U-1

                                                     File No. 70-
                         UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                            FORM U-1
                   APPLICATION OR DECLARATION
                            UNDER THE
              PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

Entergy Corporation                  Entergy Services, Inc.
639 Loyola Avenue                    639 Loyola Avenue
New Orleans, LA 70113                New Orleans, LA 70113

Entergy Arkansas, Inc.               Entergy Gulf States, Inc.
425 West Capitol                     350 Pine Street
Little Rock, AR 72201                Beaumont, TX 77701

Entergy Louisiana, Inc.              Entergy Mississippi, Inc.
4809 Jefferson Highway               308 East Pearl Street
Jefferson, LA 70121                  Jackson, MS 39201

Entergy New Orleans, Inc.
1600 Perdido Building
New Orleans, Louisiana 70112

          (Names of companies filing this statement and
             addresses of principal executive offices)

                       Entergy Corporation
           (Name of top registered holding company parent)

                        Steven C. McNeal
                  Vice President and Treasurer
                     Entergy Services, Inc.
                        639 Loyola Avenue
                  New Orleans, Louisiana 70113
                (Name and address of agent for service)

The Commission is requested to send copies of all notices, orders and
 communications in connection with this Application/Declaration to:

Ann G. Roy, Esq.                      William T. Baker, Jr., Esq.
Entergy Services, Inc.                Thelen Reid & Priest LLP
639 Loyola Avenue                     40 West 57th Street
New Orleans, Louisiana 70113          New York, New York 10019

Item 1.   Description of Proposed Transaction.

(A)  Introduction

     Entergy   Corporation  ("Entergy  Corp.")  is  a  registered

holding company under the Public Utility Holding Company  Act  of

1935, as amended (the "Act"). Its public-utility subsidiaries are

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")  (Entergy

Arkansas,   Entergy  Gulf  States,  Entergy  Louisiana,   Entergy

Mississippi  and Entergy New Orleans are hereinafter collectively

referred to as the "Operating Companies"). Entergy Services, Inc.

("Entergy   Services")  provides  general  executive,   advisory,

administrative, accounting, legal, engineering and other services

to  the Operating Companies (Entergy Corp., Entergy Services  and

the Operating Companies are hereinafter collectively referred  to

as  "Entergy", and Entergy Corp. and its subsidiary companies are

hereinafter  referred to as the "Entergy System"). The  principal

executive  offices of the applicants are located at the addresses

set forth on the cover page hereof.

     Entergy  proposes to create an independent, incentive-driven

transmission company ("Transco") as a Delaware limited  liability

company  ("LLC"), the assets of which will consist  initially  of

the  Operating  Companies'  and  Entergy  Services'  transmission

system   and   related   assets and ultimately  may  include

transmission   assets  of  other  non-affiliated   entities.   In

accordance  with  the independence requirements  of  the  Federal

Energy  Regulatory  Commission ("FERC")  under  its  transmission

system  ownership and operation rules, including FERC  Order  No.

2000  described below, Transco will be independent  of,  and  not

affiliated with, the Entergy System.

     Entergy  expects to  effect the transfer of the Entergy

System  Transmission  Assets  to  Transco  through  one  or  more

intermediate  entities  which  will be  newly-created  subsidiary

companies  of  Entergy  and may be limited  liability  companies,

corporations and/or partnerships (collectively, the "Intermediate

Entity").  Transco  will  enter  into  an  arrangement  with  the

Southwest  Power Pool (the "SPP"), an independent  not-for-profit

regional   entity,   to   establish   a   regional   transmission

organization (the "SPP Partnership RTO"). Under the resulting SPP

Partnership  RTO, the SPP proposes to perform certain operational

and  oversight  functions  for the Transco  transmission  assets,

including those of the Entergy System under its control, as  well

as  such transmission assets of the current or future members  of

the SPP (presently SPP consists of fifty-one (51) members located

in   Arkansas,  Kansas,  Louisiana,  Mississippi,  Missouri,  New

Mexico,  Oklahoma and Texas) as these utilities may  place  under

the  management of the SPP Partnership RTO. Although Transco will

operate under the oversight, and within the umbrella, of the  SPP

Partnership RTO, a separate Delaware corporation, the managing

member  (the  "Managing  Member"),  will  manage  the  day-to-day

business affairs of Transco. The Managing Member will be governed

by  a  board  of  seven (7) directors independent of  any  Market

Participant, including the Entergy System companies.

     The  Intermediate Entity will be the vehicle  through  which

the  Entergy  System  Transmission  Assets  are  transferred   to

Transco. The Operating Companies will transfer the Entergy System

Transmission   Assets  to  the  Intermediate   Entity   and   the

Intermediate  Entity,  in  turn, will transfer  those  assets  to

Transco.  The  Intermediate Entity will  assume  debt  and  other

obligations  of  the  Operating Companies,  associated  with  the

transferred assets. The Intermediate Entity will use a portion of

the  funds raised through its external financing to repay all  of

the  assumed debt and other assumed obligations of the  Operating

Companies.  The Intermediate Entity may obtain financing  through

the  issuance  of debt and equity securities and  may  assume  or

guarantee  indebtedness.  Debt or  preferred  stock  incurred  or

issued  by  the  Intermediate Entity will be  assumed  by  and/or

assigned  to  Transco  upon transfer to Transco  of  the  related

Entergy  System  Transmission  Assets.  Upon  completion  of  the

transfer  to  Transco, all of the obligations of the Intermediate

Entity  with respect to the transferred assets and the associated

financing  will  terminate. The Intermediate Entity  may  receive

services  from Entergy Services. The Intermediate Entity  expects

that  it may be required to pay dividends out of capital,  rather

than retained earnings.

     The  Applicants request authorization under the Act from the

Securities  and  Exchange Commission (the "Commission"),  to  the

extent  not  otherwise exempted under the Act, or  authorized  by

order  of the Commission, for (i) Entergy Corp. and the Operating

Companies  to  form,  hold  interests  in,  and  acquire   equity

securities of, the Intermediate Entity; (ii) Entergy Services  to

transfer  the Entergy Services Assets to the Operating Companies;

(iii)  the  Operating  Companies  to  transfer  their  respective

Transmission  Assets  to the Intermediate Entity;  (iv)  (a)  the

Intermediate  Entity  to  effect  financing,  including  assuming

obligations  of the Operating Companies; and (b) the Intermediate

Entity  to  use  a  portion  of the proceeds  received  from  its

external financing to repay assumed debt and other obligations of

the  Operating  Companies; (v) Entergy Corp.  and  the  Operating

Companies  to  transfer,  directly,  or  indirectly  through  the

Intermediate Entity, ownership and operational control  over  the

Entergy System Transmission Assets to Transco; (vi) Entergy Corp.

and  the  Operating Companies to receive, directly or indirectly,

in  exchange for such transfers, passive member units in  Transco

("Class  B  Interests"); (vii) Entergy Corp.  and  the  Operating

Companies  to  exchange,  at  such  time  as  they  elect,  their

respective  Class B Interests for shares of the  Class  B  Common

Stock of the Managing Member ("Class B Common Stock") and to

sell  Class  B  Interests and Class B Common  Stock;  (viii)  the

Operating  Companies and the Intermediate Entity to pay dividends

out of capital; and (ix) Entergy Services to provide services  to

the  Intermediate  Entity and possibly  to  provide  services  to

Transco on a limited basis.

(B)  Transco

     (1)  Transco Operations, Organization and Ownership

     (a)  General

     Transco,  an  independent  LLC,  will  have  the  duty   and

authority  to  provide transmission service in  geographic  areas

formerly  served  by  Transco members,  including  the  Operating

Companies.  Transco's functions will be to operate, maintain  and

enhance  the Transco system including: (1) responding to requests

for   transmission  service  across  the  Transco   system;   (2)

evaluating  the  requests  for  interconnection  to  the  Transco

system;  and  (3) developing and implementing the expansion  plan

for  the  Transco  system. Transco will operate  within  the  SPP

Partnership RTO and under its oversight.

     (b)  Transco Operating Agreements and Agency Agreements

     Transco  members,  including the  Operating  Companies,  may

transfer  ownership and control of their transmission  assets  to

Transco  in  exchange for Class B Interests. Other non-affiliated

entities and/or the Operating Companies may enter into agreements

("Operating Agreement") with Transco relating to the operation of

their  transmission  assets. A form of the  Operating  Agreement,

which  is  subject  to  FERC approval, is filed  as  Exhibit  B-1

hereto.  The  Operating Agreement authorizes Transco to  exercise

functional  operational control over transmission assets  covered

by  the  Operating  Agreement  and  to  incorporate  the  revenue

requirement   associated  with  such  assets  into  the   Transco

transmission  rate  schedules.  Consequently,  the  Transco  will

exercise  its  operating authority in two ways: it will  directly

control  transmission facilities contributed to it in return  for

Class  B  Interests, and it will control transmission  facilities

subject to its operational control under the Operating Agreement,

by  directly  controlling or by directing the transmission  asset

owners  to  take actions relating to those assets.  Finally,  the

Operating  Companies  may also enter into  a  separate  agreement

("Agency   Agreement")  which  authorizes  Transco   to   provide

transmission  and wholesale distribution services  on  behalf  of

Transco members over non-transferred facilities. A form of Agency

Agreement, which is subject to FERC approval, is filed as Exhibit

B-2 hereto. In the event that certain of the Operating Companies'

Transmission Assets have not been transferred to Transco,  as  of

January 1, 2002, Transco will assume operational control of those

Transmission Assets through the Operating and/or Agency Agreement

with the respective Operating Companies (see footnote 3 above).

     (c)  Independence of Transco and Managing Member from the Entergy
System

     The  transmission  assets transferred to Transco,  including

the  Entergy System Transmission Assets, will be pooled into  one

system,  which will be governed by the Managing Member under  the

Limited Liability Company Agreement of Transco (the "Transco  LLC

Agreement").  A  copy of the Transco LLC Agreement  is  filed  as

Exhibit A-1 hereto. The Managing Member's board of directors will

manage  the  business affairs of Transco. In  addition,  the  SPP

Partnership  RTO,  in  its oversight of Transco,  will  serve  as

security coordinator and will be responsible, among other things,

for  the dispute resolution and market monitoring functions. This

two-pronged  governing structure promotes Transco's  independence

as an entity separate from Entergy System control.

     The  Managing Member will manage Transco's business  affairs

and   employ   the   personnel  necessary  to   carry   out   its

responsibilities. No employee of the Entergy System  will  be  an

employee  of Transco unless such employee has terminated  his/her

employment  with  other entities within the  Entergy  System  and

divested  all stock ownership in any member or Market Participant

within  six months of employment with Transco, except for benefit

plans the value of which do not vary with the performance of  the

member  or Market Participant. The Managing Member will initially

have  a  seven  (7) member board of directors with the  expertise

necessary  for  running an independent transmission  company  and

accessing capital markets.

     The  initial  board of directors will be  chosen  through  a

procedure  designed to satisfy requirements  that  the  board  be

independent  from  Market  Participants,  including  the  Entergy

System.  The passive owners will select one national search  firm

from  the  following three: Korn Ferry International, Heidrick  &

Struggles   International   and  Russell   Reynolds,   or   their

successors. The selected search firm will then identify  fourteen

(14) candidates that satisfy the board member qualifications  set

forth  in  the plan under which Transco is created (the  "Transco

Implementation Plan"). A copy of the Transco Implementation  Plan

is  filed as Exhibit A-5 hereto. The search firm will provide the

names  and  qualifications of the candidates to a board selection

committee (the "Board Selection Committee").

     The   Board   Selection  Committee  will  consist   of   two

representatives  from  the  group of utilities  that  have  given

notice  of their intent to transfer their transmission facilities

to  Transco,  one representative from the group of entities  that

have  given  notice  of  their intent  to  execute  an  Operating

Agreement with Transco, two representatives from the group of the

cooperatives, municipalities and federal power marketing agencies

that  sell electricity at retail or at wholesale within the  area

served   by   the   proposed  members   of   Transco,   and   two

representatives  from the group of the power marketers,  brokers,

industrial consumers, and entities that are developing generation

facilities  that  are, or will be, connected to the  transmission

grid  owned  by  Transco. Each Market Participant group  will  be

responsible    for   identifying   its   representatives.    Each

representative  on the Board Selection Committee  will  have  one

vote.  The  Board Selection Committee will then select seven  (7)

directors  from  the fourteen (14) candidates identified  by  the

search firm. At least 4 of the 7 must have been president,  chief

executive  officer, chief operating officer or a director  of  at

least  one  other publicly-traded company and at least  two  must

have had experience in the electric utility industry.

     Transco  officers and employees must also be independent  of

any  Market  Participant and must have no affiliation  with,  nor

financial  interest  in,  any Market Participant,  including  the

Entergy  System  companies. Former officers  or  employees  of  a

Market  Participant may become officers or employees of  Transco;

provided  that  they divest all stock ownership in  their  former

employer  within six months of employment with Transco, and  they

sever  all  financial interest in their former employers,  except

for  benefit  plans  the value of which  do  not  vary  with  the

performance  of the former employer. Employees of  the  Operating

Companies  and  Entergy Services that transfer  to  Transco  will

terminate  their  employment with any entity within  the  Entergy

System.  The transmission owners that contribute their assets  to

Transco  will initially appoint, subject to ratification  by  the

Managing  Member's board of directors, Transco's chief  executive

and senior officers. In addition, under Transco's Code of Conduct

(the "Code of Conduct"), the directors, officers and employees of

Transco  are  precluded from providing preferential treatment  or

preferential  access  to information to any  Market  Participant,

including  any  Entergy System company. See the Code  of  Conduct

which is filed herewith as Exhibit 1 to the Transco LLC Agreement

which is filed as Exhibit A-1 hereto.

     The Managing Member will initially own a nominal interest in

Transco  but  will control 100% of the interests that  have  full

power  to vote ("Class A Interests"). The Managing Member's board

of  directors  will run the business affairs of  Transco.  Market

Participants, including Entergy System companies,  will  own  the

Class  B Interests, which are passive investment interests. Class

B  Interests  share  in Transco's profits and  losses,  and  have

certain  limited  voting rights for protection  of  the  holders'

investment interests, as described below. Transco cannot  require

Class  B  Interest  holders  to  contribute  additional  capital,

although  under limited circumstances, a Class B Interest  holder

may   voluntarily   make  an  additional  capital   contribution.

Consequently,  Transco expects it will have to  raise  additional

capital,  from  parties other than Entergy System companies,  for

its financing needs. The Managing Member will be the vehicle used

to  access  the markets and raise the necessary capital,  through

bank  lines  of credit, the issuance of commercial paper,  and/or

the  issuance of securities, through public offerings or, through

private  placements.  As  the Managing  Member  contributes  this

additional capital to Transco, its ownership interest in  Transco

will increase.

     Until such time as there is public and/or private investment

in  Transco,  the members of the initial board of directors  will

fill  all  vacancies when a director's term  expires  or  a  seat

otherwise  becomes vacant. Directors, officers and  employees  of

the Managing Member are subject to the same restrictions on their

relationships   with   the  Entergy  System   or   other   Market

Participants  as  Transco directors, officers and  employees  are

under  the  Code  of Conduct. Once the Managing Member  has  sold

stock  through an initial public offering, the board of directors

will  be  selected by the investors holding voting  interests  as

with  any  public company. In the event that there is an  interim

period  of  time  when there is only private  investment  in  the

Managing  Member, the private investors will be  provided  voting

rights  proportionate to their investment. Moreover, the Managing

Member  has  been  structured to prohibit any Market  Participant

from  owning  Class A shares which are, as discussed  below,  the

"voting securities" of the Managing Member within the meaning  of

Section  2(a)(7)  of  the  Act. As a result,  subsequent  to  the

election  of  the initial board of directors, Market Participants

will  be precluded from selecting the board of directors  of  the

Managing Member. Having the board of directors selected  in  this

fashion  provides  another  level  of  independence  and  further

ensures  that  no Market Participant is directly, or  indirectly,

controlling the activities of Transco.

     The  Managing  Member will have available for  issuance  two

classes  of  equity  securities. The first, the  Class  A  Common

Stock,  with full power to vote, will be issued to the  directors

and to non-Market Participant capital investors. The second,

the Class B Common Stock, with limited voting rights, as discussed

below,  will  be  issued to those persons or  entities  that  are

Market  Participants  or  those  persons  or  entities  that,  in

consideration for the issuance of such shares, will  transfer  to

the  Managing  Member  all  or  any  portion  of  their  Class  B

Interests.  The  Operating Companies may convert  their  Class  B

Interests  into  Class  B Common Stock or sell such Class  B

Interests or Class B Common Stock to other entities.

     Transco  will  operate under the oversight of  the  SPP.  As

delineated in the SPP Partnership RTO Memorandum of Understanding

("MOU"),  the  SPP  will be responsible for: (1)  acting  as  the

regional  security coordinator for the SPP and  Transco  systems;

(2)   performing  available  transfer  capability/total  transfer

capability  ("ATC/TTC") calculations for  the  SPP  and  Transco,

subject  to  the  conditions of the MOU; (3) fostering  full  and

complete  input  by  all Market Participants  into  the  SPP

Partnership RTO's and the Transco's policies; (4) overseeing  the

regional  transmission  expansion  planning  process;   and   (5)

providing an appropriate forum for market monitoring and  dispute

resolution. Certain functions will be performed by the SPP and by

Transco.

     The  operation  of Transco under SPP oversight  provides  an

additional  level of independence for Transco. For example,  this

structure  allows the SPP to perform certain essential  functions

such  as the calculation of ATC/TTC. This removes these important

calculations from any possible control by Entergy or other Market

Participants  in Entergy's region. In addition, the SPP  provides

additional   oversight  for  the  functions  that  are   actually

performed  by  Transco.  That  is, the  SPP  is  responsible  for

monitoring the markets. For instance, this monitoring  plan  will

ensure that Transco does not engage in actions or behaviors  that

are  inconsistent  with  the  SPP  Partnership  RTO  transmission

tariff.

     Furthermore,   the   Transco  structure  itself   eliminates

vertical  integration for purposes of transmission and eliminates

the   distinction  between  bundled  native  load  and  customers

purchasing network transmission service. Transco will operate its

system  independently of its predecessor utilities. Once  Transco

is  established, the Operating Companies will take service  under

the SPP Partnership RTO transmission tariff.

     The  Managing  Member's ownership interest in  Transco  will

grow  as  a result of the conversion mechanism incorporated  into

Transco's  structure.  As  previously  discussed, this conversion

mechanism allows the passive members of Transco to convert  their

Class  B Interests, from passive interests in Transco to Class  B

Common  Stock of the Managing Member, and, as a result,  for  the

Managing Member to increase its ownership interest in Transco.

     Reference is made to the forms of the Transco LLC Agreement,

the  Certificate of Incorporation of the Managing Member, the By-

Laws  of  the Managing Member and the Class B Common  Stock,  the

Transco Implementation Plan, the Operating Agreement and the MOU,

filed  as  Exhibits  A-1 through A-4, B-1 and B-3,  respectively,

hereto  and  Item  3  for further information on  the  structure,

organization and voting powers of the members of Transco and  the

Managing Member.

     (2)  Transco and FERC Requirements

     The  transfer of the Entergy System Transmission  Assets  to

Transco,  with  Transco operating as part of the SPP  Partnership

RTO  is  being done in accordance with FERC Orders Nos. 2000  and

2000-A.

     FERC  Orders  No.  2000  and 2000-A  identify  four  minimum

characteristics that a transmission entity must  meet  and  eight

minimum  functions  that a transmission entity  must  perform  to

qualify   as   a   regional  transmission  organization   ("RTO")

thereunder.   The  four  minimum  characteristics  include:   (i)

independence,  (ii)  scope and configuration,  (iii)  operational

authority,  and  (iv) short-term reliability. The  eight  minimum

functions  require the RTO to: (i) be the sole  administrator  of

its own transmission tariff and employ a pricing system that will

promote   efficient  use  and  expansion  of   transmission   and

generation facilities, (ii) ensure the development and  operation

of  market  mechanisms to manage transmission  congestion,  (iii)

develop  and implement procedures to address parallel  path  flow

issues  within its region and with other regions, (iv)  serve  as

the  provider of last resort for the ancillary services  required

by FERC Order No. 888, (v) be the single OASIS site administrator

for   all   transmission  facilities  under   its   control   and

independently  calculate  ATC/TTC,  (vi)  provide  for  objective

monitoring  of  markets  it  operates or  administers,  (vii)  be

responsible  for  planning,  directing  or  arranging,  necessary

transmission expansions, additions, and upgrades that will enable

it   to   provide   efficient,  reliable  and  non-discriminatory

transmission  service  and  coordinate  these  efforts  with  the

appropriate  state authorities, and (viii) ensure the integration

of  reliability  practices within an interconnection  and  market

interface  practices among regions. FERC Orders 2000  and  2000-A

further  require that RTOs (i) engage in a collaborative  process

with  stakeholders in the region in designing the  RTO,  (ii)  be

designed in accordance with the "open architecture" principle  so

that  it can evolve over time, and (iii) accommodate, and  report

on their efforts to include, public power.

     The  design of Transco and the Managing Member entities, and

their operations under the oversight of the SPP, will comply with

the  above requirements as described in Entergy's application  to

FERC filed herewith as Exhibit D-1.

     (3)  Transmission Assets Being Transferred

     (a)  Entergy System Transmission Assets

     The Operating Companies propose to transfer ownership and/or

control  of  their  respective Transmission  Assets  to  Transco,

directly or indirectly, through the Intermediate Entity.

     Transco  will  acquire from the Operating Companies  all  of

their transmission facilities that operate at or above 69 kV. The

Transmission Assets proposed to be transferred include:

     - Transmission lines (including towers, poles and conductors)
       and transmission substations;

     - Transformers providing transformation within the bulk
       system;

     - System control center and operating facilities;

     - Lines providing connections to generation sources and step-
       up (plant) substations;

     - Radial taps from the transmission system up to, but not
       including, the facilities that establish the final connection to
       distribution facilities or retail customers;

     - Common facilities in substations that provide primarily a
       transmission function;

     - Voltage control devices and power flow control devices
       directly connected to the transmission system; and

     - Other transmission-related assets comprising the Entergy
       Services Assets (see footnote 1).

     The   Operating  Companies'  Transmission  Assets  will   be

transferred at net book value. The net book value for the Entergy

Arkansas   Transmission   Assets,   the   Entergy   Gulf   States

Transmission  Assets, the Entergy Louisiana Transmission  Assets,

the  Entergy Mississippi Transmission Assets, and the Entergy New

Orleans  Transmission  Assets,  including  the  Entergy  Services

Assets,  as  of  December 31, 1999, would have been approximately

$522,000,000,   $516,000,000,  $348,000,000,   $382,000,000   and

$25,000,000, respectively. Since the end of 1999, as a result  of

ongoing  capital expenditures, the amount of the  Entergy  System

Transmission  Assets  to  be transferred  to  Transco,  has  been

increasing in an annual amount of approximately $250,000,000.

     (b)  Transmission Assets of Non-Affiliated Entities

     Transco  also may acquire transmission assets from  entities

other than the Operating Companies.

(C)  Financing and Redemption, Retirement or Repurchase of
Securities and Sale of Class B Interests and Class B Common Stock
and Provision of Services

     (1)  Intermediate Entity Financing

     In  connection with the transfer to the Intermediate  Entity

of  the  Entergy  System  Transmission Assets,  the  Intermediate

Entity  will  assume a proportionate share of  the  debt  of  the

Operating Companies associated with the Transmission Assets. Each

Operating  Company  will be granted a security  interest  in  its

transferred  Transmission Assets to secure the repayment  of  the

debt assumed by the Intermediate Entity. Separate agreements will

be executed with respect to each Operating Company.

     The  Operating  Companies  will  effect  releases  of  their

respective Transmission Assets from the liens of their respective

mortgage  indentures and immediately thereafter contribute  those

assets   to   the  Intermediate  Entity  in  exchange   for   the

Intermediate  Entity's  assumption  of  debt  and  an   ownership

interest  in  the Intermediate Entity. First Mortgage  Bonds,  as

well as other long-term debt and liabilities, including pollution

control  revenue  bonds, and a variety of contracts  and  leases,

will  be  allocated to the transmission assets with corresponding

assumptions  of debt by the Intermediate Entity. The Intermediate

Entity  will  assume its allocated portion of  Operating  Company

debt  and liabilities pursuant to assumption agreements relating,

respectively,  to each of the Operating Companies  (collectively,

hereinafter referred to as the "Assumption Agreement"). A form of

Assumption Agreement is filed as Exhibit B-4 hereto. Reference is

also made to footnote 15 for further information relating to  the

debt assumption arrangements.

     When  the Intermediate Entity obtains independent financing,

it  will  use  the proceeds to repay the amounts owed  under  the

Assumption  Agreement and then transfer transmission  assets  and

new   debt  to  Transco  receiving  passive  ownership  interests

therein.  Although  it is intended that the  refinancing  by  the

Intermediate  Entity  be  immediate,  such  that  the  Assumption

Agreement  is  immediately defeased, it  may  be  the  case  that

immediate  refinancing will be impossible or inadvisable  because

of  economic, capital market or other business reasons,  and  the

Assumption Agreement may need to remain in place for a separation

period (the "Separation Period") which in no event will be longer

than  one  year  from the date of the transfer of  the  Operating

Company  Transmission  Assets to the Intermediate  Entity,  which

transfer is expected to be December 15, 2001.

     Under the Assumption Agreement, the Intermediate Entity must

simultaneously  execute  Mortgage, Deed  of  Trust  and  Security

Agreements  relating,  respectively, to  each  of  the  Operating

Companies (collectively, hereinafter referred to as the "Security

Agreement")  that grants each Operating Company a first  priority

lien   on   the  transmission  assets  it  transferred   to   the

Intermediate Entity to protect the Operating Company in the event

of  a  default  by the Intermediate Entity under  the  Assumption

Agreement.  A form of Security Agreement is filed as Exhibit  B-5

hereto.

     The Intermediate Entity proposes, from time to time, through

June  30, 2004, to issue short-term debt consisting of borrowings

under  one  or  more  credit agreements  ("Facility"),  to  issue

commercial  paper or to use other forms of short-term  financing.

The  maturity  of  such  debt  will  not  exceed  one  year.  The

Intermediate Entity intends to use a portion of the funds  raised

through  this  external financing to repay all of  the  debt  and

other assumed obligations of the Operating Companies.

     The Intermediate Entity may sell commercial paper, from time

to  time,  in  established domestic or European commercial  paper

markets to dealers at the prevailing discount rate per annum,  or

at the prevailing coupon rate per annum, at the date of issuance.

It  is expected that the dealers acquiring commercial paper  from

the Intermediate Entity will re-offer such paper at a discount to

corporate, institutional and, with respect to European commercial

paper, to individual investors.

     Such  commercial paper issuances may be backed by bank lines

of credit for 100% of the outstanding amount of commercial paper,

if necessary, to assure the desired credit rating from the rating

agencies.  Loans  under the Facility will be at  rates  generally

available to borrowers of similar credit quality at the time  the

Facility is established.

     The  Intermediate Entity also may issue from time  to  time,

through  June  30,  2004, long-term debt  consisting  of  secured

bonds, unsecured debentures, medium-term notes, convertible debt,

subordinated  debt,  bank borrowings, other  debt  securities  or

other forms of long-term financing, whether secured or unsecured.

Any  long-term debt security would have a maturity  ranging  from

one  to 50 years. Debentures, medium-term notes and secured bonds

will be issued under an indenture.

     Any  short-term or long-term debt security or Facility would

have  such  designation,  aggregate  principal  amount,  interest

rate(s)  or methods of determining the same, terms of payment  of

interest,   redemption   provisions,  non-refunding   provisions,

sinking  fund terms, conversion or put terms and other terms  and

conditions as the Intermediate Entity may determine at  the  time

of issuance.

     In  addition,  the  Intermediate  Entity  may  issue  equity

securities,   capital  shares,  partnership  interests,   limited

liability company interests, member interests, trust certificates

or other forms of equity interests.

     The  Intermediate  Entity may also raise funds  through  (1)

capital contributions or (2) loans.

     The  amount of short-term and long-term debt outstanding  at

any time, including debt under the Facility, will not exceed,  in

the aggregate, $1.9 billion ("Debt Limit") and, together with the

equity  securities outstanding, will not exceed, in the aggregate

$3.8  billion  ("Finance Limit"). Entergy requests  authorization

for  the Intermediate Entity, to the extent not otherwise exempt,

or authorized by Commission order, under the Act, to issue and to

have  outstanding at any one time, debt up to the amount  of  the

Debt  Limit  and  to  issue  and  to  have  outstanding,  in  the

aggregate, debt and equity up to the amount of the Finance Limit.

Entergy may need to guarantee, lend its credit in support of,  or

assume  obligations of, the securities of the Intermediate Entity

and   requests   authorization,  to  the  extent  not   otherwise

authorized  under  the  Act,  for such  guaranties,  support,  or

assumption of obligations, up to the Finance Limit.

     Intermediate Entity debt and equity securities may be issued

and sold pursuant to purchase agreements or standard underwriting

agreements.  Public distribution may be effected through  private

negotiations  with  underwriters, dealers or agents,  or  through

competitive   bidding  among  underwriters.  In  addition,   such

securities  may be issued and sold through private placements  or

other non-public offerings to one or more persons. All such  debt

instruments and stock sales will be at rates or prices and  under

conditions negotiated, or based upon, or otherwise determined by,

competitive  capital  markets. In no  event,  however,  will  the

effective cost of money on short-term debt exceed the greater  of

(a)  500  basis  points  over the London Interbank  Offered  Rate

("LIBOR") for the relevant interest rate period, and (b) a  gross

spread  over  U.S.  Treasury securities that is  consistent  with

similar  securities of comparable credit quality  and  maturities

issued  by  other companies. The interest rate on long-term  debt

will  not exceed at the time of issuance the greater of  (a)  500

basis  points  over U.S. Treasury securities having  a  remaining

term  comparable to the term of such series, if issued at a fixed

rate,  or  500 basis points over LIBOR for the relevant  interest

rate  period,  if  issued at a floating rate,  and  (b)  a  gross

underwriting spread that is consistent with similar securities of

comparable  credit  quality  and  maturities  issued   by   other

companies.

     The  Intermediate Entity also requests authorization, to the

extent  not  otherwise authorized under the Act,  to  enter  into

interest  rate  hedging  transactions with  respect  to  existing

indebtedness  ("Interest  Rate  Hedges"),  subject   to   certain

limitations  and  restrictions, in  order  to  reduce  or  manage

interest  rate cost. Interest Rate Hedges would only  be  entered

into with counterparties ("Approved Counterparties") whose senior

debt  ratings, or the senior debt ratings of the parent companies

of  the  counterparties,  as published  by  Standard  and  Poor's

Ratings Group, are equal to or greater than BBB, or an equivalent

rating from Moody's Investors Service or Fitch.

     Interest  Rate  Hedges  will involve the  use  of  financial

instruments  commonly used in today's capital  markets,  such  as

interest rate swaps, caps, collars, floors, and structured  notes

(i.e.,  a  debt instrument in which the principal and/or interest

payments  are  indirectly linked to the value  of  an  underlying

asset  or index), or transactions involving the purchase or sale,

including   short  sales,  of  U.S.  Treasury  obligations.   The

transactions  would  be  for fixed periods  and  stated  notional

amounts.  Fees,  commissions and other  amounts  payable  to  the

counterparty or exchange (excluding, however, the swap or  option

payments)  in  connection with an Interest Rate  Hedge  will  not

exceed  those  generally  obtainable in competitive  markets  for

parties of comparable credit quality.

     In addition, the Intermediate Entity requests authorization,

to  the  extent not otherwise authorized under the Act, to  enter

into   interest  rate  hedging  transactions  with   respect   to

anticipated  debt offerings ("Anticipatory Hedges"),  subject  to

certain  limitations  and restrictions. Such Anticipatory  Hedges

would  only  be  entered into with Approved  Counterparties,  and

would  be  utilized  to fix and/or limit the interest  rate  risk

associated  with any new issuance through (i) a forward  sale  of

exchange-traded  U.S. Treasury futures contracts,  U.S.  Treasury

obligations  and/or a forward swap (each a "Forward Sale"),  (ii)

the  purchase of put options on U.S. Treasury obligations (a "Put

Options  Purchase"), (iii) a Put Options Purchase in  combination

with  the  sale  of call options on U.S. Treasury obligations  (a

"Zero Cost Collar"), (iv) transactions involving the purchase  or

sale, including short sales, of U.S. Treasury obligations, or (v)

some  combination of a Forward Sale, Put Options  Purchase,  Zero

Cost   Collar  and/or  other  derivative  or  cash  transactions,

including, but not limited to structured notes, caps and collars,

appropriate for the Anticipatory Hedges.

     Anticipatory  Hedges  may  be  executed  on-exchange   ("On-

Exchange  Trades")  with brokers through the opening  of  futures

and/or  options  positions traded on the Chicago Board  of  Trade

("CBOT"), the opening of over-the-counter positions with  one  or

more counterparties ("Off-Exchange Trades"), or a combination  of

On-Exchange  Trades  and  Off-Exchange Trades.  The  Intermediate

Entity  will determine the optimal structure of each Anticipatory

Hedge  transaction  at  the time of execution.  The  Intermediate

Entity  may  decide to lock in interest rates  and/or  limit  its

exposure  to  interest rate increases. All open  positions  under

Anticipatory Hedges will be closed on or prior to the date of the

new  issuance and the Intermediate Entity will not, at any  time,

take  possession or make delivery of the underlying U.S. Treasury

Securities.

     The Intermediate Entity will comply with existing and future

financial  disclosure  requirements of the  Financial  Accounting

Standards Board associated with hedging transactions.

     (2)  Financing of Multiple Intermediate Entities, Intra Entergy
System Financing and Restructuring

     In the event that the Intermediate Entity is composed of one

or    more   corporations,   limited   liability   companies   or

partnerships,  Entergy  requests authority,  to  the  extent  not

otherwise exempted, or authorized by Commission order, under  the

Act,  for  any  such  Intermediate Entity or Entities  to  extend

credit  to,  or  to guarantee the obligations of,  or  indemnify,

other  such  Intermediate Entities and to  loan  to,  to  acquire

securities  of, or borrow from, other such Intermediate  Entities

up  to the Debt or Finance Limit, as appropriate. One or more  of

such  Intermediate  Entities  may  also  assume  obligations   or

securities of the Operating Companies incurred in connection with

the  Entergy  System  Transmission Assets, and  Entergy  requests

authority  for such assumption up to the amount of the Debt Limit

to  the extent not otherwise authorized by order, or exempt under

the  Act. In addition, Entergy Corp. requests authority,  to  the

extent  not otherwise exempt, or authorized by order,  under  the

Act,  to acquire the securities of, and/or make loans to, one  or

more  entities  comprising  the Intermediate  Entity  up  to  the

Finance or Debt Limit, as appropriate.

     It  may  be  necessary  to reorganize  and  restructure  the

Intermediate  Entity, from time to time, into different  entities

or ownership structures. Entergy requests authority to the extent

not  otherwise exempt, or otherwise authorized, under the Act for

such internal reorganization and restructuring and, to the extent

not  otherwise exempt, or otherwise authorized, possibly to  sell

interests in the Intermediate Entity to non-affiliates, including

the assignment of Intermediate Entity obligations.

     (3)  Redemption, Retirement and/or Repurchase of Securities and
Sale of Class B Interests and Class B Common Stock

     The Operating Companies request authority, to the extent not

otherwise exempt under the Act, to direct the use of a portion of

the  proceeds  received  from  the Intermediate  Entity  for  the

retirement, redemption or repurchase of their debt and/or  equity

securities in accordance with the terms of the instruments  under

which those securities were issued.

     Entergy  and  the  Operating Companies, to  the  extent  not

otherwise exempt under the Act, request authority to sell Class B

Interests and Class B Common Stock.

     (4)  Dividends Out of Capital

     One  or  more  of the newly created entities comprising  the

Intermediate  Entity may need to pay dividends to  its  immediate

parent  company  out  of  capital. To the  extent  not  otherwise

authorized under the Act, these entities request authority to pay

such  dividends  out  of capital. Moreover,  to  rebalance  their

capital  structures  after  repayment  of  assumed  debt  by  the

Intermediate  Entity, the Operating Companies  may  need  to  pay

dividends out of capital to Entergy Corp., including dividends of

and  out  of their interests in Transco. The Operating  Companies

request authority for such dividends.

     (5)  Provision of Services

     Entergy  Services may need to provide administrative  and/or

corporate  services  to  the Intermediate  Entity.  All  of  such

services  will  be  provided "at cost"  in  accordance  with  the

requirements  of Rules 87, 90 and 91 under the Act  and  will  be

performed under a service agreement, a form of which is filed  as

Exhibit  J-1  hereto. Further, Entergy Services  may  provide  to

Transco certain services, which will be limited in scope  and  in

conformity with the FERC's independence requirements.

Item 2.   Fees, Commissions and Expenses.

     The  fees,  commissions  and  expenses  incurred  or  to  be

incurred in connection with the transactions proposed herein will

be filed by amendment.

Item 3.   Applicable Statutory Provisions.

     The following Sections of, or Rules under, the Act may apply

to the proposed transactions to the extent not otherwise exempted

or  previously authorized under the Act. To the extent that other

Sections  or  Rules  are  deemed to apply,  the  Applicants  also

request authority under such Sections and/or Rules.

    Section and/or Rule                Transaction

Sections 2(a)(8), 2(a)(11) and   Transco     and    Managing
2(a)(17)                         Member      not      being
                                 "subsidiary companies"  or
                                 "affiliates"  of   Entergy
                                 Corp.

Sections 6 and 7                 Issuance  of securities  by
                                 Intermediate Entity,  from
                                 time to time

Sections 9 and 10                Acquisition  of  securities
                                 of  one  or more  entities
                                 comprising             the
                                 Intermediate       Entity,
                                 Transco  and the  Managing
                                 Member, from time to time

Section 12(b) and Rule 45        Guaranties,  or  extensions
                                 of  credit, to or  by  one
                                 or      more      entities
                                 comprising             the
                                 Intermediate Entity,  from
                                 time to time

Section 12(c) and Rule 46        Dividends  out  of  capital
                                 of     the    Intermediate
                                 Entity  and the  Operating
                                 Companies

Section 12(d) and Rules 43 or    Redemption,  retirement  or
44                               repurchase  of  securities
                                 by      the      Operating
                                 Companies;   transfer   of
                                 Entergy  Services   Assets
                                 to      the      Operating
                                 Companies;   transfer   of
                                 ownership    of    Entergy
                                 System        Transmission
                                 Assets   to   Intermediate
                                 Entity   and  to  Transco;
                                 reorganization         and
                                 restructuring           of
                                 Intermediate       Entity;
                                 possible      sale      of
                                 interests  in Intermediate
                                 Entity  including transfer
                                 of   Intermediate   Entity
                                 obligations;    sale    of
                                 Class   B  Interests   and
                                 Class B Common Stock

Section 13                       Provision  of  services  to
                                 the   Intermediate  Entity
                                 and possibly to Transco

Sections 32 and 33 and  Rules    Aggregate  investments   in
53 and 54                        exempt           wholesale
                                 generators  ("EWGs")   and
                                 foreign  utility companies
                                 ("FUCOs")

(A)  Sections 2(a)(8), 2(a)(11) and 2(a)(17)

     In  accordance with FERC Order No. 2000, the Transco and the

Managing  Member will be independent from any Market Participant.

The  structure of the Transco and the Managing Member  have  been

set  up to ensure independence from the Entergy System. Moreover,

this  independence  also  satisfies the  Commission's  tests  for

determining that an entity is not an "affiliate" or a "subsidiary

company"  in  a  holding  company system within  the  meaning  of

Sections  2(a)(8)  and  2(a)(11) of the Act,  since  among  other

matters,  the Entergy System's security interests in Transco  and

the  Managing  Member  are  not "voting  securities"  within  the

meaning of Section 2(a)(17).

     There  are four aspects of the independence of Transco  from

the  Entergy  System:  (1) the oversight  by  the  non-affiliated

entity,  the  SPP Partnership RTO, of Transco; (2)  the  complete

separation between Transco and the Entergy System of interlocking

directors,  officers  and  employees; (3)  the  Code  of  Conduct

prohibiting  the grant of any preferential treatment  to  Entergy

System  companies by Transco; and (4) the passive nature  of  the

Entergy  System's  investment in Transco and its  limited  voting

rights. The same is true for any interest in the Managing  Member

that  Entergy  may  acquire; moreover, as  described  above,  the

process for selecting directors of the Managing Member, who  will

have  control of the Managing Member and over the voting  of  the

Class  A  Interests (the securities with principal voting power),

is  designed,  specifically,  to  ensure  independence  from  the

Entergy System. The Entergy System will not have any contracts or

arrangements  to  exercise control over Transco or  the  Managing

Member  and,  as  discussed below, the  Entergy  System's  voting

rights will be limited.

     Voting Rights

     In  several recent no-action letters, the Commission's staff

(the  "Staff")  has  concurred  that  various  securities  having

limited  voting rights are not "voting securities" under  Section

2(a)(17)  of the Act, including rights to vote on major corporate

or  partnership  transactions, such as mergers, or  dissolutions.

These  voting  rights, if the investor is in a passive  role  and

does  not  otherwise exercise a "controlling influence" over  the

entity  invested,  through  control  or  other  arrangement,  are

granted merely to protect the investment.

     Two recent Commission no-action letters are S.W.

Acquisition, L.P. ("TNP Letter"), and Berkshire Hathaway, Inc.

("MidAmerican Letter") are instructive on the issue of limited

voting power and control. The TNP letter involved the going

private transaction of TNP Enterprises, Inc. ("TNP"), an exempt

holding company. Equity investors formed a limited partnership

("TNLP") to acquire TNP. The general partner of TNLP, a limited

partnership controlled by one individual, was to manage the day-

to-day affairs of TNLP. Initial financing for the buyout was

provided through the sale of limited partnership interests and

preferred stock with limited voting rights and from bridge loans.

The preferred stock had voting rights similar to the voting

rights permitted to preferred stockholders of utility companies

under the SEC's Statement of Policy Regarding Preferred Stock,

Holding Co. Act. Rel. No. 13106; 1956 SEC Lexis 515 (1956). Under

long-standing Commission interpretation, these rights did not

render the preferred stock a "voting security" or, otherwise give

the holders a "controlling influence" over the issuing

corporation.

     The TNP Letter focused on the extent of the voting rights of

the limited partners. Counsel, in their letter request to the

Staff, indicated that the TNLP limited partner rights were of a

kind previously determined by the Staff (in the context of

independent power projects) not to constitute a "controlling

influence" or a "voting security" under the Act. Various events

required the consent of the holders of 51% of the TNLP limited

partnership interests to protect their investments. In addition,

unanimous approval of the limited partners was necessary to

reorganize or recapitalize TNLP to the detriment of any limited

partner.

       The MidAmerican no-action letter involved a going private

transaction in which a package of common stock and preferred

stock, with limited voting power, was sold to a corporate

investor without affecting the corporate acquiror's status under

the Act. Berkshire Hathaway, Inc., and its affiliates

(collectively "BH"), joined three individuals, including the

Chairman of the Board, the President and a Director of

MidAmerican Energy Holdings Company ("MEHC"), in acquiring MEHC

and, indirectly, its only public-utility subsidiary, MidAmerican

Energy Company, a combination electric and gas utility company.

Under the going private structure, BH was to purchase

approximately 9.7% (but not more than 9.9%) of the outstanding

shares of MEHC's  voting common stock, up to $800 million in

aggregate principal amount of MEHC Trust Preferred Stock ("Trust

Preferred") and approximately $1.21 billion of MEHC Zero Coupon

Convertible Preferred Stock ("CV Preferred"). The balance of

MEHC's common stock, approximately 90.3%, was to be purchased by

the three individuals, with one individual and his family to own

approximately 86%. Upon completion of the transaction, BH was to

own approximately 81%, the family group, 18%, and the other

individuals, 1%, out of the total of MEHC equity (excluding the

Trust Preferred). Since the management shareholders were to

continue in management, would control a majority of the

outstanding common shares and could elect directors, the Staff

agreed that BH was not in a position to control MEHC. Moreover,

BH had had no prior dealings with MEHC and intended to exercise

its rights only as an investor but not as a manager of MEHC.

       The MidAmerican Letter request focused on the rights of

the CV Preferred to determine whether or not that security was a

"voting security" or otherwise gave BH the right to exercise a

"controlling influence" over MEHC (the Trust Preferred had no

voting rights). BH, as holder of the CV Preferred, had the right

to elect 2 directors (out of 10) to MEHC's Board of Directors.

All actions of the Board of Directors required a simple majority

vote of a quorum. The CV Preferred had no rights to appoint or

remove officers of MEHC (other than consent rights to the

appointment or removal of MEHC's Chief Executive Officer). The CV

Preferred was given approval rights over certain major events,

similar to but less than the TNLP limited partner rights

discussed above, to protect the holders' investments. Under these

circumstances the Staff agreed that BH was not a "holding

company" and MEHC was not a "subsidiary company" of a "holding

company".

     Entergy's limited voting rights in Transco through

acquisition of Class B Interests and, if exercised, in the

Managing Member through acquisition of Class B Common Stock

provide the Entergy System with a lesser package of, and

certainly no more than, the voting rights in SW Acquisition L.P.

and Berkshire Hathaway, Inc.

     For  the reasons described above in part I(B)(1)(c)  and  in

this  Item  3,  no  Entergy System company will own  or  control,

directly  or indirectly, a "voting security", within the  meaning

of Section 2(a)(17) of the Act, of Transco or the Managing Member

nor  exercise  a  "controlling influence"  over  Transco  or  the

Managing  Member. While the Class B Interests and Class B  Common

Stock,  which  Entergy System companies may own, do have  limited

voting rights to veto certain major transactions, these rights do

not  lead  to  the  Entergy System companies  holding  a  "voting

security"  of,  or  exercising  a  "controlling influence"  over,

Transco  or  the  Managing Member, both  within  the  meaning  of

Sections  2(a)(17),  2(a)(8) and 2(a)(11) of  the  Act,  defining

"voting   security",   "subsidiary   company"   and   "affiliate"

respectively. In the case of Transco, this conclusion is  further

supported  by the ability of a separate entity unaffiliated  with

the  Entergy  System,  the  SPP, to  control  various  day-to-day

operations  of  Transco. Consequently, neither  Transco  nor  the

Managing  Member  will  be,  nor should  be  declared  to  be,  a

"subsidiary  company" or an "affiliate" of  any  company  in  the

Entergy  System  within  the  meaning  of  Sections  2(a)(8)  and

2(a)(11) of the Act.

(B)  Section 10

     Since  the  Operating Companies and Entergy  Corp.  will  be

acquiring  the securities of the Intermediate Entity and  Transco

and  may be acquiring the securities of the Managing Member,  the

proposed transactions will be subject to Section 9(a) of the Act.

Thus,  the  proposed  transactions  cannot  proceed  without  the

approval of the Commission pursuant to Section 10 of the Act. The

relevant  statutory standards to be satisfied are  set  forth  in

Sections 10(b), 10(c) and 10(f) of the Act.

     (1)  SECTION 10(b)

     Section  10(b) of the Act provides that, if the requirements

of  Section 10(f) are satisfied, the Commission shall approve  an

acquisition under Section 9(a) unless the Commission finds that:

      (1)  such acquisition will tend towards interlocking
      relations or the concentration of control of public-utility
      companies, of a kind or to an extent detrimental to the
      public interest or the interest of investors or consumers;

      (2)  in case of the acquisition of securities or utility
      assets, the consideration, including all fees, commissions,
      and other remuneration, to whomsoever paid, to be given,
      directly or indirectly, in connection with such acquisition
      is not reasonable or does not bear a fair relation to the
      sums invested in or the earning capacity of the utility
      assets to be acquired or the utility assets underlying the
      securities to be acquired; or

      (3)  such acquisition will unduly complicate the capital
      structure of the holding company system of the applicant or
      will be detrimental to the public interest or the interest
      of investors or consumers or the proper functioning of such
      holding company system.

