility Operating Income
27 Revenues from Merchandising, Jobbing and Contract Work (415)
28 (Less) Costs and Exp. of Merchandising, Jobbing and Contract
Work (416) (36,152) (36,152)
29 Revenues from Nonutility Operations (417) 1,223 1,223
30 (Less) Expenses of Nonutility Operations (417.1) 491,974 491,974
31 Nonoperating Rental Income (418) 345,180 345,180
32 Equity in Earnings of Subsidiary Companies (418.1) 517,759 517,759
33 Interest and Dividend Income (419) 17,323,273 17,323,273
34 Allowance for Other Funds Used During Construction (419.1) 2,617,675 2,617,675
35 Miscellaneous Nonoperating Income (421) 53,294,565 53,294,565
36 Gain on Disposition of Property (421.1) 1,430,159 1,430,159
37 TOTAL Other Income (Total of Lines 26-36) 75,074,012 75,074,012
38 Other Income Deductions
39 Miscellaneous Amortization (425) $ -
40 Miscellaneous Income Deductions (426.1-426.5) 198,613,196 198,613,196
41 TOTAL Other Income Deductions (Total of Lines 37-39) 198,613,196 198,613,196
42 Taxes Applic. to Other Income and Deductions
43 Taxes Other Than Income Taxes (408.2) 92,493 92,493
44 Income Taxes - Federal (409.2) (6,040,855) (6,040,855)
45 - Other (409.2) -
46 Provision for Deferred Income Taxes (410.2) 33,023,102 33,023,102
47 (Less) Provision for Deferred Income Taxes - Cr. (411.2) 20,420,169 20,420,169
48 Investment Tax Credit Adj. - Net (411.5) (716,435) (716,435)
49 TOTAL Taxes on Other Income and Deduct. (Total of Lines 41-47) 5,938,136 5,938,136
50 Net Other Income and Deductions (Total of Lines 35, 40 and 48) (129,477,320) (129,477,320)
51 Interest Charges
52 Interest on Long-Term Debt (427) 172,715,998 172,715,998
53 Amort. of Debt Disc, and Expense (428) 1,928,955 1,928,955
54 Amortization of Loss on Reacquired Debt (428.1) 7,140,315 7,140,315
55 (Less) Amort. of Premium on debt - Credit (429) 30,755 30,755
56 (Less) Amortization of Gain on Reacquired Debt (429.1) 158,400 158,400
57 Interest on Debt to Assoc. Companies (430) 799,609 799,609
58 Other Interest Expense (431) 10,505,547 10,505,547
59 (Less) allowance for Borrowed Funds Used During Construction (432) 2,234,703 2,234,703
60 Net Interest Charges (Total of Lines 51-58) 190,666,566 190,666,566
61 Income Before Extraordinary Items (Total of Lines 22, 49 and 59) (4,209,356) 3,892,803 8,813,725 711,566
62 Extraordinary Items After Taxes -
63 Net Income (Total of Lines 60 and 61) ($4,209,356) $3,892,803 $8,813,725 $711,566
</TABLE>
<PAGE>
EXHIBIT F
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
Pro Forma Adjustments
Line As Recorded Debit Credit As Adjusted
No.UNAPPROPRIATED RETAINED EARNINGS (Account 216)
<S> <C> <C> <C>
1 Balance - December 31, 1995 $412,765,993 $412,765,993
2
3 Credit: Adjustment from Undistributed Subsidiary Earnings 1,199,808 1,199,808
4
5 Debit: Capital stock expense (Acct 214) associated with preferred
6 stock redemption (169,021) (169,021)
7
8 Balance Transferred from Income (Account 433 less Account 418.1) (4,151,341) 4,920,922 769,581
9
10 Dividends Declared - Preferred Stock (Account 437) 28,335,553 28,335,553
11
12 Dividends Declared - Common Stock (Account 438) -
13
14 Total Dividends Declared 28,335,553 28,335,553
15
16 Balance - December 31, 1996 $381,309,886 $ $4,920,922 $386,230,808
UNAPPROPRIATED UNDISTRIBUTED SUBSIDIARY EARNINGS
17 Balance - September 30, 1995 ($54,740,288) ($54,740,288)
18
19 Equity in Earnings for Year (Credit) (Account 418.1) (58,015) (58,015)
20
21 Adjustment to Parent Retained Earnings (1,199,808) (1,199,808)
22
23 Balance - September 30, 1996 ($55,998,111) $ $ ($55,998,111)
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
In re: CIVIL ACTION
NO. 94-2763-B2
CAJUN ELECTRIC POWER
COOPERATIVE, INC. Bankruptcy Case
Debtor. NO. 94-11474
) Chapter 11
Federal Tax Id. No.: 72-0655799 )
)
ORDER AND JUDGMENTS APPROVING SETTLEMENT BY AND AMONG
CAJUN ELECTRIC POWER COOPERATIVE, INC., ENTERGY
GULF STATES, INC.. ENTERGY CORPORATION, AND THE
RENAL UTILITIES SERVICE OF THE DEPARTMENT OF AGRICULTURE
This matter coming to be heard on the Motion (the "'Motion") of
Ralph R. Mabey Chapter 11 Trustee (the
Trustee") pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure to approve
settlement between Cajun Electric Power Cooperative, Inc. ("Cajun"
or the "Debtor") and Entergy Gulf States, Inc. formerly known as
Gulf States Utilities Company (
("GSU"), in accordance with the terms set forth in the Settlement
Term Sheet, dated May 2, 1996, executed by the Trustee, GSU, and
Entergy Corporation ("Entergy") and recommended for adoption by
the Rural Utilities Service of the United States Department of
Agriculture (the "RUS") (the "Settlement Term Sheet", a copy of
which is attached hereto as Exhibit A), the Motion, and this order
(the 'Settlement');
Upon consideration of the Motion, due and proper notice having
been provided thereof to parties entitled thereto, and on the
basis of the record of this case, including the evidence presented
at the hearing on the Motion to approve the Settlement, the
litigation involving the parties described in the Motion and attachments
thereto (and the Court having taken judicial notice of litigation
pending before it) and the Court's oral Findings of Fact ~d
Conclusions of Law on the record on August 26, 1996, which ore
incorporated herein by reference and a transcript of which shall
be filed by the Trustee as soon as practicable, and pursuant to 11
USC 105(a) and 363(b) and Federal Rule of Bankruptcy Procedure
Rule 9019(a);
The Court having considered all objections not withdrawn (the
"Objections") to approve the Settlement and to this Order and
Judgment (hereinafter, the "Order");
The Court is of the opinion that the Motion is meritorious;
accordingly,
IT IS ORDERED, ADJUDGED AND DECREED THAT:
1. The relief requested in the Motion is granted.
2. The Settlement is approved.
3. All Objections are denied with prejudice.
4. The Settlement as approved includes, but is not limited to:
a. A global settlement of all disputes between GSU and Cajun which
will result in reciprocal dismissal with prejudice of all claims
and counterclaims and a general release of any liability
of any kind arising out of the transactions or occurrences upon
which the presently litigated matters are based;
b. A global settlement of all disputes between GSU and RUS which
will result in a dismissal with prejudice of all pending litigated
matters in which the RUS has intervened and a judgment in favor of
RUS on GSU's subordination complaint against the RUS;
c. A settlement of certain disputes between RUS and Cajun
including all matters related to the Rives Bend nuclear power
facility ("River Bend") including a release and waiver of all
claims and causes of action, whether known or unknown, by Cajun
against RUS for equitable subordination, all claims and causes of
action by Cajun against RUS for "lender liability," and all claims
alleging waiver of deficiency judgment rights under Louisiana R.S.
