As filed October 20, 2000
File No. 70-9723
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2
on
FORM U-1/A
APPLICATION/DECLARATION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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ENTERGY CORPORATION
639 Loyola Avenue
New Orleans, LA 70113
(Name of company filing this statement and address of
principal executive office)
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ENTERGY CORPORATION
(Name of top registered holding company parent)
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C. John Wilder
Executive Vice President and
Chief Financial Officer
Entergy Corporation
639 Loyola Avenue
New Orleans, LA 70113
(Name and address of agent for service)
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The Commission is requested to send copies of all notices, orders
and communications in connection with this Application or Declaration to:
Christopher J. Bernard William T. Baker, Jr.
Entergy Power Marketing Corp. Thelen Reid & Priest LLP
Parkwood 2 Building 40 West 57th Street, Suite 2500
10055 Grogans Mills Road New York, New York 10019
The Woodlands, Texas 77380
Elizabeth A. Martin, Senior Counsel
Entergy Services, Inc.
639 Loyola Avenue
New Orleans, LA 70113
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The Application-Declaration filed in this proceeding on July 25, 2000, as
amended by Amendment No. 1, filed September 5, 2000, is hereby further amended
as follows:
1. Item 1 - Description of Proposed Transaction is restated in its
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entirety to read as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
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1.1. Background. Entergy Corporation ("Entergy") is a registered holding
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company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). Its public utility subsidiaries include Entergy Arkansas, Inc., Entergy
Gulf States, Inc., Entergy Louisiana, Inc., Entergy Mississippi, Inc., and
Entergy New Orleans, Inc. (collectively, the "Entergy Operating Companies"). The
Entergy Operating Companies provide public-utility service to approximately 2.5
million electric customers in portions of Arkansas, Louisiana, Mississippi, and
Texas and 235,000 retail gas customers in portions of Louisiana.
Entergy also engages through subsidiaries in various other energy-related
and non-utility businesses. One such subsidiary, Entergy Power Marketing Corp.
("EPMC"), was formed in 1995 as an "exempt wholesale generator" ("EWG") in order
to engage in the marketing and brokering of electric power at wholesale.1
Pursuant to a Commission order dated January 6, 1998 (Holding Co. Act Release
No. 26812) ("January 1998 Order"), EPMC relinquished its EWG status and claimed
status as an "energy-related company" under Rule 58. EPMC engages in marketing
and trading of physical and financial energy commodities in wholesale and retail
markets throughout the United States, subject to certain conditions.2 EPMC
currently has physical sales of approximately 200 million cubic feet of gas per
day and, in 1999, sales of about 47.2 million MWh of electricity. Under the
January 1998 Order, Entergy is also authorized to finance the energy marketing
activities of EPMC and to provide guaranties to EPMC.
By further order of the Commission dated June 22, 1999 (Holding Co. Act
Release No. 27039) (the "June 1999 Order"), Entergy and certain of its
non-utility subsidiaries (including EPMC) were authorized, among other things,
to acquire, directly or indirectly, the securities of one or more non-utility
companies (called "New Subsidiaries") organized to engage in the
previously-authorized service and development activities of other Entergy
non-utility subsidiaries and/or to acquire and/or finance the acquisition of the
securities of one or more EWGs, "foreign utility companies" ("FUCOs"), "exempt
telecommunications companies" ("ETCs"), "energy-related companies" within the
meaning of Rule 58 ("Rule 58 Companies"), and companies formed to provide
operations and maintenance services to nonassociate companies ("O&M Subs"). New
Subsidiaries, EWGs, FUCOs, ETCs, Rule 58 Companies and other non-utility
subsidiaries of Entergy (including EPMC and O&M Subs) which Entergy is
authorized or by rule permitted to acquire and own are referred to herein (as
they were in the June 1999 Order) collectively as "Nonutility Companies."
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1 See Entergy Power Marketing Corp., 73 FERC P. 161,063 (1995).