     (a)  Section 10(b)(1)

         The   proposed  transactions  will  not   tend   towards

interlocking relations or the concentration of control of public-

utility companies, of a kind, or to an extent, detrimental to the

public interest or the interest of investors or consumers.

     Since the ultimate result of the proposed transactions is to

shift to third parties the control of the Entergy System over its

Transmission  Assets  in accordance with FERC  requirements,  the

proposed transactions will not tend toward any "concentration  of

control of public utility companies" that is detrimental  to  the

public interest or the interest of consumers or investors.

     (b)  Section 10(b)(2)

       (i) Fairness of Consideration. Section 10(b)(2) of the Act

requires the Commission to determine whether the consideration in

connection   with  a  proposed  acquisition  of   securities   is

reasonable and whether it bears a fair relation to the investment

in  and the earning capacity of the utility assets underlying the

securities  being  acquired.  Each Entergy  System  company  that

transfers assets to Transco will receive an interest based on the

value  of the assets that it contributes as a proportion  of  all

the   assets  contributed  to  Transco.  With  respect  to   such

transfers,  the  transmission facilities will be  transferred  at

their  net  book value, and the transferring entity will  receive

its  interest  based on that value. The Applicants  believe  that

such consideration bears a fair relation to the investment in and

the earning capacity of the transmission assets to be transferred

because  it  is  based  on the net book value  of  those  assets.

Because  the  Transco's  rates  will  also  be  subject  to  FERC

approval, it can be expected that those rates (which will largely

also be based on the same net book value) will permit the Transco

to  earn a fair return on them as well. This being the case,  all

members of Transco, including the Operating Companies, can expect

to earn a fair return on their investment.

        (ii)     Reasonableness of Fees. An estimate of the  fees

and   expenses  to  be  paid  in  connection  with  the  proposed

transactions  will be set forth in Item 2 hereof.  The  estimated

amounts  to  be paid are fees required to be paid to governmental

bodies,  fees  for  necessary professional  services,  and  other

expenses  incurred or to be incurred in connection with  carrying

out the proposed transactions.

     (c)  Section 10(b)(3)

        Capital  Structure. Section 10(b)(3)  requires  that  the

Commission  determine  whether  the  proposed  transactions  will

unduly  complicate the Operating Companies' or  the  Intermediate

Entity's capital structures or will be detrimental to the  public

interest,  the interests of investors or consumers or the  proper

functioning  of  the  Operating  Companies  or  the  Intermediate

Entity.

     The  corporate capital structures of the Operating Companies

and  the  Intermediate  Entity  after  the  consummation  of  the

proposed  transactions  will  not  be  unduly  complicated.   The

proposed  transactions, when outside financing is  undertaken  by

the Intermediate Entity, will ultimately result in a reduction of

the  size  of  the  capital structure of each  of  the  Operating

Companies,  although debt/equity ratios will remain approximately

the  same. In addition, the securities to be issued by  the

Intermediate Entity are of types and amounts comparable to  those

of   other  financing  entities  in  registered  holding  company

systems.  See The Southern Company, Holding Co. Act Release  Nos.

27061  and 27134 (Aug. 18, 1999 and Feb. 9, 2000). Moreover,  the

assumption  of  the Intermediate Entity's securities  by  Transco

upon   the   transfer  of  Entergy  System  Transmission   Assets

effectively  removes  the  Intermediate  Entity  as  a   possibly

complicating factor in the structure of the Entergy System.

     (2)  SECTION 10(c)

     Section 10(c) of the Act provides that:

     Notwithstanding  the  provisions  of  subsection  (b),   the

Commission shall not approve:

      (1)  an acquisition of securities or utility assets, or of
      any other interest, which is unlawful under the provisions
      of Section 8 or is detrimental to the carrying out of the
      provisions of Section 11; or

      (2)  the acquisition of securities or utility assets of a
      public utility or holding company unless the Commission
      finds that such acquisition will serve the public interest
      by tending towards the economical and efficient development
      of an integrated public utility system . . . .

     (a)  Section 10(c)(1)

        Consistent  with  the  standards  set  forth  in  Section

     10(c)(1) of the Act, the proposed acquisition of securities will

not be unlawful under the provisions of Section 8 of the Act,  or

detrimental to the carrying out of the provisions of  Section  11

of the Act.

     Section 8 prohibits a registered holding company or  any  of

its subsidiaries from acquiring, owning interests in or operating

both  a  gas  utility  company and an  electric  utility  company

serving  substantially the same area if prohibited by state  law,

and  is  thus  not  applicable to the  transactions  contemplated

herein.

     Section  11(a) of the Act requires the Commission to examine

the  corporate  structure  of  registered  holding  companies  to

ensure,  among  other things, that unnecessary  complexities  are

eliminated   and   voting  powers  are   fairly   and   equitably

distributed.  The  Entergy  System is  organizing,  and  will  be

granted limited voting powers in, the Managing Member and Transco

consistent  with FERC requirements. Consequently, this  structure

and  Entergy's  voting  powers  should  be  consistent  with  the

requirements of Section 11(a).

     (b)  Section 10(c)(2)

       As the following discussion will demonstrate, the proposed

transactions  will serve the public interest by  tending  towards

the  economical and efficient development of an integrated public

utility system, as required by Section 10(c)(2) of the Act.

           (i)   Efficiencies  and Economies. As  described  more

fully  above, the proposed transactions tend towards the required

efficiencies  and economies by tying together control,  planning,

maintenance and financial responsibilities for the Entergy System

Transmission  Assets  into  a single  company,  Transco,  all  in

accordance with FERC requirements. Moreover, in conjunction  with

its  participation in the SPP Partnership RTO, Transco, in  which

the  Entergy System will have a passive investment interest, will

have an independent, streamlined and cost-efficient business that

will create synergies and result in better service in the Entergy

System  region and non-discriminatory access for all transmission

users.

           (ii)  Integrated Public Utility System. As applied  to

electric  utility companies, the term "integrated public  utility

system" is defined in Section 2(a)(29)(A) of the Act as:

      a system consisting of one or more units of generating
      plants and/or transmission lines and/or distributing
      facilities, whose utility assets, whether owned by one or
      more electric utility companies, are physically
      interconnected or capable of physical interconnection and
      which under normal conditions may be economically operated
      as a single interconnected and coordinated system confined
      in its operation to a single area or region, in one or more
      states, not so large as to impair (considering the state of
      the art and the area or region affected) the advantages of
      localized management, efficient operation, and the
      effectiveness of regulation.

     The  Commission has previously taken notice of  developments

that have occurred in the electric business in recent years,  and

has  interpreted  the Act and analyzed proposed  transactions  in

light  of  these changed and changing circumstances.  See,  e.g.,

American  Electric Power Co., Holding Co. Act Release  No.  27186

(June 14, 2000) ("AEP Order").

     On   the  basis  of  the  statutory  definition  above,  the

Commission has established four standards that must be met before

the Commission will find that an integrated public utility system

will result from a proposed transaction:

      (1)  the utility assets of the system are physically
      interconnected or capable of physical interconnection;

      (2)  the utility assets, under normal conditions, may be
      economically operated as a single interconnected and
      coordinated system;

      (3)  the system must be confined in its operations to a
      single area or region; and

      (4)  the system must not be so large as to impair
      (considering the state of the art and the area or region
      affected) the advantages of localized management, efficient
      operation, and the effectiveness of regulation.

Environmental Action, Inc. v. SEC, 895 F.2d 1255, 1263 (9th  Cir.

1990),  quoting In re Electric Energy, Inc., 38 S.E.C.  658,  668

(1958).

     The   proposed  transactions  satisfy  all  four  of   these

requirements.  In  examining proposed transactions  to  determine

whether  the  integration requirements have been  satisfied,  the

Commission has "interpreted the Act and analyzed transactions  in

the  light  of  .  . . changed and changing circumstances."   AEP

Order. Applicants believe that the recent FERC Order No. 2000, as

well as the competition legislation enacted in both Arkansas  and

Texas,   constitutes  such  changing  circumstances   which   the

Commission   must   consider   when   evaluating   the   proposed

transactions.

     PHYSICAL  INTERCONNECTION.  In view of the above, the  facts

presented  clearly support a finding that the utility  assets  of

the  Transco  will be "physically interconnected  or  capable  of

physical   interconnection"  within  the   meaning   of   Section

2(a)(29)(A) of the Act once the transactions contemplated  herein

are  completed through the ability of the Operating Companies  to

transmit  power  to each other over the open-access  transmission

facilities of the Transco to which they are connected.

     SINGLE   INTERCONNECTED  AND  COORDINATED  SYSTEM.   Section

2(a)(29)(A)  of the Act requires that the utility  assets,  under

normal  circumstances, may be "economically operated as a  single

interconnected  and  coordinated  system."  The  Commission   has

interpreted  this  language to refer, in  the  changing  electric

utility  environment, to the ability to coordinate  the  electric

operations,  through  access to independent transmission  between

two  electric  systems. See Energy East, Corp., Holding  Co.  Act

Release  No.  27224 (Aug. 31, 2000); Exelon Corporation,  Holding

Co.  Act Release No. 27256 (Oct. 19, 2000); and Carolina Power  &

Light  Company, Holding Co. Act Release No. 27284  (November  27,

2000).

     SINGLE  AREA  OR REGION.  The existing Entergy  System  will

continue   to  define  the  geographic  parameters  of  Entergy's

integrated  system  since Transco will not be an  "affiliate"  of

Entergy  and,  consequently, any additions to the Transco  system

from  non-affiliated  parties  will  not  be  part  of  Entergy's

integrated electric system.

     LOCALIZED  MANAGEMENT,  EFFICIENT  OPERATION  AND  EFFECTIVE

REGULATION.  The proposed transactions will not impair  localized

management, efficient operation or regulation since the Operating

Companies will continue to be managed from their headquarters  in

Arkansas, Louisiana, Texas and Mississippi, to be subject to  the

jurisdiction  of the public service commissions in  those  states

and the Council of the City of New Orleans (the "Council") and to

have their operations coordinated by Entergy Services.

     (3)  SECTION 10(f)

     Section 10(f) provides that

      The Commission shall not approve any acquisition as to
      which an application is made under this section unless it
      appears to the satisfaction of the Commission that such
      State laws as may apply in respect of such acquisition have
      been complied with, except where the Commission finds that
      compliance with such State laws would be detrimental to the
      carrying out of the provisions of section 11.

     The  Operating  Companies  are  currently  and  will  remain

subject,  respectively,  to the jurisdiction  of  the  APSC,  the

Louisiana Public Service Commission (the "LPSC"), the Mississippi

Public  Service  Commission  (the  "MPSC"),  the  Public  Utility

Commission  of  Texas  (the "PUCT") and the Council.  Transco  is

being created in accordance with Arkansas, Louisiana, Mississippi

and  Texas  law. In addition, certain aspects of the transactions

proposed  herein are subject to approval by the ASPC,  the  LPSC,

the  MPSC,  the PUCT, and the Council. Thus, the requirements  of

Section 10(f) are satisfied.

     Rules  53  and  54.   The proceeds to be received  from  the

proposed  transactions  will not be used to  invest  directly  or

indirectly in an EWG or FUCO.

     The  transactions proposed herein are also subject  to  Rule

54.  In  determining whether to approve the issue or  sale  of  a

security by a registered holding company for purposes other  than

the  acquisition  of  an  EWG or FUCO, or  transactions  by  such

registered  holding company or its subsidiaries other  than  with

respect  to EWGs or FUCOs, the Commission shall not consider  the

effect of the capitalization or earnings of any subsidiary  which

is  an EWG or FUCO upon the registered holding company system  if

Rules  53(a), (b) and (c) are satisfied. In that regard, assuming

consummation  of  the transactions proposed in this  application,

all  of  the conditions set forth in Rule 53(a) are, and will  be

satisfied,  and none of the conditions set forth  in  Rule  53(b)

exists or, as a result thereof, will exist.

     Entergy Corp. states that for purposes of Rule 53(a)(1)  its

"aggregate  investment" in all EWGs and FUCOs  was  approximately

$448,143,645, representing approximately 15.2% of Entergy Corp.'s

consolidated  retained  earnings  as  of  September   30,   2000.

Furthermore, Entergy Corp. has complied with and will continue to

comply  with  the  record keeping requirements of  Rule  53(a)(2)

concerning affiliated EWGs and FUCOs. In addition, as required by

Rule  53(a)(3), no more than 2% of the employees of the Operating

Companies  will  render services to affiliated  EWGs  and  FUCOs.

Finally,  none of the conditions set forth in Rule  53(b),  under

which the provisions of Rule 53 would not be available, have been

met.

Item 4.   Regulatory Approvals.

     Entergy  filed an application with the FERC on  October  16,

2000   seeking  authorization  to  transfer  the  Entergy  System

Transmission Assets to Transco, which application is pending.  In

addition, on December 29, 2000, Entergy filed an application with

the  FERC  requesting approval of the transmission rate  schedule

pursuant  to  which transmission service will  be  provided  over

Transco's  transmission assets, which application is pending.  In

January  2000,  Entergy Gulf States filed a  business  separation

plan  with the PUCT and amended such plan in June 2000.  In  July

2000,  the  PUCT issued an interim order to approve  the  amended

business  separation  plan. Entergy Gulf  States  will  make  any

additional filings with the PUCT that are necessary to  establish

Transco.  In  addition, the APSC, the Council, the LPSC  and  the

MPSC   must   approve   certain  aspects  of   the   transactions

contemplated herein. The necessary applications have  been  filed

with  these commissions. No other state commission, and no  other

Federal   commission,   has  jurisdiction   over   the   proposed

transactions.

Item 5.   Procedure.

     The  Commission is requested to publish a notice under  Rule

23  with respect to the filing of this Application/Declaration as

soon as practicable. The Applicants request that the Commission's

Order  be  issued as soon as practicable after the notice  period

and  in  any event not later than September 30, 2001.  This  will

facilitate meeting the December 15, 2001 deadline contemplated by

FERC  Order  No. 2000 for the commencement of Transco  operations

and  the timely completion of the transfers of the Entergy System

Transmission Assets.

     The  Applicants further request that there not be  a  30-day

waiting period between issuance of the Commission's order and the

date  on  which the order is to become effective, hereby waive  a

recommended   decision  by  a  hearing  officer  or   any   other

responsible  officer  of the Commission,  and  consent  that  the

Division  of  Investment Management may assist in the preparation

of  the  Commission's decision and/or order, unless the  Division

opposes the matters proposed herein.

Item 6.   Exhibits and Financial Statements.

(A)  Exhibits.

A-1   Form of Limited Liability Company Agreement of Transco.

A-2   Form  of  Certificate  of  Incorporation  of  the  Managing

      Member.

A-3   Form of By-Laws of the Managing Member.

A-4   Transco Implementation Plan.

A-5   Form of Articles of Organization of Intermediate Entity.*

A-6   Form of By-Laws of Intermediate Entity.*

B-1   Form of Operating Agreement.

B-2   Form of Agency Agreement.

B-3   SPP Partnership RTO Memorandum of Understanding.

B-4   Form of Assumption Agreement.

B-5   Form of Security Agreement.*

C     Not Applicable.

D-1   Application  Of Entergy Services, Inc. For  Approval  Of  A

      Regional  Transmission Organization  And  Approval  Of  The

      Transfer  Of Transmission Assets To A Regional Transmission

      Organization  -  submitted on behalf of  Entergy  Arkansas,

      Entergy Gulf States, Entergy Louisiana, Entergy Mississippi

      and Entergy New Orleans to the FERC.

D-2   Order  of  the  FERC regarding Entergy Services,  Inc.  For

      Approval  Of  A  Regional  Transmission  Organization   And

      Approval  Of  The  Transfer  Of Transmission  Assets  To  A

      Regional Transmission Organization.*

D-3   Application  By Entergy Arkansas For Approval  To  Transfer

      Transmission Assets to the APSC.

D-4   Order of the APSC regarding Application By Entergy Arkansas

      For Approval To Transfer Transmission Assets.*

D-5   Application  of Entergy Gulf States, Inc. For  Approval  Of

      Its     Business     Separation    Plan     Pursuant     To

      Subst.R.25.272(b)(3) to the PUCT.*

D-6   Interim  Order Approving Business Separation  Plan  of  the

      PUCT  regarding  Entergy Gulf States'  business  separation

      plan.*

D-7   Joint Application On Behalf Of Entergy Gulf States, Inc.

      And Entergy Louisiana, Inc. For Official Action Of

      Approval Of Or Non-Opposition To A Transfer Of Ownership

      And/Or Control Of Certain Transmission Assets to the LPSC.

D-8   Order of the LPSC regarding Joint Application On Behalf  Of

      Entergy  Gulf States, Inc. And Entergy Louisiana, Inc.  For

      Official  Action  Of  Approval Of Or  Non-Opposition  To  A

      Transfer   Of   Ownership   And/Or   Control   Of   Certain

      Transmission Assets.*

D-9   Application of Entergy Mississippi to the MPSC.

D-10  Order of the MPSC regarding Entergy Mississippi.*

D-11  Joint Application Of  Entergy New Orleans, Inc. And Entergy

      Louisiana, Inc. For Official Action Of Approval Of Or  Non-

      Opposition  To  A Transfer Of Ownership And/Or  Control  Of

      Certain Transmission Assets to the Council.

D-12  Order  of  the Council regarding Entergy New Orleans,  Inc.

      And Entergy Louisiana, Inc. For Official Action of Approval

      Of  Or  Non-Opposition To A Transfer  Of  Ownership  And/Or

      Control Of Certain Transmission Assets.*

F-1   Opinion of Friday, Eldredge & Clark, LLP.*

F-2   Opinion of Orgain, Bell & Tucker, LLP.*

F-3   Opinion   of  Ann  G.  Roy  -  Associate  General  Counsel,

      Corporate  and  Securities of Entergy  Services,  Inc.  for

      Entergy  Louisiana,  Entergy Mississippi  and  Entergy  New

      Orleans.*

F-4   Opinion of Thelen Reid & Priest LLP.*

G     Not applicable.

H     Form of Notice.*

J-1   Form  of Service Agreement between the Intermediate  Entity

      and Entergy Services.*

* To be filed by amendment.

(B)  Financial Statements.

1.1   Balance Sheet of Entergy Consolidated, as of September  30,

      2000 (incorporated by reference to the Quarterly Report  on

      Form   10-Q   of   Entergy  Corp.  and   its   consolidated

      subsidiaries  for  the quarter ended  September  30,  2000)

      (File No. 1-11299).

1.2   Statement  of  Income  of  Entergy  Consolidated,   as   of

      September  30,  2000  (incorporated  by  reference  to  the

      Quarterly  Report  on Form 10-Q of Entergy  Corp.  and  its

      consolidated  subsidiaries for the quarter ended  September

      30, 2000) (File No. 1-11299).

1.3   Balance Sheet of Entergy Arkansas, as of September 30, 2000

      (incorporated by reference to the Quarterly Report on  Form

      10-Q  of  Entergy Arkansas for the quarter ended  September

      30, 2000) (File No. 1-10764).

1.4   Statement  of  Income of Entergy Arkansas  for  the  period

      ended September 30, 2000 (incorporated by reference to  the

      Quarterly Report on Form 10-Q of Entergy Arkansas  for  the

      quarter ended September 30, 2000) (File No. 1-10764).

1.5   Balance  Sheet of Entergy Gulf States, as of September  30,

      2000 (incorporated by reference to the Quarterly Report  on

      Form  10-Q  of  Entergy Gulf States for the  quarter  ended

      September 30, 2000) (File No. 1-27031).

1.6   Statement  of Income of Entergy Gulf States for the  period

      ended September 30, 2000 (incorporated by reference to  the

      Quarterly  Report on Form 10-Q of Entergy Gulf  States  for

      the quarter ended September 30, 2000) (File No. 1-27031).

1.7   Balance  Sheet  of Entergy Louisiana, as of  September  30,

      2000 (incorporated by reference to the Quarterly Report  on

      Form  10-Q  of  Entergy  Louisiana for  the  quarter  ended

      September 30, 2000) (File No. 1-8474).

1.8   Statement  of Income of Entergy Louisiana, as of  September

      30, 2000 (incorporated by reference to the Quarterly Report

      on  Form  10-Q  of Entergy Louisiana for the quarter  ended

      September 30, 2000) (File No. 1-8474).

1.9   Balance  Sheet of Entergy Mississippi, as of September  30,

      2000 (incorporated by reference to the Quarterly Report  on

      Form  10-Q  of  Entergy Mississippi for the  quarter  ended

      September 30, 2000) (File No. 0-320).

1.10  Statement of Income of Entergy Mississippi, as of September

      30, 2000 (incorporated by reference to the Quarterly Report

      on  Form 10-Q of Entergy Mississippi for the quarter  ended

      September 30, 2000) (File No. 0-320).

1.11  Balance  Sheet of Entergy New Orleans, as of September  30,

      2000 (incorporated by reference to the Quarterly Report  on

      Form  10-Q  of  Entergy New Orleans for the  quarter  ended

      September 30, 2000) (File No. 0-5807).

1.12  Statement of Income of Entergy New Orleans, as of September

      30, 2000 (incorporated by reference to the Quarterly Report

      on  Form 10-Q of Entergy New Orleans for the quarter  ended

      September 30, 2000) (File No. 0-5807).

1.13  Balance  Sheet  of  Entergy Services, as of  September  30,

      2000.*

1.14  Statement  of  Income of Entergy Services, as of  September

      30, 2000.*

* To be filed by amendment.

Item 7.   Information as to Environmental Effects.

     None   of   the  matters  that  are  the  subject  of   this

Application/Declaration involve a "major federal action"  nor  do

they  "significantly affect the quality of the human environment"

as  those  terms  are used in section 102(2)(C) of  the  National

Environmental Policy Act. The transaction that is the subject  of

this  Application/Declaration will not result in changes  in  the

operation  of  the  Applicants that will have an  impact  on  the

environment.  The Applicants are not aware of any federal  agency

that  has  prepared  or  is  preparing  an  environmental  impact

statement  with respect to the transactions that are the  subject

of this Application/Declaration.




                           SIGNATURES



     Pursuant  to the requirements of the Public Utility  Holding

Company  Act of 1935, as amended, the undersigned companies  have

duly  caused  this  Application/Declaration filed  herein  to  be

signed  on  their  behalf  by  the  undersigned  thereunto   duly

authorized.


                              Entergy Corporation
                              Entergy Services, Inc.
                              Entergy Arkansas, Inc.
                              Entergy Gulf States, Inc.
                              Entergy Louisiana, Inc.
                              Entergy Mississippi, Inc.
                              Entergy New Orleans, Inc.



                         By:  /s/ Steven C. McNeal
                         Name:  Steven C. McNeal
                         Title: Vice President and Treasurer



Date:     March 2, 2001



_______________________________
  Entergy Arkansas, Entergy Gulf States, Entergy Louisiana,
       Entergy Mississippi and Entergy New Orleans own and operate
       transmission assets comprising, respectively, 4,827, 5,562,
       2,689, 2,743, and 206 miles of transmission facilities, and
       associated substations, real property interests and related
       assets (separately, hereinafter called the "Entergy Arkansas
       Transmission Assets", the "Entergy Gulf States Transmission
       Assets", the "Entergy Louisiana Transmission Assets", the
       "Entergy Mississippi Transmission Assets", and the "Entergy New
       Orleans Transmission Assets" and, collectively, the "Operating
       Companies' Transmission Assets"). Entergy Services owns various
       assets (the "Entergy Services Assets") which are related to the
       operation of, and ancillary to, the Operating Companies'
       Transmission Assets. Entergy Services will transfer the Entergy
       Services Assets, with a depreciated book cost which is estimated
       to be at this time approximately $1,000,000 to the Operating
       Companies and these assets will become part of the transmission
       assets transferred to Transco (collectively, the Operating
       Companies' Transmission Assets and the Entergy Services Assets,
       are referred to, hereinafter, as the "Entergy System Transmission
       Assets").

  As to Entergy Gulf States, the transactions may be accomplished
       under Texas merger law which provides for allocations of assets
       and obligations rather than transfers, assignments or
       assumptions. To the extent that Entergy Gulf States uses the
       Texas merger law, the phrases "transfer", "assignment" or
       "assumption" in this Application refer, as well, to allocations
       of assets or obligations.

  Market Participant is defined in FERC Order 2000 to include
       any entity that, either directly or through an affiliate, sells
       or brokers electric energy, or provides ancillary services to a
       regional transmission organization ("RTO"), unless the FERC finds
       that such entity does not have economic or commercial interests
       that would be significantly affected by such RTO's actions or
       decisions; and any other entity that the FERC finds has economic
       or commercial interests that would be significantly affected by
       the RTO's actions or decisions. See 18 C.F.R. Section
       35.34(b)(2).

  Entergy anticipates that the transfer of ownership of Entergy
       System Transmission Assets through the Intermediate Entity to
       Transco may occur simultaneously in one or more transfer
       transactions. In this event, certain transactions for which
       approval is sought in this filing may be exempt or otherwise
       authorized by order of the Commission. In addition, if only the
       right to direct the operation of Entergy System Transmission
       Assets is transferred to Transco, no regulatory approval is
       necessary under the Act.

  The final percentage ownership interests, as well as the
       definitive number of Class B Interests and shares of Class B
       Common Stock to be acquired, will depend upon the actual
       participants in the Transco and the value of the transmission
       assets transferred to Transco by such participants, all as
       described below.

  Under the Managing Member's By-Laws, directors must own a
       minimum of ten (10) shares of Class A Common Stock (which means
       that the directors will collectively own a minimum of seventy
       (70) shares of Class A Common Stock and have the voting power
       over such shares). Under the Voting Trust Agreement (which is an
       exhibit to the Transco Implementation Plan) each director must
       vote his/her shares of the Managing Member in accordance with the
       decisions of the majority of the directors. During the period
       prior to a Managing Member public offering, any person who
       acquires Class A Common Stock in the Managing Member will be
       required to be a party to, and accept the terms of, the Voting
       Trust Agreement. Directors and all members of their immediate
       families, may not have any financial interest in, including
       owning the securities of, any Market Participant, except
       indirectly through certain mutual funds.

  Class B Common Stock may be converted into Class A Common
       Stock by a holder thereof unless the holder is a Market
       Participant. Consequently, no company in the Entergy System will
       be permitted to convert its Class B Common Stock into Class A
       Common Stock unless and until the Entergy System ceases to be a
       Market Participant.

  The SPP Partnership RTO will administer a single tariff and a
       joint Open Access Same-Time Information System ("OASIS") site
       that will apply to transmission service within the SPP and
       Transco. Transco will have control over those portions of the
       tariff that affect the commercial terms and conditions of
       transmission service over Transco's facilities. Transco will be
       responsible for conducting studies and scheduling transactions on
       Transco's system and will be the provider of last resort for
       ancillary services in accordance with FERC Orders 888 and 2000.
       The SPP and Transco agree to use the Vacar, Southern and TVA
       model for calculating ATC/TTC. The SPP Partnership RTO will
       perform all ATC/TTC calculations utilizing a methodology that is
       mutually agreed to between Transco and the SPP. In designing
       transmission rates, the SPP and Transco agree there will be no
       "pancaked" rates for transmission service with respect to
       transactions using both the Transco and the SPP systems.

  Once retail access is implemented in Texas, the load serving
       entities will take service under the SPP Partnership RTO
       transmission tariff.

 The proposed terms and conditions of the Interest Rate Hedges
       and  Anticipatory  Hedges  are  substantially  the  same  as  the
       Commission  has  approved  in  other  cases.   See  New   Century
       Energies, Inc., et al., Holding Co. Act Release No. 27000  (April
       7, 1999); and SCANA Corporation., et al., Holding Co. Act Release
       No. 27137 (February 14, 2000).

 Available April 12, 2000; 2000 SEC No-Act. Lexis 1028.

 Available March 10, 2000; 2000 SEC No-Act. Lexis 368.

 These events included:
       (i)   transactions involving conflicts between TNLP and any
             partner;
       (ii)  distributions to the partners under the TNLP Agreement
             (relating to the economics of the transaction) and advisory
             fees paid to any affiliated party;
       (iii) a public offering of any securities of TNLP or its
             subsidiaries (other than any normal financing activities of the
             utility subsidiary);
       (iv)  TNP's voting of the shares of common stock of its
             subsidiaries in extraordinary circumstances including mergers,
             sales of significant assets or changes in charter documents;
       (v)   approving changes in the aggregate greater than 15% to the
             business plan and annual operating budget;
       (vi)  modification of the name of TNLP and changes in TNLP's
             principal place of business or amendments to the formation
             documents of TNLP or TNP;
       (vii) entering into contracts for goods and services in
             excess of $1,000,000 other than in accordance with the then
             current business plan and annual operating budget;
       (viii)a merger, joint venture, partnership or similar
             transaction or liquidation or dissolution (after five years the
             limited partners can force a public offering of TNLP shares);
       (ix)  disposing of any significant business or assets (such as
             generating plants or transmission systems) or acquiring any
             stock or assets of another entity or entering into any new line
             of business;
       (x)   creating or issuing any Partnership Interests or new class
             of equity securities of TNP, or its utility subsidiary, or
             options or other securities convertible or exchangeable into
             partnership Interests;
       (xi)  declaring distributions in respect of any capital stock of
             TNP or any subsidiary of TNLP which is not wholly owned by
             TNLP;
       (xii) voluntary incurrence of indebtedness in excess of
             $1,000,000 except to the extent consistent with any then
             current annual capital or operating budget and business plan;
       (xiii)making capital expenditures that vary from those
             provided for in the budget by $5,000,000 per event or series of
             related events but otherwise not cumulatively;
       (xiv) making any material change in accounting practices or
             a change in TNLP's accountant;
       (xv)  commencing any bankruptcy or receivership proceeding;
       (xvi) initiating certain actions or suits in excess of
             $1,000,000 or taking action with respect to transfers of
             Partnership Interests; and
       (xvii)adopting or amending any employee stock option plan
             or any other material employee benefit plan or the employment
             agreement of the chief executive officer.

 In the absence of cumulative voting, BH could not elect any
       director based, solely, on its 9.9% common stock share interest.

 Class B Interests in Transco held by the Entergy System are
       passive investment securities which share in the profits and
       losses of Transco, but have no right to vote on the day-to-day
       business affairs of Transco, except with respect to certain
       fundamental rights affecting the investment value of their
       passive interests. The Class A Interests in Transco which are
       held by the Managing Member have the full voting rights and
       control over the day-to-day operations of Transco. In similar
       fashion, Class A Common Stock in the Managing Member has full
       voting rights, controls the Managing Member and is held and voted
       by the non-market participants. The Class B Common Stock which
       the Entergy System may own upon conversion of Class B Interests
       has basically the same limited voting rights on fundamental
       matters as the Class B Interests and represents a passive
       investment in the Managing Member.

       Transco Class B Interest holders and Managing Member Class B
       Common Stock holders will have certain limited voting rights.
       With respect to these limited voting rights, holders of Transco
       Class B Interests and Managing Member Class B Common Stock will
       vote together with holders of Managing Member Class A Common
       Stock as a single class. A Super Majority of 75% shall be
       required for approval of: (1) any proposal to issue more than 10%
       of any outstanding class or series of securities of the Managing
       Member to one or more affiliates of the Managing Member, other
       than those issuances of securities, including distributions
       thereof, that are made on the same terms to all stockholders of
       the Managing Member; (2) any transaction that would result in a
       change of control of the Managing Member, the sale, transfer,
       lease or exchange of substantially all of the Managing Member's
       assets and any merger or consolidation of the Managing Member
       with any other entity when all or a portion of the consideration
       received is cash; (3) any acquisition or business development
       opportunity that is not directly or indirectly related to the
       provision of electric transmission service; (4) any proposal to
       have the Managing Member adjudicated insolvent, seek
       reorganization, consent to an appointment of a receiver or make
       an assignment for the benefit of the Managing Member's creditors;
       and (5) any proposal to amend the Managing Member's Certificate
       of Incorporation that ultimately affects the rights of the Class
       B Common Stock holders, including the right to convert upon
       dissolution to Class A Common Stock. The Class B Interest holders
       in Transco will have the right to vote on these matters
       concerning the management affairs of the Managing Member if they
       own at least one (1) share of Class B Common Stock in the
       Managing Member. As a result of owning at least one (1) share in
       the Managing Member, the Transco Interest holders will be awarded
       the votes corresponding to their share(s) of Class B Common Stock
       plus the votes corresponding to their Transco Class B Interests,
       as if they had been converted into shares of Class B Common
       Stock.

       Holders of Transco Class B Interests will also have limited
       voting rights with respect to Transco matters; such rights will
       be similar to their voting rights with respect to Managing Member
       matters described in clauses (2) through (5) in the immediately
       preceding paragraph. Holders of Transco Class A and B Interests
       will vote together as a single class with respect to such Transco
       matters. In addition, approval by a Super Majority of the Transco
       Class A and B Interest holders, voting together as a single
       class, will be necessary in the following matters with respect to
       the business decisions of Transco: (1) any proposal to amend
       certain terms of the Transco LLC Agreement or to amend the Voting
       Trust Agreement in the Transco Implementation Plan; and  (2) any
       transfer of a Member Interest in Transco to a transferee. Changes
       in the Managing Member's By-Laws must be approved by either a
       Super Majority of 75% of the Class A and Class B Common Stock
       holders, voting together as a single class, or a majority of the
       entire board of directors then in office. Note that Transco Class
       B Interest holders may only vote with respect to changes to the
       By-Laws of the Managing Member to the number of shares they own
       in the Managing Member and may not vote their interests in
       Transco convertible into Class B Common Stock of the Managing
       Member.

 The transfer of the Operating Companies Transmission Assets to
       the Intermediate Entity will temporarily result in additional
       leverage at the Operating Companies. The Operating Companies will
       have offsetting assets, however, associated with the debt assumed
       pursuant to the Assumption Agreement. This additional leverage
       will exist only until that debt is repaid, which could occur
       immediately, or to the end of the Separation Period at the
       latest. Once the Intermediate Entity raises external debt and
       uses it to pay assumption debt and a corresponding amount of
       Operating Company debt, the Operating Companies ratio of debt to
       total capital will temporarily decline. The Operating Companies'
       capital ratios will return to approximately their original level
       when the Operating Companies ultimately dividend their ownership
       interests in Transco to Entergy Corp.

EX-99

							Exhibit A-1



		       LIMITED LIABILITY COMPANY AGREEMENT
				       FOR
				  [TRANSCO] LLC

	  This Limited Liability Company Agreement (the "Agreement") of
	     (the "Company") is made and entered into as of this     day of
- ------------                                                     ---
	  , [2001] by and among [Manager Corp.], a Delaware Corporation (the
- ----------
"TRANSCO Manager"), ETP-II, LLC as a member of the Company, and each Person (as
defined herein) who may be admitted from time to time as a member of the Company
(individually, a "Member" and collectively, the "Members").

				    RECITALS

	  WHEREAS, the Members desire to form the Company in accordance with the
provisions of the Delaware Limited Liability Company Act (6 Del. C. ss. 18-101,
et seq.), as in effect on the date hereof, and as it may be amended from time to
time (the "Act"), and desire to enter into a written agreement pursuant to the
Act governing the affairs of the Company and the conduct of its business.

	  NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the Members agree as
follows:

				    ARTICLE 1
				   DEFINITIONS
				   -----------

	  "Act" means the Delaware Limited Liability Company Act, as in effect
	   ---
on the date hereof, and as it may be amended from time to time.

	  "Additional Capital Contributions" means any additional capital
	   --------------------------------
contributions made pursuant to Section 3.3 of this Agreement.

	  "Adjusted Capital Account Deficit" means, with respect to any Member,
	   --------------------------------
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:

     (i)  Credit to such Capital Account any amounts which such Member is
	  obligated to restore pursuant to any provision of this Agreement or is
	  deemed obligated to restore pursuant to the penultimate sentences of
	  Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and


				       1



     (ii) Debit to such Capital Account the items described in Sections
	  1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
	  1.704-1(b)(2)(ii)(d)(6) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.

	  "Affiliate" means an affiliate, as defined by the FERC in Order No.
	   ---------
2000.

	  "Approval Terms" means the provisions of Sections 6.1, 8.5, 9.6, 10.5,
	   --------------
11.2, and 11.3 and Article 13 of this Agreement, including the applicable
defined terms used in such provisions.

	  "Book Tax Value", with respect to any asset of the Company, means:
	   --------------

     (i)  the initial Book Tax Value of any asset contributed by a Member to the
	  Company on the date hereof as an Initial Capital Contribution shall
	  equal the Net Book Value of such asset; the initial Book Tax Value of
	  any asset contributed or agreed with the Company to be contributed by
	  a Member (or prospective Member) to the Company after the date hereof
	  but prior to the second anniversary of the date hereof as an Initial
	  Capital Contribution shall equal at least the Net Book Value of such
	  asset; and, the initial Book Tax Value of any asset contributed by a
	  Member to the Company on or after the second anniversary of the date
	  hereof as an Initial Capital Contribution shall equal the fair market
	  value of such asset, as agreed to by such Member and the Managing
	  Member (which fair market value may be either greater or less than Net
	  Book Value);

     (ii) the initial Book Tax Value of any asset acquired (other than by means
	  of a Capital Contribution by a Member) or created by the Company shall
	  equal the adjusted tax basis of such asset for U.S. Federal income tax
	  purposes;

     (iii) the Book Tax Values of all Company assets (including intangible
	  assets such as goodwill) may be adjusted by the Tax Matters Partner to
	  equal their respective fair market values as of the following times
	  (each a "Revaluation Event"):

	  (a)  the acquisition of an additional Interest in the Company by any
	       new or existing Members in exchange for a Capital Contribution;


				       2



	  (b)  the distribution by the Company to a Member of money or Company
	       property as consideration for an Interest in the Company; and

	  (c)  the liquidation of the Company within the meaning of Regulations
	       section 1.704-1(b)(2)(iv)(f)(5)(ii); -

     provided, however, that adjustments pursuant to clauses (a) and (b) above
     --------  -------
     shall be made if the Tax Matters Partner reasonably determines that such
     adjustments are necessary or appropriate to reflect the relative economic
     interests of the Members in the Company;

     (iv) the Book Tax Values of all Company assets (including intangible assets
	  such as goodwill) shall be adjusted to reflect any adjustments to the
	  adjusted basis of such assets pursuant to Code sections 734(b) or
	  743(b), but only to the extent that such adjustments are required to
	  be taken into account in determining Capital Accounts pursuant to
	  Regulations section 1.704-1(b)(2)(iv)(m); provided, however, that Book
						    --------  -------
	  Tax Values shall not be adjusted pursuant to this subsection (iv) to
	  the extent that the Tax Matters Partner determines that an adjustment
	  pursuant to subsection (iii) is necessary or appropriate in connection
	  with a transaction that would otherwise result in an adjustment
	  pursuant to this subsection (iv); and

     (v)  if the Book Tax Value of an asset has been determined or adjusted
	  pursuant to subsection (i), (ii), (iii) or (iv) above, such Book Tax
	  Value shall thereafter be adjusted by the Depreciation taken into
	  account with respect to such asset for purposes of computing Profits
	  and Losses and other items allocated pursuant to Sections 4.1 through
	  4.3.

The foregoing definition of Book Tax Value is intended to comply with the
provisions of Regulations section 1.704-1(b)(2)(iv) and shall be interpreted and
applied consistently therewith.

	  "Business Day" means any day (other than a day which is a Saturday,
	   ------------
Sunday or legal holiday in the State of Delaware).

	  "Capital Account" means, for each Member, the capital account
	   ---------------
maintained by the Company for such Member as described in Section 4.1.

	  "Capital Contribution" means the amount of money and the initial Book
	   --------------------
Tax Value of other property voluntarily contributed by a Member to the Company,
including Initial Capital Contributions and Additional Capital Contributions.


				       3



	  "Code" means the Internal Revenue Code of 1986, as amended from time
	   ----
to time or any successor statute. A reference to the Code shall be deemed to
include any mandatory or successor provisions thereto.

	  "Code of Conduct" means the Code of Conduct attached hereto as Exhibit
	   ---------------
1, applicable to the Managing Member and the Company, as the same may be amended
from time to time by the Board, as approved by the FERC and in effect from time
to time.

	  "Depreciation" means, for each Fiscal Year or part thereof, an amount
	   ------------
equal to the depreciation, amortization, or other cost recovery deduction
allowable for U.S. Federal income tax purposes with respect to an asset for such
Fiscal Year or part thereof, except that if the Book Tax Value of an asset
differs from its adjusted basis for U.S. Federal income tax purposes at the
beginning of such Fiscal Year, the depreciation, amortization, or other cost
recovery deduction for such Fiscal Year or part thereof shall be an amount which
bears the same ratio to such Book Tax Value as the U.S. Federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year or part thereof bears to such adjusted tax basis. If such asset has a zero
adjusted tax basis, the depreciation, amortization, or other cost recovery
deduction for each taxable year shall be determined under a method reasonably
selected by the Tax Matters Partner.

	  "Economic Terms" means the provisions of Sections 2.7, 2.10, 2.11 and
	   --------------
2.12, Article 3, Article 4, Article 5, Article 6, Sections 7.1(b), 7.2(d) and
7.3, Article 10, Article 11, Article 12 and Sections 14.7, 14.10 and 14.11,
including the applicable defined terms used in such provisions.

	  "FERC" means the Federal Energy Regulatory Commission, or any
	   ----
successor entity thereto.

	  "Fiscal Year" means the fiscal year of the Company as defined in
	   -----------
Section 2.9 hereof.

	  "Formation Date" means the date on which the term of the Company shall
	   --------------
commence as defined in Section 2.5 hereof.

	  "GAAP" means generally accepted accounting principles, as in effect
	   ----
from time to time.

	  "Initial Capital Contribution" means any initial capital contribution
	   ----------------------------
made pursuant to Section 3.2 of this Agreement.


				       4



	  "Interest" means, with respect to any Member at any time, such
	   --------
Member's entire beneficial ownership interest in the Company at such time,
including such Member's Capital Account, voting rights, and right to share in
profits and losses, all items of income, gain, loss, deduction and credit,
distributions and all other benefits and liabilities of the Company, together
with such Member's obligations to comply with all of the terms of this
Agreement.

	  "Liquidator" has the meaning set forth in Section 11.2 hereof.
	   ----------

	  "Majority of the Members" means Members holding Percentage Interests
	   -----------------------
representing more than fifty percent (50%) of the outstanding Interests in the
Company.

	  "Managing Member" means TRANSCO Manager.
	   ---------------

	  "Market Participant" means a Market Participant as defined in
	   ------------------
Order No. 2000.

	  "Member and Shareholder Agreement" means that certain Member and
	   --------------------------------
Shareholder Agreement dated as of              , by and between the Members of
				  -------------
the Company, the holders of Class B Common Stock of the Managing Member, and the
Managing Member.

	  "Member Nonrecourse Debt" has the meaning set forth in Regulations
	   -----------------------
Section 1.704-2(b)(4).

	  "Member Nonrecourse Debt Minimum Gain" means the amount determined
	   ------------------------------------
pursuant to the provisions of Treasury Regulations Section 1.704-2(i)(3).

	  "Member Nonrecourse Deductions" has the meaning set forth in Treasury
	   -----------------------------
Regulations Sections 1.704-1(i)(1) and 1.704-2(i)(2).

	  "Minimum Gain" means the amount determined pursuant to the provisions
	   ------------
of Treasury Regulations Section 1.704-2(d).

	  "Net Book Value" of an asset contributed (or proposed to be
	   --------------
contributed) by a Member (or a prospective Member) to the Company as an Initial
Capital Contribution or for cash means (i) for those Members (or prospective
Members) who maintain their financial books and records in accordance with the
FERC's Uniform System of Accounts, the net book value of such asset as
determined pursuant to the FERC's Uniform System of Accounts, and (ii) for those
Members (or prospective Members) who do not maintain their financial books and
records in accordance with the FERC's Uniform System of Accounts, the best


				       5



reasonable estimate of the original cost of such asset, net of depreciation, as
determined in accordance with the FERC's Uniform System of Accounts.

	  "Nonrecourse Deductions" has the meaning set forth in Treasury
	   ----------------------
Regulations Section 1.704-2(b)(1).

	  "Nonrecourse Liability" means those liabilities defined as such in
	   ---------------------
Treasury Regulations Section 1.704-2(b)(3).

	  "Order No. 2000" means Order No. 2000 and all supplements and
	   --------------
amendments thereto issued by the FERC.

	  "Percentage Interest" means with respect to any Member, as of any
	   -------------------
date, the ratio (expressed as a percentage) of such Member's Capital Account on
such date to the aggregate Capital Accounts of all Members on such date, such
Capital Accounts to be determined after giving effect to all contributions,
distributions and allocations for all periods ending on or prior to such date,
which ratio shall be set forth on Schedule A attached hereto following any such
determination.

	  "Person" means any individual, partnership, limited liability company,
	   ------
joint venture, corporation, trust, unincorporated organization, governmental
entity or any department or agency thereof.

	  "Profits" or "Losses" means, for each Fiscal Year or part thereof, the
	   -------      ------
taxable income or loss of the Company for such Fiscal Year or part thereof
determined in accordance with Code section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

     (i)  any income of the Company that is exempt from federal income tax shall
	  be added to such taxable income or loss;

     (ii) any expenditures of the Company described in Code section 705(a)(2)(B)
	  of the Code or treated as such pursuant to Regulations section
	  1.704-1(b)(2)(iv)(i) shall be subtracted from such taxable income or
	  loss;

     (iii) any depreciation, amortization and other cost recovery deductions
	  allowable for federal income tax purposes for such fiscal year shall
	  be computed using Depreciation with reference to the Book Tax Value of
	  the assets as reported for Capital Account purposes as opposed to the
	  adjusted tax bases of such assets, in computing such taxable income or
	  loss;


				       6



     (iv) gain or loss resulting from any disposition of Company property with
	  respect to which gain or loss is recognized for federal income tax
	  purposes shall be computed with reference to the Book Tax Value of the
	  property disposed of, rather than the adjusted tax basis of such
	  property;

     (v)  in the event the Book Tax Value of any Company asset is adjusted
	  pursuant to subsection (iii) or (iv) of the definition of Book Tax
	  Value, the amount of such adjustment shall be taken into account as
	  gain or loss from the disposition of such asset for purposes of
	  computing Profits and Losses;

     (vi) to the extent an adjustment to the adjusted tax basis of any Company
	  asset pursuant to Code sections 734(b) or 743(b) is required to be
	  taken into account in determining Capital Accounts pursuant
	  Regulations section 1.704-1(b)(2)(iv)(m)(4) as a result of a
	  distribution other than in liquidation of a Member's Interest, the
	  amount of such adjustment shall be treated as an item of gain (if the
	  adjustment increases the basis of the asset) or loss (if the
	  adjustment decreases the basis of the asset) from the disposition of
	  the asset and shall be taken into account for purposes of computing
	  Profits or Losses; and

     (vii) any items which are specially allocated pursuant to Sections 5.1(b)
	  or 5.2(b) hereof shall not be taken into account in computing Profits
	  or Losses.

	  "Regulations" means the regulations promulgated under the Code by the
	   -----------
Department of the Treasury, as such regulations may be amended from time to
time.

	  "RTO" means an RTO as defined by Order No. 2000.
	   ---

	  "Substitute Member" means a Person who has become a substitute Member
	   -----------------
pursuant to Section 10.3 hereof.

	  "Super Majority of the Members" means Members holding Percentage
	   -----------------------------
Interests representing more than seventy five percent (75%) of the outstanding
Interests in the Company.

