File No. 70-9123
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
_____________________________
AMENDMENT NO. 4
To
APPLICATION-DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_____________________________
Entergy Corporation Entergy Nuclear, Inc.
639 Loyola Avenue 1340 Echelon Parkway
New Orleans, LA 70113 Jackson, MS 39213
Entergy Enterprises, Inc. Entergy Operations Services, Inc.
4 Park Plaza, Suite 2000 110 James Parkway West, Suite 110
Irvine, CA 92614 St. Rose, LA 70087
Entergy Power, Inc. Entergy Power Operations U.S., Inc.
Parkwood Two Building 4 Park Plaza, Suite 2000
10055 Grogan's Mill Road Irvine, CA 92614
Suite 500
The Woodlands, TX 77380
Entergy Global Power Entergy Power Marketing Corp.
Operations Corporation Parkwood Two Building
4 Park Plaza, Suite 2000 10055 Grogan's Mill Road, Suite 500
Irvine, CA 92614 The Woodlands, TX 77380
(Names of companies filing this statement
and addresses of principal executive offices)
_____________________________
Entergy Corporation
(Name of top registered holding company parent of
each applicant or declarant)
_____________________________
C. John Wilder Geoffrey Roberts
Executive Vice President President
and Chief Financial Officer Entergy Enterprises, Inc.
Entergy Corporation 4 Park Plaza, Suite 2000
639 Loyola Avenue Irvine, CA 92614
New Orleans, LA 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:
Frederick F. Nugent, Esq. Laurence M. Hamric, Esq.
General Counsel Associate General Counsel
Entergy Enterprises, Inc. Entergy Services, Inc.
4 Park Plaza, Suite 2000 639 Loyola Avenue
Irvine, CA 92614 New Orleans, LA 70113
Thomas C. Havens, Esq. Kent R. Foster, Esq.
Whitman Breed Abbott & Vice President
Morgan LLP Entergy Services, Inc.
200 Park Avenue P.O. Box 8082
New York, NY 10166 Little Rock, AR 72203
<PAGE>
Item 1. Description of Proposed Transaction.
Item 1 of the Application-Declaration in this File, as
previously amended, is hereby further amended and restated
to read in its entirety as follows:
"Entergy Corporation ("Entergy"), a Delaware corporation
which is a registered holding company under the Public Utility
Holding Company Act of 1935, as amended (the "Act"), and its
wholly-owned subsidiaries Entergy Enterprises, Inc., Entergy
Power, Inc., Entergy Power Marketing Corp., Entergy Nuclear,
Inc., Entergy Operations Services, Inc., Entergy Global Power
Operations Corporation and Entergy Power Operations U.S., Inc.
(Entergy and such subsidiaries, collectively, the "Applicants")
hereby request the approval of the Securities and Exchange
Commission (the "Commission") under the Act, to the extent not
exempt from Commission approval under the Act, or otherwise
permitted or authorized under the Act pursuant to Commission
rule, regulation or order: (1) for Entergy and certain of its
existing or future subsidiary companies to issue guarantees and
provide other forms of credit support to or for the benefit of
Entergy's affiliates which are Non-utility Companies (as
hereinafter defined) from time to time during the period through
December 31, 2002, in an aggregate amount not to exceed $750
million; (2) for Entergy to acquire, directly or indirectly, the
securities of one or more companies (collectively, the "New
Subsidiaries") organized for purposes of performing certain
service and development activities currently authorized by the
Commission<FN1>, and/or for purposes of acquiring (including
financing or refinancing an acquisition), owning and holding the
securities of (i) "exempt wholesale generators" ("EWGs"), as
defined in Section 32(a) of the Act, (ii) "foreign utility
companies" ("FUCOs"), as defined in Section 33(a) of the Act
(EWGs and FUCOs are sometimes collectively referred to herein as
"Exempt Projects"), (iii) "exempt telecommunications companies"
("ETCs"), as defined in Section 34(a) of the Act, (iv) other
subsidiary companies of Entergy (including "O&M Subs", as
hereinafter defined) that currently are authorized or permitted
by rule, regulation or order of the Commission under the Act to
engage in other businesses ("Authorized Subsidiary Companies")<FN2>,
(v) other New Subsidiaries and/or (vi) "energy-related
companies", as defined in Rule 58 under the Act ("Energy-related
Companies";<FN3> New Subsidiaries, Exempt Projects, ETCs, Authorized
Subsidiary Companies and Energy-related Companies are
collectively referred to herein as "Non-utility Companies"); (3)
for Non-utility Companies to issue and sell securities to
Entergy, to other Non-utility Companies and/or to non-associate
companies for the purpose of financing (or refinancing)
investments in Non-utility Companies; (4) for Non-utility
Companies to perform certain service and development activities
currently authorized by the Commission; and (5) for certain
related transactions, all as more particularly described herein.
I. Background.
The following section generally describes the business of
Entergy and its subsidiaries, including each of the other
Applicants.
A. The Entergy System.
Entergy and its various direct and indirect subsidiary
companies comprise the Entergy System (the "Entergy System" or
"System"), which currently consists of: (1) five domestic retail
electric utility companies - Entergy Arkansas, Inc. ("Entergy
Arkansas"), Entergy Gulf States, Inc. ("Entergy Gulf States"),
Entergy Louisiana, Inc. ("Entergy Louisiana"), Entergy
Mississippi, Inc. ("Entergy Mississippi") and Entergy New
Orleans, Inc. ("Entergy New Orleans") (such companies are
sometimes referred to herein, collectively, as the "System
operating companies"); (2) a domestic wholesale electric
generating company that sells power to the System operating
companies (other than Entergy Gulf States) - System Energy
Resources, Inc. ("SERI"); (3) a company that provides
administrative and other services primarily to the System
operating companies - Entergy Services, Inc. ("ESI"); (4) a
company that provides management, operations and maintenance
services for the System's nuclear facilities - Entergy
Operations, Inc. ("EOI"); (5) a company that primarily implements
and/or maintains certain fuel supply programs for the System
operating companies - System Fuels, Inc. ("SFI"); (6) a company
that markets and sells its electric generating capacity and
energy principally to non-associate purchasers in the domestic
bulk power markets - Entergy Power, Inc. ("EPI"); (7) a company
that invests in and develops energy and energy-related projects
and businesses on behalf of the Entergy System, and markets
skills and products developed by System companies - Entergy
Enterprises, Inc. ("Entergy Enterprises"); (8) a company that
markets and brokers electricity and other energy commodities and
that may also engage in other non-utility activities permitted
under Rule 58 - Entergy Power Marketing Corp. ("EPMC"); and (9)
various other companies formed or to be formed to develop,
acquire and own Entergy's interests in domestic and foreign
energy, energy services, energy-related and telecommunications
businesses.
Entergy, through its domestic public utility subsidiaries
and its Exempt Projects, is engaged principally in the
generation, transmission, distribution and sale of electricity at
retail and wholesale and the purchase of electricity at
wholesale. Entergy's domestic retail public utility companies
provide electric service to approximately 2.4 million customers
in portions of the states of Arkansas, Louisiana, Mississippi,
Tennessee and Texas, and retail gas service in and around Baton
Rouge, Louisiana and in New Orleans, Louisiana.
B. Entergy Enterprises, Inc.
Pursuant to the June 1995 Order, the Commission authorized
Entergy Enterprises, among other things, (1) to conduct
development activities with respect to potential investments by
Entergy in various energy, energy-related and other non-utility
businesses ("Development Activities"), (2) to provide various
management, administrative and support services ("Administrative
Services") to certain of its associate companies<FN4>, (3) to provide
consulting services ("Consulting Services") to certain of its
associate companies and to non-associate companies, and (4) to
provide operations and maintenance services ("O&M Services")
directly, or indirectly through other subsidiaries of Entergy
("O&M Subs") to non-associate companies and to certain of its
associate companies, in each case utilizing the skills and
resources of other System companies<FN5>, subject to the conditions
set forth in the June 1995 Order (Development Activities,
Administrative Services, Consulting Services and O&M Services are
sometimes referred to herein as "Services").