2 See Entergy Services, Inc., 74 FERC P. 61,137 (1996) (authorizing EPMC to
sell power at market based rates) and Entergy Power Marketing Corp., 75
FERC P. 61,282 (1996) (order on compliance filing).
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In addition, under the June 1999 Order, the Commission authorized Entergy
and the Nonutility Companies (1) to provide guaranties and other forms of credit
support or enhancements to or for the benefit of Nonutility Companies in an
aggregate amount outstanding not to exceed $750 million, to the extent such
transactions are not otherwise exempt; 3 (2) to engage in various types of
transactions designed to consolidate or reorganize under one or more New
Subsidiaries all or part of Entergy's ownership interests in Nonutility
Companies and New Subsidiaries; and (3) to provide operations, administrative
and consulting services to other Nonutility Companies at prices determined
without regard to "cost," subject to specified limitations and restrictions.
Entergy is authorized to finance its investments in New Subsidiaries and O&M
Subsidiaries from available cash resources and from the proceeds of borrowings
and common stock sales authorized in other proceedings.4
On May 26, 2000, Entergy and Koch Energy, Inc. ("Koch"), an unaffiliated,
privately-held diversified company, entered into an agreement to form a new
Delaware limited partnership to be called Entergy-Koch, LP ("Entergy-Koch").
Entergy-Koch will be the vehicle through which Entergy and Koch will combine
certain discrete non-utility energy assets of the two companies and their
respective subsidiaries. Specifically, subject to receiving any necessary
regulatory approvals, Entergy will contribute to Entergy-Koch its ownership
interest in EPMC, and Koch will contribute to Entergy-Koch its ownership
interest in its energy trading and marketing subsidiary, Koch Energy Trading,
Inc. ("KET"). EPMC and KET will thereupon be combined to form a single new
energy marketing and trading company (herein referred to as "Trading Company").
In addition, Koch will contribute to Entergy-Koch the common stock of its
wholly-owned subsidiary, Koch Gateway Pipeline Company ("Gateway Pipeline"),
which owns and operates an interstate natural gas pipeline system and related
gas gathering and storage facilities. Gateway Pipeline will remain a separate
subsidiary of Entergy-Koch. Entergy will also contribute, directly or
indirectly, to Entergy-Koch all of the stock of EGT Holding, Ltd. ("EGT"). EGT
is an indirect subsidiary of Entergy Power Development Corporation ("EPDC"),
which, in turn, is a direct subsidiary of Entergy. EPDC is a FUCO through which
Entergy holds investments in foreign power development projects.5 EGT's sole
asset consists of the stock of Entergy Trading & Marketing, Ltd. ("ET&M"), which
was formed in 1998 principally to trade energy commodities in order to manage
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3 By supplemental order in File No. 70-9123, the Commission has authorized an
increase in the maximum aggregate amount of guarantees and other forms of
credit support that such companies may provide to $2 billion. See Entergy
Corporation, Holding Co. Act Release No. 27216 (Aug. 21, 2000).
4 See Entergy Corporation, Holding Co. Act Release No. 26693 (March 25, 1997)
(authorizing Entergy to issue and sell up to 30 million additional shares
of its common stock through December 31, 2000 pursuant to its dividend
reinvestment and stock purchase plan); and Entergy Corporation, Holding Co.
Act Release No. 26674 (February 26, 1997) (authorizing Entergy to issue and
sell short-term notes from time to time through December 31, 2002, in an
aggregate principal amount at any time outstanding not to exceed $500
million).
5 EPDC is currently constructing two combined cycle gas turbine merchant
power plants in the UK through FUCO subsidiaries. One is the Saltend
Project, a 1,200 MW plant that will produce both steam and electricity, and
the other is the Damhead Creek project, an 800 MW facility. Both are
expected to go into commercial operation in 2000.
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the fuel supply and power sales risks of certain FUCOs owned by Entergy in the
United Kingdom.
The contributions to Entergy-Koch will be made pursuant to the terms of a
Contribution Agreement. In addition to the assets and interests described above,
the Contribution Agreement contemplates that the parties will also make
contributions of cash to Entergy-Koch in amounts that will equalize (or
"true-up") the values of the interests in EPMC, KET, Gateway Pipeline and ET&M.