	  "Transfer" means any sale, assignment, gift, hypothecation, pledge,
	   --------
encumbrance, alienation, mortgage or other disposition, whether voluntary or by
operation of law (other than a transfer which may arise by reason of death or


				       7



incapacity), of an Interest or any portion thereof; provided, however, that for
purposes of this Agreement, a Transfer shall not include the conversion of an
Interest or any portion thereof pursuant to Section 3.4 hereof.

	  "Transferee" means a purchaser, transferee, assignee (other than
	   ----------
assignees for purposes of collateralizing a Member's loan) or any other Person
who takes, in accordance with the terms of this Agreement, an Interest in the
Company.

				    ARTICLE 2
			  THE LIMITED LIABILITY COMPANY
			  -----------------------------

	  2.1 Formation. The Members have formed the Company as a limited
	      ---------
liability company pursuant to the provisions of the Act and in accordance with
the further terms and provisions hereof. [On       , [2001], the Certificate of
					     ------
Formation of the Company were filed with the Secretary of State of the State of
Delaware in conformity with the Act.] Each of the Members shall execute or cause
to be executed from time to time all other instruments, certificates, notices
and documents, and shall do or cause to be done all such filing, recording,
publishing and other acts, in each case, as may be necessary or appropriate from
time to time to comply with all applicable requirements for the formation and/or
operation and, when appropriate, termination of a limited liability company in
the State of Delaware and all other jurisdictions where the Company shall desire
to conduct its business.

	  2.2 Name. The name of the Company shall be [Transco LLC] and its
	      ----
business shall be carried on in this name with such variations and changes as
are necessary to comply with the requirements of the jurisdictions in which the
Company's operations are conducted.

	  2.3 Business Purpose. The purpose of the Company is to obtain and
	      ----------------
maintain approval as an independent transmission company and to operate as an
independent transmission company, to hold and operate certain transmission
assets in respect of the same and, subject to the approval of the Members as may
be required under this Agreement, to engage in or transact any other lawful act
or activity or business for which a limited liability company may be formed
under the Act; provided, however, that in no event shall the Company engage in
or transact any activity or business that would result in the Company not being
in compliance with Order No. 2000 and all applicable requirements of such rules
and orders as the FERC may now or hereafter issue regarding RTOs; and provided
further, that the Company shall not be a Market Participant and shall at no time
hold, directly or indirectly, any interest in a Market Participant. The Company
shall possess and may exercise all the powers and privileges granted by the Act
or by any other law or by this Agreement, together with any powers incidental
thereto, insofar as such powers and privileges are necessary or convenient to
the conduct, promotion or attainment of the business purposes or activities of
the Company as described in the immediately preceding sentence. A public


				       8



informational filing regarding any activity or business that the Company engages
in or transacts that is not directly or indirectly related to the services or
functions that are commonly performed by RTOs shall be filed with the FERC
together with a certificate duly executed on behalf of the Company certifying
that engaging in or transacting such activity or business is in compliance with
Order No. 2000 and all applicable requirements of such rules and orders as the
FERC may now or hereafter issue regarding RTOs.

	  2.4 Registered Office and Agent. The registered office of the Company
	      ---------------------------
in the State of Delaware and its registered agent for service of process on the
Company in the State of Delaware shall be as set forth in the Certificate of
Formation of the Company, as filed with the Secretary of State of the State of
Delaware, as the same may be amended from time to time.

	  2.5 Term. The term of the Company shall commence on the date and time
	      ----
of the filing of the Certificate of Formation of the Company in the office of
the Secretary of State of the State of Delaware (the "Formation Date") and shall
continue until dissolved and liquidated in accordance with Article 11 hereof.

	  2.6 Principal Office and Places of Business. The mailing address and
	      ---------------------------------------
the street address of the principal office of the Company shall be located in
the State of Delaware, as determined by the Managing Member. The Company may
from time to time have such other place or places of business within or without
the State of Delaware as the Managing Member may deem advisable.

	  2.7 Title to Company Property. No real or other property of the
	      -------------------------
Company shall be deemed to be owned by any Member individually. Legal title to
all property of the Company shall be held and conveyed in the name of, and
vested solely in, the Company. Each Member's Interest in the Company shall
constitute personal property.

	  2.8 The Members. The name, address and facsimile number and Percentage
	      -----------
Interest of each Member is set forth on Schedule A attached hereto, which
Schedule A shall be updated, from time to time, as provided under this
Agreement.

	  2.9 Fiscal Year. Unless the Tax Matters Partner shall at any time
	      -----------
otherwise determine in accordance with Code section 706, the Fiscal Year of the
Company shall be the Managing Member's taxable year, which ends on December 31,
and the initial Fiscal Year of the Company shall commence on the Formation Date
and end on December 31, 2000.

	  2.10 No State Law Partnership. The Members agree to form a limited
	       ------------------------
liability company and intend that the Company not be a partnership (including a


				       9



limited partnership) or joint venture under the laws of the State of Delaware or
any other laws and that no Member be a partner or joint venture of any other
Member for any purpose; provided, however, that to the extent permitted by
applicable law, the Company shall be treated as a partnership for federal, state
and local income tax purposes. This Agreement shall not be construed in any
manner that is inconsistent with the foregoing.

	  2.11 No Liability of Members. All debts, obligations and liabilities
	       -----------------------
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company. No Member shall have any
liability for the debts, obligations or liabilities of the Company solely by
reason of being a Member, and no Member shall have any liability for the debts,
obligations or liabilities of any other Member.

	  2.12 Acquisition of Transmission Facilities. In order for the Company
	       --------------------------------------
to acquire ownership of or operational control over transmission facilities
covering the widest possible area, the Managing Member, on behalf of the
Company, shall have the authority to acquire ownership of or otherwise obtain
operational control over transmission facilities owned by others either through
an agreement of sale, a lease, an operating agreement or any other device
allowing the transfer of ownership or operational control of transmission
facilities to the Company. The Managing Member, on behalf of the Company, may
acquire or otherwise obtain ownership or control over additional transmission
facilities in the foregoing manner without the approval of the Members (but
subject to the Managing Member's fiduciary duty to the Members as set forth in
Section 9.1(b) hereof); provided, however, that no Person shall be admitted as a
Member of the Company, nor shall any Interests in the Company be issued, in
connection with any of the foregoing, except in strict compliance with the
provisions of Articles 3 and 10 of this Agreement. In furtherance of the
foregoing, for a period beginning on the date hereof and continuing until the
second anniversary of the date hereof, the Managing Member, on behalf of the
Company, may not refuse to agree to acquire ownership of any interconnected
transmission facilities if the owner of such transmission facilities has offered
ownership of its assets in service on the date the Commission issues a final
order approving the formation of the Company at the Net Book Value of such
assets and otherwise on commercially reasonable terms. The Managing Member shall
not, at any time, refuse to acquire operational control over any interconnected
transmission facilities if the owner of such transmission facility has offered
operational control thereover to the Company on commercially reasonable terms.
Notwithstanding anything contained herein to the contrary, the provisions of
this Section 2.12 shall be subject, at all times, to the provisions of Section
8.5 of this Agreement.

	  2.13 Representations and Warranties of the Members. Each Member
	       ---------------------------------------------
represents and warrants that:


				       10



	       (a) It is duly organized, validly existing and in good standing
under the laws of the state of its organization;

	       (b) It has all requisite power and authority to enter into this
Agreement; the execution and delivery by such Member of this Agreement and the
consummation by such Member of the transactions contemplated hereby have been
duly authorized by all necessary and appropriate action on the part of such
Member; and this Agreement has been duly and validly executed and delivered by
such Member and constitutes (assuming the due and valid execution and delivery
of this Agreement by the other Members), the legal, valid and binding
obligations of each Member, enforceable against each Member in accordance with
its terms;

	       (c) There is no litigation pending or, to the best knowledge of
such Member, threatened against such Member which has a reasonable likelihood of
materially and adversely affecting the operations, properties or business of the
Company or any of such Member's obligations under this Agreement;

	       (d) The execution, delivery and performance by such Member of
this Agreement will not result in a breach of any of the terms, provisions or
conditions of any agreement to which such Member is a party which has a
reasonable likelihood of materially and adversely affecting the operations,
properties or business of the Company or such Member's obligations under this
Agreement;

	       (e) The execution and delivery by such Member of this Agreement
and the formation of the Company as a limited liability company does not require
any filing by it with, or approval or consent of, any governmental authority
which has not already been made or obtained, except the filing of the
Certificate of Formation of the Company in the office of the Secretary of State
of the State of Delaware; and

	       (f) There are no claims, either administrative or judicial, at
law or in equity, pending or, to the knowledge of such Member, threatened
against it which could, if continued, have a material adverse affect on the
business, operations, properties, assets or condition (financial or otherwise)
of such Member, or the ability of such Member to perform its obligations under
this Agreement.


				       11



				    ARTICLE 3
		  MEMBERS, CAPITAL STRUCTURE AND CONTRIBUTIONS
		  --------------------------------------------

	  3.1 Capital Structure.
	      -----------------

	       (a) The capital structure of the Company shall consist of two
classes of common Interests: the "Class A Interests" and the "Class B
Interests", each of which shall have the following respective rights,
preferences and designations and the other rights, preferences and designations
established for such class in this Agreement:

		    (i) The Class A Interests shall be issued to and
     initially owned by the Managing Member. Except as provided in Article 8,
     the Class A Interests shall be the only voting Interests. Holders of
     Class A Interests shall receive allocations and distributions pursuant
     to Article V hereof.

		    (ii) The Class B Interests initially owned by the
     remaining Members. Except as provided in Article 8, the Class B
     Interests shall be non-voting Interests. Holders of Class B Interests
     shall receive allocations and distributions pursuant to Article 5
     hereof.

	       (b) Ownership of Interests shall be evidenced by certificates
("Interests Certificates"). Interests Certificates representing the Class A
Interests and Class B Interests shall be in the forms of Exhibits      and
								  ----     ----
respectively. The Interests Certificates need not bear a seal of the Company but
shall be executed by the Managing Member. The Interest Certificate books shall
be kept by the Managing Member. The Interests Certificates shall be
consecutively numbered (on a class-by-class basis), shall be entered in the
books of the Company as they are issued and shall exhibit the holder's name and
number of Interests. The Managing Member may determine the conditions upon which
a new Interest Certificate may be issued in place of an Interest Certificate
that is alleged to have been lost, stolen or destroyed and may, in its
discretion, require the owner of such Interest Certificate or its legal
representative to give bond, with sufficient surety, to indemnify the Company
and the Managing Member against any and all losses or claims that may arise by
reason of the issuance of a new Interest Certificate in the place of the one so
lost, stolen or destroyed. Each Interest Certificate shall bear a legend on the
reverse side thereof substantially in the following form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT
     HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
     REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO THE TERMS AND


				       12



     PROVISIONS OF THAT CERTAIN LIMITED LIABILITY COMPANY AGREEMENT OF THE
     COMPANY, DATED AS OF                ,          (AS SUCH AGREEMENT MAY BE
			  --------------- ---------
     AMENDED FROM TIME TO TIME), A COPY OF WHICH MAY BE OBTAINED FROM THE
     MANAGING MEMBER OF THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

	  3.2 Initial Capital Contributions.
	      -----------------------------

	       (a) Each Member is herewith contributing, as an initial capital
contribution to the Company (an "Initial Capital Contribution"), all of its
right, title and interest (whether now held or hereafter acquired) in and to the
assets listed and described, together with a statement of the agreed upon Book
Tax Value of such assets, following such Member's name on Schedule B attached
hereto. In exchange for its Initial Capital Contribution, each Member is
herewith receiving an Interest in the Company in proportion to such Member's
Percentage Interest, which shall be set forth on Schedule A attached hereto.

	       (b) Other Persons may be admitted as Members of the Company
provided that (i) any such Person becomes a party to this Agreement by
executing, delivering, adopting and acknowledging this Agreement, and (ii) such
Person makes an Initial Capital Contribution, the agreed upon Book Tax Value of
which shall be approved by the Managing Member at the time such Person is
admitted, upon receipt of which the Company shall update Schedule B attached
hereto accordingly. Upon satisfaction of the foregoing, such Person shall become
a Member and shall receive an Interest in the Company in proportion to such
Member's Percentage Interest, which shall be set forth on Schedule A attached
hereto. As a result of the admission of any such additional Member, the
Percentage Interests of each other Member shall be adjusted accordingly and the
Company shall update Schedule A attached hereto accordingly.

	       (c) The Members shall be entitled to make Additional Capital
Contributions as provided in Section 3.3 hereof.

	  3.3 Additional Capital Contributions. Members shall not be obligated
	      --------------------------------
to make any additional capital contribution to the Company (an "Additional
Capital Contribution"). The Managing Member may make additional capital
contributions in his discretion, provided that the Percentage Interests of each
Member shall be adjusted accordingly and the Company shall update Schedule A
attached hereto accordingly. A Member that holds a Class B Interest may, with
the approval of the Super Majority of the Percentage Interests of the Company,
make Additional Capital Contributions, provided that the Percentage Interests of
each Member shall be adjusted accordingly and the Company shall update Schedule
A attached hereto accordingly.


				       13



	  3.4 Optional Conversion of Member Interests. Each Member, at its
	      ---------------------------------------
option, may convert all or any portion of its Interest in the Company into
shares of non-voting Class B Common Stock of the Managing Member by transferring
to the Managing Member such portion of its Interest to be so converted pursuant
to the terms of the Member and Shareholder Agreement, provided that, as a result
of any such conversion, the Percentage Interests of each Member shall be
adjusted accordingly and the Company shall update Schedule A attached hereto
accordingly.

				    ARTICLE 4
				CAPITAL ACCOUNTS
				----------------

	  4.1 Capital Accounts. Each Member shall have a capital account (a
	      ----------------
"Capital Account") which account shall be credited with (i) the Capital
Contributions (net of liabilities that the Company is considered to assume or
take subject to under Code section 752) contributed by such Member to the
Company; and (ii) allocations of Profits to it pursuant to Section 5.1. Each
Member's Capital Account shall be debited with (i) the amount of cash and the
Book Tax Value of other property distributed to such Member (net of liabilities
that such Member is considered to assume or take subject to under Section 752 of
the Code) and (ii) allocations of Losses to it pursuant to Section 5.1. The
provisions of this Agreement relating to the maintenance of Capital Accounts and
procedures under liquidation of the Company are intended to comply generally
with Regulations section 1.704-1(b), and shall be interpreted and applied in a
manner consistent therewith and, to the extent the subject matter thereof is
otherwise not addressed by this Agreement, the provisions of such Regulations
are hereby incorporated by reference.

	  The Members hereby agree to be bound by the provisions of this Article
4 (relating to Capital Accounts) and Article 5 (relating to Allocations) in
reporting their shares of Company income and loss for all tax purposes, except
to the extent otherwise required by applicable law. Notwithstanding any
requirements of law, the Members agree, for purposes of maintaining their
Capital Accounts, to be bound by the allocations contained in Article 5,
notwithstanding any allocations for income tax purposes.

	  4.2 No Other Capital Contributions. Except as provided in Section 3.3,
	      ------------------------------
no Member shall be permitted or obligated to make any Additional Capital
Contributions to the Company's capital.

	  4.3 No Interest on Capital Contributions. No Member shall be entitled
	      ------------------------------------
to demand or receive interest on its Capital Contributions.


				       14



	  4.4 No Right of Withdrawal. No Member shall have the right to withdraw
	      ----------------------
any portion of such Member's Capital Contributions to, or to receive any
distributions from, the Company, except as provided in Articles 6 and 11 hereof.

	  4.5 Loans. The Company may borrow funds from third parties or enter
	      -----
into other similar credit, guarantee, financing or refinancing arrangements with
third parties for any prudent business purpose and at reasonable rates.

	  4.6 Transfers. (a) In the event that all or a portion of an Interest
	      ---------
in the Company is Transferred in accordance with the terms of this Agreement,
the Transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred Interest.

	       (b) In the case of a Member who sells its entire Interest in the
Company, the Company taxable year shall close with respect to such Member, and
such Member's distributive share of all items of Profits, Losses and any other
items of income, gain, loss or deduction shall be determined using the interim
closing of the books method under Code Section 706 and Regulations Section
1.706-1(c)(2)(i). Except as otherwise provided in this Article 4 or Article 5,
in all other cases in which it is necessary to determine the Profits, Losses, or
any other items allocable to any period, Profits, Losses, and any such other
items shall be determined on a daily, monthly, or other basis, as determined by
the Board using any permissible method under Code Section 706 and the
Regulations thereunder.

				    ARTICLE 5
			  ALLOCATION OF PROFIT AND LOSS
			  -----------------------------

	  5.1 Allocation of Profit and Loss.
	      -----------------------------

	       (a) Allocations to Capital Accounts. After giving effect to the
		   -------------------------------
special allocations provided in Section 5.1(b) and (c), Profits and Losses shall
be allocated among the Members as of the last day of each Fiscal Year (except as
otherwise required under Section 4.6(b)) in proportion to their Percentage
Interests.

	       (b) Special Allocations. The following special allocations shall
		   -------------------
be made in the following order and priority:

		    (i) Minimum Gain Chargeback. Except as otherwise provided in
			-----------------------
Section 1.704-2(f) of the Treasury Regulations, notwithstanding any other
provision of this Article 5, if there is a net decrease in Company Minimum Gain
during any Fiscal Year, each Member shall be specially allocated items of
Company income and gain for such Fiscal Year (and, if necessary, subsequent


				       15



Fiscal Years) in an amount equal to such Member's share of the net decrease in
Company Minimum Gain, determined in accordance with Section 1.704-2(g) of the
Treasury Regulations. Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury
Regulations. This Section 5.1(b)(i) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and
shall be interpreted consistently therewith.

		    (ii) Member Minimum Gain Chargeback. Except as otherwise
			 ------------------------------
provided in Section 1.704-2(i)(4) of the Treasury Regulations, notwithstanding
any other provision of this Article 5, if there is a net decrease in Member
Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during
any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Treasury Regulations, shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in an amount equal to such Member's share
of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury
Regulations. This Section 5.1(b)(ii) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i)(4) of the Treasury Regulations and
shall be interpreted consistently therewith.

		    (iii) Nonrecourse Deductions. Nonrecourse Deductions for any
			  ----------------------
Fiscal Year or other period shall be specially allocated among the Members in
proportion to their percentage interests. Any Member Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i)(1).

		    (iv) Section 754 Adjustments. To the extent an adjustment to
			 -----------------------
the adjusted tax basis of any Company asset pursuant to Sections 734(b) or
743(b) of the Code is required pursuant to Treasury Regulations Sections
1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of its Interest, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such


				       16



gain or loss shall be specially allocated to the Members in accordance with
their interests in the Company in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was
made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

		    (v) Curative Allocations. The allocations set forth in
			--------------------
Sections 5.1(b)(i), (ii), (iii), and (iv) (the "Regulatory Allocations") are
intended to comply with certain requirements of the Treasury Regulations. It is
the intent of the Members that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss, or deduction
pursuant to this Section 5.1(b)(v). Therefore, notwithstanding any other
provision of this Article 5 (other than the Regulatory Allocations), the
Managing Member shall make such offsetting special allocations of Company
income, gain, loss, or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of this
Agreement and all Company items were allocated pursuant to Section 5.1(a). In
exercising its discretion under this Section 5.1(b)(v), the Board shall take
into account future Regulatory Allocations under Sections 5.1(b)(i) and (ii)
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Section 5.1(b)(iii).

	       (c) Redeterminations. If for any taxable period of the Company,
		   ----------------
the Company is deemed to have a net increase (or decrease) in taxable income as
a result of a redetermination by a tax authority resulting from transactions
between the Company and any Member or any Affiliate of any Member, the item or
items of Profits or Losses that resulted in such increase (or decrease) in
taxable income shall be allocated to the Member that was (or the Affiliate of
which was) a party to the transaction and the Capital Accounts of the Members
shall reflect such allocations.

	  5.2 Tax Allocations. (a) If, as a result of contributions of property
	      ---------------
by a Member to the Company or as an adjustment to the Book Tax Value of Company
assets pursuant to this Agreement, there is a disparity between the Book Tax
Value of any Company asset and the Company's adjusted tax basis in such asset,
any items of income, gain, loss and deduction with respect to such property
shall be allocated among the Members so as to take account of such variation
between the Book Tax Value and the adjusted tax basis of such asset, consistent
with Code section 704(c) and the Regulations thereunder using the traditional
method permitted under such Regulations.

	       (b) For purposes of this Agreement, any "excess nonrecourse
liabilities" of the Company, within the meaning of Regulations section
1.752-3(a)(3), shall be allocated among the Members in the same manner as gain


				       17



from the disposition of all assets of the Company subject to such liabilities
would be allocated among the Members pursuant to Code section 704(c)(1)(A).

	       (c) Any elections or other decisions relating to the maintenance
of Capital Accounts or the allocation provisions of this Article 5 shall be made
by the Board in any manner that reasonably reflects the purpose and intention of
this Agreement. Allocations pursuant to this Section 5.2 are solely for purposes
of federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Profits,
Losses, other items or distributions pursuant to any provision of this
Agreement.

				    ARTICLE 6
				  DISTRIBUTIONS
				  -------------

	  6.1 Distributions in Kind. No distributions of property other than
	      ----------------------
cash shall be made without the consent of all of the Members.

	  6.2 No Right to Distributions. No Member shall have the right to
	      -------------------------
demand or receive distributions of any amount, except as expressly provided in
this Article 6.

	  6.3 Withholding. If the Company is required to withhold with respect
	      -----------
to any payments, distributions or allocations to a Member by applicable federal,
state, local or foreign tax laws, the Company may withhold such amounts and make
such payments to taxing authorities as are necessary to ensure compliance with
such tax laws. Any funds withheld by reason of this Section 6.3 shall
nonetheless be deemed distributed or allocated (as the case may be) to the
Member in question for all purposes under this Agreement. If the Company did not
withhold from actual distributions or allocations any amounts it was required to
withhold, the Company may, at its option, (i) require the Member to which the
withholding was credited to reimburse the Company for such withholding; or (ii)
reduce any subsequent distributions to such Member by the amount of such
withholding. The obligation of a Member to reimburse the Company for taxes that
were required to be withheld shall continue after such Member Transfers its
Interest in the Company or after a withdrawal by such Member. Each Member agrees
to furnish the Company with any representations and forms as shall reasonably be
requested by the Company to assist it in determining the extent of, and in
fulfilling, any withholding obligations it may have.


				       18



	  6.4 Distributions of cash. [To be provided.]
	      ---------------------


				    ARTICLE 7
			     ACCOUNTING AND REPORTS
			     ----------------------

	  7.1 Books and Records.
	      -----------------

	       (a) The Company shall maintain or cause to be maintained at its
principal office, located in the State of Delaware, this Agreement and all
amendments thereto and full and accurate books of the Company showing all
receipts and expenditures, assets and liabilities, profits and losses, and all
other books, records and information required by the Act as necessary for
recording the Company's business and affairs. The Company's books and records
for financial reporting purposes shall be maintained in accordance with GAAP,
consistently applied, except to the extent provided hereunder for purposes of
maintaining Capital Accounts in accordance with Article 4 hereof and calculating
the Profits or Losses allocated thereto in accordance with Article 5 hereof.
Such documents, books and records shall be maintained until two (2) years after
the termination and liquidation of the Company. The Company's financial
statements shall also be kept in accordance with all applicable regulatory
requirements, including the FERC's Uniform System of Accounts, and such
financial statements shall be used in connection with setting the Company's
rates, subject to regulation by the FERC.

	       (b) Except as any such right may be limited by the Code of
Conduct or any applicable requirements of such orders or rules as the FERC may
now or hereafter issue regarding access to facilities, books and records of
RTOs, each Member shall have the right at reasonable times during usual business
hours to examine, audit and make copies of the books of account and other
financial and accounting books and records of the Company and other books and
records relating to the reserves, assets, liabilities and expenses of the
Company and expenditures by the Managing Member on behalf of the Company,
including all information necessary to enable each Member to prepare all
federal, state and local tax returns and reports and to support and defend such
returns and reports; provided, however, that none of the foregoing activities
shall be conducted in a manner that unreasonably interferes with the Company's
operations or business or provides any Member (other than the Managing Member)
with information that is proprietary or that gives such member a competitive
advantage that is not permitted by Order No. 2000 or any other applicable
requirements of such rules or orders as the FERC may now or hereafter issue
regarding RTOs. Such right may be exercised through any agent or employee of a
Member designated in writing by it or by an independent public accountant,
engineer, attorney or other consultant so designated. The Member making the
request shall bear all expenses incurred in any inspection, audit or examination


				       19



made at such Member's behest. Should any inspection, audit or examination
disclose any immaterial errors or immaterial improper charges, the Managing
Member shall make, or cause to be made, appropriate adjustments therefor. In the
event such errors or such improper charges are material and disadvantage one
Member relative to the other Members, the Managing Member shall (i) reimburse
the Company therefor and (ii) bear all reasonable expenses of such inspection,
audit or examination.

	  7.2 Reports to Members.
	      ------------------

	       (a) As soon as available to the Company and in any event within
thirty (30) days after the end of the first eleven (11) months of each Fiscal
Year and within forty-five (45) days after the end of the last month of each
Fiscal Year, the Managing Member shall cause to be prepared and sent to each
Member for the prior month and for the period from the beginning of such Fiscal
Year to the end of such fiscal month, a financial statement package which shall
(i) be prepared in accordance with GAAP (except that certain footnotes may be
omitted); and (ii) set forth in each case in comparative form versus both the
figures for the previous Fiscal Year, and the forecast for the current Fiscal
Year.

	       (b) As soon as practicable and in any event within ninety (90)
days after the end of each Fiscal Year, the Managing Member shall provide to
each Member audited financial statements of the Company for such Fiscal Year
setting forth in each case in comparative form the figures for the previous
Fiscal Year, certified by such certified public accountants as may be selected
by the Managing Member.

	       (c) The Company or the Managing Member shall provide to each
Member on a timely basis such information as a Member may reasonably request
regarding the details of transactions recorded in the financial statements
described in Subsections 7.2(a) and 7.2(b) hereof.

	       (d) As requested, the Company shall provide to each Member such
information as may be necessary for them to comply with applicable financial
reporting requirements of any competent governmental authorities or agencies or
stock exchange on which the shares of any such company are listed including,
without limitation, the New York Stock Exchange and the U.S. Securities and
Exchange Commission and such information regarding the financial position,
business, properties or affairs of the Company as a Member may reasonably
request.

	  7.3 Tax Matters.
	      -----------

	       (a) The Managing Member is hereby designated the "Tax Matters
Partner" for federal income tax purposes pursuant to Section 6231 of the Code


				       20



with respect to all taxable years of the Company and is authorized to do
whatever is necessary to qualify as such. Each Member hereby agrees to join in
the execution of such forms or documents or to take such other actions as may be
necessary or appropriate to designate the Managing Member as the Tax Matters
Partner. Any direct or indirect costs and expenses incurred by the Tax Matters
Partner, acting in its capacity as such, shall, upon submission of an adequate
accounting, be deemed costs and expenses of the Company, and the Company shall
reimburse the Tax Matters Partner for such amounts. The Members hereby agree
that the Company shall indemnify the Tax Matters Partner pursuant to Article 12
of this Agreement from and against any and all damages asserted against or
incurred by the Tax Matters Partner in connection with any actions which the Tax
Matters Partner reasonably believes to be within the scope of the authority
conferred on it pursuant to this Agreement.

	       (b) The Tax Matters Partner shall prepare or cause to be prepared
all tax returns required of the Company. As soon as practicable after the end of
each taxable year, the Tax Matters Partner shall furnish to each Member such
information in the possession of the Tax Matters Partner requested by such
Member as necessary to timely fulfill such Member's federal, state, local and
foreign tax obligations, including Schedule K-1, or any similar form as may be
required by the Code or the Internal Revenue Service (the "IRS"). The Members
shall file their respective tax returns, as such pertain to the business of the
Company, in a manner consistent with the Company's tax and information returns.

	       (c) The Tax Matters Partner shall use its best efforts to do all
acts and take whatever steps are required to maximize, in the aggregate, the
federal, state and local income tax advantages available to the Company and
shall defend all tax audits and litigation with respect thereto.

	       (d) In the event that the Company shall be the subject of any
audit, assessment of taxes, other examination by any tax authority, proceedings,
or appeal of such a proceeding relating to taxes, whether administrative or
judicial (a "Tax Contest"), to the extent the Company is treated as an entity
for purposes of such Tax Contest, the Tax Matters Partner shall be authorized to
act for, and its decision shall be final and binding upon, the Company and each
Member thereof, except to the extent otherwise provided in Code section 6224(c).

	       (e) The Members hereby authorize the Tax Matters Partner to make
(or cause to be made) any elections for tax purposes, including any election
under Code section 754, as it determines, in its sole discretion, except to the
extent inconsistent with Article 5 hereof with respect to the maintenance of
Capital Accounts and allocations thereto; provided, however, that the Tax
					  --------  -------
Matters Partner may not make (or cause to be made) any election to cause the


				       21



Company to be treated as an association taxable as a corporation without the
approval of a Majority of the Members.

	  7.4 Annual Operating Budget and Five Year Plan. No later than
	      ------------------------------------------
forty-five (45) days before the end of each Fiscal Year, the Managing Member
shall prepare in good faith and submit to the Membership Committee (as defined
in Article 8), for its information and comment (but not for its approval), an
annual operating budget ("Annual Operating Budget") and five year plan, each of
which shall, in the best judgment of the Managing Member, reflect reasonable
expectations for the Company during the period covered. The Managing Member
shall in its sole discretion approve the Annual Operating Budget and any
amendments thereto.

	  7.5 Agreements with Affiliates
	      --------------------------

	       (a) The Company shall not enter into any agreement or contract
with a Member, any Affiliate of a Member, or any agent of a Member unless any
such agreement or contract shall contain substantially such terms and conditions
as would be contained in a similar agreement or contract entered into by the
Company as the result of arm's-length negotiations from a comparable
unaffiliated disinterested third party.

	       (b) A Member may provide to the Company such accounting and tax
services to the extent such services are necessary for the Member to prepare a
consolidated financial statement or a consolidated tax return. No other
accounting or tax services shall be received by the Company from a Member except
as provided in Section 7.5(a).

				    ARTICLE 8
			       ACTIONS BY MEMBERS
			       ------------------

	  8.1 Membership Committee. The Company shall have a Membership
	      --------------------
Committee made up of all Members. Except as otherwise provided in this
Agreement, on all matters requiring approval of the Members, each Member shall
be entitled to vote ratably in proportion to its then current Percentage
Interest in the Company.

	  8.2 Meetings. Meetings of the Membership Committee shall be held only
	      --------
at the call of the Managing Member and only for the purpose of seeking the
approval or consent of the Members as provided in the Approval Terms of this
Agreement or for the consideration of any extraordinary matter, including
changes in applicable state or federal income tax laws or regulations, changes
in the rules, regulations or policies of the FERC applicable to RTOs or such
other laws or regulations applicable to the Company or the Members, as Members.
The Members may take action by the vote of Members at a meeting in person or by


				       22



proxy, or without a meeting by written consent. Any action required or permitted
to be taken at any meeting of the Membership Committee may be taken without a
meeting if Members holding Percentage Interests sufficient to approve the action
pursuant to the terms of this Agreement consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the
Membership Committee. In no instance where action is authorized by written
consent shall a meeting of the Membership Committee be called or notice be
given; however, a copy of the action taken by written consent shall be sent
promptly to all Members and filed with the minutes of the proceedings of the
Membership Committee.

	  8.3 Notice, Quorum and Vote Required. Meetings of the Membership
	      --------------------------------
Committee may be called by the Managing Member upon at least five (5) days'
prior written notice of the time and place of such meeting. For any meeting of
the Membership Committee, the presence in person or by proxy of a Majority of
the Members at the time of the action taken shall constitute a quorum for the
transaction of business. Unless otherwise specifically provided herein, all
matters requiring approval or consent of the Members shall be decided by an
affirmative vote or written consent of a Majority of the Members.

	  8.4 Power to Bind the Company. Except as specifically provided
	      -------------------------
pursuant to the Approval Terms of this Agreement or the Act, the Members, other
than the Managing Member, shall not participate in the control or operation of
the Company. No Member, other than the Managing Member, shall have the authority
to sign or deliver any instrument transferring or affecting the Company's
interest in any real or personal property. No Member (acting in its capacity as
such), other than the Managing Member, shall have any authority to bind the
Company to any third party with respect to any matter.

	  8.5 Matters Requiring Member Approval. To the extent that the Members
	      ---------------------------------
may waive their right to vote, approve or consent in respect of any matter
requiring approval of the Members under the Act or other applicable law, the
Members (other than the Managing Member) hereby waive any such right. In
addition to any other matter requiring approval of the Members under any
nonwaivable provisions of the Act or other applicable law, and any other vote of
the Members provided under the Approval Terms of this Agreement, an affirmative
vote of a Super Majority of the Members holding Class B Interests shall be
required for any of the following matters:

	       (a) any proposal by the Company to (a) enter into any transaction
that would result in a change of control of the Company, (b) sell, transfer,
lease, exchange or otherwise dispose of all, or substantially all, of the assets
of the Company (other than pursuant to a mortgage or security interest entered
into in connection with a financing of the Company's business) and all or a
portion of the consideration received therefor by the Company is cash, or (c)


				       23



merge or consolidate with or into any other entity and all or a portion of the
consideration received therefor by the Members is cash. A "change of control" or
"transfer of control" as applied herein to the Company shall be deemed to have
occurred if, following the consummation of any transaction, less than twenty
percent (20%) of the outstanding Interests of the Company (or any successor
entity resulting from such transaction) is held by those holders of the
Interests of the Company immediately prior to the consummation of such
transaction;

	       (b) any acquisition or business development opportunity that is
otherwise permissible under Sections 2.3 and 9.1(c) of this Agreement but is not
directly or indirectly related to the provision of electric transmission
service, including but not limited to the formation and administration of
electric markets, or other services or functions that are commonly performed by
RTOs;

	       (c) any proposal to (i) institute proceedings to have the Company
adjudicated bankrupt or insolvent, (ii) consent to the institution of bankruptcy
or insolvency proceedings against the Company, (iii) file a petition seeking a
reorganization of the Company under federal or state bankruptcy laws, (iv)
consent to the appointment of a receiver or trustee for the Company, or (v) make
an assignment for the benefit of creditors of the Company;

	       (d) any proposal to amend the Approval Terms or the Economic
Terms of this Agreement.

	       (e) any proposal to dissolve the Company pursuant to Section
11.1(d).


				    ARTICLE 9
			   DUTIES AND RESPONSIBILITIES
			   ---------------------------
			     OF THE MANAGING MEMBER
			     ----------------------

	  9.1 General Management.
	      ------------------

	       (a) Except as otherwise expressly provided pursuant to the
Approval Terms of this Agreement, the Managing Member, in its capacity as a
Member of the Company under the Act, shall have sole and complete charge and
management of all the affairs and business of the Company, in all respects and
in all matters. The Managing Member shall be an agent of the Company, and the
actions of the Managing Member taken in such capacity and in accordance with
this Agreement shall bind the Company. The Managing Member shall at all times be
a Member of the Company. Except as otherwise expressly provided pursuant to the
Approval Terms of this Agreement, the Members other than the Managing Member
shall not participate in the control of the Company, and shall have no right,


				       24



power or authority to act for or on behalf of, or otherwise bind the Company.
Except as expressly provided pursuant to the Approval Terms of this Agreement or
required by any non-waivable provisions of applicable law, Members other than
the Managing Member shall have no right to vote on or consent to any other
matter, act, decision or document involving the Company or its business.

	       (b) At all times the Managing Member shall have a fiduciary duty
of loyalty and care to the Company and shall act in good faith and in a manner
that the Managing Member reasonably believes to be in the best interests of the
Company. In managing the business and affairs of the Company, the Managing
Member shall owe the Members a fiduciary duty to maximize the value of the
Company, and the assets controlled by the Company and to protect the integrity
of the Member's capital investment. The fiduciary duties owed by the Managing
Member to the Members shall not require the Directors and Officers to consider
the interests of the Members outside the Company's business.

	       (c) At all times the Managing Member shall operate, maintain,
plan and expand the Company's transmission system to meet the needs of all users
of such transmission system in a non-discriminatory manner, consistent with all
applicable requirements of Order No. 2000 and such other orders or rules as the
FERC may now or hereafter issue regarding RTOs.

	  9.2 Exclusive Control. Except as otherwise expressly provided pursuant
	      -----------------
to the Approval Terms of this Agreement, the Managing Member shall have full,
exclusive and complete discretion to manage and control the business and affairs
of the Company, to make all decisions affecting the business and affairs of the
Company and to take all such actions as it reasonably deems necessary or
appropriate to accomplish the purposes and direct the affairs of the Company.
The Managing Member shall have the right to manage and make decisions in a
manner that the Managing Member reasonably believes will foster the long term
growth and prospects of the business, and the Managing Member shall have no
duties or liabilities to another Member or other Person for actions and
decisions that the Managing Member reasonably believes are necessary,
appropriate or consistent with such long term growth and prospects. The Managing
Member shall have the sole power and authority to bind the Company, except and
to the extent that such power is expressly delegated in writing to any other
Person by the Managing Member.

	  9.3 Certain Powers. Except as otherwise expressly provided pursuant to
	      --------------
the Approval Terms of this Agreement, the Managing Member shall have the
exclusive right, power and authority, in the management of the business and
affairs of the Company, to do or cause to be done any and all acts at the
expense of the Company, deemed by the Managing Member to be necessary or
appropriate to effectuate the business of the Company. Except as expressly
provided pursuant to the Approval Terms of this Agreement and, without limiting


				       25



the generality of the foregoing, the Managing Member shall have full and
complete power and authority, without the approval of any other Member:

	       (a) to conduct any business that is not inconsistent with the
Company's purpose as set forth in Section 2.3 hereof or the provisions of
Section 9.1(c) hereof, and to exercise any rights and powers, permitted of a
limited liability company organized under the laws of the state of Delaware, in
any state, territory, district or foreign country as the Managing Member deems
necessary or advisable;

	       (b) to acquire by purchase, lease or otherwise, and/or to
otherwise own, hold, operate, finance, maintain, improve, lease, sell, convey,
mortgage, transfer or dispose of any property or other assets that the Managing
Member deems necessary or advisable;

	       (c) to negotiate, enter into, perform, modify, extend, terminate,
amend, waive, renegotiate and/or carry out any contract and agreements of any
kind and nature, including without limitation, contracts and agreements with any
Member or any agent of the Company, as the Managing Member deems necessary or
advisable, but only in such a manner that is consistent with the provisions of
this Agreement, the Code of Conduct, Order No. 2000 and all applicable
requirements of such rules or orders as the FERC may now or hereafter issue
regarding RTOs;

	       (d) to lend money and to invest and reinvest its funds;

	       (e) to sue and be sued, complain and defend, and participate in
administrative, judicial and other proceedings, in the name of, and on behalf
of, the Company;

	       (f) to pay, collect, compromise, arbitrate or otherwise adjust or
settle any and all claims or demands of or against the Company, in such amounts
and upon such terms and conditions as the Managing Member shall reasonably
determine;

	       (g) to, from time to time, employ, engage, hire or otherwise
secure the services of such Persons, including any Member, as the Managing
Member may deem necessary or advisable for the proper execution of its duties as
Managing Member hereunder, provided such services are within the scope of the
foregoing authority granted to the Managing Member hereunder, with such
employment to be for such reasonable compensation and upon such reasonable terms
and conditions as the Managing Member shall determine, but only in such a manner
that is consistent with the provisions of this Agreement, the Code of Conduct,
Order No. 2000 and all applicable requirements of such rules or orders as the
FERC may now or hereafter issue regarding RTOs;


				       26



	       (h) to, from time to time, appoint such Executive Officers as the
Managing Member deems necessary or advisable, define and modify, from time to
time, such Executive Officers' duties, and fix and adjust, as appropriate, such
Executive Officers' compensation;

	       (i) to borrow money and issue evidences of indebtedness
necessary, convenient or incidental to the business of the Company, and secure
the same by mortgage, pledge or other lien on any tangible assets of the
Company;

	       (j) to prepare, execute, file record, publish and deliver any and
all instruments, documents or statements necessary or convenient to effectuate
any and all actions that the Managing Member is authorized to take on behalf of
the Company;

	       (k) to deal with, or otherwise engage in business with, or
provide services to and receive compensation therefor from, any Person who has
provided services to, lent money to, sold property to, or purchased property
from the Company or a Member, or any Person who may do so in the future, but
only in such a manner that is consistent with the provisions of this Agreement,
the Code of Conduct, Order No. 2000 and all applicable requirements of such
rules or orders as the FERC may now or hereafter issue regarding RTOs; and

	       (l) to establish all accounting and tax policies that the Company
will use to maintain its books and records.

	  9.4 Restrictions on Other Members. Except as expressly provided in the
	      -----------------------------
Approval Terms of this Agreement or required by any non-waivable provision of
the Act or other applicable law, no Member other than the Managing Member shall
(a) have the right to vote on or consent to any other matter, act, decision or
document involving the Company or its business, (b) have the authority to sign
or deliver any instrument transferring or affecting the Company's interest in
any real property, or (c) take part in the day-to-day management, or the
operation or control, of the business and affairs of the Company. Except to the
extent expressly delegated by the Managing Member, no other Member or Person
other than the Managing Member shall be an agent for the Company or have any
right, power or authority to transact any business in the name of the Company or
to act for or on behalf of or to bind the Company.

	  9.5 Personnel. The Managing Member may, in its sole discretion, employ
	      ---------
for the Company such personnel as it deems appropriate, but only in such a
manner that is consistent with the provisions of this Agreement, the Code of
Conduct, Order No. 2000 and such rules and orders as the FERC may now or
hereafter issue regarding RTOs.


				       27



	  9.6 Restrictions on Managing Member. Notwithstanding any contrary
	      -------------------------------
provision of this Agreement, without the approval or written consent of all of
the Members, the Managing Member shall not have the authority to:

	       (a) Do any act in contravention of this Agreement or contrary to
the best interests of the Company;

	       (b) Knowingly perform any act that would subject any Member to
liability for the debts, liabilities or obligations of the Company;

	       (c) Require any Member to make Additional Capital Contributions
to the Company;

	       (d) Receive any compensation for performing its duties as the
Managing Member;

	       (e) Except for such adjustments or revaluations as are
contemplated in the definition of Book Tax Value set forth in Article 1 hereof,
revalue, or cause to be revalued, any assets of the Company; or

	       (f) Do any acts, perform any actions or effect any matters
requiring approval of the Members under the provisions of this Agreement or the
Act or other applicable law, without first obtaining the approval of the Members
required by such provisions.

				   ARTICLE 10
	   TRANSFER OF INTERESTS IN THE COMPANY; WITHDRAWAL OF MEMBERS
	   -----------------------------------------------------------

	  10.1 Prohibited Transfers. Except as provided in Section 10.2 of this
	       --------------------
Agreement, no Member may Transfer or encumber its Interest in the Company or any
part thereof in any way whatsoever, and any such Transfer or encumbrance in
violation of this Article 10 shall be null and void as against the Company,
except as otherwise permitted herein or provided by law, and the Transferring or
withdrawing Members shall be liable to the Company and the other Members for all
damages that they may sustain as a result of such attempted Transfer.

	  10.2 Permitted Transfers by Members. No Member may Transfer all or a
	       ------------------------------
portion of its Interest in the Company unless:

	       (a) the Member desiring to consummate such Transfer (the
"Assigning Member"), and the prospective Transferee each execute, acknowledge
and deliver to all the other Members such instruments of transfer and assignment
with respect to such Transfer and such other instruments as are reasonably


				       28



satisfactory in form and substance to a Super Majority of the Members, except
that the provisions of this Section 10.2 (a) shall not apply to any Transfer
that is made immediately prior to, and in connection with , the conversions of
that portion of such Interest that is to be Transferred into shares of Class B
Common Stock of the Managing Member pursuant to the terms of this Agreement and
the Member and Shareholder Agreement and the immediate conversion thereafter of
such shares of Class B Common Stock into shares of Class A Common Stock pursuant
to the provisions of the Certificate of Incorporation of the Managing Member for
purposes of offering and selling such shares of Class A Common Stock to the
public or to private investors;

	       (b) the Transfer will not violate any securities laws or any
other applicable federal or state laws or the order of any court having
jurisdiction over the Company or any of its assets;

	       (c) the Transfer will not result in or create a "prohibited
transaction" as defined in Code section 4975(c) or result in or cause the
Company or any Member to be liable for excise tax under Chapter 42 of the Code
or result in or cause the Company or the Company's assets to become the assets
of an employee benefit plan (as defined in Section 3(3) of ERISA);

	       (d) the Transfer will not cause any violation of or an event of
default under, or result in acceleration of any indebtedness under, any note,
mortgage, loan, or similar instrument or document to which the Company is a
party; and

	       (e) the Transfer will not cause the Company to be classified as
corporation (or an association taxable as a corporation) within the meaning of
the Code section 7701 or as a publicly traded partnership within the meaning of
Code section 7704.

	  10.3 Substitute Member. A Transferee of the whole or any part of an
	       -----------------
Interest in the Company who satisfies the conditions set forth in Section 10.2
hereof shall have the right to become a Member in place of the Assigning Member
(a "Substitute Member") only if all of the following conditions are satisfied:

	       (a) the fully executed and acknowledged written instrument of
assignment that has been filed with the Company sets forth a statement of the
intention of the Assigning Member that the Transferee become a Substitute Member
in its place;

	       (b) the Transferee executes, adopts and acknowledges this
Agreement, and those certain other agreements set forth in Schedule C attached


				       29



hereto, and agrees to assume all the obligations of the Assigning Member
hereunder and thereunder; and

	       (c) any costs of the Transfer incurred by the Company shall have
been reimbursed to the Company by the Assigning Member or the Transferee.

	       (d) No Transferee may become a Substitute Member, and no
assignment by the Assigning Member shall become effective, with the prior
approval of FERC.

	  10.4 Involuntary Withdrawal by a Member. Upon the occurrence of an
	       ----------------------------------
event referenced in 6 Del.C. ss. 18-304 of the Act, or any successor provision
thereto, the Member with respect to whom such event occurred shall forthwith
cease to be a Member and shall have no rights or powers as a Member and the
continuation of the Company shall be governed by Section 11.2 of this Agreement.

	  10.5 Voluntary Withdrawal by a Member. No Member may resign or
	       --------------------------------
withdraw from the Company without the prior approval of the FERC.

	  10.6 Effect of Transfer. No Transfer shall relieve any Member from its
	       ------------------
obligations incurred hereunder prior to such Transfer.

				   ARTICLE 11
			   DISSOLUTION AND LIQUIDATION
			   ---------------------------

	  11.1 Dissolution. The Company shall be dissolved upon the first of the
	       -----------
following events to occur (each a "Dissolution Event"):

	       (a) The withdrawal, resignation, dissolution or liquidation of a
Member, or the occurrence of an event resulting in the Member ceasing to be such
under the Act;

	       (b) One hundred eighty (180) days after the filing of a
bankruptcy petition, provided that such petition has not been dismissed in the
interim;

	       (c) The sale, transfer or other disposition of all or
substantially all the assets of the Company, including condemnation by eminent
domain;

	       (d) An agreement of the Super Majority of the Members to dissolve
the Company, as provided in Section 8.5(e);


				       30



	       (e) An entry of a decree of judicial dissolution of the Company;
or

	       (f) The occurrence of any other event specified under the Act as
one requiring such dissolution.

	  11.2 Election to Continue the Business. The Company shall not be
	       ---------------------------------
dissolved pursuant to a Dissolution Event specified in Subsections 11.1(a) or
(f) (except as otherwise provided in the Act), if, within 45 days of such
Dissolution Event, a Majority of the Members remaining agree in writing to
continue the business of the Company, and in the event there is only one
remaining Member, such Member shall have the right to admit a new Member in
accordance with the terms of this Agreement.