C. Entergy Power, Inc.
Pursuant to a Commission order dated August 27, 1990 (the
"1990 Order")<FN6>, EPI was formed to participate as a supplier of
electricity at wholesale to non-associate companies in bulk power
markets. In accordance with the 1990 Order, EPI acquired (1) the
31.5% undivided ownership interest of Entergy Arkansas in Unit
No. 2 of the Independence Steam Electric Generating Station
("ISES 2"), a coal-fired generating facility located in Arkansas,
and (2) Entergy Arkansas' 100% ownership interest in Unit No. 2
of the Ritchie Steam Electric Generating Station ("Ritchie 2"), a
544 megawatt ("MW") oil- and gas-fired generating facility
located in Arkansas. EPI's acquired interests in ISES 2 and
Ritchie 2 represented an aggregate of 809 MW of generating
capacity.<FN7> Since 1990, EPI has been engaged in the business of
marketing and selling its capacity and related energy, at
wholesale, principally to non-associate bulk power purchasers on
negotiated (i.e., market based) terms and conditions. EPI is
presently authorized by the Federal Energy Regulatory Commission
(the "FERC") to sell, at market based rates, up to an aggregate
of 1,500 MW of capacity and energy. To facilitate such sales,
EPI receives electric transmission service pursuant to the
Entergy System's open access transmission tariff.
D. Entergy Power Marketing Corp.
EPMC was originally organized in 1995 as an EWG in order to
engage in the marketing and brokering of electric power at
wholesale.<FN8> Pursuant to a Commission order dated January 6, 1998
(HCAR No. 26812), EPMC relinquished its EWG status, and currently
engages in the brokering and marketing of energy commodities in
wholesale and retail markets throughout the United States,
subject to compliance with applicable state laws and to certain
other conditions set forth in such order.<FN9> EPMC also engages in
risk management and other activities related to its energy
commodities business. In accordance with the above-referenced
Commission order, EPMC does not own or operate any facilities
that would cause it to be an "electric utility company" or a "gas
utility company" as defined in the Act.
E. Entergy Nuclear, Inc.
Entergy Nuclear, Inc. ("ENI"), a wholly-owned subsidiary of
Entergy, was organized pursuant to the June 1995 Order as an O&M
Sub for the purpose of engaging in the business of operating and
managing nuclear power facilities. On February 13, 1997, ENI
entered into an agreement with Maine Yankee Atomic Power Company
("Maine Yankee") to provide management and operating services for
the Maine Yankee Nuclear Plant for an initial period of up to one
year. On November 6, 1997, following a decision to permanently
close the plant, ENI and Maine Yankee entered into a renewal and
extension of the original agreement providing for ENI to render
services in connection with the decommissioning of the plant
through September 30, 1998. Effective October 1, 1998, ENI and
Maine Yankee entered into a long-term decommissioning services
agreement under which ENI will continue providing management
oversight services for the permanent decommissioning of the Maine
Yankee Nuclear Plant through December 31, 2004. ENI may enter
into agreements with other utility systems to provide O&M
Services. However, no other agreements have been concluded to
date.
F. Entergy Operations Services, Inc.
Entergy Operations Services, Inc. ("EOSI"), a wholly-owned
subsidiary of Entergy Enterprises, was organized pursuant to the
June 1995 Order as an O&M Sub to engage in the business of
operating and maintaining fossil-fueled generation, transmission
and distribution assets of utility companies, municipalities and
large commercial and industrial customers, primarily in the
United States. EOSI's current business activities include the
sale to non-affiliates of various O&M Services, including
services relating to the design and construction of fossil-fueled
generating facilities and other power projects. EOSI is
currently providing services to, or on behalf of, the City of
Austin, Texas, and ESKOM, a South African utility, with respect
to the management and operation of certain coal-fired generating
units and nuclear generating units owned and/or operated by these
customers. EOSI has also recently performed substation
maintenance and construction work for several industrial
customers.
G. Other Existing O&M Subs.
In addition to ENI and EOSI, in December 1997 Entergy
organized a new wholly-owned subsidiary, Entergy Global Power
Operations Corporation, and its wholly-owned subsidiary, Entergy
Power Operations U.S., Inc., as O&M Subs pursuant to the June
1995 Order. However, to date, these companies have been
minimally capitalized, and neither company has entered into any
agreements for the provision of O&M Services.
H. Entergy Technology Holding Company and Subsidiaries.
In February 1996, Entergy formed a new wholly-owned
subsidiary, Entergy Technology Holding Company ("ETHC"), and its
wholly-owned subsidiary, Entergy Technology Company ("Entergy
Technology") as ETCs under Section 34 of the Act. During 1996,
ETHC acquired six full service security monitoring companies, all
of which (with the exception of Sonitrol Southeast, Inc.) were
merged in 1997 into a new ETC subsidiary called Entergy Security
Corporation. On January 29, 1999, ETHC sold Entergy Security
Corporation to Tyco International, Ltd. for a total purchase
price of $237 million.
Entergy, through Entergy Technology, is marketing a portion
of Entergy's existing telecommunications system in conjunction
with additional facilities to be constructed or leased by Entergy
Technology. Entergy Technology is offering bulk interstate
telecommunications capacity on a wholesale basis to
telecommunications carriers, who will then market such capacity
to third parties. In addition, during 1997 and 1998, ETHC
entered into joint ventures with, or acquired other interests in,
companies engaged in the local exchange carrier and personal
communications service business. Entergy's current intention is
to sell these businesses.
I. Entergy's Financing of Non-Utility Businesses.
Entergy is currently authorized under the terms of, and to
the extent provided by, orders and supplemental orders issued by
the Commission in File Nos. 70-8839, 70-8903 and 70-8863
(collectively, the "Financing Orders"), to finance the operations
of various Non-utility Companies by issuing and selling debt and
equity securities and by issuing guarantees of the securities or
other obligations of Entergy subsidiaries (other than Excepted
Companies).<FN10> Entergy's authorization under the Financing Orders
may be summarized as follows:
(1) File No. 70-8839. Pursuant to Commission orders dated
June 6, 1996 (HCAR No. 26528) and March 25, 1997 (HCAR No.
26693), Entergy is authorized to issue and sell up to an
aggregate of thirty million shares of its authorized but unissued
common stock, par value $0.01 per share ("Common Stock") pursuant
to its Dividend Reinvestment and Stock Purchase Plan (the
"DRIP"). Proceeds from the issuance and sale of Common Stock
under the DRIP may be used for general corporate purposes,
including investments in Exempt Projects (subject to any
requisite Commission approval and to compliance with Rule 53) and
in other Non-utility Companies. Through December 31, 1998,
Entergy had sold a total of 16,517,483 shares of Common Stock
pursuant to the DRIP.
(2) File No. 70-8903. Pursuant to the Commission's order
dated February 26, 1997 (HCAR No. 26674) (the "February 1997
Order"), Entergy is authorized to enter into credit facilities
with one or more banks pursuant to which Entergy would effect
borrowings and reborrowings (collectively, "Borrowings"), and
issue unsecured notes in connection therewith, from time to time
through December 31, 2002, in an aggregate principal amount
outstanding at any time not to exceed $500 million.<FN11> Entergy may
use the proceeds of Borrowings for general corporate purposes,
including to finance the acquisition of the securities or other
interests in Exempt Projects and other Non-utility Companies.<FN12>
(3) File No. 70-8863. Pursuant to Commission order dated
January 6, 1998 (HCAR No. 26812), Entergy is authorized to
finance the energy brokering and marketing activities of EPMC by
making capital contributions in an aggregate principal amount of
up to $20 million and by issuing guarantees or similar
commitments to EPMC in an aggregate principal amount of up to
$150 million.