It is also contemplated that Entergy, indirectly through a non-utility
subsidiary, will purchase certain energy accounts receivable created by KET and
then contribute those receivables to Entergy-Koch as a means to equalize
Entergy's and Koch's investments.
The values placed on the contributions of Entergy and Koch to Entergy-Koch
resulted from arms-length negotiations. Valuations were determined based on a
variety of methodologies including mark-to-market valuation of energy commodity
trading portfolios, financial analysis (including review of projected
financials) and comparable asset valuations (e.g., trading comparables,
comparable transactions, etc.).
Entergy is not proposing to transfer or contribute any assets of the
Entergy Operating Companies to Entergy-Koch. Moreover, Entergy's participation
in the venture will not have any effect on the Entergy Operating Companies or on
the rates or credit ratings of the Entergy Operating Companies. The Entergy
Operating Companies will not have an ownership interest, directly or indirectly,
in the venture and will not extend credit to or assume or become liable for any
debts or obligations of the venture. The only relationships between the Entergy
Operating Companies and Entergy-Koch will be as described below in Item 1.3.5.
The general partner of Entergy-Koch, with a 1% interest, will be
Entergy-Koch, LLC ("EK-LLC"), a Delaware limited liability company to be formed
by Koch and Entergy Power International Holdings Corporation ("EPIH"), a
wholly-owned subsidiary of Entergy.6 Koch and EPIH will each hold a 50%
interest in EK-LLC. In addition, Entergy and Koch will each acquire and hold,
indirectly, a 49.5% limited partnership interest in Entergy-Koch. The Entergy
limited partnership interest will be held by two other Delaware limited
liability companies formed by EPIH specifically for that purpose.
The contributions of the Entergy assets and Koch assets will be made to
Entergy-Koch from time to time as and when all necessary regulatory approvals
have been obtained and such assets, in the judgment of the parties, may be
successfully integrated into the then-existing business of Entergy-Koch. All of
the transactions relating to the formation of Entergy-Koch and the entities that
will hold Entergy's ownership interests in the venture, the transfer of the
Entergy assets and the additional contributions of cash will be carried out in
accordance with Entergy's authorization under the June 1999 Order. Entergy-Koch
will be a partially-owned New Subsidiary within the meaning of such order,
inasmuch as it will be engaged exclusively in the business of holding the
securities of other Nonutility Companies. As an indirect subsidiary company of
Entergy, Entergy-Koch will not in the future acquire the securities of or other
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6 EPIH, a Delaware corporation, is currently a FUCO but will relinquish its
status as such and instead serve as a New Subsidiary (within the meaning of
the June 1999 Order) for the purpose of acquiring and holding an interest
in Entergy-Koch.
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interest in any business except in accordance with an order of this Commission
(including without limitation the June 1999 Order) or pursuant to an available
exemption, including, specifically, Rule 58 or Section 32, 33 or 34, as
applicable.
1.2 Summary of Authorizations Requested. Entergy herein requests approval
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for (a) Entergy to invest, indirectly through one or more Nonutility Companies,
including but not limited to Entergy-Koch, up to $1.2 billion in specified types
of energy-related, non-utility assets ("Energy-Related Assets") that are
incidental to the energy marketing and brokering activities of Trading Company;
(b) the expansion of the energy marketing and brokering activities of Trading
Company and of any other energy marketing affiliate hereafter formed or acquired
by Entergy-Koch to include marketing and brokering of energy commodities in
Canada; (c) the issuance of guaranties and other forms of credit support by
Entergy-Koch on behalf or for the benefit of its direct and indirect
subsidiaries; (d) the declaration and payment of dividends out of capital or
unearned surplus by Entergy-Koch and its direct and indirect subsidiaries; and
(e), to the extent not otherwise permitted or exempt under the Commission's
rules, the sale of goods and services by and between Entergy-Koch's subsidiaries
and the Entergy Operating Companies and Nonutility Companies.