13: 4108 .1.
5. The Settlement as approved does not resolve claims between RUS
and Cajun not involving River Bend unless dealt with in the
Settlement.
6. The terms and provisions of the Settlement which are intended
to apply prior to the closing of the Settlement (the "Consummation
Date") shall be binding, effective, and enforceable against each
of the Trustee, GSU, Entergy and the RUS as of the date hereof.
The terms and provisions of the Settlement which are intended to
apply on and after the Consummation Date shall be binding,
effective and enforceable against each of the Trustee, GSU,
Entergy and RUS as of the Consummation Date.
7. The Trustee is authorized to set aside in a decommissioning
trust fund or other appropriate vehicle the sum of $125,000,000 in
1995 dollars. When the Trustee acts pursuant to this
authorization, he shall transfer the funds in Cajun's existing
decommissioning trust fund and will use funds on hand to make up
the difference. The funds on hand need to make up the difference,
which may be funds subject to the Order Concerning Use of Cash
Collateral to Substitute Cajun's "1996 Budget" for all references
in said Order to Cajun's "l995 Budget" (Docket No. 1536), will be
transferred free and clear of any lien, claim or other interest
asserted by any party. Moreover, the transfer of these funds shall
not result in a transfer of any party's lien on, claim against, or
other interest in these funds to other assets of Cajun or its
estate, and shall not create rights or claims in any party against
any other party or against the assets of Cajun or its estate. The
transfer of these funds is a necessary and proper expense of
Cajun's estate, and no party shall thereafter assert any rights
except as granted herein, relating to these funds, including any
claims that the funds were cash collateral, were not property of
the estate, were subject to refund or repayment, were subject to
actual or constructive trust, or were subject to an equitable
lien. This prohibition on the assertion of rights is not a ruling
on, and shall not preclude the assertion of, claims that other
funds not transferred into the decommissioning trust fund or other
appropriate vehicle are cash collateral, are not property of the
estate, are subject to refund or repayment, are subject to actual
or constructive trust, or are subject to an equitable lien, except
insofar as such claims relate to or rely on the transfer of the
funds into the decommissioning trust fund or other appropriate
vehicle. The funding of the trust fund, together with the transfer
of the Cajun River Bend Interest (the "Cajun River Bend Interest"
as that term is defined in the Term Sheet) will absolve Cajun, its
member cooperatives, and any successor to assets, other than the
Cajun River Bend Interest, now owned by Cajun (but not others who
may succeed to the ownership of the Cajun River Bend Interest) of
all responsibility for River Bend Decommissioning Costs (as that
term is defined in the Term Sheet).
8. The Trustee is authorized without the necessity of any further
order or approval of this Court, to transfer all assets as
provided in the Settlement, including but not limited to the Cajun
River Bend Interest, Cajun's interest in River Bend fuel and spare
parts (under the option provided for in the Term Sheet),
Transmission lines 745 and 746 (provided, as required by the Term
Sheet, that Entergy's Network Service Tariff and its Transmission
Service Tariff, under which Cajun receives service, makes the
continued ownership of the Transmission Line or Lines by Cajun or
the transferee of its generating assets unnecessary for Cajun or
its transferee's provision of current or future service by reason
of the benefits provided under the new tariffs), and any other
assets required by the Settlement, free and clear of any lien or
other interest asserted by any party.
9. RUS is authorized to receive from GSU and Cajun Cajun's share
of all cash payments resulting from the litigation presently being
conducted against General Electric in connection with claims
alleging River Bend design defects. Cajun's share of all payments
in kind and other non-cash consideration received or promised as a
result of the litigation shall be paid to the owner of the Cajun
River Bend Interest at the time such payments in kind or other non
cash consideration become due. All of such transfers and payments
shall be free and clear of any lien or other interest asserted by
any party.
10. The Trustee is authorized and directed, without the necessity
of any further order or approval of this Court, to take any and
all actions necessary or appropriate to implement, effectuate, and
consummate the Settlement and any transactions contemplated
thereby or by this Order, including, without limitation., the
issuance, execution and delivery of any document, certificate,
agreement or instrument, the filing of any pleading, and the
transfer or other disposition of any assets. No action or approval
of the Board of Directors of Cajun shall be required with respect
to the implementation and consummation of the Settlement.
11. Without limiting the generality of the foregoing, between the
date hereof and until and including the Consummation Date:
a. the Trustee, and GSU, Entergy, and RUS as necessary, shall
undertake any and all such actions as are necessary or appropriate
to cause the Consummation Date to occur no later than June 1, 1997;
b. the Trustee shall cause Cajun to cease prosecution of all of
its objections to any and all relief sought by GSU or Entergy, or
any of their affiliates, in any regulatory or administrative
proceeding in which approval of the merger of Entergy and GSU is
sought, including any related appellate proceedings to the extent
that Cajun's objection to such relief is intended to be settled or
resolved on or prior to the Consummation Date in accordance with
the terms of the Settlement;
c. the Trustee, with the intervention of GSU, if required, shall
cause to be stayed all civil actions and regulatory and
administrative proceedings, other than proceedings which are the
subject of paragraph 9(b) of this Order, which are pending between
Cajun, on the one hand, and GSU or Entergy, on the other hand,
including any related appellate proceedings, and which are
intended to be settled or resolved on the Consummation Date in
accordance with the terms of the Settlement;
d. the Trustee, and RUS, GSU, and Entergy, as necessary or
appropriate, shall undertake such actions as are necessary or
appropriate to cause the disposition of the Cajun River Bend
Interest on the Consummation Date in the manner provided in Section
1 of the Settlement Term Sheet, and will cooperate to
effect, at the option of RUS, the disposition of the
Cajun River Bend Interest before the Consummation Date
subject to consent of the parties and further court
order as provided in paragraph 13 below;
e. the Trustee and GSU, jointly or singly, shall
undertake to obtain all regulatory approvals reasonably
considered to be required to implement, consummate, and
effectuate the Settlement (the "Regulatory Approvals");
and
f. the Trustee, GSU, Entergy, and RUS shall undertake
all such other necessary or appropriate actions as are
intended to occur prior to the Consummation Date in
accordance with the terms and provisions of the
Settlement Term Sheet.