II. Proposed Transactions.
A. Issuance of Guarantees.
In order to facilitate the development, acquisition and
ownership by Entergy of interests in other businesses, as
authorized or permitted under the Act from time to time
(including, without limitation, interests in Non-utility
Companies), to the extent such transactions are not exempt from
the Act or otherwise authorized or permitted by rule, regulation
or order of the Commission issued thereunder, Entergy and Non-
utility Companies hereby request authority to issue guarantees or
provide other forms of credit support or enhancements
(collectively, "Guarantees") to or for the benefit of Non-utility
Companies from time to time through December 31, 2002.
Guarantees may take the form of Entergy or a Non-utility Company
agreeing to guarantee, undertake reimbursement obligations,
assume liabilities or other obligations in respect of or act as
surety on bonds, letters of credit, evidences of indebtedness,
equity commitments, performance and other obligations undertaken
by Entergy's associate Non-utility Companies. For example, such
associate companies may be called upon to furnish various types
of bonds as security, including bid bonds, performance bonds, and
material and payment bonds. Moreover, various Non-utility
Companies may require credit support from Entergy or from other
Non-utility Companies to cover performance and other obligations.
Guarantees may also be necessary or desirable to satisfy the
requirements of lenders or other project participants under
financing documents or other project agreements to which an
associate Non-utility Company of Entergy is or will become a
party (including with respect to the provision of construction,
interim or permanent debt or equity financing). These forms of
credit enhancements are typical in the marketplace, and would
significantly benefit Entergy's investments in Non-utility
Companies by, among other things, facilitating the making of
proposals in respect of investments in Non-utility Companies, and
helping to reduce the cost of necessary bonds, sureties, and
other credit support. The terms and conditions of Guarantees
would be established at arm's length based upon market
conditions.
Entergy hereby requests, on its behalf and on behalf of the
Non-utility Companies, all requisite authority under the Act to
issue Guarantees from time to time through December 31, 2002 in
an aggregate amount not to exceed $750 million (the "Aggregate
Authorization") at any one time outstanding (including any
guarantees previously issued and outstanding pursuant to the June
1995 Order), provided that the amount of a Guarantee shall not
reduce the Aggregate Authorization to the extent that the
provision of such Guarantee is exempt from the Act or is
otherwise authorized or permitted by rule or regulation of the
Commission issued thereunder. Any Guarantees provided by Entergy
to Exempt Projects would be subject to the limitation on
"aggregate investment" in EWGs and FUCOs set forth in Rule 53(a),
pending receipt of Commission authorization being sought in File
No. 70-9049. Pending the receipt of such authorization, Entergy
would only issue Guarantees to Exempt Projects to the extent that
the amount of any such Guarantee, when added to Entergy's
"aggregate investment" in Exempt Projects, would not exceed 50%
of Entergy's "consolidated retained earnings" (as defined in Rule
53(a)). Any Guarantees provided to Energy-related Companies
would be subject to the limitation on "aggregate investment" in
energy-related companies set forth in Rule 58.
Entergy is not requesting approval of the Commission in this
File to issue and sell any securities other than Guarantees.
However, Entergy consents and agrees that the Commission may
reserve jurisdiction in its order in this File over the issuance
and sale by Entergy of any securities other than Guarantees,
pending completion of the record herein.
B. Organization of New Subsidiaries, O&M Subs and Related
Transactions.
As discussed above, Entergy System companies from time to
time have invested in or considered potential opportunities to
acquire electric generation, transmission and/or distribution
facilities outside the United States and to engage in certain
authorized non-utility businesses domestically. Entergy expects
to pursue other such opportunities in the future. To facilitate
its investments in FUCOs, EWGs and other Non-utility Companies,
and to provide Entergy with additional flexibility to structure
(and restructure) its investments in Non-utility Companies,
Entergy proposes to create one or more New Subsidiaries. New
Subsidiaries may be direct or indirect subsidiary companies used
to acquire, hold and/or finance the acquisition of, the
securities of one or more Exempt Projects, ETCs, Energy-related
Companies, other New Subsidiaries, O&M Subs and/or Authorized
Subsidiary Companies, or to raise debt or equity capital for
purposes described herein. New Subsidiaries may also perform
Development Activities, Administrative Services and/or Consulting
Services, as described further below. To the extent such
transactions are not exempt from the Act or otherwise authorized
or permitted by rule, regulation or order of the Commission
issued thereunder, Entergy requests authority for New
Subsidiaries to engage in the activities described herein.
There are a number of legal and business reasons for the use
of special-purpose subsidiaries such as the New Subsidiaries in
connection with investments in Non-utility Companies. For
example, the formation and acquisition of special-purpose
subsidiaries is often necessary or desirable to facilitate the
acquisition and ownership of a FUCO, an EWG or another Non-
utility Company. Furthermore, the laws of some foreign countries
may require that the bidder in a privatization program be a
domestic company in that country. In such cases, it would be
necessary for Entergy to form a foreign subsidiary as the entity
submitting the bid or other proposal. In addition, the
interposition of one or more New Subsidiaries may allow Entergy
to defer the repatriation of foreign source income, or to take
full advantage of favorable tax treaties among foreign countries,
or otherwise to secure favorable U.S. income tax treatment that
would not otherwise be available. New Subsidiaries would also
serve to isolate business risks, facilitate subsequent
adjustments to, or sales of, ownership interests by or among the
members of the ownership group, or to raise debt or equity
capital in domestic or foreign markets.
A New Subsidiary may be organized, among other things, (1)
in order to facilitate the making of bids or proposals to develop
or acquire an interest in any EWG, FUCO or another Non-utility
Company; (2) after the award of such a bid proposal, in order to
facilitate closing on the purchase or financing of an EWG, FUCO
or another Non-utility Company; (3) at any time subsequent to the
consummation of an acquisition of an interest in an EWG, FUCO or
another Non-utility Company in order, among other things, to
effect an adjustment in the respective ownership interests in
such business held by Entergy and non-affiliated investors; (4)
to facilitate the sale of ownership interests in one or more
EWGs, FUCOs or other Non-utility Companies; (5) to comply with
applicable laws of foreign jurisdictions limiting or otherwise
relating to the ownership of domestic companies by foreign
nationals; (6) as a part of tax planning in order to limit
Entergy's exposure to U.S. and foreign taxes; (7) to further
insulate Entergy and the Excepted Companies from operational or
other business risks associated with investments in Non-utility
Companies; or (8) for other lawful business purposes.
Investments in New Subsidiaries may take the form of any
combination of the following: (1) purchases of capital shares,
partnership interests, member interests in limited liability
companies, trust certificates or other forms of equity interests
(collectively, "Equity Securities"); (2) capital contributions;
(3) open account advances without interest; (4) loans; and (5)
Guarantees issued, provided or arranged in respect of the
securities or other obligations of the New Subsidiaries. Funds
for any direct or indirect investment by Entergy in any New
Subsidiary will be derived from (1) Borrowings within the
limitations prescribed in the February 1997 Order; (2) sales of
Common Stock pursuant to the Commission's orders dated June 6,
1996 (see HCAR No. 26528) and March 25, 1997 (see HCAR No.
26693); (3) any appropriate future debt or equity securities
issuance authorization obtained by Entergy from the Commission;
and (4) other available cash resources. To the extent that
Entergy provides funds to a New Subsidiary which are used for the
purpose of making an investment in an Exempt Project or an
Energy-related Company, the amount of such funds would be
included in Entergy's "aggregate investment" in such entities, as
calculated in accordance with Rule 53 or Rule 58, as applicable.