Entergy will fund its cash contributions to Entergy-Koch and purchases of
energy receivables created by KET (which will immediately be contributed to
Entergy-Koch), as well as any future acquisitions of or investments in Energy
Assets using available cash and/or the proceeds of financings previously
authorized by the Commission (see fn. 4, above) or as authorized in other future
proceedings. Accordingly, Entergy is not requesting authority in this proceeding
to issue any additional securities.
1.3 Specific Approvals Requested.
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1.3.1 Investments in Energy-Related Assets. Entergy, directly or
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indirectly through one or more New Subsidiaries or other Nonutility Subsidiaries
(including Entergy-Koch), requests authority to invest, from time to time
through December 31, 2005, up to $1.2 billion (the "Investment Limitation") in
Energy-Related Assets and/or the equity securities of companies, including
Gateway Pipeline, substantially all of whose physical assets consist of such
Energy-Related Assets. Such Energy-Related Assets would include, without
limitation, natural gas production, gathering, processing, storage and
transportation facilities and equipment, liquid oil reserves and storage
facilities, and associated facilities, that would be incidental to and would
assist the Trading Company or any other energy marketing and brokering
subsidiary hereafter acquired by Entergy 7 in connection with energy marketing,
brokering and trading.
Initially, Entergy will acquire, indirectly through Entergy-Koch, the stock
of Gateway Pipeline to be contributed to Entergy-Koch by Koch. Gateway Pipeline
(formerly United Gas Pipe Line Company) owns and operates an interstate natural
gas pipeline system that is engaged in gathering, storage and transportation of
gas from the producing areas in Texas, Louisiana and the Gulf of Mexico,
offshore Alabama and Mississippi. Gateway Pipeline owns approximately 9,000
miles of interstate pipeline (including both transportation and gathering
lines), 31 compressor stations, and two gas storage facilities. The pipeline is
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7 Specifically, it is contemplated that Entergy may acquire, directly or
indirectly, the securities of one or more companies, other than EPMC, that
are engaged in energy marketing, brokering, and trading pursuant to Rule
58.
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interconnected with almost all of the other major interstate pipelines that
serve the Midwest, Northeast and Southwest markets. It also connects to the
Henry Hub, which serves as the designated delivery point for natural gas futures
contracts traded on the New York Mercantile Exchange.
In the future, Entergy proposes to acquire or construct other similar
Energy-Related Assets through new or existing subsidiaries (including
Entergy-Koch). Such Energy-Related Assets (or equity securities of companies
owning such assets) may be acquired for cash or in exchange for stock or other
securities of Entergy, or any combination of the foregoing. If common stock of
Entergy is used as consideration in connection with an acquisition of
Energy-Related Assets, the market value thereof on the date of issuance will be
counted against the proposed Investment Limitation. The principal amount or
stated amount of any other securities issued as consideration will also be
counted against the proposed Investment Limitation. Under no circumstances will
Entergy acquire, directly or indirectly, any assets or properties that would
cause the owner or operator thereof to be considered an "electric utility
company" or "gas utility company" as defined under the Act.
The Commission has previously recognized that, to be successful, a marketer
of energy commodities must be able to control significant physical assets that
are incidental and reasonably necessary in its day-to-day operations.8 Gas
marketers today must be able to offer their customers a variety of value-added,
or "bundled," services, such as gas storage and processing, that the interstate
pipelines offered prior to the issuance by the Federal Energy Regulatory
Commission ("FERC") of Order 636.9 In order to provide such value-added
services, many of the leading gas marketers have invested in production,
gathering, processing, and storage capacity at or near the principal gas
producing areas and hubs and market centers in the U.S. Similarly, in order to
compete with both interstate pipelines and local distribution companies for
industrial and electric utility sales, marketers must have the flexibility to
acquire or construct such supply facilities. In fact, most of the large
marketers today with which EPMC and KET compete own substantial physical assets
of the type described herein.