	  11.3 Closing of Affairs. In the event of the dissolution of the
	       ------------------
Company for any reason, and in the absence of an election to continue the
business of the Company, an independent liquidator (the "Liquidator") selected
by a Majority of the Members remaining shall commence to close the affairs of
the Company, to liquidate its investments and to terminate the Company. The
Liquidator shall act as a fiduciary to the Company and shall have full right and
unlimited discretion to manage the business of the Company during the period of
closing the affairs of the Company and to determine the time, manner and terms
of any sale or sales of Company property pursuant to such liquidation. Upon
complete liquidation of the Company's property and compliance with the
distribution provisions set forth in Section 11.4 hereof, the Company shall
cease to be such and the Liquidator shall execute, acknowledge and cause to be
filed all certificates necessary to terminate the Company.

	  11.4 Distributions Upon Dissolution.
	       ------------------------------

	       (a) The Liquidator shall, as soon as practicable, close the
affairs of the Company and sell or distribute the assets of the Company. The
assets of the Company shall be applied, to the extent permitted by the Act, in
the following order of priority:

	       (i) First, to pay the costs and expenses of the closing of the
		   -----
	       affairs and liquidation of the Company;

	       (ii) Second, to pay the debts and liabilities of the Company;
		    ------

	       (iii) Third, to establish reserves adequate to meet any and all
		     -----
	       contingent or unforeseen liabilities or obligations of the
	       Company, provided that at the expiration of such period of time


				       31



	       as the Liquidator may deem advisable, the balance of such
	       reserves remaining after the payment of such contingencies or
	       liabilities shall be distributed as hereinafter provided; and

	       (iv) Finally, to all Members in accordance with their positive
		    -------
	       Capital Account balances, after giving effect to all
	       contributions, distributions and allocations for all periods.

	       (b) If upon termination and liquidation of the Company, the
Liquidator determines that (i) an immediate sale of part or all of the assets of
the Company would cause undue loss to the Members, and (ii) the assets of the
Company would be readily susceptible to division for distribution in kind to the
Members, then to that extent the Liquidator may distribute such assets to the
Members in kind. For such purposes, the assets of the Company shall be valued at
fair market value at the time of distribution to be determined by an independent
appraiser selected in good faith by the Liquidator.

	  11.5 Orderly Liquidation. A reasonable time shall be allowed for the
	       -------------------
orderly liquidation of the assets of the Company and the discharge of
liabilities so as to minimize the losses normally attendant upon a liquidation.

	  11.6 Deficit Upon Liquidation. If any Member has a deficit balance in
	       ------------------------
its Capital Account (after giving effect to all contributions, distributions,
and allocations for all taxable years, including the taxable year during which
such liquidation occurs), such Member shall contribute to the capital of the
Company the amount necessary to restore such deficit balance to zero in
compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).

	  11.7 Technical Termination. Notwithstanding any other provisions of
	       ---------------------
this Section 10, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has occurred,
the assets of the Company shall not be liquidated, the Company's liabilities
shall not be paid or discharged, and the Company's affairs shall not be wound
up. Instead, solely for federal income tax purposes, the Company shall be deemed
to have contributed all of its assets and liabilities to a new partnership in
exchange for an interest in such new partnership and, immediately thereafter,
the Company will be deemed to liquidate by distributing interests in the new
partnership to the Members.


				       32



				   ARTICLE 12
				 INDEMNIFICATION
				 ---------------

	  12.1 Indemnity. The Company shall indemnify any Person who was or is a
	       ---------
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such Person is or was a Member, an
employee or an agent of the Company, against expenses, including attorneys'
fees, judgment, fines and amounts paid in settlement actually and reasonably
incurred by such Person in connection with the action, suit or proceeding if
such Person acted in good faith and in a manner which such Person reasonably
believed to be in or not opposed to the best interests of this Company, and,
with respect to a criminal action or proceeding, had no reasonable cause to
believe its conduct was unlawful; provided that such indemnity shall not be
mandatory for any Person seeking indemnity in connection with a proceeding
voluntarily initiated by such Person unless such proceeding was authorized by
the Managing Member. No Member shall be indemnified with respect to actions
between Members or their Affiliates.

	  12.2 Advance Payment of Expenses. The expenses of Members incurred in
	       ---------------------------
defending a civil or criminal action, suit or proceeding may be paid by the
Company as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the Member to repay the amount if it is ultimately determined by a court of
competent jurisdiction that such Member is not entitled to be indemnified by the
Company. The provisions of this subsection do not affect any rights to
advancement of expenses to which personnel other than Members may be entitled
under any contract or otherwise by law.

	  12.3 Other Arrangements Not Excluded. The indemnification and
	       -------------------------------
advancement of expenses authorized in or ordered by a court pursuant to this
Article 12:

	       (a) Does not exclude any other rights to which a Person seeking
indemnification or advancement of expenses may be entitled under the Certificate
of Formation or any agreement, vote of Members or otherwise, for either an
action in any such Person's official capacity or an action in another capacity
while holding such Person's office, except that indemnification, unless ordered
by a court, shall not be made to or on behalf of any Member if a final
adjudication established that such Member's acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was material
to the cause of action; and

	       (b) Continues for a Person who has ceased to be a Member,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a Person.


				       33



				   ARTICLE 13
			     AMENDMENT TO AGREEMENT
			     ----------------------

	  Notwithstanding anything contained herein to the contrary, Amendments
to this Agreement may be made by the Managing Member, provided, however, that
any amendment affecting the Approval Terms or the Economic Terms of this
Agreement shall be approved in writing by a Super Majority of the Members. An
amendment shall become effective as of the date specified in the Members'
approval or, if none is required or specified, as of the date of such approval
or as otherwise provided in the Act. Notwithstanding anything contained herein
to the contrary, this Agreement may not be amended in any manner that is
inconsistent with Order No. 2000 or any other applicable requirements of such
rules and orders as the FERC may now or hereafter issue regarding RTOs. A
public, informational copy of each amendment to this Agreement shall be filed
with the FERC, together with a certificate duly executed on behalf of the
Company certifying that such amendment is in compliance with Order No. 2000 and
all other applicable requirements of such rules and orders as the FERC may now
or hereafter issue regarding RTOs.

				   ARTICLE 14
			       GENERAL PROVISIONS
			       ------------------

	  14.1 Other Activities. A Member may engage or invest in, and devote
	       ----------------
its time to, any other business venture or activities of any nature and
description (independently or with others) and shall have no duties or
liabilities under this Agreement to any other Member or other Person for
engaging in such activities or pursuing such opportunities.

	  14.2 Nondisclosure; Publicity. The Members shall not, at any time
	       ------------------------
directly or through others, use, disclose, publish or otherwise disseminate any
and all confidential information of the Company or that of the Members
discovered, developed or known by the Members as a consequence of their
respective ownership of, employment by or relationship with the Company,
including information entrusted to the Company by others, and any proprietary
rights, inventions or tangible unpatented proprietary rights of the Company,
except that a Member may disclose information to an Affiliate provided that such
Affiliate agrees to be bound by the provisions of this Section 14.2, and except
as required for any Member's financing, banking or other credit relationships or
for any Member's compliance with the securities laws or other applicable laws.

	  14.3 Notices. Unless otherwise specifically provided in this
	       -------
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing and shall be (i) delivered by hand, (ii)
delivered by a nationally recognized commercial overnight delivery service,
(iii) mailed postage prepaid by certified mail in any such case directed or
addressed to the respective addresses set forth in Schedule A attached hereto
(iv) transmitted by facsimile to the facsimile number set forth in Schedule A


				       34



attached hereto, with receipt confirmed. Such notices shall be effective: (a) in
the case of hand deliveries, when received; (b) in the case of an overnight
delivery service, on the next business day after being placed in the possession
of such delivery service, with delivery charges prepaid; (c) in the case of
certified mail, upon receipt of the written signature card indicating acceptance
by addressee; and (d) in the case of facsimile notices, the Business Day
following the date on which electronic indication of receipt is received. Any
Member may change its address and facsimile number by written notice to the
other parties given in accordance with this Section 14.3, following the
effectiveness of which notice Schedule A attached hereto shall be updated
accordingly.

	  14.4 Entire Agreement, etc. This Agreement [and those agreements
	       ---------------------
listed on Schedule C attached hereto] shall constitute the entire agreement
between the parties hereto relating to the operations of the Company and shall
supersede all prior contracts, agreements and understandings between them
relating to such operations.

	  14.5 Construction Principles. As used in this Agreement, words in any
	       -----------------------
gender shall be deemed to include all other genders. The singular shall be
deemed to include the plural and vice versa. The captions and article and
section headings in this Agreement are inserted for convenience of reference
only and are not intended to have significance for the interpretation of or
construction of the provisions of this Agreement.

	  14.6 Counterparts. This Agreement may be executed in two or more
	       ------------
counterparts by the parties hereto, each of which when so executed will be an
original, but all of which together will constitute one and the same instrument.

	  14.7 Severability. If any provision of this Agreement is held to be
	       ------------
invalid or unenforceable for any reason, such provision shall be ineffective to
the extent of such invalidity or unenforceability; provided, however, that the
remaining provisions will continue in full force without being impaired or
invalidated in any way unless such invalid or unenforceable provision or clause
shall be so significant as to materially affect the parties' expectations
regarding this Agreement. Otherwise, the parties hereto agree to replace any
invalid or unenforceable provision with a valid provision which most closely
approximates the intent and economic effect of the invalid or unenforceable
provision.

	  14.8 Binding Effect. Subject to the provisions of this Agreement
	       --------------
relating to transferability, this Agreement shall be binding upon, and inure to
the benefit of, the Members and their respective successors and permitted
assigns.

	  14.9 Additional Documents and Acts. Each Member agrees to execute and
	       -----------------------------
deliver such additional documents and instruments and to perform such additional


				       35



acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and of the
transactions contemplated hereby.

	  14.10 No Third Party Beneficiary. This Agreement is made solely for
		--------------------------
the benefit of the parties hereto and their successors and permitted assigns and
no other Person shall have any rights, interest, or claims hereunder or
otherwise be entitled to any benefits under or on account of this Agreement as a
third party beneficiary or otherwise.

	  14.11 Waiver of Partition. Each of the Members hereby irrevocably
		-------------------
waives any and all rights that such Member may have to maintain any action for
partition of any of the Company's property.

	  14.12 Governing Law. This Agreement shall be governed by and construed
		-------------
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law.


			    [SIGNATURE PAGE FOLLOWS]


				       36



	  IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first written above.

					[Manager Corp.]

					By:
					   ------------------------------------
					Name:
					Title:


					ETP-II, LLC

					By:
					   ------------------------------------
					Name:
					Title:


					[OTHER]

					By:
					   ------------------------------------
					Name:
					Title:



				       37



								       EXHIBIT 1

				 CODE OF CONDUCT

I.   BACKGROUND
     ----------

     It is the policy of the Company to operate in a fair and non-discriminatory
manner and to implement such rules and regulations in the governance of the
organization as necessary to prevent control, or the appearance of control, of
the decision-making process by a Member or Market Participant.

     It is the policy of the Company to operate and plan the Transmission System
without adverse distinction or preference to any Member or Market Participant.

     It is the policy of the Company that the Directors, agents, Officers and
employees of the Company shall not have a direct financial interest in, or a
conflict of interest with, any Member or Market Participant.

     Nothing in this Code of Conduct is intended to restrict or expand any
rights that any federal or state regulatory authorities may have to receive or
have access to any information.

II.  STANDARDS
     ---------

     In furtherance of the above policies, the Code of Conduct for the Company
shall include, but not be limited to, the following standards:

     A.   The Company, its Directors, agents, Officers and employees shall
operate and plan the Transmission System without adverse distinction or
preference to any Member or Market Participant. In addition, the Transmission
Tariff shall be applied to any Member or Market Participant without adverse
distinction or preference to any of the Members or Market Participants.

     B.   The operation of the Company shall be conducted in such a manner
that it shall be fully separate from the operations of the Members or Market
Participants.

     C.   The Company, in operating its business, shall require any
consultant, contractor and/or subcontractor of the Company to disclose to the
Company all financial affiliations and conflicts of interest with Members or
Market Participants. The Company shall have the discretion to determine if the
contents of such disclosure warrant disqualification of such consultant,
contractor or subcontractor.


				       1



     D.   No Company Director, agent, Officer or employee shall have any
involvement in the sale of electric energy at wholesale or retail except as
required or allowed by the Agreement or the Transmission Tariff.

     E.   The Directors, agents, Officers and employees of the Company shall
not have a direct financial interest in, or stand to be financially benefitted
by, any transaction with any of the Members or Market Participants. Each
Director, agent, Officer and employee of the Company in a decision-making
position shall certify in writing that he does not have a direct financial
interest in any Member or Market Participant and that a conflict of interest
does not exist. To that end, no Company Director, agent, Officer or employee may
directly own securities issued by any Member or Market Participants, except
under the following circumstances:

	  1.   Each Company Director, agent, Officer or employee shall dispose
	       of those securities within six (6) months of the time of his
	       affiliation or employment with the Company.

	  2.   Each Company Director, agent, Officer or employee shall dispose
	       of those securities within six (6) months of the time a new
	       Member is added, or a new Market Participant begins taking
	       service under the Transmission Tariff, where the Company
	       Director, agent, Officer or employee owns securities of such
	       Member or Market Participant.

	  3.   If a Company Director, agent, Officer or employee receives a gift
	       or inheritance of those securities, he must dispose of such
	       securities within six (6) months of the date of receipt.

	  4.   Nothing in this Exhibit 1 shall be interpreted to preclude a
	       Director, agent, Officer or employee of the Company from
	       indirectly owning securities issued by a Member or Market
	       Participant through a mutual fund or similar arrangement (other
	       than a fund or arrangement specifically targeted towards the
	       electric industry or the electric utility industry, or any


				       2



	       segments thereof) under which the Director, agent, Officer or
	       employee does not control the purchase or sale of such
	       securities.

	  5.   Participation in a pension plan of a Member or Market Participant
	       shall not be deemed to be a direct financial benefit if the
	       Member's or Market Participant's performance has no material
	       effect on such pension plan.

     F.   The Company Directors, agents, Officers and employees shall not
provide non-public transmission and reliability (hereinafter "T/R") information
(including T/R information obtained from the Members and Market Participants in
the normal course of Company business) to anyone outside the Company. Those T/R
employees, in turn, are governed by the FERC Order No. 889, 61 Fed. Reg. 21737
(May 10, 1996), order on reh'g, 62 Fed. Reg. 12484 (March 14, 1997) or successor
		--------------
standards of the FERC as far as sharing any such information with their
respective merchant employees, as determined under the applicable standards of
the FERC. The Company shall maintain the confidentiality of any market
information obtained from merchant employees of any Market Participant or other
entity.

     G.   If an employee of the Company disclosed confidential information
relating to the operation or function of the organization, which disclosure is
contrary to the Code of Conduct, then notice of such disclosure shall be posted
immediately on the Company OASIS (or successor system as approved by the FERC).

     H.   The Company Directors, agents, Officers and employees shall treat
all information supplied by an entity seeking transmission service under the
Transmission Tariff, or supplied in connection with Company coordination
center(s) operations, as confidential, unless the information is required to be
put on the Company OASIS, or the entity seeking transmission service agrees that
the information can be disclosed, or the information is otherwise publicly
available.

	  Notwithstanding the restrictions contained in this Paragraph H,
Company Directors, agents, Officers and employees may share information with
third parties where required to satisfy the Operating Standards and Policies of
the North American Electric Reliability Council (hereinafter "NERC") or
successor reliability entity. A confidentiality statement must be executed by
the third party before any such information is disclosed. To the extent required
by FERC regulations, such information shall be put on the Company OASIS.


				       3



     I.   Company Directors, agents, Officers and employees shall not give
preferential access to transmission information, or any other information, to
any third party.

	  Company Directors, agents, Officers and employees shall be prohibited
from providing to any entity engaged in wholesale or retail sales of electric
energy, or to any employee, representative or agent of any such entity (except
T/R employees as provided in Paragraph F, Section II of this Exhibit 1),
information regarding the Transmission System covered by the Transmission
Tariff, unless that information is: (i) posted on the Company OASIS; (ii)
otherwise available to the general public without restriction; or (iii) is the
type of information disclosed to any third party on a non-preferential basis.

	  Any disclosures of transmission information not in compliance with
this Paragraph I shall be posted immediately on the Company OASIS.

     J.   Directors, agents, Officers and employees of the Company shall
strictly enforce all Transmission Tariff provisions established by the Company.
In the event any Director, Officer, agent or employee of the Company may
exercise his discretion, or is allowed by the Transmission Tariff to exercise
his discretion, with respect to transactions or actions covered by the
Transmission Tariff, then such discretion shall be exercised fairly and
impartially, and such event shall be logged and available for FERC audit.

     K.   No employee, agent or contractor of any entity engaged in wholesale
or retail sales of electric energy shall have access to the Company coordination
center(s), except for education tours approved by the Company President where
notification of such tours is posted on the Company OASIS.

     L.   Notices shall be posted on the Company OASIS of any employee
engaged in transmission and/or reliability functions who is terminated or
transferred from the Company. The posted information shall include the name of
the employee, the title of the employee while performing service for the
Company, and the effective date of the transfer or termination.

     M.   The Company shall maintain its books and records separately from
those of any Member or Market Participants.

     N.   The Company shall establish and file with the Board of Directors a
complaint procedure for alleged violations of any of the Code of Conduct as set
forth here. The complaint procedure shall provide for the opportunity of
alternative dispute resolution, as set forth in the Agreement.


				       4



     O.   The Company shall inform and train Company Directors, agents,
Officers and employees with regard to this Code of Conduct. The Company shall
distribute copies this Code of Conduct to each Company Director, agent, Officer
and employee, and require that each such Director, agent, Officer and employee
execute a compliance statement. The Company shall monitor compliance with this
Code of Conduct. Any Director, agent, Officer or employee of the Company failing
to comply with this Code of Conduct may be subject to disciplinary action.
Discipline may take the form of reprimand, suspension without pay, limitation in
the scope of responsibilities, monetary fines, or termination, which discipline
shall be within the discretion of the Company.

When used in this exhibit, the following terms shall have the following
meanings:

	  "Company" means either Manager Corp. or TRANSCO LLC.
	   -------

	  "Transmission Service" means the transmission of electric power and
	   --------------------
the provision of ancillary services pursuant to the Transmission Tariff.

	  "Transmission System" means facilities used to provide Transmission
	   -------------------
Service.

	  "Transmission Tariff" means the tariff filed by the Company and
	   -------------------
approved by FERC for non-discriminatory open access transmission service on the
Company's Transmission System.


				       5



SCHEDULE A

- ----------------------------- -------------------------- -----------------------
MEMBER'S NAME                 ADDRESS AND FACSIMILE      PERCENTAGE INTEREST
- ----------------------------- -------------------------- -----------------------
Managing Member               [To Come]                  [To Come]
- ----------------------------- -------------------------- -----------------------
			      [To Come]                  [To Come]
- ----------------------------- -------------------------- -----------------------
[Other]                       [To Come]                  [To Come]
- ----------------------------- -------------------------- -----------------------

- ----------------------------- -------------------------- -----------------------


				       6



								      SCHEDULE B

- ----------------------------- -------------------------------------------------
MEMBER'S NAME                 ASSETS CONTRIBUTED AS INITIAL CAPITAL
			      CONTRIBUTION & THEIR AGREED VALUE
- ----------------------------- -------------------------------------------------
[Managing Member]             [To Come]
- ----------------------------- -------------------------------------------------
			      [To Come]
- ----------------------------- -------------------------------------------------
[Other]                       [To Come]
- ----------------------------- -------------------------------------------------

- ----------------------------- -------------------------------------------------


				       7



								      SCHEDULE C

OTHER AGREEMENTS
- ----------------

[Management Agreement Between RTO LLC and RTO Corp.]

[Member and Shareholder Agreement]

[Insert other relevant agreements between the Members]


				       8

EX-99

								Exhibit A-2



			  CERTIFICATE OF INCORPORATION

				       OF

				 [MANAGER CORP.]


	  FIRST: The name of the Corporation is [Manager Corp.] (hereinafter the
	  -----
"Corporation").

	  SECOND: The address of the registered office of the Corporation in the
	  ------
State of Delaware is [     ], in the City of [     ], County of [     ]. The
		      -----                   -----              -----
name of its registered agent at that address is [     ].
						 -----

	  THIRD: The purpose of the Corporation is to engage in any lawful act
	  -----
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL"); provided, however, that in no event shall the Corporation
engage in or transact any activity or business that would result in the
Corporation not being in compliance with Order No. 2000 and all supplements and
amendments thereto issued by the FERC (as defined in this Certificate of
Incorporation) and all applicable requirements of such rules and orders as the
FERC may now or hereafter issue regarding RTOs; and provided further, that the
Corporation shall not be a Market Participant (as defined in this Certificate of
Incorporation) and shall at no time hold, directly or indirectly, any interest
in a Market Participant. A public informational filing regarding any activity or
business that the Corporation engages in or transacts that is not directly or
indirectly related to the services or functions that are commonly performed by
RTOs shall be filed with the FERC together with a certificate duly executed on
behalf of the Corporation certifying that engaging in or transacting such
activity or business is in compliance with Order No. 2000 and all supplements
and amendments thereto issued by the FERC and all applicable requirements of
such other rules or orders as the FERC may now or hereafter issue regarding
RTOs. "Market Participant" shall have the meaning ascribed to such term in Order
No. 2000 and all supplements and amendments thereto issued by the Federal Energy
Regulatory Commission (the "FERC").


				       1



	  FOURTH: (a) The total number of shares of stock which the Corporation
	  ------
shall have authority to issue is       shares of Common Stock, of which [     ]
				 -----                                   -----
shares shall be Class A Common Stock, each having a par value of [     ],
								  -----
[     ] shares shall be Class B Common Stock, each having a par value of [     ]
 -----                                                                    -----
and [     ] shares of Preferred Stock, each having a par value of
     -----
[     ]       . No holder of the Corporation's stock shall have any preemptive
 ----- -------
or subscription right to acquire the Corporation's securities. Except as
otherwise provided in this Article FOURTH or as otherwise required by applicable
law, all shares of Class A Common Stock and Class B Common Stock shall be
identical in all respects and shall entitle the holders thereof to the same
rights and privileges and shall be subject to the same qualifications,
limitations and restrictions.

	  (b) The Board of Directors is expressly authorized to provide for the
issuance of all or any shares of the Preferred Stock in one or more classes or
series, and to fix for each such class or series such voting powers, full or
limited, or no voting powers, and such distinctive designations, preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to redemption at such time or times and at
such price or prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the Corporation; or (iv) convertible into, or exchangeable for, shares of any
other class or classes of stock, or of any other series of the same or any other
class or classes of stock, of the Corporation at such price or prices or at such
rates of exchange and with such adjustments; all as may be stated in such
resolution or resolutions.

	  (c) At every meeting of stockholders, except as specifically otherwise
required by law or this Certificate of Incorporation, the holders of Class A
Common Stock shall be entitled to one vote per share of Class A Common Stock on
all matters presented for a vote of the stockholders of the Corporation,
including the election of directors of the Corporation. No Market Participant
shall own or vote any shares of Class A Common Stock or other voting securities
of the Corporation (other than Class B Common Stock), provided, however, that
investment banks and broker-dealers that are Market Participants may own voting
securities of the Corporation solely in the ordinary course of, and only for so
long as is necessary to perform, their function as an underwriter or selected
dealer of such voting securities purchased or repurchased in the ordinary course


				       2



of an underwritten offering of such voting securities or as a market maker or
trader of such voting securities for their own account.

	  (d) Except as otherwise provided in the next sentence, the Corporation
shall at all times reserve and keep available all of its authorized but unissued
shares of Class B Common Stock for issuance to persons who exchange all or a
portion of such person's Interest in the TRANSCO LLC for one or more shares of
Class B Common Stock pursuant to the terms and conditions of the Limited
Liability Company Operating Agreement for the TRANSCO LLC. No person shall own
shares of Class B Common Stock unless such person shall have transferred to the
Corporation, in consideration for the issuance of such shares, all or any
portion of such person's Interest in the TRANSCO LLC pursuant to the terms and
conditions of the Limited Liability Company Operating Agreement for the TRANSCO
LLC 1; provided, however, that at the time any person initially becomes a Member
of the TRANSCO LLC, such person (or such person's designee), for a period not to
exceed thirty (30) days following the date on which such person makes its
Initial Capital Contribution to the TRANSCO LLC, shall have the right to
purchase from the Corporation one (1) share of Class B Common Stock for a
purchase price of ten dollars ($10), which share shall be issued fully paid and
nonassessable to such person (or such person's designee) upon receipt therefrom
of such purchase price. At every meeting of stockholders, (i) except as
specifically otherwise required by law, the holders of Class B Common Stock
shall not be entitled to propose any matter for shareholder approval, and (ii)
except as specifically otherwise required by law or by the following paragraph
of this Article FOURTH of this Certificate of Incorporation, the holders of
Class B Common Stock shall not be entitled to vote on any matter presented for a
vote of the stockholders of the Corporation, including the election of directors
of the Corporation. "Interest", "Member" and "Initial Capital Contribution"
shall have the meanings ascribed to such terms in the Limited Liability Company
Operating Agreement for the TRANSCO LLC.

	  (e) Notwithstanding any provision of this Article FOURTH of this
Certificate of Incorporation to the contrary, the following matters, and only
the following matters, shall require the approval of a super majority of the
outstanding shares of Class A Common Stock and the outstanding shares of Class B
Common Stock, voting together as a single class, for which vote the holders of
Class A Common Stock shall be entitled to one vote per share of Class A Common
Stock and the holders of Class B Common Stock shall be entitled to one vote per
share of Class B Common Stock and one vote per share of Class B Common Stock
into which any Interest in the TRANSCO LLC of any such holder (or any person who
designated such holder to receive such stock pursuant to this Article FOURTH) is


- ------------------------
1    The Limited Liability Company Operating Agreement for the TRANSCO LLC
will provide that the formula for the contemplated conversion shall be set forth
in an agreement between the members of the TRANSCO LLC and the holders of Class
B Common Stock


				       3



then convertible pursuant to the terms and conditions of the Limited Liability
Company Operating Agreement for the TRANSCO LLC:

     (i) any proposal to issue more than ten percent (10%) of any outstanding
     class or series of securities of the Corporation to one or more affiliates
     of the Corporation, other than those issuances of securities, including
     distributions thereof, that are made on the same terms to all stockholders
     of the Corporation.

     (ii) any proposal by the Corporation to (a) enter into any transaction that
     would result in a change of control of the Corporation, (b) sell, transfer,
     lease, exchange or otherwise dispose of all, or substantially all, of the
     assets of the Corporation (other than pursuant to a mortgage or security
     interest entered into in connection with a financing of the Corporation's
     business) and all or a portion of the consideration received therefor by
     the Corporation is cash, or (c) merge or consolidate with or into any other
     entity and all or a portion of the consideration received therefor by the
     stockholders of the Corporation is cash. A "change of control" or "transfer
     of control" as applied herein to the Corporation shall be deemed to have
     occurred if, following the consummation of any transaction, less than
     twenty percent (20%) of the outstanding voting securities of the
     Corporation (or any successor entity resulting from such transaction) is
     held by those holders of voting securities of the Corporation immediately
     prior to the consummation of such transaction.

     (iii) any proposal to enter into any acquisition or business development
     opportunity that is otherwise permissible under Article THIRD of this
     Certificate of Incorporation but is not directly or indirectly related to
     the provision of electric transmission service, including but not limited
     to the formation and administration of electric markets, or other services
     or functions that are commonly performed by RTOs.

     (iv) any proposal to (a) institute proceedings to have the Corporation
     adjudicated bankrupt or insolvent, (b) consent to the institution of
     bankruptcy or insolvency proceedings against the Corporation, (c) file a
     petition seeking a reorganization of the Corporation under federal or state
     bankruptcy laws, (d) consent to the appointment of a receiver or trustee
     for the Corporation, or (e) make an assignment for the benefit of creditors
     of the Corporation.

     (v) any proposal to amend this Certificate of Incorporation that affects
     the rights of holders of Class B Common Stock, including the right to
     convert dissolution into Class A Common Stock.

	  (f) Subject to the terms and conditions stated herein, the holder of
any shares of Class B Common Stock shall have the right, at any time, at such


				       4



holder's option, to convert all or a portion of the shares of Class B Common
Stock held by such holder into the same number of shares (the "Conversion
Ratio") of Class A Common Stock. Such right of conversion shall be exercised by
(A) giving written notice (the "Notice") to the Corporation at its principal
office at least ten (10) days prior to the Conversion Date (as defined below)
specified therein that the holder elects to convert a stated number of shares of
Class B Common Stock into shares of Class A Common Stock on the date specified
in the Notice (the "Conversion Date"), (B) by surrendering the certificate or
certificates representing at least the number of shares of Class B Common Stock
to be converted to the Corporation at its principal office at any time during
the usual business hours on or before the Conversion Date, duly endorsed in
blank by the record owner of each certificate so surrendered, together with a
statement of the name or names (with addresses) of the person or person(s) in
whose name or names the certificate or certificates for shares issued upon
conversion shall be registered, together with either funds in the amount of any
tax that may be payable with respect to any issuance and delivery of the shares
of Class A Common Stock to a person other than the holder of the shares of Class
B Common Stock to be converted or satisfactory evidence that such tax has been
paid, is not payable or will be paid upon issuance of the shares of Class A
Common Stock.

	  In the event that any of the shares of Class A Common Stock to be
issued upon conversion are subject to restrictions on ownership under this
Certificate of Incorporation or otherwise, the Corporation shall require, as a
further condition to any such conversion, satisfactory evidence that either the
proposed conversion will not violate any such restrictions or that immediately
upon such conversion, the holder of the shares of Class B Common Stock
surrendered for conversion shall sell any shares of Class A Common Stock issued
upon the conversion to a person or entity that is qualified to hold such shares
under this Certificate of Incorporation.

	  Shares of Class B Common Stock that have been converted hereunder
shall not be canceled but shall remain as treasury shares, available for reissue
by the Corporation, unless retired by resolution of the Board of Directors.

	  The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock shares of Class A
Common Stock in a quantity sufficient to provide for the conversion of all
outstanding shares of Class B Common Stock into shares of Class A Common Stock.
If any shares of Class A Common Stock require registration with or approval of
any governmental authority under any federal or state law before such shares may
be issued upon conversion, the Corporation shall cause such shares to be duly
registered or approved, as the case may be. The Corporation shall endeavor to
use its commercially reasonable efforts to list the shares of Class A Common
Stock to be delivered upon conversion prior to such delivery upon each national
securities exchange upon which the outstanding shares of Class A Common Stock
are listed at the time of such delivery. All shares of Class A Common Stock that
shall be issued upon conversion shall, upon issue, be fully paid and
nonassessable.


				       5



	  Subject to the other provisions of this Section promptly after (A) the
Conversion Date and (B) the surrender of such certificate or certificates
representing the share or shares of Class B Common Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder requesting conversion, registered in such name or names as such holder
may direct, a certificate or certificates for the number of shares of Class A
Common Stock issuable upon the requested conversion, together with a certificate
or certificates evidencing any balance of the shares of Class B Common Stock
surrendered to the Corporation but not then being converted.

	  To the extent permitted by law, such conversion shall be deemed to
have been effected as of the close of business on the later of the Conversion
Date or the date upon which the Corporation shall have received the certificate
or certificates representing the share or shares of Class B Common Stock to be
converted, and at such time the rights of the holder of such share or shares as
such holder shall cease, and the person or persons in whose name or names any
certificate or certificates for shares shall be issuable upon such conversions
shall be deemed to have become the holder or holders of records of such shares
of Class A Common Stock.

	  The issuance of certificates representing shares of Class A Common
Stock upon the conversion of Class B Common Stock, as hereinabove set forth,
shall be made without charge or any expense or issuance tax in respect thereof;
provided, however, that if any certificate is to be issued in a name other than
that of the holder of the shares converted, the Corporation shall not be
required to issue or deliver any such certificate unless and until the person
requesting the issuance thereof shall have (i) paid to the Corporation the
amount of any tax that may be payable with respect to any transfer involved in
the issuance and delivery of such certificate or (ii) established to the
satisfaction of the Corporation that such tax has been paid or is not payable.

	  (g) In case the Corporation shall (i) pay or make a dividend or other
distribution on the Class A Common Stock in shares of Class A Common Stock, (ii)
subdivide or split the outstanding shares of Class A Common Stock into a larger
number of shares or (iii) combine the outstanding shares of Class A Common Stock
into a smaller number of shares, then in each such case the Conversion Ratio
shall be adjusted to equal the number of such shares of Class A Common Stock to
which the holder of one share of Class B Common Stock would have been entitled
upon the occurrence of such event had such share of Class B Common Stock been
converted immediately prior to the happening of such event or, in the case of a
stock dividend or other distribution, prior to the record date for determination
of stockholders entitled thereto. An adjustment made pursuant to this Section(f)
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event in the case of a dividend
or distribution and immediately after the effective date in the case of a
subdivision, split or combination.


				       6



	  In case of any capital reorganization or any reclassification of the
capital stock of the Corporation (whether pursuant to a merger or consolidation
or otherwise), each share of Class B Common Stock shall thereafter be
convertible into the number of shares of stock or other securities or property
receivable upon such capital reorganization or reclassification of capital
stock, as the case may be, by a holder of the number of shares of Class A Common
Stock into which such share of Class B Common Stock was convertible immediately
prior to such capital reorganization or reclassification of capital stock; and,
in any case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made for the application of the provisions of this Section
(f) with respect to the rights and interests thereafter of the holders of Class
B Common Stock to the end that the provisions set forth in this Section (f)
shall thereafter be applicable, as nearly as reasonably practicable, in relation
to any shares of stock or other securities or property thereafter deliverable
upon the conversion of shares of Class B Common Stock.

	  In case of any consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of another person into the
Corporation (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Class A Common
Stock) or any sale or transfer of all or substantially all of the assets of the
Corporation to the person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, each share of Class B
Common Stock shall thereafter be convertible into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Class A Common Stock
into which, a share of Class B Common Stock may have been converted immediately
prior to such consolidation, merger, sale or transfer. Adjustments for events
subsequent to the effective date of such a consolidation, merger, sale or
transfer of assets shall be as nearly equivalent as may be practicable to the
adjustment provided for in this Section (f). In any such event, effective
provisions shall be made in the certificate or articles of incorporation of the
resulting or surviving corporation, or in any contract of sale, merger,
conveyance, lease, transfer or otherwise so that the provisions set forth in
this Section (f) for the protection of the rights of the holders of shares of
Class B Common Stock shall thereafter continue to be applicable; and any such
resulting or surviving corporation shall expressly assume the obligation to
deliver, upon exercise, such shares of stock, other securities, cash and
property. The provisions of this Section (f) shall similarly apply to successive
consolidations, mergers, sales, leases or transfers.

	  In case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Class A Common Stock shares of any of its capital stock
(other than Class A Common Stock), options, rights or warrants to purchase any
of its securities, cash, other assets or evidences of its indebtedness, then in
each such case the Conversion Ratio shall be adjusted by multiplying the


				       7



Conversion Ratio immediately prior to the date of such dividend or distribution
by a fraction, of which the numerator shall be the Fair Market Value (as defined
below) per share of Class A Common Stock at the record date for determining
stockholders entitled to such dividend or distribution, and of which the
denominator shall be such Fair Market Value per share less the Fair Market Value
of the portion of the securities, cash, assets or evidences of indebtedness so
distributed applicable to one share of Class A Common Stock. For purposes
hereof, "Fair Market Value" as at any date of determination means the fair
market value of the business, securities (and with respect to a share of Class A
Common Stock, if shares of Class A Common Stock are not publicly traded, shall
mean a proportionate amount of the Fair Market Value of the Corporation as of
such date, as determined in good faith by the Board of Directors), property or
services in question as of such date, as determined in good faith by the Board
of Directors; provided, however, that if, at any date of determination of the
Fair Market Value of Class A Common Stock, shares of Class A Common Stock shall
then be publicly traded, then the Fair Market Value of a share of Class A Common
Stock outstanding on such date shall be the average daily closing prices of one
share of Class A Common Stock for the twenty (20) consecutive trading days
ending on the most recent trading day prior to the date of determination.

	  (h) In the event of any liquidation, dissolution or winding up (either
voluntary or involuntary) of the Corporation, the holders of shares of Class A
Common Stock and the holders of Class B Common Stock shall be entitled to
receive the assets and funds of the Corporation available for distribution after
payments to creditors and to the holders of any Preferred Stock of the
Corporation that may at the time be outstanding, in proportion to the number of
shares held by them, respectively, without regard to class.

	  (i) Subject to any applicable provision of law or this Certificate of
Incorporation, the Corporation shall have the power to issue and sell all or any
part of any class of stock herein or hereafter authorized to such persons, and
for such consideration, as the Board of Directors shall from time to time, in
its discretion, determine, whether or not greater consideration could be
received upon the issue or sale of the same number of shares of another class,
and as otherwise permitted by law. Notwithstanding the foregoing, whenever a
proposed issuance or transfer of shares of Class A Common Stock, or any class of
preferred stock convertible into Class A Common Stock (other than as a result of
the conversion of Class B Common Stock or upon nomination of the Directors in
connection with their execution of a Subscription Agreement), is contemplated by
the Board of Directors for a consideration equal to more than fifteen percent
(15%) of the fair market value of the total transmission assets owned by the
TRANSCO LLC at the time of such issuance or transfer, the Board of Directors
shall retain a financial advisor to render a financial opinion customary with
respect to similar transactions. Subject to any applicable provision of law or
this Certificate of Incorporation, the Corporation shall have the power to


				       8



purchase any class of stock herein or hereafter authorized from such persons,
and for such consideration, as the Board of Directors shall from time to time,
in its discretion, determine, whether or not less consideration could be paid
upon the purchase of the same number of shares of another class, and as
otherwise permitted by law.

	  FIFTH: The name and mailing address of the Sole Incorporator is as
	  -----
follows:

     Name                          Address
     ----                          -------

     Lynn T. Buckley               P.O. Box 636
				   Wilmington, DE 19899

	  SIXTH: The following provisions are inserted for the management of the
	  -----
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:

	  (a) The business and affairs of the Corporation shall be managed by or
     under the direction of the Board of Directors.

	  (b) The directors shall have concurrent power with the stockholders to
     make, alter, amend, change, add to or repeal the By-Laws of the
     Corporation. The By-Laws of the Corporation also may be made, altered,
     amended, changed, added to or repealed by the affirmative vote of the
     holders of at least two-thirds of the outstanding shares of Class A Common
     Stock. Notwithstanding anything contained herein to the contrary, neither
     the Board of Directors nor the stockholders of the Corporation may amend
     the By-Laws of the Corporation in any manner that is inconsistent with
     Order No. 2000 and all supplements and amendments thereto issued by the
     FERC or any other applicable requirements of such other rules and orders as
     the FERC may now or hereafter issue regarding RTOs. A public informational
     copy of each amendment to the By-Laws of the Corporation shall be filed
     with the FERC together with a certificate duly executed on behalf of the
     Corporation certifying that such amendment is in compliance with Order No.
     2000 and all supplements and amendments thereto issued by the FERC and all
     other applicable requirements of such other rules and orders as the FERC
     may now or hereafter issue regarding RTOs.

	  (c) The initial number of directors of the Corporation shall be seven
     (7). The number of directors of the Corporation may be increased or


				       9



     decreased from time to time, in the manner provided in the By-Laws of the
     Corporation, but shall in no event be less than seven (7) nor more than
     [twelve (12)]. Subject to the rights, if any, of the holders of shares of
     Preferred Stock then outstanding, directors shall be elected by a plurality
     of the votes cast by the shares of Class A Common Stock present and
     entitled to vote thereon at a meeting at which a quorum is present. Shares
     of Class B Common Stock shall not be entitled to vote in any election of
     directors. Election of directors need not be by written ballot unless the
     By-Laws so provide.

	  (d) The Board of Directors shall be and is divided into three classes
     of directors of as nearly equal numbers as is possible, designated Class I,
     Class II and Class III, respectively, serving staggered three-year terms,
     with the term of a class expiring at each Annual Meeting of Stockholders.
     At each Annual Meeting of Stockholders, a number of directors equal to the
     number of directors of the class whose terms expires at such Annual Meeting
     of Stockholders (or the number of directors properly nominated and
     qualified for election) shall be elected to hold office until the third
     succeeding Annual Meeting of Stockholders after their election. Any
     increase or decrease in the number of directors shall be so apportioned
     among the classes of directors as to make all classes as nearly equal in
     number as possible. In all cases, each director shall serve until a
     successor has been elected and qualified or until such director's earlier
     resignation, retirement, removal from office, death or disability.

	  (e) Subject to the rights, if any, of the holders of shares of
     Preferred Stock then outstanding, any vacancy on the Board of Directors
     resulting from an increase in the number of directors may be filled only by
     a majority of the Board of Directors then in office, provided that a quorum
     is present, and any other vacancy on the Board of Directors may be filled
     only by the remaining directors (even though less than a quorum) or by a
     sole remaining director, in each case for the full term of the class of
     directors in which the vacancy occurs or is created. The Corporation's
     stockholders, other than the members of the Board of Directors, shall not,
     and shall have no power to, fill any vacancy on the Board of Directors.
     Subject to the rights, if any, of the holders of shares of Preferred Stock
     then outstanding, any or all of the directors of the Corporation may be
     removed from office at any time, but only for cause and only by the
     affirmative vote of the holders of at least a majority of the voting power
     of the Corporation's then outstanding capital stock entitled to vote
     generally in the election of directors. Notwithstanding the foregoing,
     whenever the holders of any one or more classes or series of Preferred
     Stock issued by the Corporation shall have the right, voting separately by
     class or series, to elect directors at an Annual or Special Meeting of
     Stockholders, the election, term of office, filling of vacancies and other
     features of such directorships shall be governed by the terms of this
     Certificate of Incorporation applicable thereto, and such directors so


				       10



     elected shall not be divided into classes pursuant to this Article SIXTH
     unless expressly provided by such terms.

	  (f) No director shall be personally liable to the Corporation or any
     of its stockholders for monetary damages for breach of fiduciary duty as a
     director, except for liability (i) for any breach of the director's duty of
     loyalty to the Corporation or its stockholders, (ii) for acts or omissions
     not in good faith or which involve intentional misconduct or a knowing
     violation of law, (iii) pursuant to Section 174 of the Delaware General
     Corporation Law or (iv) for any transaction from which the director derived
     an improper personal benefit. Any repeal or modification of this Article
     SIXTH by the stockholders of the Corporation shall not adversely affect any
     right or protection of a director of the Corporation existing at the time
     of such repeal or modification with respect to acts or omissions occurring
     prior to such repeal or modification.

	  (g) In addition to the powers and authority hereinbefore or by statute
     expressly conferred upon them, the directors are hereby empowered to
     exercise all such powers and do all such acts and things as may be
     exercised or done by the Corporation, subject, nevertheless, to the
     provisions of the GCL, this Certificate of Incorporation, and any By-Laws
     adopted by the stockholders; provided, however, that no By-Laws hereafter
     adopted by the stockholders shall invalidate any prior act of the directors
     which would have been valid if such By-Laws had not been adopted.

	  (h) In addition to any qualifications that may be required by law, no
     person shall be nominated or elected a director of the Corporation, nor may
     any person serve or continue to serve as a director of the Corporation,
     unless and until such person has satisfied all of the qualifications for
     directors of the Corporation, including any qualifications for director
     independence, as may be set forth from time to time in this Certificate of
     Incorporation or the By-Laws of the Corporation.

	  (i) Except to the extent otherwise provided in this Agreement, each
     Director and Officer shall have a fiduciary duty of loyalty and care to the
     Company similar to that of directors and officers of business corporations
     organized under the GCL. In addition, each Director and Officer shall owe
     the Stockholders a fiduciary duty to maximize the value of the Company, and
     the assets controlled by the Company, and to protect the integrity of the
     Stockholders' capital investment. The fiduciary duties owed by the
     Directors and Officers to the Stockholders shall not require the Directors
     and Officers to consider the interests of the Stockholders outside the
     Company's business.

	  SEVENTH: The Corporation shall indemnify and may insure its officers
	  -------
and directors to the fullest extent permitted by law currently in effect or


				       11



hereinafter enacted, and such right to indemnification shall continue as to a
person who has ceased to be a director or officer of the Corporation and shall
inure to the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Corporation shall not be obligated to indemnify
any director or officer (or his or her heir, executor or personal or legal
representatives) in connection with a proceeding (or part thereof) initiated by
such person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors. The right to indemnification conferred by this
Article SEVENTH shall include the right to be paid by the Corporation the
expenses incurred in defending or otherwise participating in any proceeding in
advance of its final disposition.

	  The Corporation may, to the extent authorized from time to time by the
By-Laws of Corporation or the Board of Directors, provide rights to
indemnification and to the advancement of expenses to employees and agents of
the Corporation similar to those conferred in this Article SEVENTH to directors
and officers of the Corporation.

	  The rights to indemnification and to the advancement of expenses
conferred in this Article SEVENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under this Certificate of
Incorporation, the By-Laws of the Corporation, any statute, agreement, vote of
shareholders or disinterested directors or otherwise.

	  Any repeal or modification of this Article SEVENTH shall not adversely
affect any rights to indemnification and the advancement of expenses of a
director or officer of the Corporation existing at the time of such repeal or
modification with respect to any acts or omission occurring prior to such repeal
or modification.

	  EIGHTH: (a) Except as required by law, the Corporation shall not be
	  ------
required to hold a Special Meeting of Shareholders of the Corporation unless (in
addition to any other requirements of law): (i) the holders of not less than
fifty (50) percent of all the votes entitled to be cast on any issue proposed to
be considered at the proposed Special Meeting of Shareholders sign, date and
deliver to the Corporation's Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held; (ii) the
meeting is called by the Board pursuant to a resolution adopted by a majority of
the entire Board of Directors; or (iii) the meeting is called by the Chairman of
the Board of Directors. Only business within the purpose or purposes described
in the special meeting notice required by Section 222 of the GCL may be
conducted at a Special Meeting of Shareholders.

	  (b) Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the Corporation at an
Annual or Special Meeting of Shareholders. Nominations of persons for election


				       12



to the Board of Directors at an Annual or Special Meeting of Shareholders may be
made (i) by or at the direction of the Board of Directors by any nominating
committee or person appointed by the Board of Directors or (ii) by any
shareholder of the Corporation entitled to vote for the election of directors at
such meeting who complies with the procedures set forth in this Section B;
provided, however, that nominations for persons for election to the Board of
Directors at a Special Meeting of Shareholders may be made only if the election
of directors is one of the purposes described in the special meeting notice
required by Section 222 of the GCL. Nominations of persons for election at a
Special Meeting of Shareholders, other than nominations made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation delivered to or mailed and received
at the principal office of the Corporation not later than the close of business
on the fifth (5th) day following the date on which notice of such meeting is
given to shareholders or made public, whichever first occurs. Nominations of
persons for election at an Annual Meeting of Shareholders, other than
nominations made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation
delivered to or mailed and received at the principal office of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the date of the Corporation's notice of Annual Meeting of
Shareholders provided with respect to the previous year's Annual Meeting of
Shareholders; provided, however, that if no Annual Meeting of Shareholders was
held in the previous year, or the date of the current year's Annual Meeting of
Shareholders has been changed to be more than thirty (30) calendar days earlier
than the date of the first anniversary of the previous year's Annual Meeting of
Shareholders, such notice by the shareholder, to be timely, must be so delivered
to or mailed and received at the principal office of the Corporation not later
than the close of business on the fifth (5th) day following the date on which
notice of the date of the Annual Meeting of Shareholders is given to
shareholders or made public, whichever first occurs. Such shareholder's notice
to the Secretary of the Corporation shall set forth the following information:
(a) as to each person whom the shareholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the proposed nominee, (ii) the principal occupation or employment of
the proposed nominee, (iii) the class and number of shares of capital stock of
the Corporation which are beneficially owned by the proposed nominee, (iv) any
other information relating to the proposed nominee that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended, and (v) such
information as is necessary to determine whether the proposed nominee satisfies
the qualifications to serve as a director set forth in these Articles of
Incorporation or the By-Laws of the Corporation; and (b) as to the shareholder
giving notice of nomination for election, (i) the name and record address of
such shareholder, and (ii) the class and number of shares of capital stock of
the Corporation which are beneficially owned by such shareholder. The
Corporation may require any proposed nominee for election to furnish such other
information as may be reasonably required by the Corporation to determine the


				       13



eligibility of such proposed nominee to serve as a director of the Corporation.
The chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the
requirements of this Article Eight, Section (b), and if he should so determine,
he shall so declare to the meeting and the defective nomination shall be
disregarded.