Entergy may determine from time to time to consolidate or
otherwise reorganize all or any part of its direct and indirect
ownership interests in Non-utility Companies and/or New
Subsidiaries through which it may hold investments in Non-utility
Companies, and activities and functions related to such
investments, under one or more New Subsidiaries. To effect any
such consolidation or other reorganization, Entergy could, among
other things, directly or indirectly contribute to a New
Subsidiary all of the outstanding Equity Securities of one or
more Non-utility Companies (including a New Subsidiary) or sell
the Equity Securities of one or more Non-utility Companies to a
New Subsidiary. Alternatively, a Non-utility Company could
dividend the securities of one or more Non-utility Companies
(including a New Subsidiary) to a New Subsidiary.
To the extent such transactions are not exempt from the Act
or otherwise authorized or permitted by rule, regulation or order
of the Commission issued thereunder, Entergy hereby requests
authorization under the Act to consolidate or otherwise
reorganize, under one or more New Subsidiaries, Entergy's
ownership interests in one or more of Non-utility Companies the
acquisition of the securities of which is exempt from Commission
approval under the Act. As indicated above, such transactions
may take the form of such Non-utility Companies selling,
contributing or transfering in the form of a dividend to New
Subsidiaries, and New Subsidiaries acquiring, directly or
indirectly, the Equity Securities of such Non-utility Companies.
Each such transaction would be effected in compliance with all
applicable state or foreign laws and accounting requirements, and
any sale transaction would be effected for a consideration equal
to the book value of the Equity Securities of the Non-utility
Company being sold. Entergy will report on the completion of
each such transaction in the next quarterly certificate filed
pursuant to Rule 24 in this File, as described below. Entergy
further requests that the Commission reserve jurisdiction over
consolidations or other reorganizations of Entergy's direct or
indirect ownership interests in any Non-utility Companies, the
acquisition of the securities of which is not exempt from the Act
or authorized by the Commission under the Act, pending completion
of the record.
In addition, as discussed further below, Entergy hereby
requests authority through December 31, 2002 to organize and
acquire the Equity Securities of O&M Subs. Subsequent to such
organization, investments in O&M Subs may take the form of (1)
additional purchases of Equity Securities; (2) capital
contributions or open account advances without interest; (3)
loans; (4) Guarantees of the securities or other obligations of
an O&M Sub; or (5) any combination of the foregoing.
To the extent such transactions are not exempt from the Act
or otherwise authorized or permitted by rule, regulation or order
of the Commission issued thereunder, any initial investments in
the Equity Securities of New Subsidiaries or O&M Subs would be
included in the $750 million Aggregate Authorization requested
herein. Loans by Entergy to a New Subsidiary or an O&M Sub
generally would have interest rates and maturity dates that are
designed to parallel Entergy's effective cost of capital, in
accordance with Rule 52(b). However, in the limited
circumstances where a New Subsidiary or an O&M Sub is not wholly-
owned by Entergy, directly or indirectly, Entergy requests
authority under the Act to make such loans to such subsidiaries
at interest rates and maturities designed to provide a return to
Entergy of not less than Entergy's effective cost of capital. If
such loans are made to a New Subsidiary or an O&M Sub, such Non-
utility Company will not provide any Services to any associate
Non-utility Company except a company which meets one of the
conditions for the rendering of Services on a basis other than
"at cost", as described below. Furthermore, in the event any
such loans are made, Entergy will include in the next certificate
filed pursuant to Rule 24 in this File substantially the same
information as that required on Form U-6B-2 with respect to such
transaction. In addition, the principal amount of any such loans
will be included in the $750 million Aggregate Authorization
requested herein.
C. Issuance of Securities.
To the extent such transactions are not exempt from the Act
or otherwise authorized or permitted by rule, regulation or order
of the Commission issued thereunder, Entergy requests authority
under the Act for Non-utility Companies to issue and/or sell
securities (collectively, "Other Securities") to Entergy, to
other Non-utility Companies or to non-associate companies (with
or without a Guarantee being provided by Entergy or another Non-
utility Company), including banks, insurance companies, and other
financial institutions. Entergy proposes that Other Securities
be issued and sold by Non-utility Companies to Entergy, to other
Non-utility Companies or to non-associate companies pursuant to
the authorization requested herein in one or more transactions
from time to time through December 31, 2002.<FN13>
Loans by Entergy or a Non-utility Company to a Non-utility
Company generally would have interest rates and maturity dates
that are designed to parallel the lending company's effective
cost of capital, in accordance with Rule 52(b). However, in the
limited circumstances where the Non-utility Company effecting the
borrowing is not wholly-owned by Entergy, directly or indirectly,
authority is requested under the Act for Entergy or a Non-utility
Company to make such loans to such subsidiaries at interest rates
and maturities designed to provide a return to the lending
company of not less than its effective cost of capital. If such
loans are made to a Non-utility Company, such Non-utility Company
will not provide any Services to any associate Non-utility
Company except a company which meets one of the conditions for
the rendering of Services on a basis other than "at cost", as
described below. Furthermore, in the event any such loans are
made, Entergy will include in the next certificate filed pursuant
to Rule 24 in this File substantially the same information as
that required on Form U-6B-2 with respect to such transaction.
In addition, the principal amount of any such loans will be
included in the $750 million Aggregate Authorization requested
herein.
Similarly, with respect to any issuance and sale by Non-
utility Companies of Other Securities to other Non-utility
Companies, to non-associate companies or to Entergy, the
principal amount of such Other Securities would be included in
the $750 million Aggregate Authorization. In addition, Entergy
would report periodically to the Commission pursuant to Rule 24
under the Act concerning the issuance and sale of such Other
Securities to the same extent that such reporting is required by
Rule 52(c).<FN14>
The net proceeds from the issuance and sale of Other
Securities would be used for general corporate purposes,
including without limitation (1) for loans to and/or equity
investments in Non-utility Companies; (2) for the repayment,
refinancing or redemption of outstanding securities of Entergy or
Non-utility Companies originally issued for purposes of acquiring
interests in Non-utility Companies or providing funds for the
authorized or permitted business activities of such companies;
and (3) for working capital or other cash requirements of Non-
utility Companies, provided that such net proceeds will only be
applied to finance activities that are exempt under the Act or
are otherwise authorized or permitted by rule, regulation or
order of the Commission issued thereunder, and provided further,
that at the time of issuance of any Other Securities authorized
by the Commission herein that are recourse to Entergy, directly
or indirectly, the proceeds of which are to be used to invest in
any Exempt Project, Entergy will be in compliance with Rule 53
(as the conditions set forth therein may be modified by order of
the Commission issued in File No. 70-9049).<FN15>
Entergy represents and agrees that no System operating
company will incur any indebtedness, extend any credit, or sell
or pledge its assets, directly or indirectly, to or for the
benefit of any Non-utility Company, and that any Other Securities
that may be issued by a Non-utility Company, and any Guarantees
that may be issued by Entergy or a Non-utility Company, will not
be recourse to any System operating company.
D. Provision of Services.
(1) Administrative Services, Consulting Services and
Development Activities.
In order to provide Entergy with further flexibility in the
administration of its non-utility businesses, to the extent such
transactions are not exempt from the Act or otherwise authorized
or permitted by rule, regulation or order of the Commission
issued thereunder, Entergy requests authority herein for Non-
utility Companies (a) to provide other Non-utility Companies with
Administrative Services, (b) to provide Consulting Services to
other Non-utility Companies and to non-associate companies, and
(c) to engage in Development Activities, all on a world-wide
basis. Administrative Services would include, without
limitation, corporate and project development and planning,
management, administrative, employment, tax, legal, accounting,
engineering, consulting, marketing, utility performance, and
electronic data processing services, and intellectual property
development, marketing and other support services. Development
Activities would include, without limitation, investigating
sites, research, engineering and licensing activities, acquiring
options and rights, contract drafting and negotiation, legal,
accounting and financial analysis, preparing and submitting bids
and proposals, and other activities necessary to identify and
analyze investment opportunities on behalf of Entergy System
companies (other than the Excepted Companies). Consulting
Services would include, without limitation, providing
System-developed technical capabilities and expertise to
Non-utility Companies and to non-associate companies, primarily
in the areas of electric power generation, transmission and
distribution and operations ancillary thereto.<FN16> Non-utility
Companies would continue to charge fair market value for
Consulting Services provided to non-associate companies, subject
to compliance with all applicable rules of the Commission and the
terms and conditions set forth herein.