Importantly, the acquisition of gas production, gathering, processing, and
storage capacity provides energy marketers the opportunity to hedge the price of
future supplies of natural gas against changes in demand brought about due to
weather, increased usage requirements by end use customers, or other volatility
imposed by the market. Storage and pipeline assets allow energy marketers to
"bank" low cost supplies for use during periods of high volatility or take
advantage of differential price spreads between different markets. Energy
marketers with strong and balanced physical asset portfolios are able to
originate tolling or reverse tolling of gas and electric commodities, whereby
the payment is made in one or the other commodity. The integration of
production, gathering, and storage assets offer energy marketers the opportunity
to provide either gas or electric products and services to energy users, at
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8 See e.g., SEI Holdings, Inc., 62 SEC Docket 2493 (September 26, 1996);
American Electric Power Company, Inc., et al., 68 SEC Docket 1251 (November
2, 1998).
9 See FERC Order 636, FERC Stats. & Regs. P. 30,939, "Pipeline Service
Obligations and Revisions to Regulations Governing Self-Implementing
Transportation; and Regulation of Natural Gas Pipelines After Partial
Wellhead Decontrol," 57 Fed. Reg. 13,270 (April 16, 1992).
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their discretion, depending on user requirements and needs. Finally, the
physical assets underlying an energy marketer's balance sheet may provide
substantial credit support for the financial transactions undertaken by the
marketer.
It is the intention of Entergy to add to its subsidiaries' existing base of
non-utility, energy-related, assets as and when market conditions warrant,
whether through acquisitions of specific assets or groups of assets that are
offered for sale, by constructing such assets, or by acquiring existing
companies (for example, other gas marketing companies which own significant
physical assets in the areas of gas production, processing, storage, and
transportation). Ultimately, it is Entergy's objective to control a substantial
portfolio of Energy-Related Assets that would provide the Entergy system with
the flexibility and capacity to compete for sales in all major markets in the
United States and, in the future, possibly Canada.
1.3.2 Expansion of Entergy's Energy Marketing and Trading
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Activities Outside the United States. Under the terms of the Commission's
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January 1998 Order, EPMC is currently authorized to engage in energy marketing
activities in wholesale and retail markets throughout the United States. By its
terms, Rule 58 also limits the activities of "energy-related companies," which
includes companies engaged in energy marketing and brokering, to the United
States. Notwithstanding, the Commission has previously authorized several other
registered holding companies to engage in such activities in Canada, and has
reserved jurisdiction over proposals to extend such activities into other
foreign countries.10
Entergy, on behalf of Trading Company (into which EPMC will be merged) and
any other energy marketing and trading companies that it may hereafter acquire
pursuant to Rule 58 or otherwise, seeks similar authority to engage in marketing
and brokering activities outside the United States and requests that the
Commission reserve jurisdiction over such activities outside of the United
States and Canada pending completion of the record. In support thereof, Entergy
notes that all of the major U.S. marketers with which Trading Company will
compete also conduct operations in Canada. Canada is the source of a substantial
percentage of all of the gas consumed in the U.S., and also exports significant
amounts of electricity to the U.S. In approving Southern Company's proposal to
engage in energy marketing in Canada, the Commission has already noted that the
U.S. and Canadian energy markets are highly integrated and that the risks of
marketing activities in Canada (other than currency risk) are substantially the
same as the risks associated with these activities in the United States.
1.3.3 Guaranties by Entergy-Koch. Under the June 1999 Order, as
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amended by supplemental order dated August 21, 2000,11 the Commission has
authorized Entergy and the Nonutility Companies to provide guaranties and other
forms of credit support or enhancements from time to time through December 31,
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10 See Southern Energy, Inc., Holding Co. Act Rel. No. 27020 (May 13, 1999),
in which the Commission authorized a subsidiary of Southern Company to
expand its energy marketing activities into Canada. Subsequently, the SEC
has granted similar approvals to several other registered holding
companies. See e.g., Ameren Corp., Holding Co. Act Release No. 27053 (July
23, 1999); American Electric Power Co., et al., Holding Co. Act Release No.