12. As soon as practicable after the conditions
precedent to the closing of the Settlement, as contained
in the Settlement Term Sheet, shall have been satisfied
or waived by the affected party or parties, the Trustee,
GSU, Entergy and the RUS shall cause the closing of the
Settlement to occur.
13. The preliminary Injunction in the Service Water
Litigation will be continued in full force and effect
until the Consummation Date, as set forth in Section
3(b) of the Settlement Term Sheet.
14. If the Consummation Date has not occurred by the close of
business on June 1, 1997, the Trustee, GSU, Entergy and the RUS
may by agreement continue to undertake to implement, effectuate
and consummate the Settlement. However, in the absence of an
agreement, any of the parties may move the Court to order the
extension of the Consummation Date upon hearing and finding that
the Settlement will likely be effectuated within a reasonable time
upon the terms set forth in the Settlement Term Sheet and that
such extension is in the best interest of the estate.
15. The Settlement may not be modified by any Plan of
Reorganization in this bankruptcy case except as may be agreed to
by the Trustee, GSU and the RUS. The terms of the Settlement shall
be binding upon any successors to the parties thereto, including,
without limitation, any purchaser of Cajun or Cajun's assets.
16. RUS is now authorized to seek a purchaser for the Cajun River
Bend Interest (as defined in the Motion and the Settlement Term
Sheet). In the event that a purchase offer that is acceptable to
RUS is received prior to the closing of the Settlement or to the
receipt by the parties of all regulatory approvals required by the
Settlement, the Trustee, with the consent of RUS and GSU, may
submit a motion for early approval of the sale of the Cajun River
Bend Interest on terms that protect the interests of the parties
to the Settlement under the Settlement Term Sheet.
17. Each of the actions taken, documents executed, and payments
and transfers of assets made pursuant to provisions of the
Settlement and Order shall be valid, binding and enforceable and
not preferential, fraudulent or an otherwise avoidable transfer
under the Bankruptcy Code or under applicable law of the United
States or any state, province or other jurisdiction, and will, to
the fullest extent permitted by the Bankruptcy Code, vest in the
transferee good title to such property, free and clear of all
liens, claims, and encumbrances, except as otherwise provided in
the Settlement, and shall not be Subject to modification in any
Plan of Reorganization in this bankruptcy case, except as agreed
by the parties receiving the benefit under this Settlement.
18. The record of the hearing to approve the Settlement is closed.
19. This Order shall be effective according to its terms upon the
entry thereof.
20. This is a final order and immediately subject to appeal. Baton
Rouge, Louisiana, this 26th day of August, 1996.
UNITED STATES DISTRICT JUDGE
EOE: 8/27/96
NOTICE MAILED TO: Regina Callihan
On ___________ by___________ Cretan
David S. Rubin
Ralph R. Mabey
Tom Phillips
Brian Jackson
Office of U.S. Trustee
<PAGE>
EXHIBIT A
<PAGE>
SETTLEMENT TERM SHEET
WHEREAS Cajun Electric Power Cooperative, Inc. (Cajun) operating
through its Chapter 11 Trustee, Ralph R. Mabey (trustee), Rural
Utilities Service of the United States Department of Agriculture
and Gulf States Utilities (GSU) desire to resolve long-standing
disputes and disagreements respecting various issues including
operation and ownership of Cajun's undivided thirty percent
interest to the River Bend nuclear facility {the Cajun River Bend
Interest). the Trustee and GSU desire to establish mutually
favorable business relationship and Trustee, RUS and GSU deepen
to arrange for the transfer of certain specified assets, the
Trustee, RUS and GSU agree to the terms and provisions set forth
herein (the "Settlement"), recognizing that various of the
components of these terms and provisions may require approvals of
regulatory agencies to complete and may require more formal
documentation to be executed at a closing of the Settlement in
order to give full effect to the intentions of the parties set
forth herein:
1. Disposition of River Bend
(a) On or before the closing of the Settlement, Cajun will set
aside in a decommissioning trust fund or other appropriate
vehicle the sum of $125,000,000 in 1995 dollars. This fund will
be made up of Cajun's new contribution, and the amount in Cajun's
existing decommissioning trust fund (the "Trust Fund"). The
establishment of the Trust Fund, together with the transfer of
the Cajun River Bend Interest as provided herein will absolve
Cajun and any successor to assets, other than the Cajun River
Bend Interest, now owned by Cajun (but not others who may succeed
to the ownership of the Cajun River Bend Interest) of all
responsibility for River Bend Decommissioning Costs as defined
below.
Decommissioning. means all action taken to render the River Bend
nuclear power plant permanently inactive, inoperable and free of
radioactive materials. The term decommissioning is intended to be
comprehensive and include, without limitation, the entombment,
decontamination, dismantlement, removal and disposal of
structures, systems and components of the River Bend nuclear
power plant in order to permanently cease the nuclear generation
of electric energy, including all action necessary to bring the
plant site to "greenfield status and any other item included in
a study accepted and approved by regulatory authorities of
competent jurisdiction as a basis for the termination of
operations under the license to own or operate River Bend. The
term also includes preparation for decommissioning, such as
engineering and other planning activities, and all associated
activities to be performed after the actual settlement occurs, such
as physical security and radiation monitoring. The term also includes
activities associated with spent fuel storage, disposal,
transfer. transportation and removal and low level waste storage
as well as Cajun's future obligations with respect to
decontamination and decommissioning of DOE uranium enrichment
facilities. Also included is the preparation of studies and
supporting documentation required by regulatory authorities.
The foregoing application is not intended to form basis for
excluding any action or cost legitimately part of decommissioning
and returning to the site to "greenfield" status because of the
failure to accurately identify or to fall within a category
specifically identified.
"Decommissioning Costs means the funds expended to perform
Decommissioning. The term includes expenditures whether they are
treated as capital items or expense items for regulatory,
financial, or tax accounting purposes.
(b) The Trust Fund may be used only for the prudent expenditure
of Decommissioning Costs for the Cajun River Bend Interest. If,
upon the completion of Decommissioning of the River Bend plant,
the Truet Fund, and such additional amounts as have been added to
it as a result of the investment and management of funds included
therein, is not exhausted by the prudent expenditure of
Decommissioning Costs for the Cajun River Bend Interest, the
remainder will be remitted to RUS.