Administrative Services, Consulting Services and Development
Activities would generally be performed for associate Non-utility
Companies "at cost". However, to provide Entergy with further
flexibility in the administration of its non-utility businesses,
to the extent not exempt pursuant to rule, regulation or order of
the Commission, Entergy hereby requests an exemption pursuant to
Section 13(b) from the "at cost" requirements of Rules 90 and 91
under the Act in connection with the performance of
Administrative Services, Consulting Services and Development
Activities by Non-utility Companies for associate Non-utility
Companies; provided, that no such Services will be rendered to an
associate Non-utility Company on a basis other than "at cost"
unless one or more of the following conditions shall apply:
(1) such associate Non-utility Company is a FUCO or is an
EWG that derives no part of its income, directly or
indirectly, from the generation and sale of electric energy
within the United States;
(2) such associate Non-utility Company is an EWG that sells
electricity at market-based rates which have been approved
by the FERC or the appropriate state public utility
commission, provided that the purchaser is not an Excepted
Company;
(3) such associate Non-utility Company is a "qualifying
facility" ("QF") under the Public Utility Regulatory
Policies Act of 1978, as amended ("PURPA") that sells
electricity exclusively at rates negotiated at arm's length
to one or more industrial or commercial customers purchasing
such electricity for their own use and not for resale, or to
an electric utility company (other than an Excepted Company)
at the purchaser's "avoided cost" determined in accordance
with the regulations under PURPA;
(4) such associate Non-utility Company is an EWG or a QF
that sells electricity at rates based upon its cost of
service, as approved by the FERC or any state public utility
commission having jurisdiction, provided that the purchaser
of such electricity is not an Excepted Company; or
(5) Entergy does not own 100% of the Equity Securities of
such associate Non-utility Company, provided that the
ultimate purchaser of such Services is not an Excepted
Company.<FN17>
Entergy also requests an exemption from Section 13(b) of the
Act in connection with the performance of Administrative
Services, Consulting Services and Development Activities by Non-
utility Companies for associate Non-utility Companies if (a) such
associate company is a subsidiary of Entergy, the sole business
of which is developing, owning, operating and/or providing
Services to associate companies described in clauses (1), (2),
(3), (4) or (5) above, or (b) such associate company is a
subsidiary of Entergy, which subsidiary does not derive, directly
or indirectly, any material part of its income from sources
within the United States and is not a public utility company
operating within the United States.
To the extent that any Non-utility Company utilizes the
expertise or resources of an Excepted Company in connection with
the performance of Administrative Services, Consulting Services
or Development Activities, such expertise or resources shall be
provided in a manner consistent with the terms and conditions set
forth in the Commission's order in File No. 70-8529.<FN18>
(2) O&M Services.
Entergy further proposes to continue to provide, indirectly
through one or more O&M Subs, various O&M Services to or for the
benefit of developers, owners and operators of domestic and
foreign power projects and other electric utility systems or
facilities, including projects that Entergy may develop on its
own (through an associate Non-utility Company) or in
collaboration with third parties. O&M Services would include,
but not be limited to, development, engineering, design,
construction and construction management, pre-operational
startup, testing, and commissioning, long-term operations and
maintenance, fuel procurement, management and supervision,
technical and training, administrative support, market analysis,
consulting, coordination and any other managerial, technical,
administrative or consulting services required in connection with
the business of owning or operating facilities used for the
generation, transmission or distribution of electric energy
(including related facilities for the production, conversion,
sale or distribution of thermal energy) or coordinating their
operations in the power market.<FN19> An O&M Sub may also lease all
or a portion of the facilities with respect to which it is
providing O&M Services. However, an O&M Sub will not undertake
to enter into such leases without further approval of the
Commission if, as a result thereof, such O&M Sub would become a
"public-utility company" as defined in the Act.
O&M Subs would charge fair market value for O&M Services,
subject to compliance with all applicable rules of the Commission
and the terms and conditions set forth herein. To the extent not
exempt pursuant to rule, regulation or order of the Commission,
Entergy requests an exemption pursuant to Section 13(b) from the
"at cost" requirements of Rules 90 and 91 under the Act in
connection with the rendering of O&M Services to associate
companies (other than an Excepted Company); provided, that no
such Services will be rendered to an associate company on a basis
other than "at cost" unless one or more of the following
conditions shall apply:
(1) such associate company is a FUCO or is an EWG that
derives no part of its income, directly or indirectly, from
the generation and sale of electric energy within the United
States;
(2) such associate company is an EWG that sells electricity
at market-based rates which have been approved by the FERC
or the appropriate state public utility commission, provided
that the purchaser is not an Excepted Company;
(3) such associate company is a QF under PURPA that sells
electricity exclusively at rates negotiated at arm's length
to one or more industrial or commercial customers purchasing
such electricity for their own use and not for resale, or to
an electric utility company (other than an Excepted Company)
at the purchaser's "avoided cost" determined in accordance
with the regulations under PURPA; or
(4) such associate company is an EWG or a QF that sells
electricity at rates based upon its cost of service, as
approved by the FERC or any state public utility commission
having jurisdiction, provided that the purchaser of such
electricity is not an Excepted Company.
O&M Subs would either be domestic or foreign corporations,
partnerships or other entities (depending upon the legal and
regulatory requirements of a particular project). With respect
to an O&M Sub that would not qualify as an Exempt Project or an
Energy-related Company, Entergy Enterprises would continue to
provide the Commission with the same information as currently
required under the June 1995 Order concerning the formation and
capitalization of such subsidiary in the next quarterly
certificate filed pursuant to Rule 24, as set forth below. Such
certificate would, among other things, continue to represent
that, in connection with the rendering of O&M Services, no
Excepted Company has subsidized the operations of any O&M Sub,
and further, that any transfer of personnel from any Excepted
Company to, and the rendering of O&M Services by, any such O&M
Sub are in compliance with applicable rules, regulations and
orders of the Commission and have not adversely affected the
services provided by such Excepted Companies to their respective
customers.<FN20> Entergy further acknowledges that the Commission's
authorization of fair market prices with regard to any Services
provided by Non-utility Companies shall not be binding upon the
FERC or any state public utility commission having jurisdiction
over the rates charged by any associate company of Entergy, and
represents and agrees that it will not assert or take any
position to the contrary in any administrative determination of
the rates that may be charged by any such associate company.
E. Payment of Dividends.
To the extent such transactions are not exempt from the Act
or otherwise authorized or permitted by rule, regulation or order
of the Commission issued thereunder, Entergy requests
authorization under Section 12(c) of the Act and Rule 46
thereunder for Non-utility Companies (including without
limitation Varibus Corporation, GSG&T, Inc. and Southern Gulf
Railway Company, each of which is a direct, wholly-owned
subsidiary of Entergy Gulf States) to declare and pay dividends
to their respective immediate parent companies out of capital or
unearned surplus, from time to time through December 31, 2002, to
the extent permitted under applicable corporate law and any
applicable financing agreement which restricts distributions to
shareholders.
The payment by Non-utility Companies of dividends out of
capital or unearned surplus will not contravene the intent of
Section 12(c) of the Act. Permitting the use of distributable
cash to pay dividends ultimately to Entergy will benefit the
Entergy System by enabling Entergy to reduce or refinance
outstanding borrowings and fund operations of Entergy System
companies. The payment of dividends out of capital or unearned
surplus will not be detrimental to the financial integrity of the
Entergy System or jeopardize the working capital any of the
Excepted Companies (including any public-utility subsidiary
company of Entergy) since the original source of such dividends
would be distributable cash derived exclusively from Entergy's
investments in Non-utility Companies.