27062 (August 19, 1999); and Interstate Energy Corporation, Holding Co. Act
Release No. 27069 (August 26, 1999).
11 See Entergy Corporation, supra n. 3.
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2005 to or for the benefit of Nonutility Companies in an aggregate amount at any
time outstanding, not to exceed $2 billion, in addition to guaranties that are
otherwise exempt or permitted by rule or order of the Commission. Entergy-Koch
is now requesting authority to provide guaranties and other forms of credit
support or enhancements on behalf or for the benefit of its direct and indirect
subsidiaries (collectively, "Credit Support") from time to time through December
31, 2005, in an aggregate amount at any time outstanding not to exceed $2
billion, in addition to Credit Support that is exempt under Rules 45(b) and
52(b), provided that any Credit Support outstanding on December 31, 2005 shall
terminate or expire in accordance with its terms. This requested authorization
is separate from and will not be counted against the $2 billion limitation on
guarantees issued by Entergy and other Nonutility Companies.
A separate Credit Support limit for Entergy-Koch is warranted for two
principal reasons. First, it is the intent of the parties that all credit
support required in connection with the energy marketing and trading activities
of Trading Company and the other operations of Entergy-Koch's subsidiaries will
be provided by Entergy-Koch, without recourse to or support by either Entergy or
Koch. Second, guaranties of the obligations of subsidiaries under energy trading
and marketing agreements and of other types of non-financial obligations of
subsidiaries are not exempt under Rules 45(b) and 52(b) in most cases. Hence, it
is expected that Entergy-Koch will realize little if any benefit from the
exemptions that the Commission has provided for subsidiaries of registered
holding companies.
1.3.4 Payment of Dividends Out of Capital and Unearned Surplus.
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Under the June 1999 Order, the Nonutility Companies are authorized to declare
and pay dividends out of capital and unearned surplus through December 31, 2002,
subject to applicable corporate law and any restrictions under financing
agreements. Entergy-Koch, on behalf of itself and its direct and indirect
subsidiaries, requests the same authority, but without any limitation on the
period in which such dividends may be declared and paid. Entergy believes that
approval for such dividend authority on a permanent basis is warranted in this
case because of the substantial interest in Entergy-Koch that is held by a
nonassociate company that is not subject to any restrictions under the Act. In
this connection, the Commission should recognize that the policy considerations
underlying the exemption for certain types of non-utility subsidiary companies
provided by Rule 16 should apply equally in this case. Rule 16 exempts a
company, and each affiliate thereof, from all obligations under the Act imposed
upon it as a subsidiary company or affiliate of a registered holding company if
certain conditions are met. Specifically, no more than 50% of such company's
voting securities may be owned, directly or indirectly, by one or more
registered holding companies, and the company must be organized to engage
primarily in the exploration, development, production, manufacture, storage,
transportation, or supply of natural or manufactured gas.
As described above, the primary businesses of Entergy-Koch will be natural
gas transportation and storage and the purchase and sale of energy commodities,
a major component of which will be natural gas. But for the non-gas component of
Entergy-Koch's marketing operations, it is believed that Entergy-Koch would
qualify for exemption under Rule 16. Nevertheless, for purposes of determining
whether the exemption under Section 12(c) of the Act requested herein is
appropriate, the form or type of energy commodity supplied should be of no
importance.
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1.3.5 Affiliate Transactions. It is contemplated that Gateway
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Pipeline will continue to provide gas transportation and "unbundled" ancillary
services, such as gas storage (including parking and lending), balancing,
nominating and scheduling, to Entergy Operating Companies in accordance with the
terms of open-access tariffs on file with the FERC.12 Other subsidiaries of
Entergy-Koch (including Trading Company) may from time to time sell electricity
and gas to, and purchase electricity and gas from, Entergy Operating
Companies.13 It is not contemplated that the Entergy Operating Companies will
sell any property, equipment or goods to Entergy-Koch or its subsidiaries.