	  (c) At an Annual Meeting of Shareholders, only such business shall be
conducted as shall have been properly brought before such meeting. To be
properly before an Annual Meeting of Shareholders, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Direction, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a shareholder. In addition to any other
applicable requirements, for business to be properly brought before an Annual
Meeting of Shareholders by a shareholder, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation delivered to or
mailed and received at the principal office of the Corporation not less than one
hundred and twenty (120) days prior to the first anniversary of the date of the
Corporation's notice of Annual Meeting of Shareholders provided with respect to
the previous year's Annual Meeting of Shareholders; provided, however, that if
no Annual Meeting of Shareholders was held in the previous year, or the date of
the current year's Annual Meeting of Shareholders has been changed to be more
than thirty (30) calendar days earlier than the date of the first anniversary of
the previous year's Annual Meeting of Shareholders, such notice by the
shareholder, to be timely, must be so delivered to or mailed and received at the
principal office of the Corporation not later than the close of business on the
fifth (5th) day following the date on which notice of the date of the Annual
Meeting of Shareholders is given to shareholders or made public, whichever first
occurs. Such shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the Annual Meeting of
Shareholders: (i) a brief description of the business desired to be brought
before the Annual Meeting of Shareholders and the reasons for conducting such
business at the Annual Meeting of Shareholders, (ii) the name and record address
of the shareholder proposing such business, (iii) the class and number of shares
of capital stock of the Corporation which are beneficially owned by such
shareholder, and (iv) any material interest of such shareholder in the such
business. The chairman of the Annual Meeting of Shareholders shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the requirements of this Article
Eight, Section (c), and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.

	  (d) Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the GCL) outside the State of


				       14



Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.

	  NINTH: The Corporation reserves the right to amend, alter, change or
	  -----
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation. Notwithstanding the
foregoing, any amendment, alteration, change or repeal of any provision
contained in this Certificate of Incorporation is, in addition to any other vote
that may be required by law, subject to the approval of the holders of
two-thirds of the outstanding shares of Class A Common Stock; provided, however
that if any such amendment, alteration, change or repeal affects the rights of
holders of Class B Common Stock, then such amendment, alteration, change or
repeal shall also be subject to the approval of the holders of a majority of the
outstanding shares of Class A Common Stock and the outstanding shares of Class B
Common Stock, voting together as a single class, for which vote the holders of
Class A Common Stock shall be entitled to one vote per share of Class A Common
Stock and the holders of Class B Common Stock shall be entitled to one vote per
share of Class B Common Stock and one vote per share of Class B Common Stock
into which any Interest in the TRANSCO LLC of any such holder (or any person who
designated such holder to receive such stock pursuant to Section (c) of Article
FOURTH of this Certificate of Incorporation) is then convertible pursuant to the
terms and conditions of the Limited Liability Company Operating Agreement for
the TRANSCO LLC. Notwithstanding anything contained herein to the contrary,
neither the Board of Directors nor the stockholders of the Corporation may amend
this Certificate of Incorporation in any manner that is inconsistent with Order
No. 2000 and all supplements and amendments thereto issued by the FERC or any
other applicable requirements of such other rules and orders as the FERC may now
or hereafter issue regarding RTOs. A public informational copy of each amendment
to this Certificate of Incorporation shall be filed with the FERC together with
a certificate duly executed on behalf of the Corporation certifying that such
amendment is in compliance with Order No. 2000 and all supplements and
amendments thereto issued by the FERC and all other applicable requirements of
such other rules or orders as the FERC may now or hereafter issue regarding
RTOs.

	  I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
       [     ] Day of [     ]       ,[     ].
- ------- -----          ----- -------  -----


					     ----------------------------------
					     [Name of Incorporator]
					     Sole Incorporator


				       15

EX-99

							Exhibit A-3



				     BY-LAWS

				       OF

				 [MANAGER CORP.]

		     (hereinafter called the "Corporation")

				    ARTICLE I

				     OFFICES
				     -------

	  Section 1. Registered Office. The registered office of the Corporation
	  ---------  -----------------
shall be in the City of [To Come], County of [To Come], State of Delaware.

	  Section 2. Other Offices. The Corporation may also have offices at
	  ---------  -------------
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.

				   ARTICLE II

			    MEETINGS OF SHAREHOLDERS
			    ------------------------

	  Section 1. Place of Meetings. Meetings of the shareholders for the
	  ---------  -----------------
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.





	  Section 2. Annual Meetings. The Annual Meetings of Shareholders for
	  ---------  ---------------
the election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Shareholders.

	  Section 3. Special Meetings. Unless otherwise required by law or by
	  ---------  ----------------
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Shareholders, for any purpose or purposes, may be called by the Chairman and
shall be called by the Chairman if the holders of not less than fifty (50)
percent of all the votes entitled to be cast on any issue proposed to be
considered at the proposed Special Meeting of Shareholders sign, date and
deliver to the Corporation's Secretary one or more written demands for the
meeting describing the purpose or purposes for which it is to be held or a
resolution adopted by a majority of the entire Board of Directors requests such
a meeting with such resolution stating the purpose or purposes of the proposed
meeting. At a Special Meeting of Shareholders, only such business shall be
conducted as shall be specified in the notice of meeting (or any supplement
thereto).

	  Section 4. Notice. Whenever shareholders are required or permitted to
	  ---------  ------
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date and hour of the meeting, and, in the case of a
Special Meeting, the purpose or purposes for which the meeting is called. Unless
otherwise required by law, the written notice of any meeting shall be given not


				       2



less than ten nor more than sixty days before the date of the meeting to each
shareholder entitled to vote at such meeting.

	  Section 5. Adjournments. Any meeting of the shareholders may be
	  ---------  ------------
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.

	  Section 6. Quorum. Unless otherwise required by law or the Certificate
	  ---------  ------
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders for the
transaction of business. A quorum, once established, shall not be broken by the
withdrawal of enough votes to leave less than a quorum. If, however, such quorum
shall not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, in the manner
provided in Section 5, until a quorum shall be present or represented.


				       3



	  Section 7. Voting. Unless otherwise required by law, the Certificate
	  ---------  ------
of Incorporation or these By-Laws, any question brought before any meeting of
shareholders, other than the election of directors, shall be decided by the vote
of the holders of a majority of the total number of votes of the capital stock
represented and entitled to vote thereat, voting as a single class. Unless
otherwise provided in the Certificate of Incorporation, and subject to Section 5
of Article V hereof, each shareholder represented at a meeting of shareholders
shall be entitled to cast one vote for each share of the capital stock entitled
to vote thereat held by such shareholder. Such votes may be cast in person or by
proxy but no proxy shall be voted on or after three years from its date, unless
such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
shareholders, in such officer's discretion, may require that any votes cast at
such meeting shall be cast by written ballot.

	  Section 8. Consent of Shareholders in Lieu of Meeting. Unless
	  ---------  ------------------------------------------
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Shareholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office


				       4



in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each shareholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8 to
the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its registered
office in the state of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those shareholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation as provided above in this section.

	  Section 9. List of Shareholders Entitled to Vote. The officer of the
	  ---------  -------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of shareholders, a complete
list of the shareholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each shareholder and the number


				       5



of shares registered in the name of each shareholder. Such list shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any shareholder of the Corporation who is present.

	  Section 10. Stock Ledger. The stock ledger of the Corporation shall be
	  ----------  ------------
the only evidence as to who are the shareholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of shareholders.

	  Section 11. Conduct of Meetings. The Board of Directors of the
	  ----------  -------------------
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the shareholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the shareholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda


				       6



or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to shareholders of record of the Corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.

				   ARTICLE III

				    DIRECTORS
				    ---------

	  Section 1. Number, Election and Qualifications of Directors. The Board
	  ---------  ------------------------------------------------
of Directors shall consist of not less than seven nor more than twelve members,
the exact number of which shall initially be fixed by the Certificate of
Incorporation and thereafter from time to time by the Board of Directors. The
Board of Directors shall be and is divided into three classes of directors of as
nearly equal numbers as is possible, designated Class I, Class II and Class III,
respectively, serving staggered three-year terms, with the term of a class
expiring at each Annual Meeting of Shareholders. At each Annual Meeting of
Shareholders, a number of directors equal to the number of directors of the
class whose terms expires at such Annual Meeting of Shareholders (or the number
of directors properly nominated and qualified for election) shall be elected to
hold office until the third succeeding Annual Meeting of Shareholders after


				       7



their election. Any increase or decrease in the number of directors shall be so
apportioned among the classes of directors as to make all classes as nearly
equal in number as possible. In all cases, each director shall serve until a
successor has been elected and qualified or until such director's earlier
resignation, retirement, removal from office, death or disability. Except as
provided in Section 2 of this Article III, directors shall be elected by a
plurality of the votes cast by the shares of Class A Common Stock present and
entitled to vote thereon at a meeting at which a quorum is present. Any director
may resign at any time upon written notice to the Corporation. Directors must
own a minimum of 10 shares of Class A Common Stock and must satisfy the
qualifications for Director Independence set forth in Section 11 hereof. The
Board of Directors shall set, by resolution, the maximum age limitation to be
imposed in connection with the election of directors; until the Board of
Directors adopts any such resolution, no person shall be entitled to be elected
a director after such person reaches the age of 72.

	  Section 2. Vacancies. Unless otherwise required by law or the
	  ---------  ---------
Certificate of Incorporation, vacancies resulting from an increase in the number
of directors may be only by a majority of the directors then in office, provided
that a quorum is present, and any other vacancies arising through death,
resignation, removal, or otherwise may be filled only by a majority of the
directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office for the full term of the
class of directors in which the vacancy occurs or is created by an increase in


				       8



the number of directors and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.

	  Section 3. Duties and Powers. The business and affairs of the
	  ---------  -----------------
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
shareholders.

	  Section 4. Meetings. The Board of Directors may hold meetings, both
	  ---------  --------
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman or by a
majority of the Board of Directors. Notice thereof stating the place, date and
hour of the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by telephone or telegram
on twenty-four (24) hours' notice, or on such shorter notice as the person or
persons calling such meeting may deem necessary or appropriate in the
circumstances.

	  Section 5. Quorum. Except as otherwise required by law or the
	  ---------  ------
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors then in office shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the


				       9



Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting of the time
and place of the adjourned meeting, until a quorum shall be present.

	  Section 6. Actions by Written Consent. Unless otherwise provided in
	  ---------  --------------------------
the Certificate of Incorporation, or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.

	  Section 7. Meetings by Means of Conference Telephone. Unless otherwise
	  ---------  -----------------------------------------
provided in the Certificate of Incorporation, members of the Board of Directors
of the Corporation, or any committee thereof, may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 7 shall constitute presence in person at such meeting.

	  Section 8. Committees. The Board of Directors may designate one or
	  ---------  ----------
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors shall establish an Audit Committee which
shall satisfy all of the applicable requirements (including the adoption of an
appropriate charter for such audit committee) of the Securities and Exchange


				       10



Commission and the New York Stock Exchange or National Association of Securities
Dealers. The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of any such committee. In the absence or disqualification of a
member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to the
extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.

	  Section 9. Compensation. The directors may be paid their expenses, if
	  ---------  ------------
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.


				       11



	  Section 10. Interested Directors. No contract or transaction between
	  ----------  --------------------
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the director or officer's vote is
counted for such purpose if (i) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to the director or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or ratified
by the Board of Directors, a committee thereof or the shareholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.


				       12



	  Section 11. Director Independence. No person shall be nominated or
	  ----------  ---------------------
elected a director of the Corporation, nor may any person serve or continue to
serve as a director of the Corporation, unless and until such person and all
members of his or her Immediate Family (as defined in these By-Laws) has no
financial interest in, including the ownership of securities of, any Market
Participant (as defined in these By-Laws), except that such a person and any
member of his or her Immediate Family will be permitted to own securities of a
Market Participant through diversified mutual funds (other than those funds
concentrating their investments in the electric power industry or the electric
utility industry or any segments thereof). Notwithstanding the foregoing, any
such person and any member of his or her Immediate Family who holds a financial
interest in a Market Participant may (i) hold such a financial interest for a
period not to exceed six months following such person's initial election to the
Board of Directors or (ii) petition (or the Corporation, on behalf of any such
person and any member of his Immediate Family, may petition) the Federal Energy
Regulatory Commission (the "FERC") for (x) an exception to the foregoing
prohibition on holding any such financial interest or (y) an extension of time
to dispose of any such financial interest (with respect, however, in either case
to only those financial interests held by such person and any member of his


				       13



Immediate Family at the time of such person's initial election to the Board of
Directors), which exception or extension the FERC may grant if the FERC
determines that the required disposition of such financial interest will result
in economic hardship to such person or any member of his or her Immediate Family
due to tax effects or legal restraints on the transfer of such financial
interest and that granting such exception or extension will be consistent with
the public interest. For purposes of these By-Laws, "Market Participant" shall
have the meaning ascribed to such term in Order No. 2000 and all supplements and
amendments thereto issued by the FERC and the "Immediate Family" of a person
shall mean such person's spouse and dependent children.

	  No person shall be in violation of the foregoing provisions if he or
she or any member of his or her Immediate Family continues his or her
pre-existing participation in a qualified defined benefits pension plan, health
benefits plan, and/or other supplemental retirement plans of a Market
Participant for purposes of receiving pension and other supplemental benefits
and post-employment health benefits or remaining eligible to receive such
benefits at a future time so long as the benefits to such person under any such
pension plan do not vary with the economic performance of such Market
Participant or the value of any of such Market Participant's securities held by
such plan; provided, however, that if any such person is able to transfer his or
her pension account to another unrelated firm without suffering adverse
financial consequences in the opinion of the Board of Directors, such person
shall be required to effect such transfer.

	  In addition to the foregoing provisions, no director nor any member of
his or her Immediate Family shall be an employee, director or officer of any
Market Participant. The Board of Directors shall develop and implement policies,


				       14



designed to ensure independence, regarding the ownership of securities of
suppliers of the Corporation by directors and members of their Immediate Family.

	  In connection with the foregoing, the Corporation shall retain an
independent compliance auditor (which shall not be its independent public
accountant) and cause such independent compliance auditor to obtain all
information necessary to determine whether each director of the Corporation is
in compliance with the provisions of this Section 11. Each director shall file
an annual compliance affidavit with such independent compliance auditor. Such
independent compliance auditor shall report to the Audit Committee of the Board
of Directors any facts and circumstances which lead it to believe that any
director of the Corporation is not in compliance with the provisions of this
Section 11. With the exception of any such report to the Audit Committee and any
action taken by the Audit Committee as a consequence thereof, all information
obtained and compiled by such independent compliance auditor shall be held in
strict confidence by the same.

				   ARTICLE IV

				    OFFICERS
				    --------

	  Section 1. General. The officers of the Corporation shall be chosen by
	  ---------  -------
the Board of Directors and shall be a Chairman, a President, a Secretary and a
Treasurer, as well as a Chief Executive Officer, a Chief Financial Officer and a
Principal Accounting Officer. The Chairman shall be a director of the
Corporation. The Board of Directors, in its discretion, also may choose one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise


				       15



prohibited by law or the Certificate of Incorporation. The officers of the
Corporation need not be shareholders of the Corporation nor, except in the case
of the Chairman, need such officers be directors of the Corporation. The Board
of Directors, by resolution, shall establish the authority and responsibilities
for each of the Chief Executive Officer, the Chief Financial Officer and the
Principal Accounting Officer.

	  Section 2. Election. The Board of Directors, at its first meeting held
	  ---------  --------
after each Annual Meeting of Shareholders (or action by written consent of
shareholders in lieu of the Annual Meeting of Shareholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors, provided, however, that prior to the
election of any person as an officer of the Corporation (other than the Chief
Executive Officer) the Chief Executive Officer shall recommend to the Board of
Directors persons to be selected for each such office. All officers of the
Corporation shall hold office until their successors are chosen and qualified,
or until their earlier death, resignation or removal. Any officer elected by the
Board of Directors may be removed at any time by the affirmative vote of the
Board of Directors. Any vacancy occurring in any office of the Corporation shall
be filled by the Board of Directors. The salaries and other compensation of all
officers of the Corporation shall be fixed by the Board of Directors.


				       16



	  Section 3. Voting Securities Owned by the Corporation. Powers of
	  ---------  ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.

	  Section 4. Chairman. The Chairman shall preside at all meetings of the
	  ---------  --------
shareholders and of the Board of Directors. The Chairman shall possess the same
power as the President to sign all contracts, certificates and other instruments
of the Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President, the Chairman shall exercise all the
powers and discharge all the duties of the President. The Chairman shall also
perform such other duties and may exercise such other powers as may from time to
time be assigned by these By-Laws or by the Board of Directors.

	  Section 5. President. The President shall, subject to the control of
	  ---------  ---------
the Board of Directors and the Chairman, have general supervision of the
business of the Corporation and shall see that all orders and resolutions of the


				       17



Board of Directors are carried into effect. The President shall execute all
bonds, mortgages, contracts and other instruments of the Corporation requiring a
seal, under the seal of the Corporation, except where required or permitted by
law to be otherwise signed and executed and except that the other officers of
the Corporation may sign and execute documents when so authorized by these
By-Laws, the Board of Directors or the President. In the absence or disability
of the Chairman, the President shall preside at all meetings of the shareholders
and the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to such
officer by these By-Laws or by the Board of Directors.

	  Section 6. Vice Presidents. At the request of the President or in the
	  ---------  ---------------
President's absence or in the event of the President's inability or refusal to
act, the Chairman, or at the Chairman's request or in the Chairman's absence or
inability or refusal to act, the Vice President, or the Vice Presidents if there
is more than one (in the order designated by the Board of Directors), shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice
President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. In the Chairman's absence or
inability or refusal to act and if there be no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to


				       18



act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.

	  Section 7. Secretary. The Secretary shall attend all meetings of the
	  ---------  ---------
Board of Directors and all meetings of shareholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman or the President, under whose supervision the
Secretary shall be. If the Secretary shall be unable or shall refuse to cause to
be given notice of all meetings of the shareholders and special meetings of the
Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest to the affixing by such officer's signature. The Secretary shall see
that all books, reports, statements, certificates and other documents and
records required by law to be kept or filed are properly kept or filed, as the
case may be.


				       19



	  Section 8. Treasurer. The Treasurer shall have the custody of the
	  ---------  ---------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of the Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.

	  Section 9. Assistant Secretaries. Assistant Secretaries, if there be
	  ---------  ---------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the


				       20



event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.

	  Section 10. Assistant Treasurers. Assistant Treasurers, if there be
	  ----------  --------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging to
the Corporation.

	  Section 11. Other Officers. Such other officers as the Board of
	  ----------  --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.


				       21



	  Section 12. Officer Independence. No person shall serve or continue to
	  ----------  --------------------
serve as an officer of the Corporation, unless and until such person and all
members of his or her Immediate Family has no financial interest in, including
the ownership of securities of, any Market Participant, except that such person
and any member of his or her Immediate Family will be permitted to own
securities of a Market Participant through diversified mutual funds (other than
those funds concentrating their investments in the electric power industry or
the electric utility industry or any segments thereof). Notwithstanding the
foregoing, any such person and any member of his or her Immediate Family who
holds a financial interest in a Market Participant may (i) hold such a financial
interest for a period not to exceed six months following such person's initial
service as an officer or (ii) petition (or the Corporation, on behalf of any
such person and any member of his Immediate Family, may petition) the FERC for
(x) an exception to the foregoing prohibition on holding any such financial
interest or (y) an extension of time to dispose of any such financial interest
(with respect, however, in either case to only those financial interests held by
such person and any member of his Immediate Family at the time of such person's
initial service as an officer), which exception or extension the FERC may grant
if the FERC determines that the required disposition of such financial interest
will result in economic hardship to such person or any member of his or her
Immediate Family due to tax effects or legal restraints on the transfer of such
financial interest and that granting such exception or extension will be
consistent with the public interest.


				       22



	  No person shall be in violation of the foregoing provisions if he or
she or any member of his or her Immediate Family continues his or her
pre-existing participation in a qualified defined benefits pension plan, health
benefits plan, and/or supplemental retirement plan of a Market Participant for
purposes of receiving pension and other supplemental retirement benefits and
post-employment health benefits or remaining eligible to receive such benefits
at a future time so long as the benefits to such person under any such pension
plan do not vary with the economic performance of such Market Participant or the
value of any of such Market Participant's securities held by such plan.

	  In addition to the foregoing provisions, no officer nor any member of
his or her Immediate Family shall be an employee, director or officer of any
Market Participant.

	  The Board of Directors shall develop and implement policies, designed
to ensure independence, regarding the ownership of securities of suppliers of
the Corporation by officers and members of their Immediate Family.

	  In connection with the foregoing, the Corporation shall retain an
independent compliance auditor (which shall not be its independent public
accountant) and cause such independent compliance auditor to obtain all
information necessary to determine whether each officer of the Corporation is in
compliance with the provisions of this Section 12. Each officer shall file an
annual compliance affidavit with such independent compliance auditor. Such
independent compliance auditor shall report to the Audit Committee of the Board


				       23



of Directors any facts and circumstances which lead it to believe that any
officer of the Corporation is not in compliance with the provisions of this
Section 12. With the exception of any such report to the Audit Committee and any
action taken by the Audit Committee as a consequence thereof, all information
obtained and compiled by such independent compliance auditor shall be held in
strict confidence by the same.

				    ARTICLE V

				      STOCK
				      -----

	  Section 1. Form of Certificates. Every holder of stock in the
	  ---------  --------------------
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman, the President or a Vice President and (ii) by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by such
shareholder in the Corporation.

	  Section 2. Signatures. Any or all of the signatures on a certificate
	  ---------  ----------
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.

	  Section 3. Lost Certificates. The Board of Directors may direct a new
	  ---------  -----------------
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of


				       24



an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed or the issuance of such new certificate.

	  Section 4. Transfers. Stock of the Corporation shall be transferable
	  ---------  ---------
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.

	  Section 5. Record Date.
	  ---------  -----------

	  (a) In order that the Corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more


				       25



than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of shareholders
of record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.

	  (b) In order that the Corporation may determine the shareholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining shareholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of shareholders are recorded. Delivery


				       26



made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining shareholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolutions taking such
prior action.

	  (c) In order that the Corporation may determine the shareholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the shareholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining shareholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.

	  Section 6. Record Owners. The Corporation shall be entitled to
	  ---------  -------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not


				       27



it shall have express or other notice thereof, except as otherwise required by
law.

				   ARTICLE VI

				     NOTICES
				     -------

	  Section 1. Notices. Whenever written notice is required by law, the
	  ---------  -------
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or shareholder, such notice may be given by mail,
addressed to such director, member of a committee or shareholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.

	  Section 2. Waivers of Notice. Whenever any notice is required by law,
	  ---------  -----------------
the Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or shareholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Attendance of a person at a
meeting, present in person or represented by proxy, shall constitute a waiver of
notice of such meeting, except where the person attends the meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.


				       28



				   ARTICLE VII

			       GENERAL PROVISIONS
			       ------------------

	  Section 1. Dividends. Dividends upon the capital stock of the
	  ---------  ---------
Corporation, subject to the requirements of the Delaware General Corporation Law
("GLC"), the Federal Power Act or any other applicable law and the provisions of
the Certificate of Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting of the Board of Directors (or any
action by written consent in lieu thereof in accordance with Section 6 of
Article III hereof), and may be paid in cash, in property, or in shares of the
Corporation's capital stock. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.

	  Section 2. Disbursements. All checks or demands for money and notes of
	  ---------  -------------
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.

	  Section 3. Fiscal Year. The fiscal year of the Corporation shall be
	  ---------  -----------
fixed by resolution of the Board of Directors.

	  Section 4. Corporate Seal. The corporate seal shall have inscribed
	  ---------  --------------
thereon the name of the Corporation, the year of its organization and the words


				       29



"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

				  ARTICLE VIII

				 INDEMNIFICATION
				 ---------------

	  Section 1. Power to Indemnify in Actions, Suits or Proceedings Other
	  ---------  ---------------------------------------------------------
than Those by or in the Right of the Corporation. Subject to Section 3 of this
- ------------------------------------------------
Article VIII, the Corporation shall indemnify any person who was or is a party
to any proceeding (other than an action by, or in the right of, the
Corporation), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in, or not opposed to, the best interests of the Corporation or, with respect to


				       30



any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.

	  Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
	  ---------  ---------------------------------------------------------
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
- -------------------------------
Corporation shall indemnify any person, who was or is a party to any proceeding
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer, employee, or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, except that no indemnification shall be made under this Article
VIII in respect of any claim, issue, or matter as to which such person shall
have been adjudged to be liable unless, and only to the extent that, the court
in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.


				       31



	  Section 3. Authorization of Indemnification.
	  ---------  --------------------------------

     (a) Any indemnification under Section 1 and Section 2 of Article VIII
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in Section 1 or Section 2 of
this Article VIII, as the case may be. Such determination shall be made: (i) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to such proceeding; (ii) if such a quorum is not obtainable
or, even if obtainable, by majority vote of a committee duly designated by the
board of directors (in which directors who are parties may participate)
consisting solely of two or more directors not at the time parties to the
proceeding; (iii) by independent legal counsel (1) selected by the board of
directors prescribed in (i) or the committee prescribed in (ii) or (2) if a
quorum of the directors cannot be obtained for (i) and the committee cannot be
designated under (ii), selected by majority vote of the full board of directors
(in which directors who are parties may participate); or (iv) by the
shareholders by majority vote of a quorum consisting of shareholders who were
not parties to such proceeding or, if no such quorum is obtainable, by a
majority vote of shareholders who were not parties to such proceeding.
Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility


				       32



is made by independent legal counsel, persons specified by (iii) shall evaluate
the reasonableness of expenses and may authorize indemnification.

     (b) To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in Section 1 or Section 2 of this Article VIII or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
against expenses actually and reasonably incurred by him or her in connection
therewith.

	  Section 4. Good Faith Defined. For purposes of any determination under
	  ---------  ------------------
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, or, with respect to any criminal action
or proceeding, to have had no reasonable cause to believe such person's conduct
was unlawful, if such person's action is based on the records or books of
account of the Corporation or another enterprise, or on information supplied to
such person by the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section 4 shall mean any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a


				       33



director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Section 1 or 2 of this Article VIII, as the case may be.

	  Section 5. Indemnification by a Court. Notwithstanding the failure of
	  ---------  --------------------------
the Corporation to provide indemnification, and despite any contrary
determination of the board or of the shareholders in the specific case, a
director, officer, employee, or agent of the Corporation who is or was a party
to a proceeding may apply for indemnification or advancement of expenses, or
both, to the court conducting the proceeding, to the circuit court, or to
another court of competent jurisdiction. On receipt of an application, the
court, after giving any notice that it considers necessary, may order
indemnification and advancement of expenses, including expenses incurred in
seeking court-ordered indemnification or advancement of expenses, if it
determines that: (i) the director, officer, employee, or agent is entitled to
mandatory indemnification under Section 3(b) of this Article VIII in which case
the court shall also order the Corporation to pay the director reasonable
expenses incurred in obtaining court-ordered indemnification or advancement of
expenses; (ii) the director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the Corporation of its power pursuant to Section 7; or (iii) the director,
officer, employee, or agent is fairly and reasonably entitled to indemnification
or advancement of expenses, or both, in view of all the relevant circumstances,


				       34



regardless of whether such person met the standard of conduct set forth in
Section 1, Section 2 or Section 7 of this Article VIII.

	  Section 6. Expenses Payable in Advance. Expenses incurred by an
	  ---------  ---------------------------
officer or director in defending a civil or criminal proceeding may be paid by
the Corporation in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if he or she is ultimately found not to be entitled to
indemnification by the Corporation pursuant to this Article VIII. Expenses
incurred by other employees and agents may be paid in advance upon such terms or
conditions that the board of directors deems appropriate.

	  Section 7. Nonexclusivity of Indemnification and Advancement of
	  ---------  ----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided pursuant to
- --------
this Article VIII are not exclusive, and the Corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office. However, indemnification or advancement of expenses shall not be made to
or on behalf of any director, officer, employee, or agent if a judgment or other
final adjudication establishes that his or her actions, or omissions to act,
were material to the cause of action so adjudicated and constitute: (i) a
violation of the criminal law, unless the director, officer, employee, or agent


				       35



had reasonable cause to believe his or her conduct was lawful or had no
reasonable cause to believe that his or her conduct was unlawful; (ii) a
transaction from which the director, officer, employee, or agent derived an
improper personal benefit; (iii) in the case of a director, a circumstance under
which the liability provisions of Section 174 of GLC are applicable; or (iv)
willful misconduct or a conscious disregard for the best interests of the
Corporation in a proceeding by or in the right of the Corporation to procure a
judgment in its factor or in a proceeding by or in the right of a shareholder.

	  Section 8. Insurance. The Corporation may purchase and maintain
	  ---------  ---------
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against the person and incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify the person against such liability under the
provisions of this Article VIII.

	  Section 9. Certain Definitions. For purposes of this Article VIII,
	  ---------  -------------------
references to the "Corporation" include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who is or
was a director, officer, employee, or agent of a constituent corporation, or is
or was serving at the request of a constituent corporation as a director,
officer, employee, or agent of another corporation, limited liability company,
partnership, joint venture, trust, or other enterprise, is in the same position


				       36



under this Article VIII with respect to the resulting or surviving corporation
as he or she would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII, references
to "other enterprises" include employee benefit plans. References to "expenses"
include counsel fees, including those for appeal. References to "liability"
include obligations to pay a judgment, settlement, penalty, fine (including an
excise tax assessed with respect to any employee benefit plan), and expenses
actually and reasonably incurred with respect to a proceeding. The term
"proceeding" includes any threatened, pending, or completed action, suit, or
other type of proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal. The term "agent" includes a
volunteer. The term "serving at the request of the Corporation" includes any
service as a director, officer, employee, or agent of the Corporation that
imposes duties on such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries. The term "not opposed to the best
interests of the Corporation" describes the actions of a person who acts in good
faith and in a manner he or she reasonably believes to be in the best interests
of the participants and beneficiaries of an employee benefit plan.

	  Section 10. Survival of Indemnification and Advancement of Expenses.
	  ----------  -------------------------------------------------------
The indemnification and advancement of expenses as provided in this Article VIII
shall continue as, unless otherwise provided when authorized or ratified, to a
person who has ceased to be a director, officer, employee, or agent and shall


				       37



inure to the benefit of the heirs, executors, and administrators of such a
person, unless otherwise provided when authorized or ratified.

	  Section 11. Limitation on Indemnification. Notwithstanding anything
	  ----------  -----------------------------
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 of this
Article VIII), the Corporation shall not be obligated to indemnify any director,
officer, employee, or agent in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was authorized
or consented to by the Board of Directors of the Corporation.


				       38



				   ARTICLE IX

				 CODE OF CONDUCT
				 ---------------

	  Section 1. Compliance. The Board of Directors shall adopt the Code of
	  ---------  ----------
Conduct in the form attached to the TRANSCO Limited Liability Company Agreement,
as may be revised by the FERC to ensure that such directors, officers and
employees are independent from Market Participants.

				    ARTICLE X

				   AMENDMENTS
				   ----------

	  Section 1. Amendments. These By-Laws may be altered, amended or
	  ---------  ----------
repealed, in whole or in part, or new By-Laws may be adopted by the shareholders
(as described below) or by the Board of Directors, provided, however, that
notice of such alteration, amendment, repeal or adoption of new By-Laws be
contained in the notice of such meeting of shareholders or Board of Directors as
the case may be. All such amendments must be approved by either (i) the holders
of two-thirds of the outstanding shares of Class A and Class B Common Stock, or
(ii) a majority of the entire Board of Directors then in office. Notwithstanding
anything contained herein to the contrary, neither the Board of Directors nor
the shareholders of the Corporation may amend these By-Laws in any manner that
is inconsistent with Order No. 2000 and all supplements and amendments thereto
issued by the FERC or any other applicable requirements of such other rules and
orders as the FERC may now or hereafter issue regarding RTOs. A public
informational copy of each amendment to these By-Laws shall be filed with the
FERC together with a certificate duly executed on behalf of the Corporation


				       39



certifying that such amendment is in compliance with Order No. 2000 and all
supplements and amendments thereto issued by the FERC and all other applicable
requirements of such other rules and orders as the FERC may now or hereafter
issue regarding RTOs.

				      * * *


Adopted as of:
	       ---------------------

Last Amended as of:
		    ----------------


				       40

EX-99

								Exhibit A-4



			   TRANSCO IMPLEMENTATION PLAN

	  Entergy Services, Inc., a [Delaware] corporation on behalf of Entergy
Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc. and Entergy New Orleans, Inc. (collectively, "Entergy"),
desires to form an independent transmission company. This Plan describes the
process by which Entergy shall form an independent transmission company as part
of the SPP Partnership RTO.


				    ARTICLE I
				   DEFINITIONS
				   -----------

	  The following capitalized terms used in this Plan shall have the
meanings set forth below:

	  "Affiliate" means an affiliate, as defined by the FERC in Order No.
	   ---------
2000.

	  "Application" means the Application for Approval of a Regional
	   -----------
Transmission Organization and Approval to Transfer Assets filed by Entergy
Services, Inc. with FERC on October 16, 2000.

	  "Board Selection Committee" has the meaning set forth in Section 3.1
	   -------------------------
hereof.

	  "Business Day" means any day (other than a day which is a Saturday,
	   ------------
Sunday or legal holiday in the State of Delaware).

	  "By-Laws" means the By-Laws of Manager Corp., attached as Attachment B
	   -------
to the Application.

	  "CEO" has the meaning set forth in Section 3.5 hereof.
	   ---

	  "Certificate of Incorporation" means the Certificate of Incorporation
	   ----------------------------
of Manager Corp., attached as Attachment C to the Application.





	  "Certificate of Formation" means the Certificate of Formation of
	   ------------------------
TRANSCO LLC.

	  "Code of Conduct" means the Code of Conduct as applicable to Manager
	   ---------------
Corp. and TRANSCO LLC, as approved by the FERC and in effect from time to time.

	  "Compliance Auditor" has the meaning set forth in Section 4.1 hereof.
	   ------------------

	  "Divestiture Notice" means a written letter of intent delivered by a
	   ------------------
transmission owner to the members of TRANSCO LLC and filed with the FERC (no
later than thirty days following such date as Entergy shall select and post on
the website for the TRANSCO contemplated hereby, which date selected by Entergy
shall be no later than thirty days after the FERC issues its initial order
approving this Plan) stating that such transmission owner intends to divest its
transmission facilities to TRANSCO LLC in exchange for a non-managing member
interest in TRANSCO LLC as contemplated by the LLC Agreement, and setting forth
the terms and conditions of such transmission owner's proposal to effect such
divestiture.

	  "FERC" means the Federal Energy Regulatory Commission, or any
	   ----
successor entity thereto.

	  "LLC Agreement" means the Limited Liability Company LLC Agreement for
	   -------------
TRANSCO LLC, attached as Attachment A to the Application.

	  "Manager Corp." means that certain Delaware corporation to be formed
	   ------------
by Entergy as contemplated herein, which corporation shall serve as the managing
member of the TRANSCO LLC contemplated to be formed hereby.

	  "Member and Shareholder Agreement" means that certain Member and
	   --------------------------------
Shareholder Agreement, among Manager Corp. and the members of TRANSCO LLC,
attached hereto as Exhibit A.

	  "Operating Agreement" means the Operating Agreement, a pro forma draft
	   -------------------
of which is attached as Attachment E to the Application.

	  "Order No. 2000" means Order No. 2000 issued by the FERC and all
	   --------------
supplements and amendments thereto that are effective as of the date hereof.

	  "Person" means any individual, partnership, limited liability company,
	   ------
joint venture, corporation, trust, unincorporated organization, governmental
entity or any department or agency thereof.


				       2



	  "Plan" means this TRANSCO Implementation Plan together with all of the
	   ----
Exhibits attached hereto.

	  "RTO" means an RTO as defined by Order No. 2000, or any subsequent
	   ---
order or rulemaking issued or made by the FERC relating to the same.

	  "Search Firm" has the meaning set forth in Section 3.3 hereof.
	   -----------

	  "Subscription Agreements" means those Subscription Agreements by and
	   -----------------------
between Manager Corp. and each Person named as a candidate for election as an
initial director of Manager Corp, each in the form attached hereto as Exhibit B.

	  "TRANSCO" means an independent transmission company.
	   -------

	  "TRANSCO LLC" means that certain Delaware limited liability company to
	   -----------
be formed by Entergy as contemplated herein, which limited liability company
shall serve as, and hold the transmission assets to be operated by, the TRANSCO
LLC contemplated to be formed hereby.

	  "Voting Trust Agreement" means that certain Voting Trust Agreement,
	   ----------------------
attached hereto as Exhibit C.


				   ARTICLE II
		   FORMATION OF MANAGER CORP. AND TRANSCO LLC
		   ------------------------------------------

	  2.1. TRANSCO. Entergy intends to (i) form an independent transmission
	       -------
company as part of an RTO approved by FERC under Order No. 2000, by effecting
the formation of TRANSCO LLC, which will serve as, and hold the transmission
assets that will be operated by, such independent transmission company and the
formation of Manager Corp., which will serve as the managing member of such
independent transmission company, all as contemplated by this Plan, and (ii)
contribute all of its transmission assets to TRANSCO LLC as soon as practicable
following the formation of TRANSCO LLC, subject to all required regulatory
approvals.

	  2.2. Manager Corp. Entergy shall use all commercially reasonable
	       ------------
efforts to cause, as soon as practicable, as contemplated by Article III hereof,
the formation of Manager Corp. as a Delaware corporation, including, without
limitation, filing, or causing to be filed, the Certificate of Incorporation,
with the Secretary of State of the State of Delaware, causing the Manager Corp.
to adopt the By-Laws, and taking, or causing to be taken, any and all such
further actions as shall be necessary to effect the formation of Manager Corp.
as contemplated hereby and in the Certificate of Incorporation and the By-Laws.


				       3



	  2.3. TRANSCO LLC. Entergy shall use all commercially reasonable
	       -----------
efforts to cause, as soon as practicable, the formation of TRANSCO LLC as a
Delaware limited liability company, including, without limitation, filing, or
causing to be filed, the Certificate of Formation, with the Secretary of State
of the State of Delaware, executing, or causing to be executed by all the
parties thereto, the LLC Agreement, and taking, or causing to be taken, any and
all such further actions as shall be necessary to effect the formation of
TRANSCO LLC as contemplated hereby and in the LLC Agreement.

	  2.4. Additional TRANSCO Agreements. Entergy shall use all commercially
	       -----------------------------
reasonable efforts to execute, or cause to be executed by the respective parties
thereto, in each case as contemplated hereunder, the Subscription Agreements, in
the form attached hereto as Exhibit B, the Member and Shareholder Agreement, in
the form attached hereto as Exhibit A, and the Voting Trust Agreement, in the
form attached hereto as Exhibit C, and to take, or cause to be taken, any and
all such further actions as shall be necessary to effect the transactions
contemplated hereby or thereby.


				   ARTICLE III
			     INITIAL BOARD SELECTION
			     -----------------------

	  3.1. Board Selection Committee. A board selection committee (the
	       -------------------------
"Board Selection Committee") shall be established which shall be charged with
the responsibility of selecting the initial slate of directors for Manager Corp.
The Board Selection Committee shall consist of representatives from each of the
following stakeholder groups: (i) two representatives from the group of
transmission owners that have given written notice of their intent to divest
their transmission facilities to the TRANSCO LLC; (ii) one representative from
the group of transmission owners that have given written notice of their intent
to commit the operation of their transmission facilities to the TRANSCO LLC
pursuant to the provisions of an Operating Agreement; (iii) two representatives
from the group of cooperatives, municipalities, and federal power marketing
agencies that provide service at wholesale or retail within the geographic
region covered by the transmission assets proposed to be either divested to, or
committed to, the TRANSCO LLC; and (iv) two representatives from the group of
power marketers, brokers, or entities that own or are developing generation
facilities within the region covered by the transmission assets proposed to be
either divested to, or committed to, the TRANSCO LLC. Each stakeholder group
identified in clauses (i) through (iv) of the immediately preceding sentence
shall determine the method for selecting its representative to serve on the
Board Selection Committee. As soon as practicable following the formation of the
Board Selection Committee, the Board Selection Committee shall meet to elect a
chairman and a vice-chairman and to determine all procedures that are necessary


				       4



or advisable for the Board Selection Committee to take action and conduct its
affairs in accordance with the terms of this Plan.

	  3.2. Director Qualifications. In addition to the qualifications for
	       -----------------------
directors of Manager Corp. contained in the Certificate of Incorporation and the
By-Laws, those persons chosen to serve as initial directors of Manager Corp.
shall also have qualifications equivalent to those of directors of public
corporations with equivalent or larger revenues and assets than that anticipated
for TRANSCO LLC. At least two of the initial Directors must have experience in
the electric utility industry. The remaining initial directors shall reflect, as
much as is practicable, a mix of backgrounds and experience. In addition, those
persons selected as such initial directors shall be of a caliber that will
engender credibility in the marketplace, maximize the value of an initial public
offering of Manager Corp. and provide Manager Corp. with quality and experienced
leadership. The Board Selection Committee shall require the Search Firm (as
defined below) to select and consult with a nationally recognized investment
banking firm concerning the qualifications of directors necessary to achieve the
foregoing goals. At least four of such initial directors shall be or have been a
president, chief executive officer, chief operating officer or director of at
least one publicly traded corporation, and no such initial director shall be 72
years of age or older.

	  3.3. Search Firm. The transmission owners who have agreed to form the
	       -----------
TRANSCO shall retain one of the following nationally recognized search firms:
Korn Ferry International, Heidrick & Struggles International or Russell Reynolds
or their successor firms (such firm selected, the "Search Firm") to propose to
the Board Selection Committee fourteen candidates for election as initial
directors of Manager Corp., which candidates must (i) satisfy all of the
qualifications described in Section 3.2 hereof, the Certificate of Incorporation
and the By-Laws (except that only eight of the primary candidates must be or
have been a president, chief executive officer, chief operating officer or
director of at least one publicly traded corporation and, except further that
six of the candidates shall have experience in the electric utility industry)
and should reflect a mix of backgrounds and experiences), and (ii) agree, if
elected, to serve as directors of Manager Corp., execute a Subscription
Agreement as contemplated by Section 3.6 hereof, execute the Voting Trust
Agreement as contemplated by Section 3.6 hereof, and take all such other actions
required to be taken by the directors of Manager Corp. as contemplated under
this Plan. The Board Selection Committee shall require the Search Firm to
propose its pool of candidates to the Board Selection Committee as soon as
practicable following its retention as the Search Firm but in no event later
than June 1, 2001. Except for such disclosure as may be necessary for customary
reference checks, the identities of those individuals proposed by the Search
Firm to the Board Selection Committee shall be kept in the strictest confidence
by both the Search Firm and the Board Selection Committee and shall not be
shared with any other Person. The Search Firm and all members of the Board


				       5



Selection Committee shall be required to execute a standard confidentiality
agreement to such effect.

	  3.4. Selection Process. Upon receipt from the Search Firm of its
	       -----------------
proposed pool of candidates, the Board Selection Committee shall select the
seven members of the Board from the slate of candidates and shall determine the
class of directors in which each such candidate shall serve in accordance with
the Certificate of Incorporation. In the event there is a tie in the vote, the
Search Firm shall have a vote to break such tie.

	  3.5. CEO Selection. The transmission owners who have agreed to form
	       -------------
the TRANSCO LLC, shall select, in proportion with their ownership interests, an
individual who satisfies the independence requirements of the Certificate of
Incorporation and the By-Laws to serve as the initial chief executive officer
(the "CEO"). The Board of Directors shall use all commercially reasonable
efforts to meet in order to ratify the selection of the CEO made by the members
of the TRANSCO LLC. In the event the Board does not ratify the CEO selected by
the members of the TRANSCO LLC, the Board shall meet and select an individual
that satisfies the requirements set forth in this Section 3.5 to serve as CEO.

	  3.6. Election of Directors and Initial Meeting. As soon as practicable
	       -----------------------------------------
following the selection of the CEO, the transmission owners who have agreed to
form the TRANSCO shall cause the Board Selection Committee's slate of candidates
to be elected or named as initial directors of Manager Corp., in such classes as
are determined under Section 3.4 hereof, and shall require such persons to elect
a chairman of Manager Corp. in the following manner: (i) each Person identified
on the Board Selection Committee's slate of candidates shall execute a
Subscription Agreement, in the form attached hereto as Exhibit B; (ii) the names
of such Persons shall be listed as the initial directors of Manager Corp.,
designated in such classes as are determined under Section 3.4 hereof, in the
Certificate of Incorporation, which Certificate of Incorporation shall be filed
with the Secretary of State of the State of Delaware, as contemplated by Section
2.2 hereof; (iii) as soon as practicable thereafter, the directors of Manager
Corp. shall hold their initial meeting of the board of directors of Manager
Corp., at which meeting such directors shall (u) authorize the issuance to each
director, in accordance with such director's Subscription Agreement, one hundred
(100) shares of Class A Common Stock of Manager Corp. at a price per share of
ten dollars ($10), which shares, upon receipt of consideration therefor and
following their issuance, shall be the only outstanding shares of Class A Common
Stock of Manager Corp.; (v) approve the By-Laws as the By-Laws for Manager
Corp.; (w) elect a chairman of Manager Corp.; (x) authorize Manager Corp.'s
execution and delivery of the LLC Agreement and the Member and Shareholder
Agreement; (y) appoint the Compliance Auditor (as contemplated by Section 4.1
hereof) as the independent compliance auditor of Manager Corp. (but not the
independent public accountant for Manager Corp.) and require the Compliance


				       6



Auditor to perform those duties described in Section 4.2 hereof; and, (z) take
such other action as such directors deem necessary in order to consummate the
transactions contemplated hereby; and (iv) immediately upon the issuance of
shares of Class A Common Stock of Manager Corp. to each director, each such
director shall execute the Voting Trust Agreement.

	  3.7. Compensation. The directors and the CEO of Manager Corp. shall be
	       ------------
compensated, commensurate with the compensation of directors and chief executive
officers of companies of comparable size and business activity.


				   ARTICLE IV
			 INDEPENDENT COMPLIANCE AUDITING
			 -------------------------------

	  4.1. Appointment of Compliance Auditor. The Board Selection Committee
	       ---------------------------------
shall select a firm that (i) is one of the ten largest accounting firms in the
United States, and (ii) is not the independent public accountant for either
Manager Corp. or TRANSCO LLC (such firm selected, the "Compliance Auditor") to
serve as the independent compliance auditor of Manager Corp. As soon as
practicable following the Board Selection Committee's selection of the
Compliance Auditor, the board of directors of Manager Corp. shall appoint the
Compliance Auditor as the independent compliance auditor of Manager Corp.