(c) Upon the transfer of the Cajun River Bend Interest, Cajun
shall deliver title thereto free and clear of all liens and
encumbrances except those agreed to by the purchaser. In the
event the Cajun River Bend Interest is transferred to RUS, its
liens and encumbrances on the Cajun River Bend Interest shall be
merged with the title which it obtains. In the event the Cajun
River Bend Interest transferred to any other person, RUS will
release all of its liens and encumbrances on the Cajun River Bend
Interest. The foregoing release by RUS shall not be construed as
a waiver or release of the portion of RUS's claims against Cajun
which remain unsatisfied by the transfers of title for which
provision is made herein. Notwithstanding RUS's release of liens
on the Cajun River Band Interest or the merger of title if the
Cajun River Bend Interest is transferred to RUS, the amount of
RUS's claims against Cajun shall be reduced only to the extent of
RUS's receipt of proceeds from the sale of the Cajun River Bend
Interest. If the Cajun River Bend Interest is transferred to GSU under
paragraph 1(f) below, the amount of RUS's claims against Cajun
shall not be reduced on account of the transfer of the Cajun
River Bend Interest. The parties hereto agree that any
disposition of the Cajun River Bend Interest under the Settlement
shall be considered commercially reasonable.
d) In the sole discretion of RUS, the Cajun River Bend Interest
will be transferred under one of the two options or subparagraph
(f) set forth below.
In connection with such transfer, Cajun will satisfy the
obligation to fund the Trust Fund required by paragraph 1(a) and
GSU will make available to all prospective purchasers records,
personnel and facilities such that prospective purchasers can
conduct an appropriate due diligence evaluation before making
their bid. GSU may subject the examination of personnel, records
and facilities to retain confidentiality and business
requirements. RUS shall have substantial flexibility in
exercising its discretion to arrange for the transfer of the
Cajun River Bend Interest. In furtherance of that end, RUS's
flexibility shall include, but shall not be limited to,
negotiating with and selecting prospective purchaser, being
permitted to establish a reserve price which must be met before
consummating s sale at auction, not being required to accept the
highest bid received at an auction and taking title to the Cajun
River Bend Interest itself for subsequent reconveyance.
Option 1
The Cajun River Bend Interest and Cajun's interest in River Bend
fuel and space parts will be sold, with net proceeds remitted to
RUS. The purchaser will become obligated to fully comply with the
NRC license requirements, all other applicable laws and
regulations and the provisions of the River Bend JOPOA, as
amended in the respects described as Exhibit No. I, commencing
with the date of the transfer of the Cajun River Bend Interest.
The Big Cajun No. 2, Coat Unit #3 JOPOA will also be similarly
amended, as may be required. All of Cajun's interest and
obligations under the River Bend JOPOA, the NRC license and any
recorded documents of transfer between GSU and Cajun relating to
River Bend will be canceled and transferred to Cajun Bend,
subject to the provisions of this paragraph, will be assumed by the
purchaser. data used herein, the obligations under the River Bend
JOPOA, for which a successor shall be obligated shall be limited to
obligations for operations commencing with the closing of the Settlement
and for fuel and spare parts purchased only after the closing of the
Settlement and shall not include unfulfilled or unpaid obligations which
Cajun suffered while it was still the owner. GSU may elect to become a
bidder if RUS elects to conduct an auction under that option.
Option 2
The Cajun River Bend Interest and Cajun's interest in River Bend
fuel and spare parts will be transferred to RUS which will become
obligated to fully comply with the Cajun NRC license
requirements, all other applicable laws and regulations and the
provisions of the River Bend JOPOA, as amended in the respects
described in Exhibit No. 1, commencing with the date of its
succession to the Cajun River Bend Interest. The Big Cajun No.
2, Coal Unit #3 JOPOA will also be similarly amended, as may be
required. All of Cajun's interest and obligations under the
River Bend JOPOA, the MRC license and any recorded documents of
transfer between GSU and Cajun relating to River Bend will be
canceled and terminated as to Cajun and will be assumed by RUS As
used herein, the obligations under the River Bend JOPOA for which
RUS shall be obligated shall be limited to obligations for
operations commencing with the closing of the Settlement and for
fuel and spare parts purchased only after the closing of the
Settlement and shall not include unfulfilled or unpaid
obligations which Cajun licensed while it was still the owner.
(e) RUS will receive from GSU and Cajun's share of all cash
payments resulting from the litigation presently being conducted
against General Electric in connection with claims alleging River
Bend design defects Cajun's share of all payments in kind and
other non-cash compensation received or provided as a result of
the litigation will be payable to the owner of the Cajun River
Bend Interest at the time such payments in kind or other non-cash
consideration become due.
The same allocation shall be made between RUS and transfer of the
Cajun River Bend Interest of refunds or other benefit related to
the payment by Cajun to the U.S. Government to fund the
decontamination decommissioning of DOE's uranium enrichment
facilities.
(f) In the event that no offer is accepted by RUS under Option 1
above and in the further event that RUS elects not to become the
transferee of the Cajun River Bend Interest under Option 2 above,
the Cajun River Bend Interest, together with Cajun's interest in
River Bend fuel and spare parts, will be transferred to GSU with
no payment by GSU to Cajun's estate or to RUS.
2. Transmission and Certain Other Issues
(a)Pursuant to existing FERC declines. the claim due GSU for past
transmission services under the CTOC credits and QTF Dockets
amounts to $55,000,000 (the Liquidated Transmission Debt"). The
Liquidated Transmission Debt consists of $32,000,000 due under
the QTF Docket and $23,000,000 due under the CTOC Credits Docket.
GSU waives its right to collect the Liquidated Transmission Debt
from Cajun. .
(b) Cajun or Cajun's transferee or transferees of its generation
assets will receive transmission services
under Entergy's Network Service Tariff and Entergy
transmission Service Tariff as of the later of (i)
twelve months from the date of the Settlement or (ii)
the date of the closing of the Settlement. Neither GSU
or Entergy will oppose the entitlement of Cajun or
such transferee to service thereunder or its
effectiveness at such date.
(c) All previous transmission agreement existing between Cajun
and Entergy, GSU, LP&L or MP&L will be terminated upon the
commencement of services described in paragraph 2 (b)
hereinabove. Cajun will use its best efforts or to obtain
agreement from its distribution coops to be bound by the terms
and provisions of Entergy's Network Service Tariff, during the
time they receive service over facilities to which such tariff is
applicable.