Entergy-Koch, on behalf of itself and its subsidiaries, requests authority
to sell energy commodities other than electricity and natural gas to the Entergy
Operating Companies, including but not limited to oil, coal and risk management
services and products. All such transactions will be performed at "cost"
determined in accordance with Rules 90 and 91. In addition, all such
transactions will be carried out in compliance with the terms of the settlement
agreement entered into in October 1992 between the Entergy Operating Companies
and the state regulatory commissions (other than the Louisiana Public Service
Commission ("LPSC")) in Entergy's service area and the affiliate interest
conditions approved by the LPSC in May 1993 (collectively, the "Settlement
Agreements"). In the event that any Entergy Operating Company renders services
to Entergy-Koch or any of its subsidiaries, such transactions would also be
performed in accordance with the pricing formula contained in the Settlement
Agreements.14
Finally, authority is requested for Entergy-Koch and its subsidiaries and
other Nonutility Companies to provide administrative and consulting services to
each other at fair market prices, subject to the limitations contained in the
June 1999 Order.15
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12 Such transactions are generally exempt under the Act pursuant to Rule 81.
13 Electricity and natural gas are expressly excluded from the definition of
"goods" under Rule 80.
14 See Entergy Corporation, et al., Holding Co. Act Release No. 27040 (June
22, 1999), in which the Commission granted an exemption under Section
13(b)(2) of the Act in order to allow the Entergy Operating Companies and
certain other regulated subsidiaries of Entergy (collectively, the
"Regulated Utilities") to charge cost plus 5%, in accordance with the
Settlement Agreements, for services rendered to Entergy's unregulated
non-utility subsidiaries (collectively, "Nonregulated Businesses"). The
other pricing provisions in the Settlement Agreements are as follows: (1)
transfers of generating assets, fuel and fuel-related assets and of market,
technological or similar data by a Regulated Utility to a Nonregulated
Business must be priced at market value, (2) profits on the sale of
products developed by a Regulated Utility and marketed by a Nonregulated
Business must be divided equally between the two companies, after deduction
for the incremental costs associated with making the products available for
sale, (3) development of royalty payments on a case-by-case basis in
connection with transfers of product rights, patents, copyrights, or
similar rights from a Regulated Utility to a Nonregulated Business, and (4)
use of competitive bidding or similar procedures approved by the
appropriate state commission to price any procurements with a fair market
value in excess of $100,000.
15 The June 1999 Order authorizes Nonutility Subsidiaries to sell
administrative and consulting services at fair market prices to specified
types of exempt non-utility associate companies (specifically, EWGs, FUCOs,
and "qualifying facilities"), subject to certain limitations, and to
partially-owned non-utility associate companies (like Entergy-Koch),
provided that the ultimate purchaser of these services is not an Entergy
Operating Company or any other subsidiary of Entergy whose activities and
operations are primarily related to the provision of services or goods to
such companies.
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1.4 Other Matters. Pursuant to Rule 24, Entergy proposes to report on a
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quarterly basis the amount of Energy-Related Assets purchased or constructed and
the amount of any equity securities of any company substantially all of whose
assets consist of Energy-Related Assets that were acquired in the preceding
period, including a description of such securities. In order to simplify
reporting obligations, it is proposed that any marketing activities of
"energy-related companies" acquired, directly or indirectly, by Entergy
(including Trading Company) pursuant to Rule 58 be reported on Form U-9C-3. It
is also proposed that a description of the amount, type, and, if a debt
security, the maturity and interest rate, of securities issued by Entergy or any
Nonutility Company in connection with the acquisition of Energy-Related Assets
(or the equity securities of any company owing such assets) be included as part
of the quarterly reports filed pursuant to Rule 24 in File No. 70-9123.
2. Item 3.1.2 - Exemption from "At Cost" Standard is deleted and
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intentionally left blank.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned company has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
ENTERGY CORPORATION
By: /s/ Michael G. Thompson
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Name: Michael G. Thompson
Title: Senior Vice President, General
Counsel and Secretary
Date: October 20, 2000