	  4.2. Responsibilities of Compliance Auditor. Manager Corp. shall
	       --------------------------------------
require the Compliance Auditor to develop and implement a system of independent
compliance auditing to (i) ensure that the limitations on stock ownership and
the director, officer and employee independence requirements contained in the
Certificate of Incorporation, the By-Laws and the Code of Conduct are fully
satisfied and (ii) audit the relationships between the holders of shares of
Class B Common Stock and the members of TRANSCO LLC and Manager Corp. and
TRANSCO LLC to ensure that they are consistent with the requirements of Order
No. 2000. In performing such duties, the Compliance Auditor shall be authorized
to conduct such audits of the directors, officers and employees of Manager Corp.
and TRANSCO LLC as such Compliance Auditor, in its discretion, deems necessary
to implement its system of independent compliance auditing. Except as required
by (or ensuring compliance with) law, the Certificate of Incorporation, the
By-Laws or this Plan, the Compliance Auditor shall keep confidential all
information relating to the security holdings of a director, officer or employee
of Manager Corp. or TRANSCO LLC.

	  4.3. Annual Compliance Affidavit. Manager Corp. shall require each of
	       ---------------------------
its directors, officers and employees and the TRANSCO LLC shall require its
officers and employees, to file annually with the Compliance Auditor an
affidavit certifying that such director officer or employee is in compliance
with the limitations on stock ownership and the independence requirements, as


				       7



applicable, contained in the Certificate of Incorporation, the By-Laws, the
Limited Liability Company Operating Agreement and the Code of Conduct.


				       8



								       EXHIBIT A


			MEMBER AND SHAREHOLDER AGREEMENT

	  This Member and Shareholder Agreement (the "Agreement") is made and
entered into as of this      day of           , 2000 by and between the Persons
			----        ----------
(as defined herein) set forth on Schedule A attached hereto and [Manager Corp.],
a Delaware corporation (the "Managing Member") (each such Person, a "Party" and
collectively, the "Parties").

				    RECITALS

	  WHEREAS, as of the date hereof, the Persons set forth on Schedule A
are members of TRANSCO LLC, a Delaware limited liability company (the "TRANSCO
LLC");

	  WHEREAS, pursuant to the terms of that certain Limited Liability
Company Operating Agreement for TRANSCO LLC (the "Operating Agreement"), to
which each of the Persons set forth on Schedule A is a party, the Interests (as
defined in the Operating Agreement) are convertible into shares of class B
common stock, par value $.01 per share (the "Class B Common Stock") of the
Managing Member, pursuant a formula to be set forth in this Agreement;

	  WHEREAS, under the Certificate of Incorporation of Manager Corp. (the
"Certificate of Incorporation") the Managing Member may issue shares of Class B
Common Stock only to those Persons who, in consideration for the issuance of
such shares, shall have transferred to the Managing Member all or any portion of
such Person's Interest in the TRANSCO pursuant to the terms and conditions of
the Operating Agreement;

	  WHEREAS, the Parties desire to set forth certain matters governing
their relationship as Members (as defined in the Operating Agreement) of the
TRANSCO LLC and holders (or potential holders) of Class B Common Stock,
including, among other things, the formula pursuant to which Interests in the
TRANSCO LLC are to be converted into shares of Class B Common Stock and certain
registration rights under the Securities Act (as defined herein);

	  NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the Parties agree as
follows:


				      A-1



				    ARTICLE 1
				   DEFINITIONS
				   -----------

	  "Affiliate" means an affiliate, as defined by the FERC in Order No.
	   ---------
2000.

	  "Agreement" means this Agreement together with any Schedules and
	   ---------
Exhibits attached hereto.

	  "Business Day" means any day (other than a day which is a Saturday,
	   ------------
Sunday or legal holiday in the State of Delaware).

	  "Certificate of Incorporation" means the Certificate of Incorporation
	   ----------------------------
of the Managing Member.

	  "Class B Common Stock" has the meaning set forth in the Recitals.
	   --------------------

	  "FERC" means the Federal Energy Regulatory Commission, or any
	   ----
successor entity thereto.

	  "Managing Member" means Manager Corp., a Delaware corporation.
	   ---------------

	  "Operating Agreement" means the Limited Liability Company Operating
	   -------------------
Agreement for TRANSCO LLC.

	  "Order No. 2000" means Order No. 2000 issued by the FERC and all
	   --------------
supplements and amendments thereto that are effective as of the date hereof.

	  "Participating Principal Shareholder(s)" means any Person set forth on
	   --------------------------------------
Schedule A that has requested that its Registrable Securities be included in a
demand registration under Section 4.1 of this Agreement or an incidental
registration under Section 4.2 of this Agreement, as the case may be.

	  "Partnership RTO" means the RTO under which the Company operates as an
	   ---------------
independent transmission company under the oversight and within the structure of
the Southwest Power Pool.

	  "Party" and "Parties" have the meanings set forth in the preamble of
	   -----       -------
this Agreement.

	  "Person" means any individual, partnership, limited liability company,
	   ------
joint venture, corporation, trust, unincorporated organization, governmental
entity or any department or agency thereof.


				      A-2



	  "Registrable Securities" means those shares of Class A common
	   ----------------------
stock,par value $.01 per share (the "Class A Common Stock), of the Managing
Member which may be issued upon the conversion of shares of Class B Common Stock
that are issued by the Managing Member to any Person set forth on Schedule A (or
any such Person's designee) upon the conversion of part or all of such Person's
Interest in the TRANSCO LLC; provided, however, that any such securities shall
cease to be Registrable Securities with respect to a proposed offer or sale
thereof when a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement or when they are held by
any Person other than a Person set forth on Schedule A (or any such Person's
designee).

	  "Registration Expenses" has the meaning set forth in Section 4.8 of
	   ---------------------
this Agreement.

	  "RTO" means an RTO as defined by Order No. 2000, or any subsequent
	   ---
order or rulemaking issued or made by the FERC relating to the same.

	  "Rule 144" means Rule 144 promulgated under the Securities Act, or any
	   --------
successor rule to similar effect.

	  "SEC" means the United States Securities and Exchange Commission.
	   ---

	  "Securities Act" means the Securities Act of 1933, as amended, or any
	   --------------
successor statute.

	  "Subsidiaries" means all corporations or partnerships as to which the
	   ------------
designated Person has either a direct or indirect ownership interest, by way of
stock ownership or otherwise, representing at least 51% of the voting power of
such corporations or the right to otherwise control the decision making of such
corporation or partnership.

	  "TRANSCO" means an independent transmission company.
	   -------

	  "TRANSCO LLC" means TRANSCO LLC, Delaware limited liability company.
	   -----------


				      A-3



				    ARTICLE 2
		  REPRESENTATIONS AND WARRANTIES OF THE PARTIES
		  ---------------------------------------------

	  Each Party represents and warrants that:

	  2.1. Organization. It is duly organized, validly existing and in good
	       ------------
standing under the laws of the state of its organization;

	  2.2. Authorization. It has all requisite power and authority to enter
	       -------------
into this Agreement; the execution and delivery by such Party of this Agreement
and the consummation by such Party of the transactions contemplated hereby have
been duly authorized by all necessary and appropriate action on the part of such
Party; and this Agreement has been duly and validly executed and delivered by
such Party and constitutes (assuming the due and valid execution and delivery of
this Agreement by the other Parties), the legal, valid and binding obligations
of each Party, enforceable against each Party in accordance with its terms;

	  2.3. No Litigation. There is no litigation pending or, to the best
	       -------------
knowledge of such Party, threatened against such Party which has a reasonable
likelihood of materially and adversely affecting the consummation of the
transactions contemplated hereby or any of such Party's obligations under this
Agreement;

	  2.4. No Breach. The execution, delivery and performance by such Party
	       ---------
of this Agreement will not result in a breach of any of the terms, provisions or
conditions of any agreement to which such Party is a party which has a
reasonable likelihood of materially and adversely affecting the consummation of
the transactions contemplated hereby or any of such Party's obligations under
this Agreement;

	  2.5. Required Approvals. The execution and delivery by such Party of
	       ------------------
this Agreement and the consummation of the transactions contemplated hereby do
not require any filing by such Party with, or approval or consent of, any
governmental authority which has not already been made or obtained 1; and

	  2.6. No Claims. There are no claims, either administrative or
	       ---------
judicial, at law or in equity, pending or, to the knowledge of such Party,
threatened against it which could, if continued, have a material adverse affect
on the business, operations, properties, assets or condition (financial or
otherwise) of such Party, or the ability of such Party to perform its
obligations under this Agreement.


- ------------------------
1    It is anticipated that this Agreement will not be executed until FERC
     has issued its approval of the same.


				      A-4



				    ARTICLE 3
		CONVERSION OF INTERESTS INTO CLASS B COMMON STOCK
		-------------------------------------------------

	  3.1  Conversion Formula. Each Party who transfers all or any portion
	       ------------------
of its Interest in the TRANSCO LLC to the Managing Member in consideration for
the issuance of shares of Class B Common Stock shall receive, and the Managing
Member shall issue to such Party, that number of shares of Class B Common Stock
equal to: [CONVERSION FORMULA TBA].

				    ARTICLE 4
			REGISTRATION UNDER SECURITIES ACT
			---------------------------------

	  4.1  Demand Registration.
	       -------------------

	       a.   Request. Subject to the provisions of this Section 4.1
		    -------
and any other limitation to which any Person set forth on Schedule A has
contractually agreed concerning the disposition of such Person's Registrable
Securities, upon a written request signed by a Person set forth on Schedule A
that the Managing Member effect the registration under the Securities Act of all
or part of such Person's Registrable Securities, specifying the number of
Registrable Securities to be registered and the intended method of disposition
thereof, the Managing Member will deliver within two business days of receipt of
such written request a written notice of such request to all other Persons set
forth on Schedule A, and all other holders of the Managing Member's securities,
if any, that have incidental registration rights entitling them to request that
their securities be covered by such registration, and thereupon the Managing
Member will use its best efforts to effect the registration under the Securities
Act of the Registrable Securities which the Managing Member has been requested
to register by such Person, all to the extent requisite to permit the intended
disposition of the Registrable Securities to be so registered.

	       b.   Registration of Other Securities. Except as set forth in
		    --------------------------------
Section 4.1(g) below, whenever the Managing Member shall effect a registration
pursuant to this Section 4.1, as many shares of Class A Common Stock as those
Persons set forth on Schedule A have requested to be incidentally registered
therewith also shall be included among the securities covered by the
registration but no securities other than the Registrable Securities (including
those to be incidentally registered) shall be included among the securities
covered by such registration unless (i) the managing underwriter of such
offering shall have advised the Participating Principal Shareholder(s) in
writing that the inclusion of such other securities would not adversely affect
such offering or (ii) the Participating Principal Shareholder(s) shall have
consented in writing to the inclusion of such other securities.


				      A-5



	       c.   Registration Statement Form. Registrations under this
		    ---------------------------
Section 4.1 shall be on such appropriate registration form of the SEC (i) as
shall be selected by the Managing Member and as shall be reasonably acceptable
to the Participating Principal Shareholder(s) and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in the Participating Principal
Shareholder(s) request for registration. The Managing Member agrees to include
in any such registration statement all information which, in the opinion of
counsel to the Participating Principal Shareholder(s) and counsel to the
Managing Member, is required to be included.

	       d.   Effective Registration Statement. A registration
		    --------------------------------
requested pursuant to this Section 4.1 shall not be deemed to have been effected
and will not be considered one of the three demand registrations which may be
requested by a Person set forth on Schedule A (i) unless a registration
statement with respect thereto has become effective, (ii) if after it has become
effective, it does not remain effective for a period of at least 180 days
(unless the Registrable Securities registered thereunder have been sold or
disposed of prior to the expiration of such 180 day period) or such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court for any reason and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement entered into in connection with such registration are
not satisfied or waived other than by reason of the failure or refusal of a
Participating Principal Shareholder to satisfy or perform a condition to such
closing.

	       e.   Priority in Demand Registration. If a demand registration
		    -------------------------------
pursuant to this Section 4.1 involves an underwritten offering, the
Participating Principal Shareholder(s) shall cause the managing underwriter to
advise the Managing Member in writing as to the number and class or classes of
securities that can be included in such registration in addition to the
Registrable Securities (including those to be incidentally registered) that will
be within a price range acceptable to the Participating Principal Shareholder(s)
(the "Maximum Offering Amount"). Subject to Section 4.1(b), such registration
will include only (x) the Registrable Securities (including those to be
incidentally registered) and (y) up to that number of additional securities of
the Managing Member which does not exceed the Maximum Offering Amount drawn from
the Managing Member and/or other holders of the Managing Member's securities who
have incidental registration rights entitling them to have securities registered
in such offering.

	       f.   Number and Size of Demand Registrations; Other
		    ----------------------------------------------
Limitations. Notwithstanding anything in this Section 4.1 to the contrary, the
- -----------
Managing Member shall not be required to effect more than three demand


				      A-6



registrations per Person set forth on Schedule A pursuant to Section 4.1 of this
Agreement.

	       g.   Incidental Registration by the Managing Member. If any of
		    ----------------------------------------------
the Persons set forth on Schedule A makes a request for a registration pursuant
to Section 4.1(a), the Managing Member may determine to include securities of
the same class sought to be registered by any such Participating Principal
Shareholder for sale for the Managing Member's own account by giving written
notice thereof to each of the Participating Principal Shareholder(s) within 15
business days after receipt by the Managing Member of the written request of the
Participating Principal Shareholder(s), specifying the number of shares or
amount of interests which the Managing Member wishes to have registered, but
only to the extent that the number of shares or amount of interests the Managing
Member seeks to include does not, when aggregated with the number of Registrable
Securities requested to be registered by the Participating Principal
Shareholder(s) and the securities to be registered by the other holders of the
Managing Member's securities, if any, who have incidental registration rights
entitling them to have securities covered by such registration, exceed the
Maximum Offering Amount, and subject to the limitations of Section 4.1(b).

	  4.2  Incidental Registration.
	       -----------------------

	       a.   Right to Include the Registrable Securities. If the
		    -------------------------------------------
Managing Member proposes to register securities under the Securities Act by
registration on Forms S-1, S-2 or S-3 or any successor or similar form(s)
(except registrations on such Forms S-4 or S-8 and any successor or similar
forms) whether for sale for its own account or pursuant to a demand for
registration under a registration rights agreement granted to another person
(but only to the extent the incidental registration rights provided in this
Section 4.2(a) are permissible under and not inconsistent with such other demand
registration rights) it will give prompt written notice each such time (except
as otherwise provided in Section 4.2(d)) to each of the Persons set forth on
Schedule A of its intention to do so and of such Persons' rights under this
Section 4.2. Upon the written request of any of the Persons set forth on
Schedule A (specifying the Registrable Securities intended to be disposed of and
the intended method of disposition thereof), made within 15 business days after
the receipt of any such notice (10 business days if the Managing Member gives
telephonic notice to each of such Persons with written confirmation to follow
promptly thereafter, stating that (i) such registration will be on Form S-3 and
(ii) such shorter period of time is required because of a planned filing date)
(which written request by any such Person shall specify the Registrable
Securities to be disposed of by such Person and the intended method of
disposition thereof), the Managing Member will use its best efforts to effect
the registration under the Securities Act of all Registrable Securities which
the Managing Member has been so requested to register by the Participating
Principal Shareholder(s), to the extent requisite to permit the disposition (in


				      A-7



accordance with the intended methods thereof as aforesaid) of such Registrable
Securities to be so registered. If the Managing Member thereafter determines for
any reason not to register or to delay registration of such securities, the
Managing Member, by act of its Board of Directors, may, at its election, give
written notice of such determination to each of the Participating Principal
Shareholder(s) and, thereupon, (i) in the case of a determination not to
register, shall be relieved of the obligation to register such Registrable
Securities in connection with such registration (but not from any obligation of
the Managing Member to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights (if any) of the Persons set forth on
Schedule A to request that such registration be effected as a registration under
Section 4.1 or to the right of each Person set forth on Schedule A to request an
incidental registration on a subsequent registration, and (ii) in the case of a
determination to delay registration, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registration of such
other securities. The Managing Member will pay all Registration Expenses in
connection with registration of Registrable Securities requested pursuant to
this Section 4.2.

	       b.   Priority in Incidental Registration Rights in connection
		    --------------------------------------------------------
with Registrations for the Managing Member's Account. If the registration
- ----------------------------------------------------
referred to in Section 4.2(a) is to be an underwritten primary registration on
behalf of the Managing Member, and the managing underwriter(s) advise the
Managing Member in writing that in their good faith opinion such offering would
be materially and adversely affected by the inclusion therein of the total
number of securities requested to be registered by other persons entitled to
incidental registration rights from the Managing Member and the Registrable
Securities requested to be included therein by the Participating Principal
Shareholder(s) under this Agreement, the Managing Member shall include in such
registration: (i) first, all securities the Managing Member proposes to sell for
its own account ("Company Securities"), (ii) second, up to the full amount of
securities of other holders of Company securities, if any, which have incidental
registration rights with priority over the rights of the Persons set forth on
Schedule A under this Agreement, in such amount as in the good faith opinion of
the underwriter(s) can be sold after taking in account the dollar amount of
securities proposed to be sold under clause (i), without an adverse impact on
the offering or the Company Securities, and (iii) third, up to the full number
of (x) securities of Persons, if any, with incidental registration rights
coextensive with the incidental rights of the Persons set forth on Schedule A
under this Agreement and (y) Registrable Securities requested to be included in
such registration by the Participating Principal Shareholder(s), in excess of
the number or dollar amount of securities proposed to be sold under clauses (i)
and (ii) which, in the good faith opinion of such underwriter(s), can be sold
without an adverse impact on the offering or the Company Securities, allocated
pro rata among such Persons based on the number of securities each has requested
- --- ----
to be registered.


				      A-8



	       c.   Limitations; Exceptions. The Managing Member shall not be
		    -----------------------
required to effect any registration of Registrable Securities under this Section
4.2 incidental to the registration of any of its securities in connection with
mergers, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit plans. No
registration of Registrable Securities effected under this Section 4.2 shall
relieve the Managing Member of its obligation to effect a registration of
Registrable Securities pursuant to Section 4.1 hereof. The exercise of any
incidental rights under this Section 4.2 by any Participating Principal
Shareholder shall not affect the exercise of the demand rights provided for in
Section 4.1 hereof.

	  4.3  Registration Procedures. In connection with the Managing Member's
	       -----------------------
obligations pursuant to Sections 4.1 and 4.2 hereof, the Managing Member will
use its best efforts to effect such registrations to permit the sale of
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Managing Member will as
expeditiously as possible:

	       a.   prepare (within 90 days after a request for registration is
made to the Managing Member in the case of a registration pursuant to Section
4.1(a) and in any event as soon as possible) and file with the SEC, a
registration statement or registration statements on any appropriate form under
the Securities Act, which form shall be available for the sale of the
Registrable Securities by the holders thereof in accordance with the intended
method or methods of distribution thereof, and use its best efforts to cause
such registration statement to become effective and to remain continuously
effective for a period of 180 days following the date on which such registration
statement is declared effective, provided that the Managing Member shall have no
obligation to maintain the effectiveness of such registration statement after
the sale of all Registrable Securities registered thereunder;

	       b.   prepare and file with the SEC such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for the applicable period; cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities Act;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended methods of disposition by the
Participating Principal Shareholder(s) set forth in such registration statement
or supplement to such prospectus;

	       c.   notify each of the Participating Principal Shareholder(s)
and the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (i) when a prospectus or any prospectus


				      A-9



supplement or post-effective amendment has been filed, and, with respect to a
registration statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC for amendments or supplements to a
registration statement or related prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a registration statement or the initiation of any proceedings for that
purpose, (iv) if at any time the representations and warranties of the Managing
Member made as contemplated by paragraph (l) below cease to be true and correct,
(v) of the receipt by the Managing Member of any notification with respect to
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, (vi) of the happening of any event which requires the making of
any changes in a registration statement or related prospectus so that such
documents will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and (vii) of the Managing Member's reasonable
determination that a post-effective amendment to a registration statement would
be appropriate;

	       d.   make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment;

	       e.   if requested by the managing underwriters or the
Participating Principal Shareholder(s), immediately incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Participating Principal Shareholder(s) agree should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required filings of
such prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by the Participating Principal Shareholder(s) or any underwriter of
such Registrable Securities;

	       f.   furnish to each of the Participating Principal
Shareholder(s) and each managing underwriter, without charge, at least one
conformed copy of the registration statement or statements and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);


				      A-10



	       g.   deliver to each of the Participating Principal
Shareholder(s) and the underwriters, if any, without charge, as many copies of
the prospectus or prospectuses (including each preliminary prospectus) and any
amendment or supplement thereto and such other documents as such Persons may
reasonably request; the Managing Member consents to the use of such prospectus
or any amendment or supplement thereto by the Participating Principal
Shareholder(s) and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such prospectus or any amendment
or supplement thereto;

	       h.   prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the Participating
Principal Shareholder(s), the underwriters, if any, and their respective counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as the Participating Principal Shareholder(s) or any underwriter
reasonably requests in writing; keep each such registration or qualification
effective during the period such registration statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable registration statement; provided that the Managing
Member will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;

	       i.   cooperate with the Participating Principal Shareholder(s)
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends unless required by applicable law; and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters may request at least two business days prior
to any sale of Registrable Securities to the underwriters;

	       j.   use its best efforts to cause the Registrable Securities
covered by the applicable registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities;

	       k.   upon the occurrence of any event contemplated by paragraph
(c)(vi) above, prepare a supplement or post-effective amendment to the
applicable registration statement or related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such prospectus will not contain any untrue statement of a


				      A-11



material fact or omit to state any material fact necessary to make the
statements therein not misleading;

	       l.   enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (i) make such
representations and warranties to the Participating Principal Shareholder(s)
with respect to the registration statement, prospectus and documents
incorporated by reference, if any, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings and
confirm the same if and when requested; (ii) furnish to the Participating
Principal Shareholder(s) an opinion of counsel for the Managing Member addressed
to the Participating Principal Shareholder(s) and dated the date of the closing
under the underwriting agreement (if any) (or if such offering is not
underwritten, dated the effective date of the registration statement), and (ii)
use its best efforts to furnish to the Participating Principal Shareholders a
"cold comfort" letter addressed to the Participating Principal Shareholder(s)
and signed by the independent public accountants who have audited the Managing
Member's financial statements included in such registration statement, in each
such case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Participating Principal Shareholder(s) may reasonably request
and, in the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements; and (vi) the Managing Member shall
deliver such documents and certificates as may be requested by the Participating
Principal Shareholder(s) and the managing underwriters, if any, to evidence
compliance with this clause (1) and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Managing
Member; all of the above to be done at each closing under such underwriting or
similar agreement or as and to the extent required thereunder;

	       m.   otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 90 days after the end of any 12-month period (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm or best efforts underwriting offering and (ii)
beginning with the first day of the Managing Member's first fiscal quarter next
succeeding each sale of Registrable Securities after the effective date of a
registration statement, which statements shall cover said 12-month periods; and


				      A-12



	       n.   use its best efforts to cause all Registrable Securities
covered by each registration to be listed on each securities exchange and
inter-dealer quotation system on which a class of common equity securities of
the Managing Member is then listed and to pay all fees and expenses in
connection therewith.

	  The Managing Member may require the Participating Principal
Shareholder(s) to furnish to the Managing Member such information regarding
themselves and the distribution of such Registrable Securities as the Managing
Member may from time to time reasonably request in writing in order to comply
with the Securities Act. The Participating Principal Shareholder(s) agree to
notify the Managing Member as promptly as practicable of any inaccuracy or
change in information they have previously furnished to the Managing Member or
of the happening of any event, in either case as a result of which any
prospectus relating to such registration contains an untrue statement of a
material fact regarding the Participating Principal Shareholder(s) or the
distribution of such Registrable Securities or omits to state any material fact
regarding the Participating Principal Shareholder(s) or the distribution of such
Registrable Securities required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances then existing,
and to promptly furnish to the Managing Member any additional information
required to correct and update any previously furnished information or required
such that such prospectus shall not contain, with respect to the Participating
Principal Shareholder(s) or the distribution of such Registrable Securities, an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. The Persons set forth on Schedule A
agree that, upon receipt of any notice from the Managing Member of the happening
of any event of the kind described in Section 4.3(c)(ii), (iii), (v), (vi) or
(vii) hereof, each will forthwith discontinue disposition of such Registrable
Securities covered by such registration statement or prospectus until such
holder's receipt of the copies of the supplemented or amended prospectus
relating to such registration statement or prospectus, or until it is advised in
writing by the Managing Member that the use of the applicable prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in such prospectus, and, if so directed by the
Managing Member, each will deliver to the Managing Member (at the Managing
Member's expense) all copies, other than permanent file copies then in the
Participating Principal Shareholder(s)' possession, of the prospectus covering
the Registrable Securities current at the time of receipt of such notice.

	  4.4  Underwritten Offerings.
	       ----------------------

	       a.   Demand Underwritten Offerings. In any offering pursuant to a
		    -----------------------------
registration requested under Section 4.1, sales shall be made through a
nationally or regionally recognized investment banking firm (or syndicate


				      A-13



managed by such a firm) selected by the Participating Principal Shareholder(s)
and reasonably satisfactory to the Board of Directors of the Managing Member.
The Managing Member shall enter into an underwriting agreement which shall be
reasonably satisfactory in form and substance to the Participating Principal
Shareholder(s) and which shall contain representations, warranties and
agreements (including indemnification agreements to the effect and to the extent
provided in Section 4.7) as are customarily included by an issuer in
underwriting agreements with respect to secondary distributions. The
Participating Principal Shareholder(s) shall be parties to such underwriting
agreement and the representations and warranties by, and the other agreements on
the part of, the Managing Member to and for the benefit of such underwriters
shall also be made to and for the benefit of the Participating Principal
Shareholder(s). No Participating Principal Shareholder shall be required to make
any representations or warranties to or agreements with the Managing Member or
the underwriters other than representations, warranties or agreements regarding
itself, its Registrable Securities and its intended method of distribution and
any other representation required by law.

	       b.   Incidental Underwritten Offerings. If the Managing Member at
		    ---------------------------------
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 4.2 and such securities are to be distributed by or
through one or more underwriters, the Managing Member will, if requested by any
Person set forth on Schedule A as provided in Section 4.2 and subject to the
provisions of Section 4.2(b) and any rights it has granted to other holders of
securities of the Managing Member which may have a preference or priority over
the rights of the Persons set forth on Schedule A hereunder, use its best
efforts to arrange for such underwriters to include all the Registrable
Securities to be offered and sold by the Participating Principal Shareholder(s)
among the securities to be distributed by underwriters. The Participating
Principal Shareholder(s) shall be party to the underwriting agreement between
the Managing Member and such underwriters and the representations and warranties
by, and the other agreements on the part of, the Managing Member to and for the
benefit of such underwriters shall also be made to and for the benefit of the
Participating Principal Shareholder(s). No Participating Principal Shareholder
shall be required to make any representations or warranties to or agreements
with the Managing Member or the underwriters other than representations,
warranties or agreements regarding itself, its Registrable Securities and the
intended method of distribution and any other representation required by law.

	  4.5  Preparation; Reasonable Investigation. In connection with the
	       -------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Managing Member will give the Participating
Principal Shareholder(s) their underwriters, counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, and will give each of them such access to its
books and records and such opportunities to discuss the business of the Managing


				      A-14



Member with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of the
Participating Principal Shareholder(s)' and such underwriters' counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.

	  4.6  Limitations, Conditions and Qualifications to Obligations Under
	       ---------------------------------------------------------------
Registration Covenants. The obligations of the Managing Member to cause the
- ----------------------
Registrable Securities to be registered under the Securities Act are subject to
each of the following limitations, conditions and qualifications:

	       a.   The Managing Member shall not be obligated to file or keep
effective any registration statement pursuant to Section 4.1 hereof at any time
if the Managing Member would be required to include financial statements audited
as of any date other than the end of its fiscal year.

	       b.   The Managing Member, by act of its Board of Directors, shall
be entitled to postpone for a reasonable period of time (but not exceeding 90
days) the filing or effectiveness of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 4.1 if the Board of
Directors of the Managing Member determines, in its reasonable judgment, that
(i) the Managing Member is in possession of material information that has not
been disclosed to the public and the Board of Directors of the Managing Member
reasonably deems it to be advisable not to disclose such information at such
time in a registration statement or (ii) such registration and offering would
interfere with any financing, acquisition, corporate reorganization or other
material transaction involving the Managing Member and its Subsidiaries, taken
as a whole, and, in any such case, the Managing Member promptly gives each of
the Participating Principal Shareholder(s) written notice of such determination,
containing a general statement of the reasons for such postponement and an
approximation of the anticipated delay. If the Managing Member shall so postpone
the filing of a registration statement, the Participating Principal
Shareholder(s) shall have the right to withdraw the request for registration by
giving written notice to the Managing Member within 30 days after receipt of the
notice of postponement and, in the event of such withdrawal, such request shall
not be counted for purposes of one of the requests for registration to which the
Persons set forth on Schedule A are entitled pursuant to Section 4.1 hereof.

	  4.7  Indemnification.
	       ---------------

	       a.   Indemnification by the Managing Member. In the event of any
		    --------------------------------------
registration of any Registrable Securities under the Securities Act, the
Managing Member will, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, the Participating Principal Shareholder(s),
each other Person who participates as an underwriter in the offering or sale of


				      A-15



such securities and each other Person, if any, who controls any such underwriter
within the meaning of the Securities Act, against any and all judgments, fines,
penalties, charges, costs, amounts paid in settlement, losses, claims, damages,
liabilities, expenses, or attorney fees, joint or several, incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto, including interest on the foregoing ("Indemnified Damages"), to
which they or any of them may become subject under the Securities Act or any
other statute or common law, insofar as any such Indemnified Damages arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement relating to the sale of
such securities or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under blue sky or other
securities laws of jurisdictions in which the Registrable Securities are offered
("Blue Sky Filing"), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, if used prior to the
effective date of such registration statement (unless such statement is
corrected in the final prospectus and the Managing Member has previously
furnished copies thereof to any Participating Principal Shareholder seeking such
indemnification and the underwriters), or contained in the final prospectus (as
amended or supplemented if the Managing Member shall have filed with the SEC any
amendment thereof or supplement thereto) if used within the period during which
the Managing Member is required to keep the registration statement to which such
prospectus relates current, or the omission or alleged omission to state therein
(if so used) a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the indemnification agreement contained herein shall not
(i) apply to such Indemnified Damages arising out of, or based upon, any such
untrue statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Managing Member by the
Participating Principal Shareholder(s), any other shareholders of the Managing
Member participating in the registration or such underwriter specifically
stating that it is for use in connection with preparation of the registration
statement, any preliminary prospectus or final prospectus contained in the
registration statement, any such amendment or supplement thereto or any Blue Sky
Filing or (ii) inure to the benefit of any underwriter or any Person controlling
such underwriter, to the extent that any such Indemnified Damages arise out of
such Person's failure to send or give a copy of the final prospectus, as the
same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or


				      A-16



prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.

	  Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Participating Principal Shareholder(s)
or any underwriter or controlling Person and shall survive the transfer of such
securities by the Participating Principal Shareholder(s).

	       b.   Indemnification by the Participating Principal Shareholders.
		    -----------------------------------------------------------
The Managing Member may require, as a condition to including the Registrable
Securities of the Participating Principal Shareholder(s) in any registration
statement filed pursuant to Section 4.1 or 4.2, that the Managing Member shall
have received an undertaking satisfactory to it (and them, if applicable) from
each of the Participating Principal Shareholder(s) participating in the
registration to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 4.7) the Managing Member,
its officers and directors and each officer of the Managing Member and each
other Person, if any, who controls the Managing Member within the meaning of the
Securities Act, (and any other shareholders of the Managing Member participating
in the registration, if applicable) with respect to any untrue statement or
alleged untrue statement in, or omission or alleged omission from, such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Managing Member through an instrument duly executed by the Participating
Principal Shareholder(s) specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Managing
Member or any such director, officer or controlling Person and shall survive the
transfer of such securities by the Participating Principal Shareholder(s). In no
event shall any indemnity paid by the Participating Principal Shareholder(s) to
the Managing Member (and/or any other shareholders of the Managing Member
participating in the registration) pursuant to this section 4.7(b), or
otherwise, exceed the proceeds received by such Person in such offering.

	       c.   Notices of Claims, etc. Promptly after receipt by an
		    ----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 4.7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
   --------
under the preceding subdivisions of this Section 4.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In


				      A-17



case any such action is brought against an indemnified party, the indemnifying
party shall be entitled to participate in and, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. In the event that
the indemnifying party advises an indemnified party that it will contest a claim
for indemnification hereunder, or fails, within thirty (30) days of receipt of
any indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the indemnified party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the indemnified party's costs
and expenses arising out of the defense, settlement or compromise of any such
action, claim or proceeding shall be losses subject to indemnification
hereunder; provided, however, that the Managing Member shall be obligated to pay
	   --------  -------
the fees and expenses of only one counsel for the representation in a given
matter of the Participating Principal Shareholder(s) and any other shareholders
of the Managing Member participating in the registration. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. If the indemnifying party does not
assume such defense, the indemnified party shall keep the indemnifying party
apprised at all times as to the status of the defense; provided, however, that
the failure to keep the indemnifying party so informed shall not affect the
obligations of the indemnifying party hereunder. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the indemnified party


				      A-18



with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made.

	       d.   Indemnification Payments. The indemnification required by
		    ------------------------
this Section 4.7 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.

	       e.   Contribution. If the indemnification provided for in this
		    ------------
Section 4.7 shall for any reason be held by a court to be unavailable to an
indemnified party under subparagraph (a) or (b) hereof in respect of any
Indemnified Damages, then, in lieu of the amount paid or payable under
subparagraph (a) or (b) hereof, the indemnified party and the indemnifying party
under subparagraph (a) or (b) hereof shall contribute to the aggregate
Indemnified Damages, (i) in such proportion as is appropriate to reflect the
relative fault of the Managing Member and the Participating Principal
Shareholder(s) and any other shareholders of the Managing Member participating
in the registration, with respect to the statements or omissions which resulted
in such Indemnified Damages, as well as any other relevant equitable
considerations, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Managing Member and the
Participating Principal Shareholder(s) and any other shareholders of the
Managing Member participating in the registration from the offering of the
securities covered by such registration statement. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The obligations of the
Participating Principal Shareholder(s) to contribute as provided in this
subparagraph (e) are several in proportion to the relative value of their
respective Registrable Securities covered by such registration statement and not
joint. In addition, no Person shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected without
such Person's consent, which consent shall not be unreasonably withheld.

	       f.   Other Rights, Liabilities. The indemnity agreements
		    -------------------------
contained herein shall be in addition to (i) any cause of action or similar
right of the indemnified party against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to pursuant to the
law.

	       g.   Other Indemnification and Contribution. Indemnification and
		    --------------------------------------
contribution similar to that specified in the preceding subdivisions of this
Section 4.7 (with appropriate modifications) shall be given by the Managing
Member and each Participating Principal Shareholder with respect to any required
registration or other qualification of Registrable Securities under any federal


				      A-19



or state law or regulation of any governmental authority other than the
Securities Act.

	  4.8  Registration Expenses. The Managing Member will pay all
	       ---------------------
Registration Expenses (as defined below) in connection with the demand
registrations of Registrable Securities requested under Sections 4.1. In a
registration of Registrable Securities under Section 4.2, the Managing Member
will pay all Registration Expenses, other than (i) counsel's fees and expenses
for Participating Principal Shareholder(s), (ii) the fees and expenses of any
other Person retained by the Participating Principal Shareholder(s), (iii) the
Participating Principal Shareholder(s)' own internal expenses and (iv) any
incremental increase in out-of-pocket expenses incurred directly by the Managing
Member as a result of including the Registrable Securities of Participating
Principal Shareholder(s) in the offering above that which would have been
incurred by the Managing Member notwithstanding the inclusion of the Registrable
Securities in the offering; which costs and expenses the Participating Principal
Shareholder(s) shall pay, pro rata, based on the number of Registrable
Securities each is registering in the offering. Registration Expenses include
all expenses incident to the Managing Member's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
including fees with respect to filings required to be made with the National
Association of Securities Dealers, Inc., fees and expenses of compliance with
securities or blue sky laws, including, without limitation, reasonable fees and
disbursements of counsel for the underwriters, all word processing, duplicating
and printing expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel of the Managing Member and of all independent certified
public accountants of the Managing Member (including the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
underwriters fees and disbursements (excluding discounts, SEC or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities),
securities acts liability insurance if the Managing Member so desires, fees and
expenses of other Persons retained by the Managing Member and, in the case of a
registration pursuant to Section 4.1, the reasonable fees and expenses of one
counsel to the Participating Principal Shareholder(s) and any other holders of
securities being registered in such registration (selected jointly by the
holders of at least 50% of the Registrable Securities covered by such
registration) (all such expenses being herein called "Registration Expenses").
Except as otherwise provided above, the Managing Member will also pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange, rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Managing Member.


				      A-20



	  4.9  Certain Rights of Shareholders If Named in a Registration
	       ---------------------------------------------------------
Statement. If any statement contained in a registration statement under the
- ---------
Securities Act refers to any of the Persons set forth on Schedule A by name or
otherwise as the holder of any securities of the Managing Member, then each such
Person shall have the right to require the insertion therein of language, in
form and substance reasonably satisfactory to such Person and the Managing
Member, to the effect that such Person's holdings do not necessarily make either
a "controlling person" of the Managing Member within the meaning of the
Securities Act and the statement is not to be construed as a recommendation of
the investment quality of the Managing Member's securities covered thereby.

	  4.10 Holdback Agreements. The Managing Member agrees, and shall cause
	       -------------------
its Subsidiaries to agree (i) not to effect any public sale or distribution of
any securities similar to those being registered, or any securities convertible
into or exchangeable or exercisable for such securities during the five business
days prior to, and during the 90 day period beginning on, the date on which the
registration statement in which the Participating Principal Shareholders are
participating is first declared effective (except as part of such registration,
and except pursuant to a registration of securities on Form S-4 or Form S-8, or
any form substituting therefor) or the commencement of a public distribution of
the Registrable Securities pursuant to such registration statement and (ii) that
any agreement entered into after the date of this Agreement pursuant to which
the Managing Member or any of the Managing Member's Subsidiaries issues or
agrees to issue any privately placed securities similar to the Registrable
Securities shall contain a provision under which holders of such securities
agree not to effect any public sale or distribution of any such securities
during the periods described in (i) above, in each case including a sale
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act (except as part of any such registration, if permitted or when
prevented by applicable statute or regulation from entering into such an
agreement).

	  4.11 Rule 144. The Managing Member shall take all actions and file all
	       --------
such information, documents and reports as shall be required to enable the
Participating Principal Shareholders to sell their Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.


				      A-21



				    ARTICLE 5
			       GENERAL PROVISIONS
			       ------------------

	  5.1. Notices. Unless otherwise specifically provided in this
	       -------
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing and shall be (i) delivered by hand, (ii)
delivered by a nationally recognized commercial overnight delivery service,
(iii) mailed postage prepaid by certified mail in any such case directed or
addressed to the respective addresses set forth in Schedule A attached hereto
(iv) transmitted by facsimile to the facsimile number set forth in Schedule A
attached hereto, with receipt confirmed. Such notices shall be effective: (a) in
the case of hand deliveries, when received; (b) in the case of an overnight
delivery service, on the next business day after being placed in the possession
of such delivery service, with delivery charges prepaid; (c) in the case of
certified mail, upon receipt of the written signature card indicating acceptance
by addressee; and (d) in the case of facsimile notices, the Business Day
following the date on which electronic indication of receipt is received. Any
Party may change its address and facsimile number by written notice to the other
Parties given in accordance with this Section 5.1, following the effectiveness
of which notice Schedule A attached hereto shall be updated accordingly.

	  5.2. Entire Agreement, etc. This Agreement and any Schedules and
	       ---------------------
Exhibits attached hereto shall constitute the entire agreement between the
Parties relating to the subject matter hereof and shall supersede all prior
contracts, agreements and understandings between them relating to such matters.

	  5.3. Construction Principles. As used in this Agreement, words in any
	       -----------------------
gender shall be deemed to include all other genders. The singular shall be
deemed to include the plural and vice versa. The captions and article and
section headings in this Agreement are inserted for convenience of reference
only and are not intended to have significance for the interpretation of or
construction of the provisions of this Agreement.

	  5.4. Counterparts. This Agreement may be executed in two or more
	       ------------
counterparts by the Parties hereto, each of which when so executed will be an
original, but all of which together will constitute one and the same instrument.

	  5.5. Severability. If any provision of this Agreement is held to be
	       ------------
invalid or unenforceable for any reason, such provision shall be ineffective to
the extent of such invalidity or unenforceability; provided, however, that the
remaining provisions will continue in full force without being impaired or
invalidated in any way unless such invalid or unenforceable provision or clause
shall be so significant as to materially affect the Parties' expectations
regarding this Agreement. Otherwise, the Parties hereto agree to replace any
invalid or unenforceable provision with a valid provision which most closely


				      A-22



approximates the intent and economic effect of the invalid or unenforceable
provision.

	  5.6. Assignment; Binding Effect. No Party may assign this Agreement in
	       --------------------------
whole or in part without the prior written consent of all of the other Parties
hereto. This Agreement shall be binding upon, and inure to the benefit of, the
Parties and their respective successors and permitted assigns.

	  5.7. Additional Documents and Acts. Each Party agrees to execute and
	       -----------------------------
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and of the
transactions contemplated hereby.

	  5.8. No Third Party Beneficiary. This Agreement is made solely for the
	       --------------------------
benefit of the Parties hereto and their successors and permitted assigns and no
other Person shall have any rights, interest, or claims hereunder or otherwise
be entitled to any benefits under or on account of this Agreement as a third
party beneficiary or otherwise.

	  5.9. Injunctions. Irreparable damage would occur in the event that any
	       -----------
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. Therefore, the Parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, such remedy being in addition to any other
remedy to which any such Party may be entitled at law or in equity.

	  5.10. Governing Law. This Agreement shall be governed by and construed
		-------------
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law.

	  5.11. Amendment. This Agreement may be amended, modified or
		---------
supplemented only by written agreement of all of the Parties hereto.


	  IN WITNESS WHEREOF, each of the Parties to this Agreement has caused a
duly authorized officer of such Party to execute this Agreement as of the date
first above written.


				      A-23



								      SCHEDULE A

Name           Type of Entity           Address & Facsimile Number
- ----           --------------           --------------------------






				      A-24



								       EXHIBIT B

			     SUBSCRIPTION AGREEMENT

	  This Subscription Agreement (this "Agreement") is made and entered
into as of this       day of          , 2000 by and between [   ], the sole
		-----        ---------
incorporator (the "Incorporator") of Manager Corp., a Delaware corporation (the
"Corporation") and [   ], an individual who has been selected to serve as an
initial director of the Corporation (the "Director").

	  WHEREAS, the Incorporator intends to incorporate the Corporation in
the State of Delaware;

	  WHEREAS, the Director has been selected and has agreed to serve as an
initial director of the Corporation;

	  WHEREAS, upon the incorporation of the Corporation, the Director
desires to purchase one hundred (100) shares of Class A Common Stock of the
Corporation at a price per share of ten dollars ($10);

	  NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:

	  1.   The Director hereby subscribes for and agrees to purchase one
hundred (100) shares of Class A Common Stock of the Corporation at a price per
share of ten dollars ($10).

	  2.   Within three (3) business days of the incorporation of the
Corporation, the Director shall tender to the Corporation a check made payable
to the order of the Corporation in the amount of one thousand dollars ($1,000)
to purchase the shares of Class A Common Stock of the Corporation described in
paragraph 1 hereof.

	  3.   The Incorporator hereby accepts the Director's subscription
described in paragraph 1 and shall cause the Corporation, upon its
incorporation, to accept such subscription and, upon receipt of the purchase
price therefor, issue to the Director one hundred (100) shares of Class A Common
Stock of the Corporation, which shares shall be fully-paid and nonassessable.

	  4.   The Director represents and warrants to the Incorporator and
the Corporation that he or she is purchasing the aforementioned shares for his


				      B-1



or her own account for investment and not with a view to the resale or
distribution of all or any part of such shares. The Director agrees that he or
she must bear the economic risk of his or her investment for an indefinite
period of time because, among other reasons, said shares have not been
registered under the Securities Act of 1933, as amended, or under the securities
laws of any state and, therefore, cannot be resold, pledged, assigned or
otherwise disposed of unless they are subsequently registered under the
Securities Act of 1933, as amended, or under applicable securities laws of
certain states or an exemption from such registration is available.

	  5.   This Subscription Agreement may be executed in one or more
counterparts, each of which shall de deemed an original but all of which
together shall constitute one and the same instrument .

	  6.   This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and the Corporation, as a third-party
beneficiary hereof.

	  IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first written above.


					     ----------------------------------


					     ----------------------------------


				      B-2



								       EXHIBIT C

			     VOTING TRUST AGREEMENT

	  This Voting Trust Agreement (this "Agreement") is made and entered
into as of         , 2000 by and among all the members of the Board of Directors
	   ----- --
of the [Manager Corp.], a Delaware corporation (the "Managing Member"), listed
on Schedule A attached hereto (collectively, "Director-Trustees") and TRANSCO
LLC, a Delaware limited liability company (the "Company").

				   WITNESSETH:

	  WHEREAS, each Director-Trustee is the owner of that number of shares
of Class A common stock of the Managing Member (the "Class A Common Stock") set
forth opposite his or her name on Schedule A hereto:

	  WHEREAS, the Director-Trustees believe it to be in their best
interests and the best interests of the Managing Member and the Company to enter
into this Agreement so that the shares of Class A Common Stock now owned by such
Director-Trustees may be voted as a unit by such Director-Trustees;

	  NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:

Section 1.     Creation of Voting Trust. Subject to the terms and conditions
	       hereof, there is hereby created and established a voting trust in
	       respect of the shares of Class A Common Stock held by the
	       Director-Trustees as set forth on Schedule A hereto (the "Voting
	       Trust").

Section 2.     Deposit of Shares.  (a) Each of the Director-Trustees hereby
	       ------------------
	       assigns and transfers to the Voting Trust the number of shares of
	       Class A Common Stock set forth opposite such Director-Trustee's
	       name on Schedule A hereto and herewith deposits with the Voting
	       Trust the certificate or certificates representing such shares,
	       duly endorsed in blank or accompanied by a proper instrument of
	       assignment duly executed in blank, and in either case with all
	       requisite transfer tax stamps attached.  Each of the
	       Director-Trustees shall so assign, transfer and deposit any other
	       shares of Class A Common Stock and the certificates therefore
	       hereafter acquired by such Director-Trustee, including, without
	       limitation, pursuant to the exercise of options or warrants,
	       immediately upon such acquisition.  Upon receipt by the Voting
	       Trust of the certificates representing any shares of Class A
	       Common Stock, the Voting Trust shall hold such shares subject to


				      C-1



	       the terms and conditions of this Agreement and shall deliver or
	       cause to be delivered to each Director-Trustee certificates (the
	       "Voting Trust Certificates") representing the shares of Class A
	       Common Stock so deposited by such Director-Trustee.

	       (b) Until the Termination Date, the Director-Trustees, as
	       directors of the Managing Member, shall require any other Person
	       (as defined herein) who may after the date hereof become a holder
	       of shares of Class A Common Stock to become a party to this
	       Agreement and to deposit with the Voting Trust the certificate or
	       certificates representing the shares held by such Person, duly
	       endorsed in blank or accompanied by a proper instrument of
	       assignment duly executed in blank, and in either case with all
	       requisite transfer tax stamps attached, and such shares shall be
	       held by the Voting Trust subject to the terms and conditions of
	       this Agreement. Except in the event of any transfer set forth
	       herein, no transfer of any shares of Class A Common Stock owned
	       by Directors shall be permitted hereunder as long as this Voting
	       Trust Agreement is in existence. In the event of such transfer
	       the transferor shall have delivered to the Voting Trust a written
	       agreement of the transferee of such shares to be bound by the
	       terms and conditions of this Agreement and to deposit any
	       certificate or certificates representing such shares with the
	       Voting Trust in accordance with this Section 1(b). For purposes
	       of this Agreement, "Person" shall mean any natural person,
	       corporation, general or limited partnership, limited liability
	       company, joint venture, trust, association, or entity of any
	       kind.