III. Compliance With Rules 53 and 54.
Entergy hereby represents that, pursuant to Rule 54 under
the Act, (1) for the reasons discussed below, the condition set
forth in Rule 53(a)(1) that Entergy's "aggregate investment" in
EWGs and FUCOs not exceed 50% of Entergy's "consolidated retained
earnings" is not currently satisfied, and (2) all of the other
criteria of Rule 53(a) and (b) are satisfied.
Entergy's "aggregate investment" in Exempt Projects
(approximately $1.18 billion) is equal to approximately 54% of
Entergy's "consolidated retained earnings" as of September 30,
1998 (approximately $2.17 billion). Entergy's aggregate
investment in Exempt Projects currently exceeds the 50%
limitation in Rule 53(a)(1) as a result of certain charges
against Entergy's consolidated retained earnings, including a net
decrease of approximately $140 million in Entergy's consolidated
retained earnings from the quarter ended June 30, 1997 to the
quarter ended September 30, 1997.<FN21> This $140 million net
decrease was attributable primarily to the recording in July 1997
of a one-time "windfall profits tax" imposed by the British
government on London Electricity plc ("London Electricity"), at
the time an indirect subsidiary of Entergy and a FUCO, and other
privatized companies in the United Kingdom. This tax, which was
approximately US$234 million for London Electricity, was made
payable in two installments, the first of which was paid on
December 1, 1997.
Entergy currently is not rated by S&P. However, all of
Entergy's operating companies have debt ratings of at least
investment grade, except that Entergy Gulf States'debt ratings
for all debt other than senior secured debt is below investment
grade. Currently, Entergy Gulf States has $831.4 million of long-
term debt below investment grade, consisting of preferred stock,
quarterly income preferred securities, debentures, and tax exempt
bonds.
On March 20, 1995, S&P lowered the ratings of Entergy Gulf
States as follows:
Senior secured debt to BBB- (from BBB)
Senior unsecured debt and preferred stock to BB+ (from BBB-)
Preference stock to BB (from BB+)<FN22>
On March 31, 1995, Moody's Investors Service, Inc.
("Moody's") downgraded Entergy Gulf States' first mortgage bonds
to Baa3 from Baa2, debentures and senior unsecured pollution
control bonds to Ba1 from Baa3, and preferred stock to ba1 from
baa3.<FN23>
Reference is hereby made to Entergy's Annual Report on Form
10-K for the Fiscal Year ended December 31, 1998 for more recent
information concerning Entergy Gulf States rate matters,
including matters relating to River Bend.
Entergy states that as of September 30, 1992, before the
initial investment by Entergy in EWGs or FUCOs, Entergy's
consolidated debt to total capital ratio was 54.6% and its Equity
Securitiesization ratio was 45.4%. As of September 30, 1998,
Entergy's consolidated capitalization consisted of approximately
42.7% equity (including mandatorily redeemable preferred
securities) and approximately 57.3% debt (including long-term
debt, preferred stock of subsidiaries with sinking fund, and
preference stock of subsidiaries). On a pro forma basis, taking
into consideration the transactions contemplated by this filing,
the equity and debt ratios would remain approximately 42.7% and
approximately 57.3%, respectively. Entergy states that its
capitalization ratios will not be materially affected by these
transactions. Entergy further notes that its debt capitalization
ratio is within the industry range set by the independent debt
rating agencies for BBB rated utilities (40% to 65% debt).
Earnings attributable to Entergy's interests in Exempt
Projects have contributed positively to consolidated earnings,
notwithstanding the effect of the one-time windfall profits tax
assessed on London Electricity. Accordingly, operating earnings
attributable to Entergy's investments in Exempt Projects have not
had an adverse impact on Entergy's financial integrity.
So long as Entergy's "aggregate investment" in EWGs and
FUCOs exceeds the 50% limitation in Rule 53(a)(1), Entergy will
not make any additional investments in EWGs or FUCOs using the
proceeds of securities (including any Guarantees authorized
herein) issued by Entergy, except as may be authorized by the
Commission in File No. 70-9049."
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses expected to be paid or
incurred, directly or indirectly, in connection with the proposed
transactions are estimated to be approximately $35,000,
representing estimated fees and expenses of counsel to the
Applicants.
Item 5. Procedure.
The third paragraph of Item 5 of the Application-Declaration
in this File, as previously amended, is hereby further amended
and restated to read in its entirety as follows:
"Entergy Enterprises proposes to continue to provide the
Commission, on a quarterly basis within 60 days after the end of
each calendar quarter (commencing with the first full calendar
quarter following the Commission's order herein), a report
pursuant to Rule 24, which shall include the following: (1)
balance sheets and income statements of Entergy for the three,
six, or nine month period then ended; (2) all payments of
dividends out of capital or unearned surplus during the quarter;
(3) information concerning the nature and extent of
Administrative Services, Consulting Services and O&M Services
provided by Entergy Enterprises and other Non-utility Companies
during the quarter, identifying the customer company, the service
and the charge, and stating whether the charge was computed at
cost, market or pursuant to another method, which shall be
specified; (4) information concerning the formation and
capitalization of any New Subsidiaries during the quarter; (5)
information concerning the formation and capitalization of any
O&M Subs during the quarter; (6) information concerning the
completion during the quarter of any consolidation or other
reorganization of Entergy's ownership interests in Non-utility
Companies and the organizational structure of Entergy's Non-
utility Companies as of the end of such quarter; (7) information
concerning any loans made by Entergy or Non-utility Companies to
associate Non-utility Companies during the quarter that are not
exempt under Rule 52(b), to the same extent that such reporting
is required by Rule 52(c); (8) information concerning the
issuance of any Other Securities by Non-utility Companies during
the quarter, to the same extent that such reporting is required
by Rule 52(c); and (9) information concerning any Charter
Amendments during the quarter. Entergy proposes that such report
continue to combine the information required herein with the
information required in File Nos. 70-7851, 70-8002, 70-8010 and
70-8105."
Item 6. Exhibits and Financial Statements.
(a) Exhibits:
F-1 - Opinion of Laurence M. Hamric
F-2 - Opinion of Frederick F. Nugent
G - Capitalization Table
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
amendment to be signed on its behalf by the undersigned thereunto
duly authorized.
ENTERGY CORPORATION
By: /s/ Michael G. Thompson
Michael G. Thompson
Senior Vice President, General Counsel
and Secretary
ENTERGY ENTERPRISES, INC.
ENTERGY NUCLEAR, INC.
ENTERGY OPERATIONS SERVICES, INC.
ENTERGY POWER, INC.
ENTERGY POWER MARKETING CORP.
ENTERGY GLOBAL POWER OPERATIONS
CORPORATION
ENTERGY POWER OPERATIONS U.S., INC.
By: /s/ Michael G. Thompson
Michael G. Thompson
Senior Vice President - Law
and Secretary
Dated: April 14, 1999
_______________________________
<FN1> See Entergy Corporation, et al., Holding Company Act Release
("HCAR") No. 26322 (June 30, 1995) (hereinafter referred to as
the "June 1995 Order").
<FN2> The Authorized Subsidiary Companies currently consist of
Entergy Enterprises, Inc., Entergy Power, Inc., Entergy
Nuclear, Inc., Entergy Operations Services, Inc., Entergy
Global Power Operations Corporation and Entergy Power
Operations U.S., Inc.
<FN3> In late 1997, Entergy organized a new direct subsidiary
company, Entergy Business Solutions, Inc. ("EBSI") as an
"energy-related company" pursuant to Rule 58. EBSI intends to
engage, directly or indirectly, in a broad range of
"energy-related" activities, as permitted under Rule 58,
including without limitation energy commodity marketing,
energy management services and related consulting, power
quality services, power project operations and maintenance
services and the sale or distribution of thermal energy
products.