(d) Cajun or its transferee under a plan of reorganization will
retain ownership of its BC1 and BC2 Switchyards and its Through
Bus facilities. Cajun will transfer to GSU its ownership of each
of Transmission lines 745 and 746 (provided that Entergy's
Network Service tariff and its Transmission Service tariff, under
which Cajun receives service under subparagraph 2(b) above, make
the continued ownership of the Transmission line or lines by
Cajun or by the transferee of its generating assets unnecessary
for Cajun and its transferee's provision of current or future
services by reason of the benefits provided under the new
tariffs), as of the latter of (i) twelve months from the date of
the Settlement or (ii) the date of the closing of the Settlement.
Unless Transmission lines 745 and 746 are not transferred to GSU
as set forth herein, Cajun will pay RUS an amount equal to the
amount by which NRG Energy, Inc. and Zeigler Coal Holding Company
reduce the amount of their bid for the purchase of Cajun's assets
as a result of the transfer of Transmission lines 745 and 746 pursuant
to the Settlement and RUS will release its liens on transmission lines
745 and 746 upon such payment by Cajun.
3. Settlement of all Claims and Disputes
(a) Any and all claims of any nature or kind, whether or not now
pending in Court, whether known or unknown, whether founded in law,
equity or otherwise, whether or not already asserted for any and all
acts or omissions between Cajun and GSU or Entergy, and between RUS
and GSU or Entergy, will be dismissed with prejudice and released and
satisfied in full, including, but not limited to, all claims for the
River Bend litigation, the fraud and breach of contract case, the
antitrust case, the nullity case and the service water litigation, and
any claim of equitable subordination of RUS's rights, all pending
cases before any regulatory agency or on appeal from any regulatory
agency such as the transmission cases before FERC, the merger appeals
before FERC, the SEC and NRC and any and all other matters pending
before any regulatory agency) and any and all other claims or disputes
between the parties of any nature whatever, whether or not in
litigation. (The foregoing does not include resolution of claims of
RUS against Cajun that are not specifically identified and resolved in
this paragraph.) Judgment will be rendered in favor of RUS in GSU's
adversary proceeding asserting claims of equitable subordination of
RUS's rights. Any and all claims Cajun may have against RUS for
equitable subordination, whether known or unknown, will be released.
Cajun will use its best efforts to obtain a waiver of all claims held
by its members against GSU or Entergy under the nullity case, and
against RUS.
(b) The preliminary injunction issued by the U.S. District Court in
the service water litigation between GSU and Cajun shall continue in
full force and effect until the closing of the Settlement and upon
such date, all funds paid and to be paid into the Registry of the
Court pursuant to said injunction shall be paid over to GSU, together
with all interest earned thereon.
4. Approvals
The Settlement is subject to the approval of (1) all regulatory
agencies having jurisdiction over the subject matter: (2) the
bankruptcy court; (3) the Entergy Board of Directors; (4) the United
States of America on behalf of RUS.
The parties intend to give effect to and to close the Settlement
irrespective of the confirmation or lack of
confirmation of a plan of reorganization of Cajun. The parties
will use their best efforts promptly to obtain all required
approvals and to close the Settlement. The structure of the
Settlement may be modified based upon tax or regulatory advice
received by a party provided the modification does not adversely
affect another party.
The Settlement shall close no later than June 1, 1997, unless the
parties otherwise agree.
This Settlement is dated as of May 1, 1996.
Seen and Agreed this , 9th day of May, 1996
Cajun Electric Power Cooperative, Inc. through its Chapter 11
Trustee, Ralph R. Mabey
Seen and Agreed this _____day of _______, 1996
Entergy Corporation and Gulf States Utilities by
Michael G. Thompson
Senior Vice President & General Counsel
Recommended for Adoption by Rural Utilities Service this ____
day of _____ , 1996.
Larry A. Beluzza
Program Advisor
EXHIBIT I
</TABLE>
Exhibit F
New Orleans, Louisiana
March 31, 1997
Securities and Exchange Commission
450 5th Street
Washington, D.C. 20549
Ladies and Gentlemen:
Entergy Gulf States, Inc., a Texas Corporation
("Entergy Gulf States"), a subsidiary of Entergy
Corporation, a Delaware Corporation ("Entergy"), which is a
registered holding company under the Public Utility Holding
Company Act of 1935, as amended, (the "Act"), provides
retail electric service in Louisiana and Texas and furnishes
natural gas utility service in and around Baton Rouge,
Louisiana. Entergy Gulf States is seeking authority to
acquire two (2) high voltage transmission lines and related
assets from the bankruptcy estate of Cajun Electric Power
Cooperative, Inc. (the "Facilities"). The acquisition of
these assets is part of a comprehensive settlement Agreement
under the Chapter 11 Trustee of Cajun, Entergy, Entergy Gulf
States and the Rural Utilities Services of the Department of
Agriculture resolving numerous disputes between Entergy and
Entergy Gulf States, (formerly, Gulf States Utilities
Company) on one hand, and Cajun, on the other hand, which
are currently pending before the bankruptcy court
adjudicating Cajun's bankruptcy, the Commission, federal
district courts, and the federal courts of appeals.
In this connection, I have examined the Certificate of
Incorporation of the Company, the Bylaws of the Company and
the documents relating to the settlement, transaction,
including the Order and Judgment approving the settlement by
an the above referenced parties, and exhibits
thereto. I have also examined other such documents,
certificates, corporate records and matters of law as I have
deemed necessary for the purposes of rendering this opinion.
Based on the foregoing, I am of the opinion that:
1. Entergy Gulf States is a corporation validly organized
and existing under the laws of the State of Texas.
2. All actions necessary to make valid the consummation of
the proposed transaction by Entergy Gulf States described
above will have been taken when:
(a) the Application-Declaration shall have been granted
and permitted to become effective in accordance with
the applicable provisions of the Act;
(b) The Application for approval of acquisition of
Facilities filed with the Federal Energy
Regulatory Commission ("FERC") on March 18, 1997 has
been authorized pursuant to the Federal Power Act by
the FERC; and
(c) all appropriate final action shall have been taken
by the Board of Directors, or duly appointed
committee thereof with respect to the Settlement.
3. When the foregoing steps have been taken and assuming
the proposed transaction is consummated in accordance with
the (i) Application-Declaration and related orders of the
Commission and with the Application and related orders of
FERC, and, (ii) the authorization of the Board of Directors
of the Company, or a duly appointed committee in accordance
with the above referenced documents:
(a) all state laws that relate or are applicable to the
transaction (other than so called "blue sky laws" or
similar laws, upon which I do not pass herein) will
have been complied with; and
(b) the consummation of the transaction by the Company
will not violate the legal rights of the holders of
any securities issued by the Company.
I consent to the filing of this opinion as an
exhibit to the Application-Declaration.