Section 3.     Transfer of Voting Trust Certificates.  The Voting Trust
	       -------------------------------------
	       Certificates shall be transferable on the books of the Voting
	       Trust upon surrender of such Voting Trust Certificates, duly
	       endorsed in blank or accompanied by a proper instrument of
	       assignment duly endorsed in blank or accompanied by a proper
	       instrument of assignment duly executed in blank, and in either
	       case with all requisite transfer tax stamps attached, by the
	       registered holder in person or by such holder's duly authorized
	       attorney.  Upon the surrender of any Voting Trust Certificate for
	       transfer, the Voting Trust shall cancel such Voting Trust
	       Certificate and issue to the transferee new Voting Trust
	       Certificates in the same form and representing the same number of
	       shares of Class A Common Stock as was replaced by those Voting
	       Trust Certificates presented for cancellation.  Until the Voting
	       Trust Certificates are transferred as provided above, the
	       Director-Trustees shall treat the registered holder of each such
	       Voting Trust Certificate as the absolute owner thereof for all
	       purposes whatsoever.


				      C-2



Section 4.     Director-Trustees.  (a) The Director-Trustees hereby (i)
	       -----------------
	       acknowledge receipt of the Voting Trust Certificates representing
	       the shares of Class A Common Stock deposited herewith as set forth
	       in Section 2(a) hereof, (ii) accept the Voting Trust hereby
	       created in accordance with all of the terms and conditions
	       contained herein and (iii) agree that they shall exercise the
	       powers and perform the duties of the Director-Trustees as herein
	       set forth.

	       (b) Any Director-Trustee may resign at any time by delivering to
	       each of the other Director-Trustees his or her resignation in
	       writing, such resignation to take effect upon the appointment by
	       a Majority of the Director-Trustees (as defined herein) of a
	       successor Director-Trustee who shall own shares of Class A Common
	       Stock, shall have executed this Agreement and shall have
	       deposited all of his or her shares of Class A Common Stock with
	       the Voting Trust as provided herein, whereupon all powers, rights
	       and obligations of such resigning Voting Trustee under this
	       Agreement shall cease.

	       (c) Any successor Director-Trustee, when so appointed, shall have
	       the same powers and obligations as the Director-Trustee being
	       replaced and shall be subject to all the terms and conditions of
	       this Agreement, with like effect as though such successor were an
	       original party hereto.

	       (d) Every registered holder of a Voting Trust Certificate and
	       every bearer of a Voting Trust Certificate properly endorsed in
	       blank or properly assigned, by the acceptance or holding thereof,
	       severally agrees to waive and by such act does waive any and all
	       claims of every kind and nature which presently and hereafter
	       each such holder or bearer may have against the Director-Trustees
	       and agrees to release and by such act does release the
	       Director-Trustees and their successors from any liability
	       whatsoever arising out of or in connection with the exercise of
	       their powers or the performance of their duties hereunder, except
	       for the willful misconduct or gross negligence of any
	       Director-Trustee.

	       (e) The Company shall pay all reasonable expenses of the
	       Director-Trustees, including reasonable counsel fees, and shall
	       discharge all liabilities incurred by them in connection with the
	       exercise of their powers and performance of their duties under
	       this Agreement. The Company, jointly and severally, shall also
	       indemnify and hold the Director-Trustees harmless from and
	       against any and all claims and liabilities in connection with or
	       arising out of the administration of the Voting Trust created by
	       this Agreement or the exercise of any powers or the performance


				      C-3



	       of any duties by them as herein provided or contemplated, except
	       such as shall arise from the willful misconduct of any
	       Director-Trustee.

Section 5.     Voting of Shares.  (a)  Until the Termination Date, each
	       -----------------
	       Director-Trustee shall cause the shares of Class A Common Stock
	       held by the Voting Trust to be voted in accordance with the
	       decision of the Majority of the Directors-Trustees.

	       (b) For purposes of this Agreement, a "Majority of the
	       Director-Trustees" shall mean an affirmative vote of a majority
	       of the votes cast by the Director-Trustees on a particular matter
	       at a meeting of the Director-Trustees at which a majority of the
	       Director-Trustees is present in person or by proxy, with each
	       Director-Trustee entitled to one vote.

	       (c) Notwithstanding any other provision of this Agreement to the
	       contrary, in respect of any election for directors of the
	       Managing Member, each Director-Trustee shall cause the shares of
	       Class A Common Stock held by the Voting Trust to be voted in
	       favor of those nominees for director who have been nominated by
	       the Board of Directors of the Managing Member for such election.

Section 6.     Termination (a) The Voting Trust shall be effective as of the
	       -----------
	       date hereof and this Agreement and the Voting Trust shall remain
	       in full force and effect with respect to each Director-Trustee
	       until the consummation of an initial public offering by the
	       Managing Member or, the "Termination Date", at which point this
	       Agreement and the Voting Trust shall terminate.

	       (b) Upon termination of this Agreement, the Director-Trustees, in
	       exchange for or upon surrender of any Voting Trust Certificates
	       then outstanding, shall, in accordance with the terms thereof and
	       out of the certificates for the shares of Class A Common Stock
	       held by them hereunder, deliver or cause to be delivered, to the
	       holders of Voting Trust Certificates, certificates for shares of
	       Class A Common Stock representing the same number of shares which
	       are represented by such Voting Trust Certificates, and thereupon
	       all liability of the Director- Trustees for deliver of such
	       certificates shall terminate.

Section 7.     Books and Records; Notices. The Director-Trustees shall keep,
	       --------------------------
	       or cause to be kept, a record of the registered holders of the
	       Voting Trust Certificates and such other books and records as the
	       Voting Trust shall be required to maintain by law.


				      C-4



Section 8.     Notices.  All notices and other communications delivered or made
	       -------
	       hereunder shall be in writing

	       if to the Company, to [          ];

	       if to the Director-Trustees, to the respective address or fax
	       number set opposite the name of each of the Director-Trustees;

	       or, to such other address or fax number as the Company or any
	       such Director-Trustee may hereafter specify for such purpose by
	       notice to the other parties hereto.

Section 9.     Amendments. This Agreement may be amended upon the consent in
	       ----------
	       writing of a Super Majority of the members of TRANSCO LLC. Super
	       Majority shall have the meaning ascribed to such term in the
	       Limited Liability Company Operating Agreement of Transco LLC.

	       IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.


				      C-5

EX-99

								Exhibit B-1



			  PRO FORMA OPERATING AGREEMENT
			  -----------------------------

     This Operating Agreement (this "Agreement"), dated as of         , 2000, is
							      --------
entered into by and between the undersigned Transmission Owner (the
"Transmission Owner"), and [                 ], a Limited Liability Company
 ------------------         -----------------
existing under and by virtue of the laws of the State of Delaware ("Transco").
								    -------
The Transmission Owner and Transco are each referred to herein as a "Party", and
								     -----
collectively as the "Parties."
		     -------

				   WITNESSETH
				   ----------

     WHEREAS, Transco has been formed as a Limited Liability Corporation under
Delaware law to operate electric transmission facilities owned by itself and
others;

     WHEREAS, Transco intends to operate as an independent transmission company
under the oversight, and within the structure, of the Southwest Power Pool
("SPP") as part of the SPP Partnership RTO;1

     WHEREAS, Transco has received approval from the Federal Energy Regulatory
Commission to operate as a regional transmission organization pursuant to Order
Nos. 888 and 2000 of the Federal Energy Regulatory Commission; and

     WHEREAS, the Parties are entering into this Agreement to provide for the
terms and conditions under which Transco shall be authorized to exercise
Functional Control over the Transmission Owner's electric transmission
facilities, and perform additional functions with respect to such facilities, as
more fully set forth herein.

     NOW THEREFORE, in order to carry out the transactions contemplated by this
Agreement, and in consideration of the promises, covenants, terms and conditions
hereinafter set forth, the Transmission Owner and Transco, intending to be
legally bound hereby, agree as follows:


- ------------------------
1    The Pro Forma Operating Agreement assumes that the Transco will operate
	 --- -----
as part of the SPP Partnership RTO.


				       1



			       ARTICLE DEFINITIONS

     Whenever used in this Agreement as capitalized terms, the following terms
shall have the meanings specified in this Article I.

     AGENCY AGREEMENT means an agreement in the form of Appendix B hereto
entered into by Transco and an owner of Non-transferred Transmission Facilities
to allow Transco to provide Transmission Service and Wholesale Distribution
Service over the owner's Non-transferred Transmission Facilities, which are
necessary for the provision of such service, but the Functional Control of which
will not be transferred to Transco.

     ANCILLARY SERVICES means those services that are necessary to support the
transmission of capacity and energy from resources to loads while maintaining
reliable operation of the Transmission System in accordance with Good Utility
PRACTICE.

     CODE OF CONDUCT means the Code of Conduct attached to the Transco LLC
Agreement.

     CONTROL AREA means an electric power system or combination of electric
power systems to which a common automatic generation control scheme is applied
in order to: (i) match, at all times, the power output of the generators within
the electric power system(s) and capacity and energy purchased from entities
outside the electric power system(s), with the load within the electric power
system(s); (ii) maintain scheduled interchange with other Control Areas, within
the limits of Good Utility Practice; (iii) maintain the frequency of the
electric power system(s) within reasonable limits in accordance with Good
Utility Practice; and (iv) provide sufficient generating capacity to maintain
operating reserves in accordance with Good Utility Practice.

     CONTROL AREA OPERATORS means an entity that is responsible for monitoring
and controlling the electric power system and perform the Control Area function.

     DELIVERING PARTY means the entity supplying capacity and energy to be
transmitted at Point(s) of Receipt.

     DESIGNATED AGENT means any entity that performs actions or functions on
behalf of Transco, an Eligible Customer, or the Transmission Customer required
under the OATT.

     DISTRIBUTION FACILITIES means the facilities owned and operated or
controlled by a Transmission Owner, or which another owner has agreed to operate


				       2



at the request and in cooperation with a Transmission Owner, and which are used
to provide Wholesale Distribution Service.

     ELIGIBLE CUSTOMER means (i) any electric utility (including the
Transmission Owner(s) and any power marketer), Federal power marketing agency,
or any person generating electric energy for sale or resale is an Eligible
Customer under the OATT. Electric energy sold or produced by such entity may be
electric energy produced in the United States, Canada or Mexico. However, with
respect to transmission service that the Commission is prohibited from ordering
by Section 212(h) of the Federal Power Act, such entity is eligible only if the
service is provided pursuant to a state requirement that a Transmission Owner
offer the unbundled transmission service, or pursuant to a voluntary offer of
such service by the Transmission Owner, (ii) any retail customer taking
unbundled transmission service pursuant to a state requirement that the
Transmission Owner offer the transmission service, or pursuant to a voluntary
offer of such service by the Transmission Owner, is an Eligible Customer under
the OATT. A Transmission User shall receive transmission service under the
Tariff only if it complies with the obligations of Transmission Customers and
Transmission Users delineated in Section 39 of the OATT.

     FUNCTIONAL CONTROL means the ability of Transco to control the operation of
the Transmission Facilities subject to this Operating Agreement by delegating
tasks to the Transmission Owners or Control Area Operators within Transco. The
Transmission Owners or Control Area Operators may perform actual physical
operations or tasks under the direction of Transco. Functional Control is
subject to the Partnership RTO Operating Protocol and Procedures between Transco
and the SPP.

     FERC OR COMMISSION means the Federal Energy Regulatory Commission, or any
successor agency.

     GENERATION OWNER means an entity that owns or controls the electric power
generation facility which produces electrical energy and which is electrically
interconnected to the Transmission System.

     GOOD UTILITY PRACTICE means any of the practices, methods, and acts engaged
in or approved by a significant portion of the electric utility industry during
the relevant time period, or any of the practices, methods, and acts which, in
the exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result at
a reasonable cost consistent with good business practices, reliability, safety,
and expedition. Good Utility Practice is not intended to be limited to the
optimum practice, method, or act to the exclusion of all others, but rather to
be acceptable practices, methods, or acts generally accepted in the region.


				       3



     NERC means the North American Electric Reliability Council, applicable
regional electric reliability councils or successor organizations.

     NERC INTERREGIONAL SECURITY NETWORK means a near-real-time data exchange
application for the purpose of sharing operational security information. The ISN
utilizes an Inter-Control Center Communication Protocol (ICCP) based application
for exchanging operational security data over the NERC communication network.

     NETWORK INTEGRATION TRANSMISSION SERVICE means the transmission service
provided under Part III of the OATT.

     NETWORK UPGRADE means a modification or addition to transmission-related
facilities that are integrated with and support the Transmission System for
general benefit of all users of such Transmission System.

     NON-TRANSFERRED TRANSMISSION FACILITIES means certain transmission
facilities and Distribution Facilities, Functional Control over which will not
be transferred to Transco under Section 203 of the Federal Power Act, but which
are necessary for the provision of Transmission Service or Wholesale
Distribution Service to Eligible Customers pursuant to the OATT and which are
subject to the Agency Agreement.

     OATT means the SPP RTO Open Access Transmission Tariff, including the
Transco rate schedules therein, on file with the FERC, as the same may be
amended from time to time.

     OPEN ACCESS SAME-TIME INFORMATION SYSTEM ("OASIS") means the information
system and standards of conduct contained in Part 37 of the Commission's
regulations and all additional requirements implemented by subsequent Commission
orders dealing with OASIS.

     OPERATING PROTOCOL means the Transco Operating Protocol, as the same may be
amended from time to time. The Operating Protocol are attached to this Agreement
at Appendix C.

     SPP PARTNERSHIP RTO means the RTO under which the Transco operates as an
independent transmission company under the oversight and within the structure of
the SPP.

     PARTY means any entity that has signed this Agreement and is bound
hereunder.


				       4



     POINT(S) OF DELIVERY means point(s) on the Transmission System where
capacity and energy transmitted by Transco will be made available to the
Receiving Party under Part II of the OATT.

     POINT(S) OF RECEIPT means point(s) of interconnection on the Transmission
System where capacity and energy will be made available to Transco by the
Delivering Party under Part II of the OATT.

     POINT-TO-POINT TRANSMISSION SERVICE means the reservation and transmission
of capacity and energy on either a firm or non-firm basis from Point(s) of
Receipt to Point(s) of Delivery under Part II of the OATT.

     POWER PURCHASER means the entity that is purchasing the capacity and energy
to be transmitted under the OATT.

     PRICING AND REVENUE DISTRIBUTION PROTOCOL means the protocols governing the
payments and revenue distributions by the Transco to Transmission Owners, which
protocols are attached hereto at Appendix D.

     RECEIVING PARTY means the entity receiving the capacity and energy
transmitted by Transco to Point(s) of Delivery.

     REGIONAL TRANSMISSION PLANNING PROCESS bmeans the Transco Regional
Transmission Planning Process, as the same may be amended from time to time.

     REGIONAL TRANSMISSION ORGANIZATION ("RTO") means an entity that operates
					  ---
electric transmission assets in compliance with FERC's regulations.

     SERVICE AGREEMENT means the initial agreement and any amendments or
supplements thereto entered into by the Transmission Customer and Transco for
service under the OATT.

     STANDARDS OF CONDUCT means the standards set forth in Appendix C to this
Agreement.

     TRANSCO LLC AGREEMENT means the Limited Liability Company Agreement setting
forth the rights, responsibilities, and obligations of the members of Transco in
form and substance acceptable to them.

     TRANSFERRED FACILITIES means electric transmission facilities, Functional
Control over which has been transferred to Transco pursuant to an Operating
Agreement.


				       5



     TRANSMISSION CUSTOMER means any Eligible Customer (or its Designated Agent)
that (i) executes a Service Agreement, or (ii) requests in writing that Transco
file with the Commission a proposed unexecuted Service Agreement to receive
transmission service under Part II of the OATT.

     TRANSMISSION OWNER means an entity which (a) has executed an Operating
Agreement with Transco to transfer Functional Control of transmission facilities
to Transco or (b) is the Transco at such time as Transco begins operation as a
Transco.

     TRANSMISSION SERVICE means Transmission Service provided under the OATT on
a firm and non-firm basis.

     TRANSMISSION SERVICE DATE means the date upon which Transco begins
providing Transmission Service under the OATT.

     TRANSMISSION SYSTEM means the facilities owned, controlled or operated by
Transco that are used to provide transmission service under Part II and Part III
of the OATT. The Transmission System includes facilities, the Functional Control
of which has been transferred to Transco subject to Commission approval under
Section 203 of the Federal Power Act (i.e., Transferred Facilities). In
				      ---
addition, the Transmission System includes other facilities that are not
controlled or operated by Transco but are facilities that Transco is allowed to
use pursuant to an Agency Agreement in providing service under the OATT (i.e.,
									 ---
Non-transferred Transmission Facilities). Transmission System may include
Transferred Facilities, Non-transferred Transmission Facilities or both, as the
context requires.

     TRANSMISSION TRANSACTION means use or reservation of the Transmission
System for Point-To-Point and/or Network Integration Transmission Service
pursuant to a Service Agreement and the OATT.

     TRANSMISSION USER means all entities which are any one or more of the
following: (a) Transmission Customer, (b) Delivering Party, (c) Power Purchaser,
(d) Receiving Party, (e) Transmission Owner which utilizes the Transmission
System to effectuate a Transmission Transaction, or (f) broker or marketer or
any other intermediary that is a party to a Transmission Transaction.

     WHOLESALE DISTRIBUTION SERVICE means the provision of distribution service
to wholesale customers over Distribution Facilities as necessary to effectuate a
Transmission Transaction under the OATT.


				       6



				   ARTICLE II
		       AUTHORIZATION BY TRANSMISSION OWNER
		       TO OPERATE TRANSMISSION FACILITIES

     Pursuant to this Operating Agreement, the Transmission Owner authorizes
Transco to exercise Functional Control over the Transferred Facilities which are
specifically identified in Appendix A, to offer non-discriminatory open access
to such facilities and other facilities comprising the Transmission System in
accordance with the terms and conditions of the OATT, to operate the Transco as
an independent transmission company as part of the SPP Partnership RTO, to
collect and remit to the Transmission Owner revenues from the provision of such
transmission service, and to perform all duties and functions specified in this
Agreement.

				   ARTICLE III
		   RIGHTS, POWERS, AND OBLIGATIONS OF TRANSCO

3.1  OPERATION AND PLANNING.
     ----------------------

     3.1.1 FUNCTIONAL CONTROL. The Transmission Owner authorizes Transco to
	   ------------------
exercise Functional Control over the operation of the Transferred Facilities as
necessary to effectuate Transmission Transactions. Such control shall be
exercised in accordance with Good Utility Practice and shall conform to
applicable reliability guidelines, policies, standards, rules, regulations,
orders, license requirements, each Transmission Owner's specific reliability
requirements and operating guidelines, and all applicable requirements of
federal or state laws or regulatory authorities. Disputes regarding reliability
requirements and operating guidelines not resolved by negotiations shall be
resolved through the dispute resolution process provided for in the OATT.
Pending resolution of such disputes, the Transmission Owner's specific
reliability requirements and operating guidelines shall be used by Transco with
respect to the Transmission Owner' s facilities until the issue is resolved. The
methods of Functional Control are described in more detail in the Operating
Protocol attached at Appendix C.

     3.1.2 RELIABILITY. Transco shall have responsibility for the reliability of
	   -----------
the Transferred Facilities in connection with its rights, powers, and
obligations under this Agreement. The responsibilities of Transco and the
Transmission Owner in maintaining the reliability of the Transferred Facilities
are described in more detail in the Operating Protocol and the Transco's
planning process.

     3.1.3 PLANNING ACTIVITIES. Transco shall engage in such planning activities
	   -------------------
as are necessary to fulfill its obligations under this Agreement and the OATT.
The responsibilities of Transco and the Transmission Owner for planning the
Transmission System are described in more detail in the Transco's planning
process as it now exists or may hereafter be amended.


				       7



     3.1.4 PERFORMANCE OF REGULATORY OBLIGATIONS. Transco shall comply with
	   -------------------------------------
existing transmission, reporting, operating, filing, and planning obligations of
the Transmission Owner that are imposed by federal or state laws or regulatory
authorities which can no longer be performed solely by the Transmission Owner
following transfer of Functional Control of the Transferred Facilities to
Transco.

3.2  NON-DISCRIMINATORY TRANSMISSION SERVICE.
     ---------------------------------------

     3.2.1 TYPE OF SERVICE.
	   ---------------

	  (a) Transco shall offer transmission service over the entire
     Transmission System to all "Eligible Customers," as defined in the OATT,
     including the Transmission Owner, on a non-discriminatory basis, pursuant
     to the OATT and the Agency Agreement.

	  (b) The Transmission Owner shall enter into an Agency Agreement in the
     form of Appendix B, which authorizes Transco to provide transmission
     services on behalf of the Transmission Owner over Non-transferred
     Transmission Facilities.

     3.2.2 PRICING. Transco may propose to the FERC such transmission pricing
	   -------
for transmission service as is necessary to fulfill its obligations under this
Agreement and may propose to the FERC such changes in prices, pricing methods,
terms, and conditions as are necessary to continue to fulfill such obligations;
provided, however, that the pricing methodology set forth in the Pricing and
Revenue Distribution Protocol, attached at Appendix D, shall be changed only in
accordance with that Protocol.

     3.2.3 STANDARDS OF CONDUCT. Transco, its directors, officers, employees,
	   --------------------
contractors, and agents shall adhere to the Standards of Conduct contained in
the Transco LLC Agreement.

     3.2.4 OASIS. Transco and SPP shall administer a single OASIS site or
	   -----
successor system(s) pursuant to the OATT. The OASIS shall conform to the
requirements for such systems as specified by the FERC.

     3.2.5 ANCILLARY SERVICES. Transco shall offer, as part of the OATT, such
	   ------------------
Ancillary Services as are required by the FERC to be offered. Transco shall
obtain such services from suppliers, in a manner which minimizes cost,
consistent with its reliability responsibilities and other obligations under
this Agreement. In obtaining such Ancillary Services, Transco shall afford no
undue preference or disadvantage to any supplier, including the Transmission
Owner or its affiliates. Transco's responsibility as the provider of Ancillary


				       8



Services and the Transmission Owner's responsibility as a supplier of Ancillary
Services are described in the Operating Protocol and the OATT.

3.3  RESPONSIBILITIES OF TRANSCO TO THE TRANSMISSION OWNER.
     -----------------------------------------------------

     3.3.1 RELATIONSHIP. Transco and its directors, officers, employees, and
	   ------------
agents shall owe the same fiduciary duties to the Transmission Owners under this
Agreement that the Managing Member owes to LLC members under ss. 9.1(b) of the
Transco LLC Agreement.

     3.3.2 REVENUES. All revenues received by Transco for transmission service
	   --------
under the OATT shall be held, used, managed, and distributed in accordance with
the Pricing and Revenue Distribution Protocols as it now exists or is hereafter
amended; provided, however, that the Pricing and Revenue Distribution Protocols
shall be changed only in accordance with those Protocols.

     3.3.3 NON-DISCRIMINATION. Transco shall not perform its duties and
	   ------------------
functions under this Agreement in a manner that discriminates in favor of or
against the facilities of any Transmission Owner, or in a manner that
discriminates in favor of or against the Transmission Owner or any other
Transmission Owner or their affiliates.

3.4  ADDITIONAL OBLIGATIONS.
     ----------------------

     3.4.1 ASSUME LIABILITY. As between the Parties to this Agreement, Transco
	   ----------------
shall assume liability for any injury or damage to persons or property arising
from Transco's own acts or neglect, including the acts or neglect of its
directors, officers, employees, agents, and contractors, and shall release,
indemnify, and hold harmless the Transmission Owner from and against all
damages, losses, claims, demands, suits, recoveries, costs and expenses, court
costs, attorney fees, and all other obligations by or to third parties, arising
from Transco's performance or neglect of its obligations (whether arising from a
finding of negligence, strict liability or other fault or responsibility) under
this Agreement, except in cases where, and only to the extent that, the gross
negligence or intentional wrongdoing of a Transmission Owner, or the
Transmission Owners as a group, contributes to the claimed injury or damage.

     3.4.2 DISPUTE RESOLUTION. Disputes between and among Transco and the
	   ------------------
Transmission Owners, individually or collectively, will be resolved in
accordance with the procedures set forth in the OATT.

     3.4.3 INSPECTION AND AUDITING PROCEDURES. Transco shall grant each
	   ----------------------------------
Transmission Owner such access to Transco's books and records as is necessary to
verify and audit compliance by Transco with this Agreement. Such access shall be
at reasonable times and under reasonable conditions. Transco shall also comply


				       9



with the accounting and reporting requirements of federal and state regulatory
authorities (including, but not limited to, the State of Delaware) having
jurisdiction over Transco with respect to the business aspects of its business
operations. Contacts between Officers, employees, and agents of any Transmission
Owner and those of Transco pursuant to this Section 3.4.3 shall be strictly
limited to the purposes of this Section 3.4.3 and shall comply with the
applicable Code of Conduct.

     3.4.4 STRANDED COST RECOVERY CHARGES. If the Commission approves stranded
	   ------------------------------
cost charges to be recovered through schedules to be implemented by Transco,
Transco as agent shall charge and collect the applicable charge(s) from the
appropriate Transmission User(s) and distribute the amounts directly to the
appropriate Transmission Owner(s).

     3.4.5 AGREEMENT WITH OTHER TRANSMISSION OWNERS. Transco shall execute an
	   ----------------------------------------
Operating Agreement identical in substance to this Agreement with each entity
that owns or controls facilities included in the Transmission System, other than
those that contribute Transmission Assets to the Transco under the Transco LLC
Agreement.

3.5  ENFORCEMENT AUTHORITY.
     ---------------------

     3.5.1 VIOLATIONS. Transco shall have the authority to impose penalties or
	   ----------
other sanctions for any of the following actions by a Transmission Owner
(subject to the dispute resolution procedures discussed below):

	  (a) material and willful violations of the Operating Protocol, the
     Annual Regional Planning Summit, or other Transco policies related to the
     operation of Transmission Facilities;

	  (b) intentionally ignoring or disobeying any reasonable and material
     directive from Transco related to the operation of Transmission Facilities,
     including, without limitation, operating orders or directives issued by
     Transco;

	  (c) engaging in material and willful behavior which manipulates
     available transmission capability to the detriment of other Transmission
     Users;

	  (d) material and willful violation of Transco operating standards; or

	  (e) willful violation of material provisions of this Agreement.


				       10



     3.5.2 PENALTIES. As a penalty for violations specified in Section 3.5.1,
	   ---------
Transco may withhold transmission revenues from a Transmission Owner until the
violation ceases and any forfeiture is fully paid. The Transco will develop and
file with FERC its penalty structure.

     3.5.3 DISPUTE RESOLUTION. All enforcement actions of Transco shall be
	   ------------------
subject to the dispute resolution provision provided for in the OATT. Transco
shall be required to refund any forfeitures, including interest (under 18 C.F.R.
ss. 35.19(a)), which it is determined that Transco was not justified in
imposing. In such event, Transco shall not be subject to any additional
liability.

				   ARTICLE IV
	       RIGHTS, POWERS, AND OBLIGATIONS OF THE TRANSMISSION
			  OWNERS AND TRANSMISSION USERS

4.1  OPERATION AND PLANNING.
     ----------------------

     4.1.1 REDISPATCH, CURTAILMENT AND ANCILLARY SERVICE.
	   ---------------------------------------------

	  (a) Each Transmission Owner shall follow the directions of Transco in
     operating the Transmission System. No Transmission Owner shall take any
     action which unduly interferes with the provision of transmission service
     by Transco.

	  (b) Transco shall enter into generation interconnection agreements
     with all Generation Owners that could affect the reliability or capability
     of the Transmission System requiring such entities to follow the directions
     of Transco in redispatching generation, providing ancillary services,
     providing reactive and voltage control from generating resources, in
     accordance with the OATT and the Operating Protocol.

	  (c) Transco shall enter into operating agreements, Point-To-Point
     Transmission Service agreements or Network Integration Transmission Service
     agreements, as appropriate, with all Transmission Customers (including
     Transmission Owners) for the purpose of ensuring reliable operations of the
     Transmission System. The agreements will define coordination necessary with
     the Transmission Customer's facilities (including distribution facilities)
     to ensure reliability in the planning and operation of the Transmission
     System and emergency response (including curtailments) to conditions that
     could threaten the integrity of the Transmission System.

     4.1.2 MAINTENANCE PRACTICES. Each Transmission Owner shall maintain its
	   ---------------------
transmission facilities in accordance with Good Utility Practice and shall


				       11



follow the maintenance requirements set forth in more detail in the Operating
Protocol for both generation and transmission facilities.

     4.1.3 CONSTRUCTION.
	   ------------

	  (a) The Transmission Owners (including Transco) shall have the
     obligation to construct new transmission facilities reviewed, approved and
     ordered to be built by the SPP and Transco through the Transco's planning
     process. The SPP and Transco will develop non-discriminatory criteria to
     determine which Transmission Owner will be obligated to construct the new
     facilities based upon where the new transmission facilities will be
     directly connected. If the new transmission facilities will be directly
     connected to the existing facilities of one Transmission Owner, that
     Transmission Owner will be obligated to construct the new facilities. If
     two or more Transmission Owners will be interconnected directly to the new
     facilities, Transco will assign construction responsibilities in a fair and
     non-discriminatory manner.

	  (b) The Transmission Owner may satisfy its construction
     responsibilities by arranging for a third party to finance and own the new
     transmission facilities. If the third party fails to perform within a
     reasonable period of time, the Transmission Owners and Transco will remain
     obligated to undertake the construction. Transco will determine in a
     non-discriminatory manner whether such third party can meet all necessary
     criteria for financing and owning transmission in the area. It is
     envisioned that such third parties will be able to finance and own
     transmission in the Transco region. Any such third party Transmission Owner
     shall enter into an Operating Agreement with Transco.

	  (c) All construction obligations will be subject to the Transco's
     planning process.

     4.1.4 ACQUISITION. In the event a Transmission Owner acquires transmission
	   -----------
facilities not identified in Appendix A to this Agreement, such facilities shall
not become subject to Transco's Functional Control pursuant to this Agreement
unless and until both (i) Transco, on its own initiative or in response to the
request of any person, requests the Transmission Owner to assign such facilities
to its control and (ii) the Transmission Owner consents. If any transmission
facilities are added to the Transmission System as set forth above, the Parties
shall prepare a revised Appendix A.

     4.1.5 STRANDED COSTS. A Transmission Owner may seek to recover stranded
	   --------------
costs from Transmission User(s) in accordance with the terms, conditions and
procedures set forth in FERC Order No. 888. However, the Transmission Owner must
separately file any specific proposed stranded cost charge under Section 205 of


				       12



the Federal Power Act. If the Commission approves stranded cost charges to be
recovered through schedules to be implemented by Transco, Transco as agent shall
charge and collect the applicable charge(s) from the appropriate Transmission
User(s) and distribute the amounts directly to the Transmission Owner.

     4.1.6 OTHER OBLIGATIONS. Each Transmission Owner, where applicable, shall
	   -----------------
comply with the requirements of the Operating Protocol and the Transco's
planning process.

     4.1.7 LOCAL FURNISHING BONDS. No responsibility of the Transmission Owner
	   ----------------------
hereunder shall conflict with the provisions of the OATT relating to facilities
financed with local furnishing bonds.

4.2  ADDITIONAL OBLIGATIONS.
     ----------------------

     4.2.1 PROVIDING INFORMATION. Each Transmission Owner shall provide such
	   ---------------------
information to Transco as is necessary for Transco to perform its obligations
under this Agreement and the OATT. Information designated as confidential shall
be treated as confidential unless disclosure is required by Code of Conduct or
by a court or agency of competent jurisdiction.

     4.2.2 FACILITIES ACCESS. Each Transmission Owner shall allow Transco such
	   -----------------
access to Transmission System facilities as is necessary (i) to verify and audit
compliance by the Transmission Owner with this Agreement or (ii) for Transco to
perform its obligations under this Agreement. Such access shall be at reasonable
times and under reasonable conditions.

     4.2.3 INSPECTION AND AUDITING PROCEDURES. Each Transmission Owner shall
	   ----------------------------------
grant Transco such access to the Transmission Owner's books and records as is
necessary (i) to verify and audit compliance by the Transmission Owner with this
Agreement or (ii) for Transco to perform its obligations under this Agreement.
Such access shall be at reasonable times and under reasonable conditions. Each
Transmission Owner shall also comply with the accounting and reporting
requirements of any federal or state regulatory authorities (including, but not
limited to, the State of Delaware) having jurisdiction over the Transmission
Owner with respect to aspects of Transco's business operations. Contacts between
officers, employees, and agents of Transco and those of the Transmission Owner,
pursuant to this Section 4.2.3 shall be strictly limited to the purpose of this
Section 4.2.3 and shall conform to the Standards of Conduct.

     4.2.4 ASSUME LIABILITY. As between the Parties to this Agreement, each
	   ----------------
Transmission Owner ("Indemnifying Owner") shall assume liability for any injury
		     ------------------
or damage to persons or property arising from its own acts or neglect, including
the acts or neglect of its directors, officers, employees, agents, or


				       13



contractors, and shall release, indemnify and hold harmless Transco and each
other Transmission Owner ("Indemnified Owners") from any damages, losses,
			   ------------------
claims, demands, suits, recoveries, costs and expenses, court costs, attorney
fees, and all other obligations by or of third parties, arising from the
Indemnifying Owner's performance or neglect of its obligations (whether arising
from a finding of negligence, strict liability or other fault or responsibility)
under this Agreement except in cases where, and only to the extent that, the
gross negligence or intentional wrongdoing of Transco or the Indemnified
Owner(s) contributes to the claimed injury or damage.

     Except as provided in the OATT, each Transmission Owner shall not be liable
     for any costs or expenses relating to the operation, repair, maintenance,
     or improvement of any of the transmission facilities committed to the
     Transmission System by any other Transmission Owner.

				    ARTICLE V
		    TERMINATION AND WITHDRAWAL OF FACILITIES

5.1  WITHDRAWAL NOTICE. Upon submission of a written notice of withdrawal to
     -----------------
Transco, a Transmission Owner may commence a process of withdrawal of all of its
facilities from the Transmission System. Such withdrawal shall not be effective
until the later of (i) twelve (12) months after such notice is given, or (ii)
the effective date of any federal or state regulatory approval required to
effectuate such withdrawal. In the event of a merger, consolidation,
reorganization, sale, spin-off, or foreclosure, as a result of which
substantially all of the Transmission Owner's transmission facilities which are
part of the Transmission System are acquired by another entity, that entity
shall have the right to withdraw its facilities from Transco in accordance with
the foregoing. Any withdrawal shall be subject to the provisions of Section 5.2
of this Agreement.

5.2  EFFECT OF WITHDRAWAL BY A TRANSMISSION OWNER ON CONTRACTUAL OBLIGATIONS.
     -----------------------------------------------------------------------
In the event of withdrawal of a Transmission Owner pursuant to Section 5.1:

     5.2.1 TRANSMISSION CUSTOMERS HELD HARMLESS. Transmission Customers taking
	   ------------------------------------
service which involves the withdrawing Transmission Owner and which involves
transmission contracts executed before the Transmission Owner provided notice of
its withdrawal shall continue to receive service for the remaining term of the
contract at the same rates, terms, and conditions that would have been
applicable if there were no withdrawal, unless such contracts are modified by
FERC in accordance with its statutory authority or by agreement of the Parties.
The withdrawing Transmission Owner shall continue providing service to such


				       14



Transmission Customers and shall receive no more in revenues for that service
than if there had been no withdrawal by such Transmission Owner.

     5.2.2 EXISTING OBLIGATIONS. All financial obligations incurred and payments
	   --------------------
applicable to time periods prior to the effective date of such withdrawal shall
be honored by Transco and the withdrawing Transmission Owner.

     5.2.3 CONSTRUCTION OF FACILITIES. Obligations relating to the construction
	   --------------------------
of new facilities pursuant to the Transco's planning process, which imposed
duties upon the withdrawing Transmission Owner prior to such Transmission
Owner's withdrawal, shall be renegotiated as between Transco and the withdrawing
Transmission Owner. If such obligations cannot be resolved through negotiations,
they shall be resolved in accordance with the dispute resolution procedures
under the OATT.

     5.2.4 OTHER OBLIGATIONS. Other obligations between Transco and the
	   -----------------
withdrawing Transmission Owner shall be renegotiated as between Transco and the
withdrawing Transmission Owner. If such obligations cannot be resolved through
negotiations, they shall be resolved in accordance with the dispute resolution
procedures provided for in this Agreement.

5.3  REGULATORY AND OTHER APPROVALS OR PROCEDURES. The withdrawal by a
     --------------------------------------------
Transmission Owner of its facilities from Transco shall be subject to applicable
federal and state regulatory approvals or other regulatory procedures as set
forth in Section 5.1 of this Agreement.

				   ARTICLE VI
				TERM OF AGREEMENT

     This Agreement shall become effective upon the Transmission Service Date.
With respect to a Transmission Owner which begins participation after such date,
this Agreement shall become effective on the date the Transmission Owner signs
this Agreement. This Agreement shall continue in effect, for any Transmission
Owner, until the effective date of termination by that Transmission Owner
pursuant to Article V of this Agreement; provided, however, that the provisions
of Section 5.2 pertaining to the obligations of a withdrawing Transmission Owner
shall survive the termination of this Agreement.


				       15



				   ARTICLE VII
			       DISPUTE RESOLUTION

     All disputes between the Transco and the Transmission Owners shall be
subject to the dispute resolution procedures under the OATT.

				  ARTICLE VIII
				  FORCE MAJEURE

     Notwithstanding any provision in this Agreement to the contrary, neither
Party shall be liable in damages or otherwise, or be responsible to the other
Party, for failure to carry out any of its obligations under this Agreement
(other than any payment obligations) if and only to the extent that it is unable
to so perform or is prevented from performing such obligation by an event of
Force Majeure. However, a Party whose performance under this Agreement is
hindered by an event of Force Majeure shall make all reasonable obligations to
perform its obligations under this Agreement. For purposes of this Agreement, an
event of Force Majeure means any act of God, labor disturbance, act of the
public enemy, war, insurrection, riot, fire, storm or flood, explosion, breakage
or accident to machinery or equipment, any Curtailment, order, regulation or
restriction imposed by governmental military or lawfully established civilian
authorities, or any other cause beyond a Party's control.

				   ARTICLE IX
			    MISCELLANEOUS PROVISIONS

     9.1 DESCRIPTIVE HEADINGS. The descriptive headings of Articles, Sections,
	 --------------------
subsections and other provisions of this Agreement have been inserted for
convenience of reference only and shall not define, modify, restrict, construe,
or otherwise affect the construction or interpretation of any of the provisions
of this Agreement.

     9.2 GOVERNING LAW. This Agreement shall be interpreted, construed, and
	 -------------
governed by the laws of the State of Delaware without giving effect to the
conflict of law principles thereof, except to the extent preempted by the laws
of the United States of America.

     9.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
	 ----------------------
and be binding upon, each of the Parties, their respective successors and
permitted assigns. This Agreement shall not be assigned by either Party, by
operation of law or otherwise, without the prior approval of the other Party,
except to a successor in the operation of the Transmission Owner's transmission
facilities committed to the Transmission System by reason of a merger,
consolidation, reorganization, sale, spin-off, or foreclosure, as a result of
which substantially all such transmission facilities are acquired by such
successor and such successor becomes a Transmission Owner under this Agreement.


				       16



     9.4 NO IMPLIED WAIVERS. Except as otherwise provided in this Agreement, any
	 ------------------
failure of any Party to comply with any obligation, covenant, agreement, or
condition herein may be waived by the Party entitled to the benefits hereof only
by a written instrument signed by the Party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement, or condition shall not operate as a waiver of, or estoppel
with respect to, any preceding, subsequent or other failure.

     9.5 SEVERABILITY. Except for Article V of this Agreement, in the event any
	 ------------
one or more of the provisions of this Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions hereof shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The Parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions and with a view towards
effecting the purpose of this Agreement; provided, however, that if such
negotiations are unsuccessful, then the Parties may exercise their individual or
collective withdrawal or termination rights available under this Agreement.

     9.6 REPRESENTATIONS AND WARRANTIES. Each Party, with respect to itself,
	 ------------------------------
represents and warrants to the other Party as of effective date of this
Agreement as follows:

	  (i) It is duly organized, validly existing, and in good standing under
     the laws of the jurisdiction where organized, and is qualified to do
     business in the jurisdictions necessary to perform this Agreement.

	  (ii) The execution, delivery, and performance of this Agreement are
     within its powers, have been duly and validly authorized by all requisite
     action, and do not conflict with any applicable law, any of the terms or
     conditions of its governing documents, or with any other binding agreement
     except third-party joint agreements covered by Section 9.12.

	  (iii) This Agreement has been duly executed and delivered by the Party
     and this Agreement constitutes the legal, valid, and binding obligation of
     the Party enforceable against it in accordance with its terms except
     insofar as the enforceability thereof may be limited by applicable
     bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
     or other similar laws affecting the enforcement of creditor's rights


				       17



     generally, and by general principles of equity regardless of whether such
     principles are considered in a proceeding at law or in equity.

	  (iv) Except as expressly set forth in writing, it has, or will have as
     of the time required, all regulatory authorizations necessary for it to
     legally perform its obligations under this Agreement.

	  (v) There are no bankruptcy, insolvency, reorganization, receivership,
     or other similar proceedings pending or being contemplated by it, or to its
     knowledge threatened against it.

	  (vi) There are no actions at law, suits in equity, proceedings, or
     claims pending or, to its knowledge, threatened against it before or by any
     federal, state, foreign, or local court, tribunal, or governmental agency
     or authority that might materially delay, prevent, or hinder the
     performance of its obligations hereunder.

     9.7 FURTHER ASSURANCES. Each Party agrees that it shall hereafter execute
	 ------------------
and deliver such further instruments, provide all information, and take or
forbear such further acts and things as may be reasonably required and useful to
carry out the intent and purpose of this Agreement and as are not inconsistent
with the provisions of this Agreement.

     9.8 NOTICES. Except as otherwise expressly provided herein, notices
	 -------
required under this Agreement shall be in writing and shall be sent by U.S.
mail, overnight courier, hand delivery, facsimile, or other reliable electronic
means to the address of each Party as is furnished by such Party. Any notice
required under this Agreement shall be deemed to have been given either upon
delivery, if by U.S. mail, overnight courier, or hand delivery, or upon
confirmation, if given by facsimile or other reliable electronic means.

     9.9 LIMITATIONS ON LIABILITY. Notwithstanding any other provision of this
	 ------------------------
Agreement, no Transmission Owner shall be liable to any other Transmission Owner
or Transmission User for any actions taken pursuant to the direction of Transco
except in cases of the gross negligence or intentional wrongdoing of such
Transmission Owner, Member or Transmission User.

     9.10 ENTIRE AGREEMENT. This Agreement, including any attachments to this
	  ----------------
Agreement, and other agreements referenced herein constitute the entire
agreement between the Parties with respect to the subject matter of this
Agreement, and no previous or contemporary oral or written representations,
agreements, or understandings made by any Transmission Owner or of Transco shall
be binding unless contained in this Agreement, including the appendices attached
hereto, the OATT, the Agency Agreement, or other agreements referenced herein.


				       18



This Agreement shall not be amended except by the written agreement of the
Parties; provided, that the effectiveness of any such amendment shall be
conditioned upon the execution of the same amendment by all other Transmission
Owners.

     9.11 GOOD FAITH EFFORTS. The Transmission Owner agrees that it shall in
	  ------------------
good faith take all reasonable actions necessary to permit it to fulfill its
obligations under this Agreement. Where the consent, agreement, or approval of
the Transmission Owner must be obtained hereunder, such consent, agreement, or
approval shall not be unreasonably withheld, conditioned, or delayed. Where the
Transmission Owner is required or permitted to act, or omit to act, based on its
opinion or judgment, such opinion or judgment shall not be unreasonably
exercised. To the extent that the jurisdiction of any federal or state
regulatory authority applies to any part of this Agreement and/or the
transactions or actions covered by this Agreement, each Transmission Owner shall
cooperate with Transco and all other Transmission Owners to secure any necessary
or desirable approval or acceptance of such regulatory authorities of such part
of this Agreement and/or such transactions or actions.

     9.12 THIRD-PARTY JOINT AGREEMENTS. This Agreement, including the Appendices
	  ----------------------------
to this Agreement, the OATT, and the Agency Agreement shall not be construed,
interpreted, or applied in such a manner as to cause the Transmission Owner to
be in material breach, anticipatory or otherwise, of any agreement in effect on
the effective date of this Agreement between the Transmission Owner and one or
more third parties for the joint ownership, operation, or maintenance of any
electrical facilities covered by this Agreement, the OATT, or the Agency
Agreement. If the Transmission Owner has such a third-party joint agreement, it
shall discuss with Transco and the other Transmission Owners any material
conflict between such third-party joint agreement and this Agreement, the OATT,
or the Agency Agreement raised by a third party to such joint agreement, but the
resolution of such a conflict shall, vis-a-vis Transco and the other
Transmission Owners, be and remain within the sole discretion of the
Transmission Owner; provided, however, that the Transmission Owner shall, if the
conflict is otherwise unresolved, utilize the available remedies and dispute
resolution procedures to resolve such conflict, including, but not limited to,
submitting such conflict to the FERC for resolution; provided, further, that
unless so ordered by the FERC or a court having jurisdiction, in no event shall
the Transmission Owner enter into a resolution of such conflict which would
impair the reliability of the Transmission System.

     9.13 NO PARTNERSHIP. This Agreement is not intended, and shall not be
	  --------------
construed, interpreted or applied, to create a partnership or joint venture
between the Parties and, with the exception of Transco pursuant to the terms of
this Agreement and the Agency Agreement, no Transmission Owner shall be entitled
to act as an agent for any other Transmission Owner with respect to Transco.


				       19



     9.14 CURRENT DOCUMENTS. Transco and the SPP shall maintain current versions
	  -----------------
of all protocols, the OATT, the Agency Agreement, and the Transco LLC Agreement
and all amendments thereto and shall post such documents on its Internet World
Wide Web Site or equivalent form of electronic posting and provide such
documents to the Transmission Owner.

		      [THE NEXT PAGE IS THE SIGNATURE PAGE]


				       20



     IN WITNESS WHEREOF, the Transmission Owner and Transco have caused this
Operating Agreement to be signed by their respective duly authorized officers or
personnel as of the date first above written.

					[FULL NAME OF TRANSCO]


					By:
					   ------------------------------------
					   Name:
					   Title:
					   Date:


					[FULL NAME OF TRANSMISSION OWNER]


					By:
					   ------------------------------------
					   Name:
					   Title:
					   Date:


				       21











				   APPENDIX A
			    DESCRIPTION OF FACILITIES
				  [TO BE ADDED]












				       22












				   APPENDIX B
			   PRO FORMA AGENCY AGREEMENT
			   --- -----
		      (See Attachment F to the Application)












				       23











				   APPENDIX C
			       OPERATING PROTOCOL

				  [TO BE ADDED]










				       24











				   APPENDIX D
			PRICING AND REVENUE DISTRIBUTION
				    PROTOCOL

				  [TO BE ADDED]











				       25

EX-99

								Exhibit B-2



			   PRO FORMA AGENCY AGREEMENT
			   --- -----

				AGENCY AGREEMENT

     This Agreement ("Agency Agreement") is entered by and between the
undersigned owner of Non-transferred Transmission Facilities ("Owner") and the
Transco ("Transco") for the purpose of allowing the Transco to offer and provide
transmission service and Wholesale Distribution Service over Non-transferred
Transmission Facilities as detailed below.