<FN4> Specifically, Entergy Enterprises is authorized under the June
1995 Order to provide such services to associate companies
other than the System operating companies, SERI, SFI, ESI, EOI
or any other subsidiaries that Entergy may create, the
activities and operations of which are primarily related to
the domestic sale of electric energy at retail or at wholesale
to Entergy's affiliates or the provision of goods or services
thereto (such companies are sometimes referred to herein,
collectively, as the "Excepted Companies").
<FN5> Such authorization includes the marketing to non-associate
companies of intellectual property developed or otherwise
acquired by System companies, subject to certain profit
sharing provisions set forth in the June 1995 Order.
<FN6> See HCAR No. 25136. The 1990 Order was reaffirmed by the
Commission on remand from the U.S. Court of Appeals for the
District of Columbia Circuit. See HCAR No. 26410 (dated
November 17, 1995).
<FN7> Pursuant to a Commission order dated August 2, 1996 (HCAR No.
26549), on August 28, 1996, EPI sold to City Water and Light
Plant of Jonesboro (Arkansas)(which previously had a 5%
undivided ownership interest in ISES 2) an additional 10%
undivided ownership interest in ISES 2 (equivalent to 84 MW of
capacity) and related assets for a total purchase price of
approximately $37.5 million. EPI recently received a further
Commission order authorizing EPI to sell an additional portion
of its interest in ISES 2 to a nonaffiliate, East Texas
Electric Cooperative, Inc. See HCAR No. 26925 (dated
October 9, 1998). As a result of such sales, EPI currently
has approximately a 14.4% undivided ownership interest in ISES
2.
<FN8> See Entergy Power Marketing Corp., 73 FERC 161,063 (1995)
(authorizing EPMC to purchase and resell electric energy at
wholesale that it has not generated, to contract for
transmission capacity and to resell excess transmission
capacity, to contract for delivery of fuel supplies to
third-parties and to engage in brokering).
<FN9> See Entergy Services, Inc. and Entergy Power Marketing Corp.,
74 FERC 161,137 (1996) (authorizing EPMC to sell power at
market-based rates).
<FN10> Pursuant to the June 1995 Order, Entergy was authorized to
finance the performance of Services and the organization of
O&M Subs through purchases of common stock, capital
contributions, open account advances, loans and guarantees
provided to Exempt Projects and various other Non-utility
Companies in an aggregate amount not to exceed $350 million
(exclusive of any such investments that were exempted by
Commission rule). Such authorization (as well as Entergy's
authorization to form and fund O&M Subs) expired on December
31, 1997.
<FN11> The credit arrangements authorized in the February 1997 Order
replaced those previously approved in a Commission order dated
July 27, 1995 (HCAR No. 26343) pursuant to which Entergy could
effect borrowings and reborrowings under credit facilities in
an aggregate principal amount outstanding at any time not to
exceed $300 million.
<FN12> As of December 31, 1998, the indebtedness outstanding under
these credit arrangements was approximately $120 million.
<FN13> Issuances of Other Securities by a Non-utility Company
generally are not subject to prior Commission approval under
the Act pursuant to Rule 52(b), provided the conditions of
such rule are satisfied, including that the interest rate and
maturity date of debt securities are designed to parallel the
effective cost of capital of the lending company. Under
certain circumstances, however, it may be desirable for
Entergy or a Non-utility Company to make a loan to a
Non-utility Company at a rate of interest or with a maturity
that does not provide a return equivalent to the lending
company's cost of capital.
<FN14> If an Energy-related Company issues Other Securities, it will
also report such issuance to the Commission as required under
Form U-9C-3.
<FN15> In addition, to the extent such action is not exempt from the
Act or otherwise authorized or permitted by rule, regulation
or order of the Commission issued thereunder, Entergy requests
that Non-utility Companies be permitted to modify the terms of
their charters or other governing documents ("Charter
Amendments") as necessary to effectuate the issuance of Other
Securities. Entergy would describe the general terms of any
Charter Amendment in the next quarterly certificate filed with
the Commission pursuant to Rule 24 in this File.
<FN16> For example, Consulting Services could include the provision
of (1) management expertise and services, such as strategic
planning, feasibility studies, organization and policy
matters; (2) technical expertise and services, such as design
engineering, availability engineering, construction management
planning and procedures, financial planning, system planning
and operational planning; (3) operating expertise,
particularly in the operation and maintenance of generating
plants, transmission, distribution and telecommunication
facilities; (4) environmental expertise, such as environmental
licensing and compliance, negotiation of federal, state, local
and foreign governmental permits and environmental planning;
(5) training expertise and services, particularly in the area
of operations and management; (6) technical and procedural
resources, such as are embedded in computer systems, programs
and manuals; (7) expertise in fuel procurement, delivery and
storage; (8) expertise relating to the marketing and brokering
of energy commodities; and (9) demand side management or other
energy management consulting services. Consulting Services
may include the marketing to non-associate companies of
intellectual property developed or otherwise acquired by
System companies, subject to certain profit sharing provisions
set forth in the Settlement Agreement (as hereinafter
defined).
<FN17> This condition (as well as a similar condition in the case of
O&M Services, as described below) would apply in circumstances
where (i) Entergy, in the ordinary course of business, has
negotiated arrangements with a non-affiliate for the joint
ownership of an associate Non-utility Company and (ii) such
Non-utility Company receives Services from another associate
Non-utility Company. If Entergy were required to charge only
"cost" for such Services, its joint venture partner would in
effect receive a subsidy from Entergy equal to the partner's
proportionate share of the difference between the cost of
providing such Services and the price at which it would have
to obtain such Services in the open market. Entergy therefore
wishes to have the flexibility in such cases to provide
Services at market-based prices.
<FN18> In accordance with settlement arrangements that Entergy
entered into with certain of its state and local regulators in
1992, 1993 and 1998 (collectively, the "Settlement
Agreement"), Entergy has agreed, subject to the receipt of
Commission approval in File No. 70-8529, to implement special
pricing provisions relating to certain transfers of services
between Excepted Companies and Entergy's non-utility
businesses. To the extent that any of the transactions
described herein would involve transfers to which the
provisions of the Settlement Agreement would apply, the
Applicants agree that such transactions would be subject to,
and performed in compliance with, such applicable provisions
and the Commission's order issued in File No. 70-8529 with
respect thereto. Entergy has accounted for services between
Excepted Companies and Entergy's non-utility businesses to
which the pricing provisions of the Settlement Agreement
apply. Entergy plans to reimburse Excepted Companies for any
additional amounts owed in respect of such services upon
receipt of, and in accordance with, the Commission's order in
70-8529.
<FN19> Except for consulting services that may be required in
connection with the business of owning or operating such
facilities or coordinating their operations in power markets,
O&M Subs will not otherwise be engaged in the provision of
Consulting Services to associate or nonassociate companies.
<FN20> To the extent that any O&M Sub utilizes the expertise or
resources of an Excepted Company in connection with the
performance of O&M Services, pending the receipt of Commission
approval in File No. 70-8529 of Entergy's request for an
exemption pursuant to Section 13(b) of the Act, such Excepted
Company would be reimbursed for the use of such expertise or
resources "at cost".
<FN21> In addition to the reduction in Entergy's consolidated
retained earnings attributable to the U.K. windfall profits
tax, during the fourth quarter of 1997, Entergy's consolidated
retained earnings decreased by approximately $90 million due
primarily to (a) the establishment of a $227 million (net of
tax) reserve for potential regulatory adjustments based upon
management's estimates of the financial effect of potential
adverse rulings in connection with costs related to Entergy
Gulf States' River Bend nuclear plant and pending rate
proceedings in Texas, and (b) the net of tax write-off of $7.4
million of previously deferred radioactive waste facility
costs.