Very truly yours,
/s/ Ann G. Roy
Ann G. Roy
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 022
<NAME> ENTERGY CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 16,223,123 16,231,364
<OTHER-PROPERTY-AND-INVEST> 930,073 930,073
<TOTAL-CURRENT-ASSETS> 2,362,533 2,353,884
<TOTAL-DEFERRED-CHARGES> 3,450,565 3,450,565
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 22,966,294 22,965,886
<COMMON> 2,345 2,345
<CAPITAL-SURPLUS-PAID-IN> 4,320,591 4,320,591
<RETAINED-EARNINGS> 2,341,703 2,346,624
<TOTAL-COMMON-STOCKHOLDERS-EQ> 7,071,870 7,076,791
216,986 216,986
430,955 430,955
<LONG-TERM-DEBT-NET> 7,590,804 7,590,804
<SHORT-TERM-NOTES> 20,686 20,686
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 345,620 345,620
0 0
<CAPITAL-LEASE-OBLIGATIONS> 247,360 247,360
<LEASES-CURRENT> 151,287 151,287
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,297,957 7,293,036
<TOT-CAPITALIZATION-AND-LIAB> 22,966,294 22,966,294
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 421,159 424,479
<OTHER-OPERATING-EXPENSES> 5,484,805 5,485,213
<TOTAL-OPERATING-EXPENSES> 5,484,805 5,485,213
<OPERATING-INCOME-LOSS> 1,678,721 1,686,962
<OTHER-INCOME-NET> (46,964) (46,964)
<INCOME-BEFORE-INTEREST-EXPEN> 1,631,757 1,639,998
<TOTAL-INTEREST-EXPENSE> 790,571 790,571
<NET-INCOME> 420,027 424,948
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 420,027 424,948
<COMMON-STOCK-DIVIDENDS> 412,250 412,250
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 006
<NAME> ENTERGY GULF STATES INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 4,627,894 4,636,135
<OTHER-PROPERTY-AND-INVEST> 80,341 80,341
<TOTAL-CURRENT-ASSETS> 728,335 719,686
<TOTAL-DEFERRED-CHARGES> 994,878 994,878
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 6,431,448 6,431,040
<COMMON> 114,055 114,055
<CAPITAL-SURPLUS-PAID-IN> 1,152,689 1,152,689
<RETAINED-EARNINGS> 325,312 330,233
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,728,500 1,733,421
77,459 77,459
136,444 136,444
<LONG-TERM-DEBT-NET> 1,915,346 1,915,346
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 160,865 160,865
0 0
<CAPITAL-LEASE-OBLIGATIONS> 83,524 83,524
<LEASES-CURRENT> 39,110 39,110
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,426,644 2,421,315
<TOT-CAPITALIZATION-AND-LIAB> 6,431,448 6,431,040
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 102,091 105,411
<OTHER-OPERATING-EXPENSES> 1,607,283 1,607,691
<TOTAL-OPERATING-EXPENSES> 1,607,283 1,607,691
<OPERATING-INCOME-LOSS> 411,898 420,139
<OTHER-INCOME-NET> (122,039) (122,039)
<INCOME-BEFORE-INTEREST-EXPEN> 289,859 298,100
<TOTAL-INTEREST-EXPENSE> 191,655 191,655
<NET-INCOME> (3,887) 1,034
28,505 28,505
<EARNINGS-AVAILABLE-FOR-COMM> (32,392) (27,471)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
Exhibit H
SECURITIES AND EXCHANGE COMMISSION
Entergy Gulf States, Inc. 35-26269 (70- )
Filings Under the Public Utility Holding Company Act of
1935, as amended ("Act")
Date:
Notice is hereby given that the following
filingfollowingifling(s) has/have been made with the
Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred
to the applications(s) and/or declaration(s) for complete
statements of the proposed transactions(s) summarized below.
The application(s) and/or declarations(s) and any amendments
thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a
hearing on the application(s) and/or declarations(s) should
submit their view in writing by May 1, 1995 , to the
Secretary, Securities and Exchange Commission, Washington,
D.C. 20549, and serve a copy on the relevant applicant(s)
and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at
law, by certificate) should be filed with the request. Any
request for hearing shall identify specifically the issues
of fact or law that are disputed. A person who so requests
will be notified of any hearing, if ordered, and will
receive a copy of any notice or order issued in the matter.
After said date, the application(s) and/or declaration(s)(),
as filed or as amended, may be granted and/or permitted to
become effective.
Entergy Gulf States, Inc. (70- )
Entergy Gulf States, Inc., 350 Pine Street,
Beaumont, Texas 77701 ("Entergy Gulf States"), a subsidiary
of Entergy Corporation ("Entergy"), 639 Loyola Avenue, New
Orleans, Louisiana 70113, a registered holding company, has
filed an application-declaration with this Commission
pursuant to Sections 9(a) of the Public Utility Holding
Company Act of 1935 ("Act") and Rules 23 and 24 thereunder.
Entergy Gulf States is an electric and gas public
utility holding company operating in the States of Louisiana
and Texas. Entergy Gulf States seeks authority to acquire
two high-voltage transmission lines and related assets from
the bankruptcy estate of Cajun Electric Power Cooperative,
Inc. ("Cajun"). The acquisition of these assets is a part
of a comprehensive settlement agreement among the Chapter 11
Trustee of Cajun, Entergy, Entergy Gulf States, and the
Rural Utilities Services of the Department of Agriculture
(the "Settlement Agreement") resolving numerous disputes
between Entergy and Entergy Gulf States (formerly Gulf
States Utilities Company), on the one hand, and Cajun, on
the other hand, which are currently pending before the
bankruptcy court adjudicating Cajun's bankruptcy, the
Commission, federal district courts, and the federal court
of appeals.
The transmission lines and related assets proposed to
be transferred presently are part of the integrated
transmission system over which Entergy Gulf States and Cajun
transfer electric energy to serve their respective
customers, and after the transfer, these assets will
continue to be part of Entergy Gulf States transmission
system. Effective upon the transfer, all of the related
agreements in the Settlement Agreement, Cajun will begin to
take service under the Entergy's open-access tariff.
<PAGE>
ENTERGY GULF STATES, INC.
PRO FORMA ENTRIES
TO RECORD RECEIPT
OF TRANSMISSION LINES 745 AND 746 FROM
CAJUN ELECTRIC POWER COOPERATIVE, INC.