<FN22> S&P's stated reasons for the downgrade were as follows:
"The downgrade results from decision by the Public Utilities
Commission of Texas (PUCT) to reduce [Entergy Gulf States']
rates by $52.9 million. The reduction is less than the $93
million originally proposed by the hearing examiner. The rate
change includes reductions associated with calculating rates
based on "actual taxes paid methodology", the premium paid for
the power purchased from the Nelson Plant, a small
disallowance of certain River Bend operation and maintenance
costs, and certain amounts associated with allocation of
costs.
The rate reduction coupled with financial pressures resulting
from the Cajun Electric bankruptcy filing will delay the
recovery of the utility from financial stress resulting from
large debt burden incurred from the construction of the [River
Bend] nuclear station. Funds from operations interest
coverage is projected to be weak for the rating in the near
term. The utility is expected to aggressively control costs
during the recovery period and reduce dividends to Entergy
Corp. to mitigate the effects of the rate reduction."
<FN23> Moody's stated reasons for the downgrade were as follows:
"On Monday, March 20, the PUCT ordered an annual rate
reduction of $52.9 [sic] million in [Entergy Gulf States']
Texas service territory. Moody's believes that this rollback,
when combined with the prior rate rollbacks of $20 million in
1993 and $20 million in 1994, hinders substantially the
financial flexibility of [Entergy Gulf States] going forward.
In addition, Moody's notes that [Entergy Gulf States] is
facing a myriad of other uncertainties, including the ultimate
resolution of the Cajun lawsuit, ramifications of the Cajun
bankruptcy on River Bend operations, potential River Bend
asset write-downs, merger related write-offs and regulatory
proceedings with negative implications in its Louisiana
service territory. Final arguments in the Cajun lawsuit were
heard on March 17, 1995, and it is unclear as to how long the
judge, who is also the bankruptcy judge in the Cajun Chapter
11 filing, will take to issue a decision. Moody's believes
that even a dismissal of the lawsuit will result in at least a
write-off of the operating and maintenance expenses owned to
[Entergy Gulf States] for River Bend."
EXHIBIT F-1
April 14, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Entergy Corporation, et al.
File No. 70-9123
Ladies and Gentlemen:
I am Associate General Counsel of Entergy Services,
Inc. In my capacity as such, I am familiar with the transactions
proposed by Entergy Corporation ("Entergy") and the other
applicants and described in the Application-Declaration on Form U-
1, as amended (the "Application"), filed with the Securities and
Exchange Commission (the "Commission") under the Public Utility
Holding Company Act of 1935, as amended (the "Act") in the above-
referenced File. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Application.
In connection with this opinion, I have examined, among
other things, the Application and such other documents,
certificates and corporate records, and such other matters of
law, as I have deemed necessary to form the basis of this
opinion.
The opinions expressed below are subject to the
following assumptions and conditions:
(a) The Proposed Transactions shall have been duly
authorized and approved, to the extent required by the governing
documents and applicable state laws, by the Board of Directors
(or other equivalent governing body) of Entergy and/or the
applicable Non-utility Company.
(b) The Commission shall have entered an appropriate
order or orders with respect to the Proposed Transactions
granting the Application and permitting it to become effective
under the Act and the rules and regulations thereunder.
(c) The Proposed Transactions shall have been
consummated in accordance with the Application and the orders or
orders of the Commission issued with respect thereto.
Based upon the foregoing, it is my opinion that:
1. All state laws applicable to Entergy's
participation in the Proposed Transactions will have been
complied with.
2. Entergy is a validly organized and duly existing
corporation.
3. The Guarantees issued by Entergy will be valid
and binding obligations of Entergy in accordance with the terms
of such instruments.
4. The consummation of the Proposed Transactions
will not violate the legal rights of the holders of any
securities issued by Entergy or any associate company thereof.
I am a member of the bar of the States of Louisiana
and Texas and of the Commonwealth of Virginia and do not hold
myself out as an expert on the laws of any other state.
I hereby consent to the use of this opinion as an
exhibit to the Application.
Very truly yours,
/s/ Laurence M. Hamric
Laurence M. Hamric
EXHIBIT F-2
April 14, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Entergy Corporation, et al.
File No. 70-9123
Ladies and Gentlemen:
I am General Counsel for Entergy Enterprises, Inc. and
in my capacity as such I am familiar with the transactions
proposed by Entergy Corporation ("Entergy") and the other
applicants (the "Proposed Transactions") and described in the
Application-Declaration on Form U-1, as amended (the
"Application"), filed with the Securities and Exchange Commission
(the "Commission") under the Public Utility Holding Company Act
of 1935, as amended (the "Act") in the above-referenced File.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Application.
In connection with this opinion, I have examined, among
other things, the Application and such other documents,
certificates and corporate records, and such other matters of
law, as I have deemed necessary to form the basis of this
opinion.
The opinions expressed below are subject to the
following assumptions and conditions:
(a) The Proposed Transaction shall have been duly
authorized and approved, to the extent required by the governing
documents and applicable state laws, by the Board of Directors
(or other equivalent governing body) of Entergy and/or the
applicable Non-utility Company.
(b) The Commission shall have entered an appropriate
order or orders with respect to the Proposed Transactions
granting the Application and permitting it to become effective
under the Act and the rules and regulations thereunder.
(c) The Proposed Transactions shall have been
consummated in accordance with the Application and the order or
orders of the Commission issued with respect thereto.
Based upon the foregoing, it is my opinion that:
1. All state laws applicable to the participation of
the applicable Non-utility Company in the Proposed Transactions
will have been complied with.
2. The New Subsidiaries and the O&M Subs, when
organized, will be validly organized and duly existing.
3. (i) Equity Securities issued by the New
Subsidiaries and the O&M Subs will be validly issued, fully paid
and nonassessable, (ii) the holder of such Equity Securities
will be entitled to the rights and privileges appertaining
thereto as set forth in the charter or other document defining
such rights and privileges, and (iii) the holder of such Equity
Securities will legally acquire such Equity Securities.
4. The Guarantees and Other Securities constituting
debt securities will be valid and binding obligations of the Non-
utility Company providing such Guarantees or issuing such Other
Securities in accordance with the terms of such instruments.
5. The consummation of the Proposed Transactions
will not violate the legal rights of the holders of any
securities issued by the Non-utility Companies or any associate
company thereof.
I am a member of the Illinois bar and do not hold
myself out as an expert on the laws of any other state.
I hereby consent to the use of this opinion as an
exhibit to the Application.
Very truly yours,
/s/ Frederick F. Nugent
Frederick F. Nugent
<TABLE>
<CAPTION>
EXHIBIT I
ENTERGY CORPORATION AND SUBSIDIARIES
CAPITALIZATION RATIOS
September 30, 1998
(Unaudited)
Consolidated Equity Debt
per 10-Q
<S> <C> <C> <C>
Long-term debt 8,942,186 8,942,186
Currently maturing long-term debt 323,992 323,992
Notes payable 414,052 414,052
Obligations under capital leases 233,482 233,482
Obligations under capital leases-current 138,526 138,526
Subsidiaries' preferred stock with sinking fund 178,755 178,755
Subsidiary's preference stock 150,000 150,000
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts
holding solely junior subordinated deferrable
debentures 215,000 215,000
Company-obligated redeemable preferred securities
of subsidiary holding solely junior subordinated
deferrable debentures 300,000 300,000
Subsidiaries' preferred stock without sinking
fund 334,455 334,455
Common Stock 2,468 2,468
Paid-in capital 4,629,098 4,629,098
Retained earnings 2,365,285 2,365,285
Cumulative foreign currency translation
adjustment (88,373) (88,373)
Less - treasury stock 6,188 6,188
---------- --------- ----------
Total 18,132,738 7,751,745 10,380,993
========== ========= ==========
Amounts in millions of dollars 18,133 7,752 10,381
Capitalization ratios 100.0% 42.7% 57.3%
</TABLE>