LINES 745 AND 746 BALANCE
AS OF DECEMBER 31, 1996
(Amounts in Thousands)
(1) (2) (3)
Original Accumltd Net Book
Cost Deprectn Value
Line 745 $ 9,727 $ 3,967 $ 5,760
Line 746 4,857 1,968 2,889
------- -------- ---------
TOTAL $14,584 $ 5,934 $ 8,649
======= ======== =========
Transmission Depreciation Rate 2.80%
Annual Depreciation Expense on $ 408
Lines 745 & 746
Pro Forma Entries (In Thousands)
Entry 1
Debit: Utility Plant - Electric $ 14,584
Credit: Accumulated depreciation and amortizat $ 5,935
Accounts receivable - Customer 8,649
To record the receipt of Transmission Lines 745 and 746 from Cajun Electric
Power Cooperative and a portion of the Transmission Revenue receivable from
Cajun as a result of the settlement between Entergy Gulf States and Cajun of a
number of outstanding legal disputes between the two parties
Entry 2
Debit: Deferred Credits and Other Liabilities $ 8,649
Credit: Operating Revenues - Electric $ 8,649
To record the reversal of a portion of the provision for the uncollectability
the Cajun Transmission Revenue receivable and recognition of the associated
revenue as a result of the settlement
<PAGE>
PRO FORMA ENTRIES
TO RECORD RECEIPT
OF LINES 745 AND 746 FROM
CAJUN ELECTRIC POWER COOPERATIVE, INC.
Entry 3
Debit: Operating Expenses - Income taxes $ 3,484
Credit: Accumulated deferred income taxes $ 3,484
To record the income tax impact of the revenue recognized as a result of the
receipt of the transmission lines
Entry 4
Debit: Depreciation, amortization, and decom $ 408
Credit: Accumulated depreciation and amortizat $ 408
To record the annual depreciation expense on the transmission lines
Entry 5
Debit: Accumulated deferred income taxes $ 164
Credit: Operating Expenses - Income taxes $ 164
To record the full-year (Year 2 of tax depreciation life) tax impact for the
tax depreciation of the transmission lines
Entry 6
Debit: Balance transferred from income $ 4,921
Credit: Retained earnings $ 4,921
To record the transfer to Retained Earnings of the net income impact of the
receipt of the transmission lines
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
PRO FORMA STATEMENT OF LOSS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric 1,925,988 8,649 1,934,637
Natural gas 34,050 34,050
Steam products 59,143 59,143
Total 2,019,181 8,649 2,027,830
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 520,065 520,065
Purchased power 295,960 295,960
Nuclear refueling outage expenses 8,660 8,660
Other operation and maintenance 402,719 402,719
Depreciation, amortization, and decommissioning 206,070 408 206,478
Taxes other than income taxes 102,170 102,170
Amortization of rate deferrals 71,639 71,639
Total 1,607,283 408 1,607,691
Operating Income 411,898 8,241 420,139
Other Income (Deductions):
Allowance for equity funds used
during construction 2,618 2,618
Write-off of River Bend rate deferrals (194,498) (194,498)
Miscellaneous - net 69,841 69,841
Total (122,039) (122,039)
Interest Charges:
Interest on long-term debt 181,071 181,071
Other interest - net 12,819 12,819
Allowance for borrowed funds used 0
during construction (2,235) (2,235)
Total 191,655 191,655
Income Before Income Taxes 98,204 8,241 106,445
Income taxes 102,091 3,320 105,411
Net Income (Loss) (3,887) 4,921 1,034
Preferred and Preference Stock
Dividend Requirements and Other 28,505 28,505
Loss Applicable to Common Stock (32,392) 4,921 (27,471)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
PRO FORMA BALANCE SHEET
ASSETS
DECEMBER 31,1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash 6,573 6,573
Temporary cash investments - at cost,
which approximates market:
Associated companies 45,234 45,234
Other 70,599 70,599
Total cash and cash equivalents 122,406 122,406
Accounts receivable:
Customer (less allowance for doubtful accounts
of $2.0 million in 1996 and $1.6 million in 1995) 87,883 (8,649) 79,234
Associated companies 2,777 2,777
Other 30,758 30,758
Accrued unbilled revenues 75,351 75,351
Deferred fuel costs 99,503 99,503
Accumulated deferred income taxes 56,714 56,714
Fuel inventory - at average cost 45,009 45,009
Materials and supplies - at average cost 86,157 86,157
Rate deferrals 105,456 105,456
Prepayments and other 16,321 16,321
Total 728,335 (8,649) 719,686
Other Property and Investments:
Decommissioning trust fund 41,983 41,983
Other - at cost (less accumulated depreciation) 38,358 38,358
Total 80,341 80,341
Utility Plant:
Electric 7,112,021 14,584 7,126,605
Natural Gas 45,443 45,443
Steam products 81,743 81,743
Property under capital leases 72,800 72,800
Construction work in progress 112,137 112,137
Nuclear fuel under capital lease 49,833 49,833
Total 7,473,977 14,584 7,488,561
Less - accumulated depreciation and amortization 2,846,083 6,343 2,852,426
Utility plant - net 4,627,894 8,241 4,636,135
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 120,158 120,158
SFAS 109 regulatory asset - net 372,817 372,817
Unamortized loss on reacquired debt 54,761 54,761
Other regulatory assets 45,139 45,139
Long-term receivables 216,082 216,082
Other 185,921 185,921
Total 994,878 994,878
TOTAL 6,431,448 (408) 6,431,040
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC.
PRO FORMA BALANCE SHEET
LIABILITIES AND SHAREHOLDER'S EQUITY
DECEMBER 31,1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt 160,865 160,865
Accounts payable:
Associated companies 55,630 55,630
Other 85,541 85,541
Customer deposits 25,572 25,572
Taxes accrued 36,147 36,147
Interest accrued 49,651 49,651
Nuclear refueling reserve 12,354 12,354
Obligations under capital leases 39,110 39,110
Other 18,186 18,186
Total 483,056 483,056
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,200,935 3,320 1,204,255
Accumulated deferred investment tax credits 219,188 219,188
Obligations under capital leases 83,524 83,524
Deferred River Bend finance charges 33,688 33,688
Other 539,752 (8,649) 531,103
Total 2,077,087 (5,329) 2,071,758
Long-term debt 1,915,346 1,915,346
Preferred stock with sinking fund 77,459 77,459
Preference stock 150,000 150,000
Shareholder's Equity:
Preferred stock without sinking fund 136,444 136,444
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
100 shares in 1996 and 1995 114,055 114,055
Paid-in capital 1,152,689 1,152,689
Retained earnings 325,312 4,921 330,233
Total 1,728,500 4,921 1,733,421
Commitments and Contingencies (Note 2, 9, and 10)
TOTAL 6,431,448 (408) 6,431,040
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
ENTERGY GULF STATES, INC
PRO FORMA STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 357,704 357,704
Add:
Net income (loss) (3,887) 4,921 1,034
Total 353,817 4,921 358,738
Deduct:
Dividends declared:
Preferred and preference stock 28,336 28,336
Common stock 0 0
Preferred and preference stock
redemption and other 169 169
Total 28,505 28,505
Retained Earnings, December 31 325,312 4,921 330,233
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
PRO FORMA STATEMENT OF CONSOLIDATED INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C> <C>
Operating Revenues:
Electric 6,450,940 8,649 6,459,589
Natural gas 134,456 134,456
Steam products 59,143 59,143
Nonregulated and foreign energy-related businessess 518,987 518,987
Total 7,163,526 8,649 7,172,175
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses, and
gas purchased for resale 1,635,885 1,635,885
Purchased power 704,744 704,744
Nuclear refueling outage expenses 55,148 55,148
Other operation and maintenance 1,577,383 1,577,383
Depreciation, amortization, and decommissioning 790,948 408 791,356
Taxes other than income taxes 353,270 353,270
Rate deferrals (33,874) (33,874)
Amortization of rate deferrals 401,301 401,301
Total 5,484,805 408 5,485,213
Operating Income 1,678,721 8,241 1,686,962
Other Income (Deductions):
Allowance for equity funds used
during construction 9,951 9,951
Write-off of River Bend rate deferrals (194,498) (194,498)
Miscellaneous - net 137,583 137,583
Total (46,964) (46,964)
Interest Charges:
Interest on long-term debt 674,532 674,532
Other interest - net 49,053 49,053
Distributions on preferred securities of subsidiary 4,797 4,797
Allowance for borrowed funds used
during construction (8,347) (8,347)
Preferred and preference dividend requirements of
subsidiaries and other 70,536 70,536
Total 790,571 790,571
Income Before Income Taxes 841,186 8,241 849,427
Income Taxes 421,159 3,320 424,479
Income before the Cumulative Effect
of Accounting Changes 420,027 4,921 424,948
Cumulative Effect of Accounting
Changes (net of income taxes) 0 0
Net Income 420,027 4,921 424,948
Earnings per average common share
before cumulative effect of
accounting changes $1.83 $ 0.02 $ 1.85
Earnings per average common share $1.83 $ 0.02 $ 1.85
Dividends declared per common share $1.80 $1.80
Average number of common shares
outstanding 229,084,241 229,084,241
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
ASSETS
DECEMBER 31,1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents:
Cash 34,807 34,807
Temporary cash investments - at cost,
which approximates market 346,782 346,782
Special deposits 7,114 7,114
Total cash and cash equivalents 388,703 388,703
Notes receivable 1,384 1,384
Accounts receivable:
Customer (less allowance for doubtful accounts of
$9.2 million in 1996 and $7.1 million in 1995) 324,687 (8,649) 316,038
Other 99,066 99,066
Accrued unbilled revenues 351,429 351,429
Deferred fuel 122,184 122,184
Fuel inventory 139,603 139,603
Materials and supplies - at average cost 339,622 339,622
Rate deferrals 444,543 444,543
Prepayments and other 151,312 151,312
Total 2,362,533 (8,649) 2,353,884
Other Property and Investments:
Decommissioning trust funds 357,962 357,962
Nonregulated investments 513,058 513,058
Other 59,053 59,053
Total 930,073 930,073
Utility Plant:
Electric 22,811,164 14,584 22,825,748
Plant acquisition adjustment - Entergy Gulf States 455,425 455,425
Electric plant under leases 679,991 679,991
Property under capital leases - electric 147,277 147,277
Natural gas 168,143 168,143
Steam products 81,743 81,743
Construction work in progress 401,676 401,676
Nuclear fuel under capital leases 250,651 250,651
Nuclear fuel 112,625 112,625
Total 25,108,695 14,584 25,123,279
Less - accumulated depreciation and amortization 8,885,572 6,343 8,891,915
Utility plant - net 16,223,123 8,241 16,231,364
Deferred Debits and Other Assets:
Regulatory assets:
Rate deferrals 399,493 399,493
SFAS 109 regulatory asset - net 1,196,041 1,196,041
Unamortized loss on reacquired debt 217,664 217,664
Other regulatory assets 435,652 435,652
Long-term receivables 216,082 216,082
CitiPower license (net of $15.6 million of amortization) 606,214 606,214
Other 379,419 379,419
Total 3,450,565 3,450,565
TOTAL 22,966,294 (408) 22,965,886
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
LIABILITIES AND SHAREHOLDER'S EQUITY
DECEMBER 31,1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C>
Current Liabilities:
Currently maturing long-term debt 345,620 345,620
Notes payable 20,686 20,686
Accounts payable 554,558 554,558
Customer deposits 155,534 155,534
Taxes accrued 180,340 180,340
Accumulated deferred income taxes 78,010 78,010
Interest accrued 203,425 203,425
Dividends declared 8,950 8,950
Obligations under capital leases 151,287 151,287
Other 184,157 184,157
Total 1,882,567 1,882,567
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,770,760 3,320 3,774,080
Accumulated deferred investment tax credits 607,641 607,641
Obligations under capital leases 247,360 247,360
Other 1,298,306 (8,649) 1,289,657
Total 5,924,067 (5,329) 5,918,738
Long-term debt 7,590,804 7,590,804
Subsidiaries' preferred stock with sinking fund 216,986 216,986
Subsidiary's preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding
solely junior subordinated deferrable debentures 130,000 130,000
Shareholders' Equity:
Subsidiaries' preferred stock without sinking fund 430,955 430,955
Common stock, $.01 par value, authorized 500,000,000
shares; issued 234,456,457 shares in 1996 and
230,017,485 shares in 1995 2,345 2,345
Paid-in capital 4,320,591 4,320,591
Retained earnings 2,341,703 4,921 2,346,624
Cumulative foreign currency translation 21,725 21,725
Less - treasury stock (1,496,118 shares in 1996 and
2,251,318 in 1995) 45,449 45,449
Total 7,071,870 4,921 7,076,791
Commitments and Contingencies (Notes 2, 9, 10, and 16)
TOTAL 22,966,294 (408) 22,965,886
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ENTERGY CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Adjustments to Reflect
Transactions Proposed
Before In Present After
Transaction Filing Transaction
(In Thousands)
<S> <C> <C> <C>
Retained Earnings, January 1 2,335,579 2,335,579
Add:
Net income 420,027 4,921 424,948
Total 2,755,606 4,921 2,760,527
Deduct:
Dividends declared on common stock 412,250 412,250
Common stock retirements - 0
Capital stock and other expenses 1,653 1,653
Total 413,903 413,903
Retained Earnings, December 31 2,341,703 4,921 2,346,624
</TABLE>