     The Owners have filed rate schedules with FERC as part of a proposal for
establishment of the Transco ("Rate Schedules"). Upon FERC approval and the
transfer of operational control and/or ownership of those facilities in
accordance with the Transco LLC Agreement, the Transco will control certain
transmission facilities, control of which will be transferred to it under
Section 203 of the Federal Power Act. The Transco will offer to provide open
access transmission service across those facilities. In accordance with the
terms and conditions of the Southwest Power Pool ("SPP") RTO transmission tariff
("RTO Transmission Tariff") and the rates set forth in the Rate Schedules, it is
intended that the Transco also will offer to provide transmission service and
Wholesale Distribution Service over Non-transferred Transmission Facilities.

     In order for the Transco to offer service over Non-transferred Transmission
Facilities, it is necessary that the Owner provide the authority to the Transco
to provide the transmission and other services necessary.

     THEREFORE, the undersigned parties agree as follows:

				    ARTICLE I
		      INCORPORATION OF THE RTO TRANSMISSION
			    TARIFF AND RATE SCHEDULES

     The RTO Transmission Tariff and the Rate Schedules, including each and
every constituent part as it or they may be amended, is incorporated into this
Agency Agreement as though set forth herein in its entirety. In the event of any
conflict between any provision of this Agency Agreement and the RTO Transmission
Tariff and the Rate Schedules, the RTO Transmission Tariff and the Rate
Schedules shall control. Capitalized terms not defined herein shall have the
meaning set forth in the RTO Transmission Tariff.


				       1



				   ARTICLE II
			 APPOINTMENT OF TRANSCO AS AGENT

     The Owner appoints the Transco as its agent to enter into service
agreements in conformity with the RTO Transmission Tariff and the Rate Schedules
on its behalf with regard to transmission services involving Non-transferred
Transmission Facilities. It is agreed that such service agreements will bind the
Owner to perform to the requirements and specifications of the RTO Transmission
Tariff and service agreements where appropriate. A list of Non-transferred
Transmission Facilities subject to this Agency Agreement is attached as Appendix
A.

				   ARTICLE III
			    PERFORMANCE BY THE OWNER

     The Owner agrees to provide all services necessary or appropriate to
performance under the RTO Transmission Tariff and service agreements thereunder
with regard to RTO Transmission Tariff services involving Non-transferred
Transmission Facilities. Upon the Transco's request, the Owner further agrees to
provide the Transco with all information necessary or appropriate relating to
the Non-transferred Transmission Facilities to permit or facilitate the Transco
to provide service under the RTO Transmission Tariff and service agreements
relating to such facilities.

				   ARTICLE IV
				     PAYMENT

     The Transco shall distribute revenues associated with service under the RTO
Transmission Tariff and the Rate Schedules in accordance with the Pricing and
Revenue Distribution Protocol, attached hereto as Appendix B.

				    ARTICLE V
		  EFFECTIVENESS, DURATION OF AGENCY AGREEMENT,
			      AND WITHDRAWAL RIGHTS

     5.1  TERM COEXTENSIVE WITH OPERATING AGREEMENT. This Section 5.1 shall be
	  -----------------------------------------
given effect if the Owner has committed its transmission assets to the Transco,
either through transfer, lease or operating agreement, or is affiliated with a
Transmission Owner that has committed its transmission assets to the Transco,
either through transfer, lease or operating agreement. The Agency Agreement is
effective with respect to the Owner on the effective date of the Owner's, or its
affiliate's, transfer of transmission facilities to the Transco. The term of
this Agency Agreement shall thereafter be coexistent with the operation of the
Transco. This Agency Agreement is effective as of the date on which the Transco
assumes rights and duties granted to it pursuant to Article II, which date shall
be mutually agreed upon by the parties. The Owner may terminate this Agency


				       2



Agreement on 90 days notice and subject to receipt of necessary regulatory
approvals.

				   ARTICLE VI
			  LIABILITY AND INDEMNIFICATION

     6.1  The liability and indemnification provisions governing the Transco's
liability to the Owner, and the Owner's liability to the Transco, including any
indemnification, shall be the same as set forth in the RTO Transmission Tariff
where the liability issue arises as a result of services under the RTO
Transmission Tariff.

     6.2  As between the Parties to this Agreement, each Owner ("Indemnifying
								 ------------
Owner") shall assume liability for any injury or damage to persons or property
- -----
arising from its own acts or neglect, including the acts or neglect of its
directors, officers, employees, agents, or contractors, and shall release,
indemnify and hold harmless Transco and each other Owner ("Indemnified Owners")
							   ------------------
from any damages, losses, claims, demands, suits, recoveries, costs and
expenses, court costs, attorney fees, and all other obligations by or of third
parties, arising from the Indemnifying Owner's performance or neglect of its
obligations (whether arising from a finding of negligence, strict liability or
other fault or responsibility) under this Agreement except in cases where, and
only to the extent that, the gross negligence or intentional wrongdoing of
Transco or the Indemnified Owner(s) contributes to the claimed injury or damage.
Except as provided in the RTO Transmission Tariff, each Owner shall not be
liable for any costs or expenses relating to the operation, repair, maintenance,
or improvement of any of the transmission facilities committed to the Transco by
any other Owner.

				   ARTICLE VII
			  DISPUTE RESOLUTION PROCEDURES

     Any dispute between or among the Transco and the Owner arising under this
Agency Agreement shall be resolved in accordance with the Dispute Resolution
procedures of the RTO Transmission Tariff.

				  ARTICLE VIII
			    INTEGRATION AND AMENDMENT

     This is an integrated Agreement which contains all terms and conditions of
Agreement between the parties concerning the subject matter hereof. Any prior or
oral agreements concerning the subject matter not stated herein are superseded
by this Agency Agreement. This Agency Agreement may be amended only by an
executed writing.


				       3



				   ARTICLE IX
				    AUTHORITY

     The Owner hereto represents that the person executing this Agreement on its
behalf is authorized to execute this Agreement and bind such Owner to its terms,
and that such authorization has been made in compliance with all applicable
laws, articles of incorporation, bylaws, and resolutions and in a manner such
that the authorization is binding upon the Owner.

				    ARTICLE X
			    MISCELLANEOUS PROVISIONS

     10.1 DESCRIPTIVE HEADINGS. The descriptive headings of Articles, Sections,
	  --------------------
Subsections and other provisions of this Agreement have been inserted for
convenience of reference only and shall not define, modify, restrict, construe,
or otherwise affect the construction or interpretation of any of the provisions
of this Agreement.

     10.2 NO IMPLIED WAIVERS. The failure of a party to insist upon or enforce
	  ------------------
strict performance of any of the specific provisions of this Agreement at any
time shall not be construed as a waiver or relinquishment to any extent of a
party's right to assert or rely upon any such provisions, rights, or remedies in
that or any other instance, or as a waiver to any extent of any specific
provision of this Agreement; rather the same shall be and remain in full force
and effect.

     10.3 SEVERABILITY. Except for Article V of this Agreement, each provision
	  ------------
of this Agreement shall be considered severable, and if for any reason any
provision of this Agreement, or the application thereof to any person, entity,
or circumstance, is determined by a court or regulatory authority of competent
jurisdiction to be invalid, void, or unenforceable, then the remaining
provisions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired, or invalidated, and such invalid, void, or
unenforceable provision shall be replaced with a suitable and equitable
provision pursuant to Section 10.6 in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid, void, or unenforceable
provision.

     10.4 GOVERNING LAW. This Agreement shall be interpreted, construed, and
	  -------------
governed by the laws of the State of Delaware, except to the extent preempted by
the laws of the United States of America.

     10.5 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit or,
	  ----------------------
and be binding upon, each of the parties, their respective successors and
assigns permitted hereunder. This Agreement shall not be assigned by any Owner,
by operation of law or otherwise, without the prior approval of the Transco,
except to a successor in the operation of the Owner's Non-transferred
Transmission Facilities committed to this Agreement by reason of a merger,


				       4



consolidation, reorganization, sale, spin-off, or foreclosure, as a result of
which substantially all such facilities are acquired by such successor and such
successor becomes an Owner under this Agreement.

     10.6 RENEGOTIATION. If any provision of this Agreement, or the application
	  -------------
thereof to any person, entity, or circumstance, is held by a court or regulatory
authority of competent jurisdiction to be invalid, void, or unenforceable, or if
a modification or condition to this Agreement is imposed by a regulatory
authority exercising jurisdiction over this Agreement, then the parties shall
endeavor in good faith to negotiate such amendment or amendments to this
Agreement as will restore the relative benefits and benefits and obligations of
the parties under this Agreement immediately prior to such holding,
modification, or condition; provided, however, that any such amendments are
subject to the provisions of Section 10.11 hereto. If such negotiations are
unsuccessful, then the parties may exercise their individual or collective
withdrawal or termination rights available under this Agreement.

     10.7 REPRESENTATIONS AND WARRANTIES. Each party, with respect to itself,
	  ------------------------------
represents and warrants to the other as of Effective Date of this Agreement as
follows:

	  10.7.1 It is duly organized, validly existing, and in good standing
     under the laws of the jurisdiction where organized, and is qualified to do
     business in the jurisdictions necessary to perform this Agreement.

	  10.7.2 The execution, delivery, and performance of this Agreement are
     within its powers, have been duly and validly authorized by all requisite
     action, and do not conflict with any applicable law, any of the terms or
     conditions of its governing documents, or with any other binding agreement
     except third-party joint agreements covered by Section 10.13.

	  10.7.3 This Agreement has been duly executed and delivered by the
     party and, subject to the conditions, if any, expressly set forth in
     writing, this Agreement constitutes the legal, valid, and binding
     obligation of the party enforceable against it in accordance with its terms
     except insofar as the enforceability thereof may be limited by applicable
     bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
     or other similar laws affecting the enforcement of creditor's rights
     generally, and by general principles of equity regardless of whether such
     principles are considered in a proceeding at law or in equity.

	  10.7.4 It has, or will have as of the time required, all regulatory
     authorizations necessary for it to legally perform its obligations under
     this Agreement.


				       5



	  10.7.5 There are no bankruptcy, insolvency, reorganization,
     receivership, or other arrangement proceedings pending or being
     contemplated by it, or to its knowledge threatened against it.

     10.8 FURTHER ASSURANCES. Each party agrees that it shall hereafter execute
	  ------------------
and deliver such further instruments, provide all information, and take or
forbear such further acts and things as may be reasonably required and useful to
carry out the intent and purpose of this Agreement and as are not inconsistent
with the provisions of the Agreement.

     10.9 DELIVERY OF NOTICES. Except as otherwise expressly provided herein,
	  -------------------
notices required under this Agreement shall be in writing and shall be sent by
U.S. mail, overnight courier, hand delivery, facsimile, or other reliable
electronic means. any notice required under this Agreement shall be deemed to
have been given either upon delivery, if by U.S. mail, overnight courier, or
hand delivery, or upon confirmation, if given by facsimile or other reliable
electronic means.

     10.10 LIMITATIONS ON LIABILITY. Notwithstanding any other provision of this
	   ------------------------
Agreement, no Owner shall be liable to any other Owner or Transmission User, as
that term is defined in the RTO Transmission Tariff, for any actions taken
pursuant to the direction of the Transco except in cases of the gross negligence
or intentional wrongdoing of such Owner or Transmission User.

     10.11 ENTIRE AGREEMENT. This Agreement, including any attachments to this
	   ----------------
Agreement, the RTO Transmission Tariff, the Rate Schedules, the Operating
Agreement, the LLC Agreement, and other agreements referenced herein, constitute
the entire agreement between the parties with respect to the subject matter of
this Agreement, and no previous or contemporary oral or written representations,
agreements, or understandings made by any officer, agent, or employee of any
Owner or of the Transco shall be binding unless contained in this Agreement,
including the appendices attached hereto, the RTO Transmission Tariff, the
Operating Agreement, or other agreements referenced herein. This Agreement shall
not be amended except by the written agreement of the parties; provided, that
the effectiveness of any such amendment shall be conditioned upon the execution
of the same amendment by all other Owners.

     10.12 GOOD FAITH EFFORTS. The Owner agrees that it shall in good faith take
	   ------------------
all reasonable actions necessary to permit it to fulfill its obligations under
this Agreement. Where the consent, agreement, or approval of the Owner must be
obtained hereunder, such consent, agreement, or approval shall not be
unreasonably withheld, conditioned, or delayed. Where the Owner is required or
permitted to act, or omit to act, based on its opinion or judgment, such opinion
or judgment shall not be unreasonably exercised. To the extent that the
jurisdiction of any federal or state regulatory authority applies to any part of
this Agreement and/or the transactions or actions covered by this Agreement, the
Owner shall cooperate with the Transco and all other Owners to secure any


				       6



necessary or desirable approval or acceptance of such regulatory authorities of
such part of this Agreement and/or such transactions or actions.

     10.13 THIRD-PARTY JOINT AGREEMENTS. This Agreement, including the RTO
	   ----------------------------
Transmission Tariff, shall not be construed, interpreted, or applied in such a
manner as to cause any Owner to be in material breach, anticipatory or
otherwise, of any agreement in effect on the effective date of this Agreement,
between such Owner and one or more third parties who are not Owners (regardless
of the inclusion of one or more other Owners as parties to such agreement) for
the joint ownership, operation, or maintenance of any electrical facilities
covered by this Agreement, the RTO Transmission Tariff, the LLC Agreement, or
the Operating Agreement.

     10.14 NO PARTNERSHIP. This Agreement is not intended, and shall not be
	   --------------
construed, interpreted or applied, to create a partnership or joint venture, and
with the exception of the Transco, in accordance with the terms of this
Agreement, no Owner shall be entitled to act as an agent for any other Owner
with respect to the Transco.

     10.15 CURRENT DOCUMENTS. The Transco shall maintain current versions of all
	   -----------------
protocols, the RTO Transmission Tariff, the Rate Schedules, the LLC Agreement,
and the Operating Agreement and all amendments thereto and shall post such
documents on its Internet World Wide Web Site or equivalent form of electronic
posting and provide such documents to the Owner.


				       7



     IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute this Agreement, on their respective behalves.

On Behalf of the Transco                     On Behalf of the Owner


- -------------------------                    --------------------------
						   Name of Owner

- -------------------------                    ---------------------------
	Title                                      Title

- -------------------------                    ---------------------------
	Signature                                  Signature

- -------------------------                    ---------------------------
	Date                                       Date


				       8



				   APPENDIX A
		       LIST OF NON-TRANSFERRED FACILITIES

				  [TO BE ADDED]







				       9



				   APPENDIX B
			PRICING AND REVENUE DISTRIBUTION
				    PROTOCOL

				  [TO BE ADDED]






				       10

EX-99

								Exhibit B-3



		       PROPOSAL FOR INCLUSION OF A TRANSCO
		      INCLUDING ENTERGY WITHIN THE SPP RTO

     This Proposal outlines the terms and conditions in a proposed Appendix to
the Southwest Power Pool's ("SPP's") Membership Agreement that, provided SPP and
Transco agree to implement the same congestion management regime, would allow a
Transco including Entergy ("the Transco") to operate within the structure, and
under the oversight, of an SPP RTO. This is referred to as a Partnership RTO
structure.

     1.   Basic Governance and Operational Responsibilities. This proposal will
allow the Transco to operate under the oversight of the Partnership RTO. The
SPP's role shall include (1) acting as regional Security Coordinator for the SPP
and Transco systems; (2) performing, subject to the conditions set forth in
paragraph 4, the ATC and TTC calculations for the Transco; (3) fostering full
and complete input by market participants into the Transco's policies; (4)
overseeing a regional transmission expansion planning process; and (5) providing
an appropriate forum for market monitoring and dispute resolution. The proposal
should also prevent rate pancaking in the SPP's and Transco's regions. Transco
shall have the option of participating on the SPP RTO Board of Directors on the
same terms and conditions as all other SPP RTO Members. These provisions are
currently set out in Sections 4.2 and 4.3 of the Southwest Power Pool Bylaws.

     2.   Because SPP will perform multiple roles under the Partnership RTO
model, the staff structure and organization will be reviewed and appropriately
modified to ensure non-discriminatory treatment of all parties with respect to
Partnership RTO functions. The organizational structure will be designed to
provide independence between the Partnership RTO functions: oversight, planning,
security coordination and market monitoring, all of which will be performed by
SPP, and the transmission provider and tariff administrator functions, which
will be performed by SPP, by SPP non-Transco members, and by Transco. These
changes are focused on complying with the objectives outlined in FERC Order No.
2000. In particular, the following functions will be separated with a code of
conduct specifying the policies and procedures that must be followed in all
business transactions between these functions:

     a)   Transmission provider and tariff administration functions. SPP will be
	  a transmission provider within the Partnership RTO territory, as will
	  Transco. There should be a level playing field among all transmission


				       1



	  providers, control area operators, and transmission users under the
	  Partnership RTO.

     b)   Regional coordination and planning functions. SPP will provide
	  security coordination and regional planning functions for the entire
	  Partnership RTO region. The security coordinator function should be
	  clearly separated from the transmission provider and tariff
	  administrator function. The separation of the security coordinator
	  function may be achieved, at the election of the SPP Board, either
	  through the use of a strict code of conduct or by organizational
	  separation, in which case the security coordinator would report to the
	  SPP Board of Directors, independently from the tariff administrator
	  function. The code of conduct would strictly forbid the security
	  coordinator from taking any actions in carrying out the duties and
	  responsibilities of security coordinator that advantage the
	  transactions over one transmission owners system over the transactions
	  over any other transmission owners system.

     c)   Oversight functions. Under this proposal, SPP's oversight
	  responsibilities include market monitoring and ADR. These functions
	  will be carried out by a separate group of employees and managers
	  reporting directly to the SPP Board. The Board may use an independent
	  outside firm to assist in the monitoring activities. The scope of the
	  monitoring function is described below in paragraph 16. It includes
	  monitoring of the other functions of SPP, including security
	  coordination.

     3.   FERC Review and Approval of the Transco Proposal. The Transco shall
seek and obtain FERC approval to establish and operate as a Transco under the
SPP RTO.

     4.   Transmission Tariff. The Partnership RTO shall administer a single
tariff that will apply to transmission service within the SPP and Transco.
Transco will have control over those portions of the tariff that affect the
commercial terms and conditions of transmission service over Transco's
facilities. Transco shall possess the unilateral right, without receiving any
SPP or Partnership RTO approval, to make filings at FERC proposing rate or rate
structure changes (including incentive rate structures) involving transmission
charges for service to load within the Transco or transmission service that does
not cross any of the SPP transmission operator facilities. Transco also retains
the right to unilaterally make filings at FERC for the purposes of implementing
new transmission services that are not contained in the RTO Transmission Tariff,
provided that such unilateral filings do not alter terms and conditions of
service across the SPP Systems other than the Transco. Transco will provide SPP


				       2



with a copy of any such filing 30 days prior to filing with FERC and will make
reasonable efforts to resolve any issues regarding the new service prior to
filing at FERC, but in no circumstances shall this extend beyond 45 days from
the time SPP is provided a copy of the proposed filing. A detailed list of the
pro forma tariff provisions that Transco will have the unilateral right to
change through FERC filings will be developed and attached to this agreement as
[and set forth in detail in] Service Schedule A.

     The Transco will be responsible for conducting studies and scheduling
transactions on the Transco's system and shall be the provider of last resort
for ancillary services in accordance with FERC Order Nos. 888 and 2000. The SPP
and Transco agree to use a single model incorporating the VST model (Vacar,
Southern and TVA) for calculating ATC/TTC. Provided that the SPP and Transco
agree to utilize the same congestion management regime, the SPP RTO will perform
all ATC/TTC calculations utilizing a methodology that is mutually agreed to
between Transco and the SPP, including the requirement that the SPP RTO agrees:
to (1) accommodate Transco's ATC/TTC calculation frequency requirements; (2) to
coordinate with adjoining reliability regions to ensure that differing
calculation assumptions or methods between the adjoining regions and Transco/SPP
do not invalidate the border ATC/TTC values; (3) that Transco shall be
responsible for establishing the ratings of its facilities; (4) to ensure that
TTC/ATC values are consistent with a simultaneously feasible set of transmission
rights; and (5) to coordinate with Transco to ensure that the most up-to-date
VST model information is included in the SPP model .- The Transco shall have
real-time access to the ATC/TTC calculations. If the Transco and the SPP cannot
resolve a disagreement over the calculation of ATCs or TTCs, then the Transco
can submit that disagreement to the Partnership RTO's ADR process, provided
that, in the absence of System security issues, the Transco's calculation shall
be binding during the pendency of the ADR proceeding.

     5.   Transmission Rates. In designing transmission rates, SPP and
Transco agree that there shall be no pancaked rates for transmission service
with respect to transactions using both the Transco and SPP systems. To
implement this, they will agree to reciprocal waiver of access charges for
transactions scheduled on one system that terminate on the other system. For
transmission service on either the Transco's system or the SPP's system, but not
both, that is scheduled to sink outside the Partnership RTO's system (including
transmission through and out service), the customer shall pay the transmitting
system's rate. For transmission service on both the Transco's and SPP's systems
to load outside the system (including transmission through and out service), the
Transco and the SPP shall develop an appropriate single joint rate. The Transco
and the SPP shall develop a rate formula that compensates the Transco and the
SPP for their proportionate contribution to these transactions. Within these


				       3



limitations, the Transco shall possess the unilateral right to propose rates and
ratestructures (including innovative rate-making proposals) for transmission
service over the Transco's transmission facilities.

     6.   Billing. The Transco shall be responsible for billing for
transmission service that terminates on or only crosses the Transco's system.
The SPP shall be responsible for billing for transmission service that
terminates on or only crosses the SPP system. For transactions on both the SPP's
and the Transco's systems that terminate outside the combined region, the
billing shall be handled by the system on which the power exits the combined
region, provided, however, that the rate for such service will be the single
joint rate described in paragraph 4 of this document.

     SPP's Schedule 1 tariff administration fee shall apply to transmission
service within the Transco. If Transco maintains a separate tariff, Transco
shall develop, file and apply a rate schedule to collect this fee and will
provide such revenues to SPP on a monthly basis, consistent with SPP's billing
processes. Transco's total responsibility for SPP costs incurred to provide
services and systems that are used by Transco and other SPP members shall be
capped at a level equal to such costs multiplied by the ratio of the share of
annual load served by Transco's transmission system to the annual load served by
the Partnership RTO's transmission system.

     7.   Unified OASIS Site. The SPP and the Transco shall work to jointly
develop and administer a unified OASIS site for transmission service under the
SPP's and Transco's tariff. Both parties, however, shall have the option to
build, maintain and administer additional features to the OASIS site in response
to the needs of customers or the market. SPP and Transco shall ensure that
market participants have the ability to obtain transmission service across the
transmission facilities of the SPP/Transco RTO through the use of one OASIS
site.

     8.   Congestion Management. The Transco and SPP shall develop and
implement a congestion management plan for managing and relieving constraints
within the Transco's system. The Transco and the SPP agree to work together in
an effort to develop a single regional approach to congestion management. If the
SPP so requests, Transco agrees to make its congestion management system
available to SPP members at cost. Should SPP elect to develop its own system for
congestion management, Transco and SPP will coordinate their systems to ensure
maximum efficiency. At a minimum, they agree to develop a system for the joint
procurement of ancillary services and a joint protocol to address the effect of
parallel flow within the combined region that is caused by transactions
scheduled on either SPP or Transco.


				       4



     9.   Losses. The Transco shall develop and implement a proposal for loss
responsibility within the Transco's system. The Transco will coordinate with the
SPP, and its members, to develop a proposal to calculate losses on transactions
over the SPP's and the Transco's system.

     10.  Curtailments. SPP shall act as the regional Security Coordinator
for the SPP and Transco systems. In its role as Security Coordinator, SPP will
allow Transco to provide redispatch alternatives to the Security Coordinator for
transactions not scheduled by Transco that affect Transco flowgates that will
alleviate the need for transmission line loading relief (TLR). These redispatch
instructions will be by Transco.

     11.  Operations. The Transco shall be responsible for the operation of
the Transco's transmission system. This includes the responsibility to establish
ratings and operating procedures, and develop transmission and generation outage
schedules which will be coordinated with the SPP RTO, and to develop congestion
management proposals. Transco and SPP will develop transmission and generation
outage schedules designed to balance grid optimization with good utility
practice.

     12.  New Generator Interconnections. Transco shall be responsible for
evaluating and implementing requests for new generator interconnections on its
system. SPP and Transco will work together to develop a single procedure for
generator interconnections within the Partnership RTO. Market participants
seeking generator interconnections with Transco may use the SPP dispute
resolution process.

     13.  Reliability Oversight and Input. The SPP shall be informed of, and
shall be allowed to provide input into, the operational practices of the Transco
so that the SPP can determine whether such practices have an adverse reliability
impact anywhere in the region. The SPP may challenge operational procedures or
practices of the Transco through the SPP's dispute resolution process; provided
that the Transco's actions shall be binding pending the dispute resolution
process.

     14.  Planning and Expansion. The Transco shall develop its own
transmission plan for its region that includes both market-funded and
rate-funded projects. This will be submitted to the SPP for review and inclusion
in an RTO-wide plan which the SPP shall prepare. Transco may, at its option,
participate in the expansion of the transmission grid through market-funded
projects. The SPP shall review all rate-funded projects for reliability
considerations and appropriateness and then incorporate such projects into the
overall Partnership RTO expansion plan.. The SPP's review of market-funded
projects shall be limited to reliability considerations. SPP and Transco will
develop a formula to be used to apportion responsibility among all RTO


				       5



transmission owners for the funding of projects that were not included in the
Transco's plan but that the SPP has determined are required for regional
reliability reasons.

     SPP, through its affected members, and Transco mutually agree to construct
facilities to meet new requests for firm transmission service subject to the
development of appropriate cost-sharing arrangements and subject to obtaining
all necessary governmental and regulatory approvals. In carrying out this
obligation, Transco and SPP agree to use due diligence in meeting these requests
regardless of whether the request originates on the Transco system or the
portion of the grid under the control of the SPP transmission operator. SPP and
Transco also agree to work together to determine the financial responsibility
and the sharing of costs required to construct any new facilities required to
meet these requests.

     15.  Multi-State Transmission Planning Agreements. SPP and Transco
agree to work together jointly to support any multi-state transmission planning
compact that is developed in their region.

     16.  Monitoring. The Partnership RTO shall be responsible for all
market monitoring activities required of the Partnership RTO. The monitoring
function will also extend to SPP's security coordination function. In its role
as market monitor, the SPP shall have the authority to collect information and
issue reports to appropriate regulatory agencies, but it shall not have the
authority to impose penalties. The SPP's cost of monitoring the Transco's
markets shall be borne by the Transco and its customers. The SPP and Transco
shall be responsible for enforcing compliance with the provisions of their
respective tariffs.

     17.  Liability. The Transco shall assume liability for all acts or
omission resulting from the functions performed by the Transco and shall
indemnify and hold the SPP harmless for its actions in performing those
functions.

     18.  Dispute Resolution. The SPP, and its dispute resolution process,
shall be utilized for addressing all disputes between the Transco and SPP
concerning the arrangements set forth in this RTO Partnership Agreement provided
that disputes between the SPP and Transco shall be subject to non-binding
arbitration unless the parties agree otherwise. Disputes between Transco, SPP
members, or other market participants shall be subject to non-binding dispute
resolution procedures unless the parties agree otherwise.

     19.  Coordination. The Transco and the SPP shall cooperate and use
their best efforts to develop procedures and protocols to allow the Transco to
operate within the structure of the SPP.


				       6



     20.  Stakeholder and State Commission Input. The SPP's oversight shall
allow input from state commissions and market participants into the Transco's
operations and procedures. This may take the form of an SPP advisory committee
to be established for this purpose. The Transco shall establish a liaison with
such advisory committee, or comparable organization, and shall support the
process allowing input from state commissions and market participants.
Additionally, Transco will establish a Market Rules Committee, comprised of
market participants, for the purpose of providing input and recommendations to
Transco on changes to the market rules that will improve the overall efficiency
and operation of the competitive generation market.

     21.  Expandability of Transco. The Transco shall be structured to
reasonably accommodate other SPP members and non-members who elect to join. Any
current SPP member shall have the right, upon one year's advance notice,
(consistent with Section 4 of the SPP Members Agreement) to commit its assets to
the Transco and to have its transmission facilities included within the Transco
Tariff on terms and conditions comparable to the terms and conditions provided
to the initial Transco members.

     22.  Survivability. This Agreement shall remain binding and shall be
accommodated in the event that the SPP merges or combines with another regional
transmission entity. In any instance where the provisions contained within this
RTO Partnership Agreement, are in conflict with the SPP Bylaws or the SPP
Membership Agreement, the terms and conditions of this document shall control.

     23.  Withdrawal Rights. The Transco shall have the same rights to
withdraw from the SPP as other SPP members under section 4 of the SPP Membership
Agreement. Such withdrawal shall be subject to FERC approval.


				       7



			      SOUTHWEST POWER POOL
			   BOARD OF DIRECTORS MEETING
		   EMBASSY SUITES OUTDOOR WORLD - D/FW AIRPORT
				  JULY 20, 2000


			    -SUMMARY OF ACTION ITEMS-

1.   Approved minutes of the May 11, 2000 meeting as distributed.

2.   Approved a memorandum of understanding containing terms and conditions for
     the development of a contractual attachment to SPP's membership agreement
     for an independent transmission company (Transco) including Entergy to
     operate within the structure and under the oversight of the SPP RTO.

3.   Endorsed a report of the RTO Working Group as indication the organizational
     documents, to be modified pursuant to RTOWG recommendations, meet with the
     Board's satisfaction fora second SPP filing seeking FERC recognition as an
     RTO.





			      SOUTHWEST POWER POOL
			   BOARD OF DIRECTORS MEETING
			D/FW AIRPORT HYATT -DALLAS, TEXAS
				 AUGUST 30, 2000

			    -SUMMARY OF ACTION ITEMS-

Approved minutes of the July 20, 2000 Board of Directors meeting as distributed.

Approved recommended actions by the RTO Working Group for a second filing
seeking FERC recognition of SPP as an RTO, which included:
	  1.   Acceptance of the RTOWG report as indication the collaborative
	       process used in its development met with the Board of Director's
	       satisfaction;
	  2.   Concurrence on maintenance of SPP's existing Bylaws, including
	       SPP's current governance structure;
	  3.   Approval of proposed process for Section 203 filings by FERC
	       jurisdictional transmission owning members with SPP's RTO filing;
	  4.   Approval of a new RTO membership agreement;
	  5.   Approval of proposed public and regulatory education process to
	       be used in development of SPP RTO filing;
	  6.   Approval of proposed market settlement process and budgeting
	       items covering a six-year net present cost of $42 million for
	       implementation of necessary systems and additional personnel,
	       subject to approval of a specific methodology, financial plan,
	       and vendor recommendation by the Commercial Practices Committee;
	  7.   Approval of market monitoring procedures and proposed personnel
	       (3 FTEs), or the outsourcing of this responsibility if more
	       cost-effective;
	  8.   Acceptance of the report as indication the efforts undertaken to
	       address SPP's scope and configuration meet with the Board of
	       Director's satisfaction.
	  9.   Approval of proposed hybrid principles for market-based
	       congestions management and formation of a Market Rules Working
	       Group, reporting to the Commercial Practices Committee, to
	       proceed with development of market rules to implement the hybrid
	       principles;
	  10.  Acceptance of the report as indication the Seams Sub-Team
	       proposed actions meet with the Board of Director's satisfaction
	       and are to be further developed for subsequent action; and
	  11.  Approval of proposed modifications to SPP's regional transmission
	       service tariff with specific changes to be approved by the
	       Regional Tariff Working Group prior to filing.

Approved a recommendation from the floor directing the Staff to recommend a
formula rate methodology, including functionalization, for consideration by the
Board of Directors at their regular November meeting.

Approved a recommendation from the Market Settlement Working Group and the
Commercial Practices Committee to ratify the selection of Andersen Consulting to
develop SPP's market settlement system, and the development of a specific
contract for such.

EX-99

                                                                Exhibit B-4

                                                             PRELIMINARY DRAFT
                                                             -----------------

                                                             1/9/2001

                                                             SUBJECT TO REVISION
                                                             -------------------

                                     FORM OF
                            DEBT ASSUMPTION AGREEMENT

     THIS DEBT ASSUMPTION AGREEMENT, dated as of      , 200 , is between [the
                                                 -----     -
Intermediate Transmission Entity], a [corporation/limited liability company]
(hereinafter called the "Assumption Party") and [Entergy Louisiana, Inc.,
Entergy Gulf States-LA, Entergy New Orleans, Inc., Entergy Arkansas, Inc. or
Entergy Mississippi, Inc.], a corporation (hereinafter called "the Operating
Company").

                                    RECITALS

     1.   The Operating Company, a             corporation, has heretofore
                                   -----------
entered into the indentures and has issued the series of outstanding debt listed
in Schedule A hereto (the "Outstanding Debt").

     2.   [Insert appropriate state legislation, if any "the Act"]

     3.   The Federal Energy Regulatory Commission ("FERC"), pursuant to FERC
Order 2000 established December 15, 2000 as the date by which
FERC-jurisdictional transmission facilities must be committed to an independent
Regional Transmission Organization.

     4.   As part of the Operating Company's plan to comply with [the Act
and] FERC Order 2000, the Operating Company is transferring transmission assets
to the Assumption Party, and the Assumption Party agrees to assume certain
obligations to the Outstanding Debt.

     5.   As compensation to the Operating Company for the allocation of
assets to the Assumption Party, and notwithstanding the sole liability of the
Operating Company on the Outstanding Debt, the Assumption Party wishes to assume
certain liabilities of the Operating Company on Outstanding Debt on the terms
and to the extent set forth herein.

     6.   To secure the obligations of the Assumption Party to the Operating
Company hereunder, but not to secure the obligations of the Assumption Party to
the trustee for, or the holders of, Outstanding Debt pursuant to the Operating
Company are entering into the Mortgage, Deed of Trust and Security Agreement
dated as of      , 200  (as it may be supplemented as amended from time to time,
            -----     -
the "Security Agreement"), in which the Assumption Party grants the Operating
Company a lien on and security interest in certain properties of the Assumption
Party allocated to the Assumption Party in the division.





                                    AGREEMENT

     In consideration of the premises and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Assumption Party and the Operating Company DO HEREBY AGREE as follows:

Section 1. Assumption of Obligations
           -------------------------

     (a.) The Assumption Party hereby assumes on the basis set forth in the
Instrument of Assumption appended hereto as Exhibit A all of the obligations of
the Operating Company to pay to the applicable trustee for each series of the
Outstanding Debt listed on Schedule A the aggregate principal amount of such
series of Outstanding Debt listed on Schedule A hereto as having been assumed
(such portion of the Outstanding Debt so assumed, the "Assumed Debt") and
interest on the Assumed Debt, such amounts to be paid on the dates, in the
amounts and in the manner provided for by the Outstanding Debt and the
applicable indenture relating thereto, whether at maturity, upon redemption or
otherwise (but not upon the acceleration of maturity of any Assumed Debt not
caused by the default of the Assumption Party); provided, however, that so long
as no Event of Default (as hereinafter defined) shall have occurred hereunder,
the Assumption Party shall not have assumed the obligation to make payments due
upon the voluntary redemption of Outstanding Debt except for redemptions
directed by the Assumption Party in accordance with Section 3 hereof; and
provided, further, that the redemption of Outstanding Debt of any series or
purchase and cancellation of Outstanding Debt of any series at the direction of,
and with funds provided by, the Assumption Party in accordance with Section 3
hereof shall reduce the amount of Assumed Debt of such series by the principal
amount of the Outstanding Debt so redeemed or purchased.

     (b.) Concurrently with the execution and delivery hereof, the Assumption
Party shall execute and deliver to the Operating Company and each trustee
identified on Schedule 1 hereto, an Instrument of Assumption, in substantially
the form thereof attached hereto as Exhibit A with such changes as the parties
may agree upon, to evidence the assumption of obligations referred to in
subsection (a) of this Section 1.

Section 2. Reimbursement to the Operating Company
           --------------------------------------

     In the event that the Assumption Party shall have failed to pay when due
any of the obligations assumed by it hereunder and, following such failure, the
Operating Company shall have paid such obligation, the Assumption Party shall
immediately reimburse the Operating Company the full amount so paid by the
Operating Company. Any amount remaining not so immediately reimbursed by the
Assumption Party shall bear interest payable       at an annual rate equal to
                                             -----
   , or the maximum legal rate, whichever is less.
- ---

Section 3. Redemption or Purchase of Assumed Debt.
           --------------------------------------


                                       2



     (a.) Except as provided for in subsection (d.) below, the Operating Company
shall take such action under the indenture pursuant to which a series of Assumed
Debt has been issued as shall be directed by the Assumption Party to voluntarily
redeem all or a portion of the Outstanding Debt of such series in an amount not
to exceed the Assumed Debt portion of such series, but, so long as no Event of
Default (as hereinafter defined) shall have occurred and be continuing, shall
take no action other than as directed by the Assumption Party to voluntarily
redeem such series of Outstanding Debt in an amount which would cause the
Assumed Debt portion of such series to be redeemed.

     (b.) To the extent not prohibited under the terms of any Assumed Debt or
the indenture relating thereto, the Assumption Party may purchase, in any manner
permitted by law, Assumed Debt of any series and direct the Operating Company to
deliver such purchased Assumed Debt to the applicable trustee for cancellation.

     (c.) For the one series of Outstanding Debt that shall not have become due
and payable before August 1, 2005 as listed on Schedule A hereto, the Assumption
Party will use its best efforts to issue securities and to utilize the proceeds
thereof in accordance with this Section 3 to cause the redemption or purchase
and cancellation of such Assumed Debt on or prior to 200 .
                                                        -

     (d.) At any time, the Assumption Party may direct the Operating Company to
voluntarily redeem all or a part of the Assumed Debt of any series in accordance
with its terms. Upon the delivery of the principal and accrued interest payable
upon such redemption, the obligations of the Assumption Party with respect to
such Assumed Debt shall be satisfied, notwithstanding that the Operating Company
may have applied such principal and interest to the redemption of other
Outstanding Debt (the "Redeemed Debt"), but, if the Redeemed Debt shall have
been assumed in whole or in part by the Assumption Party, the obligations of the
Assumption Party in respect of the Redeemed Debt shall continue as if the
redemption had not occurred. The Assumption Party understands and agrees that,
concurrently with the execution and delivery of this Assumption Agreement, The
Operating Company is entering into assumption agreements with [other companies]
(the "Other Assumption Agreements") which contain a provision to the same effect
as this Section 3 (d), and that any redemptions of Outstanding Debt by pursuant
to the Other Assumption Agreements shall not reduce the obligations of the
Assumption Party hereunder, notwithstanding that all or a portion of the Assumed
Debt is no longer outstanding, and such obligations shall continue as if the
redemptions had not occurred. the Operating Company agrees that it will apply
any monies received from the Assumption Party for the voluntary redemption of
Assumed Debt to the redemption of Outstanding Debt of the series that produces
the greatest savings.

Section 4. General Covenant; Indemnification.
           ---------------------------------

     (a.) Neither the Operating Company nor the Assumption Party shall take or
omit to take any action which shall result in an event of default under any
indenture pursuant to which Outstanding Debt has been issued.

     (b.) The Assumption Party shall indemnify and hold the Operating Company
harmless from and against all losses, claims, damages, taxes, penalties,
liabilities, disbursements, litigation expenses, attorney's fees and expenses or


                                       3



court costs arising out of any breach by the Assumption Party of any of its
obligations contained herein or assumed hereunder.

     (c.) The Operating Company shall indemnify and hold the Assumption Party
harmless from and against all losses, claims, damages, taxes, penalties,
liabilities, disbursements, litigation expenses, attorney's fees and expenses or
court costs arising out of any breach by the Operating Company of any of its
obligations contained herein or contained in the Outstanding Debt and in any
indenture under which Outstanding Debt has been issued and which has not been
assumed by the Assumption Party.

Section 5. Events of Default.
           -----------------

     (a.) Any of the following shall constitute an "Event of Default" hereunder:

               (i)  an event of default under any indenture pertaining to
                    Outstanding Debt resulting from the failure by the
                    Assumption Party to pay or otherwise perform an obligation
                    assumed by it hereunder;

               (ii) the failure by the Assumption Party to make when due any
                    reimbursement required by Section 2 hereof;

               (iii) the failure by the Assumption Party to perform any covenant
                    (other than as set forth in clauses (i) and (ii) above) on
                    its part contained herein or assumed hereunder and the
                    continuation of such failure for a period of thirty (30)
                    days after the Operating Company shall have given the
                    Assumption Party written notice thereof;

               (iv) the assumption by the Assumption Party of any of the
                    obligations assumed by it hereunder shall at any time cease
                    to be valid and binding on the Assumption Party, or shall be
                    declared to be null and void, or the validity or
                    enforceability thereof shall be contested by the Assumption
                    Party or any governmental agency or authority; or the
                    Assumption Party shall deny in writing that it has any or
                    further liability or obligation under this Agreement;

               (v)  the Assumption Party shall fail to observe or perform any
                    term, covenant or agreement contained in the Security
                    Agreement on its part to be observed or performed;

               (vi) the Assumption Party shall (a) fail to make any payment,
                    equal to or exceeding $2,000,000, of any Debt (as defined
                    below) or to make any payment, equal to or exceeding
                    $2,000,000, of any interest or premium thereon, when due
                    (whether by scheduled maturity, required prepayment,
                    acceleration, demand or otherwise) and such failure shall
                    continue after the applicable grace period, if any,
                    specified in the agreement or instrument relating to such
                    Debt, or (b) fail to perform or observe any terms, covenant
                    or condition on its part to be performed or observed under


                                       4



                    any agreement or instrument relating to any Debt when
                    required to be performed or observed, and such failure shall
                    continue after the applicable grace period, if any,
                    specified in such agreement or instrument, if the effect of
                    such failure to perform or observe is to accelerate, or to
                    permit the acceleration of, the maturity of any Debt, the
                    unpaid principal amount of which then equals or exceeds
                    $2,000,000. "Debt" of the Assumption Party means (a)
                    indebtedness for borrowed money or for the deferred purchase
                    price of property or services in respect of which the
                    Assumption Party is liable, contingently or otherwise, as
                    obligor, guarantor or otherwise, or in respect of which the
                    Assumption Party otherwise assures a creditor against loss,
                    and (b) obligations under leases which shall have been or
                    should be, in accordance with generally accepted accounting
                    principles, recorded as capital leases in respect of which
                    obligations the Assumption Party is liable, contingently or
                    otherwise, as obligor, guarantor or otherwise, or in respect
                    of which obligations the Assumption Party assures a creditor
                    against loss; or

               (vii) the Assumption Party shall (a) apply for or consent to the
                    appointment of a receiver, trustee, liquidator or custodian
                    or the like of itself or of its property, (b) admit in
                    writing its inability to pay its debts generally as they
                    become due, (c) make a general assignment for the benefit of
                    creditors, (d) be adjudicated a bankrupt or insolvent, or
                    (e) commence a voluntary case under the Federal bankruptcy
                    laws of the United States of America or file a voluntary
                    petition or answer seeking reorganization, an arrangement
                    with creditors or an order for relief or seeking to take
                    advantage of any insolvency law or file an answer admitting
                    the material allegations of a petition filed against it in
                    any bankruptcy, reorganization or insolvency proceedings or
                    corporate action shall be taken by it for the purpose of
                    effecting any of the foregoing, or (f) if without the
                    application, approval or consent of the Assumption Party, a
                    proceeding shall be instituted in any court of competent
                    jurisdiction, under any law relating to bankruptcy,
                    insolvency, reorganization or relief of debtors, seeking in
                    respect of the Assumption Party an order for relief or any
                    adjudication in bankruptcy, reorganization dissolution,
                    winding up, liquidation, a composition or arrangement with
                    creditors, a readjustment of debts, the appointment of a
                    trustee, receiver, liquidator or custodian or the like of
                    the Assumption Party or of all or any substantial part of
                    its assets, or other like relief in respect thereof under
                    any bankruptcy or insolvency law, and if such proceeding is
                    being contested by the Assumption Party in good faith, the
                    same shall (A) result in the entry of an order for relief or
                    any such adjudication or appointment or (B) continue


                                       5



                    undismissed, or pending and unstayed, for any period of
                    sixty (60) consecutive days.

     (b.) Upon the occurrence and continuance of any Event of Default, the
Operating Company shall be relieved and discharged from all of its obligations
hereunder, and the Operating Company may, by written notice to the Assumption
Party, declare the full unpaid principal amount of all indebtedness of the
Assumption Party to the Operating Company hereunder to be immediately due and
payable, whereupon the same shall become and be immediately due and payable
without protest, presentment, notice or demand, or other formalities of any
kind, all of which are expressly waived by the Assumption Party and the
Operating Company may exercise any rights and remedies available to it under the
Security Agreement.

Section 6. Effective Date.
           --------------

     This Agreement shall become effective as of        A.M., New York time, on
                                                 ------
           .
- -----------

Section 7. Termination
           -----------

     The parties agree that this Agreement shall terminate when all of the
obligations of the Assumption Party shall have been performed.

     This Agreement shall be construed in accordance with and be governed by the
laws of the state of New York.

     IN WITNESS WHEREOF, the Operating Company and the Assumption Party have
caused this Agreement to be executed as of the day and year first above written.

                                             The Operating Company


                                             By
                                               --------------------------------
                                               Title:


                                             [Assumption Party]


                                             By
                                               --------------------------------
                                               Title:


[Note: This Debt Assumption Agreement may be used for debt issued under more
than one indenture. However, a separate Instrument of Assumption will be
utilized for each separate Indenture. Due to the structural documentary
differences of pollution control documents, one or more separate Debt Assumption


                                       6



Agreements will be utilized for pollution control bonds, however, such
agreements would be substantially similar to this Form.]

                                   Schedule 1

I.   [Identify indenture by name, date, parties]

     Name of Series      Outstanding Amount  Assumed Amount      Redemption Date
     --------------      ------------------  --------------      ---------------
     a)
     b)
     c)
     d)

II.  [Identify indenture by name, date, parties]

     Name of Series      Outstanding Amount  Assumed Amount      Redemption Date
     --------------      ------------------  --------------      ---------------
     a)
     b)
     c)
     d)


                                       7



                                                                       EXHIBIT A

                            INSTRUMENT OF ASSUMPTION

     THIS INSTRUMENT OF ASSUMPTION, dated           , 200 , is entered into by
                                          ----------     -
The Intermediate Transmission Entity, a [corporation/limited liability company]
(the "Assumption Party").

                                    RECITALS

     1.   [Insert proper party, Entergy Louisiana, Inc., Entergy New Orleans,
Inc., Entergy Gulf States-LA, Entergy Mississippi, Inc., or Entergy Arkansas,
Inc.] has heretofore entered into the [Identify Indenture], dated as of
            (as heretofore and hereafter amended or supplemented, the
- -----------
"Indenture"), with             , a                 (the "Trustee"), and has
                   ------------    ---------------
issued under the Indenture the series of outstanding debt listed in Schedule A
hereto (the "Outstanding Debt").

     2.   [Insert appropriate state legislation, if any (`the Act")]

     3.   The Federal Regulatory Commission ("FERC") pursuant to FERC Order
2000 established December 15, 2000, as the date by which FERC-jurisdictional
transmission facilities must be committed to an independent Regional
Transmission Organization.

     4.   As part of the Operating Company's plan to comply with the
requirements of [the Act and] FERC Order 2000, the Operating Company is
transferring transmission assets to the Assumption Party, and the Assumption
Party agrees to assume certain obligations with regard to the Outstanding Debt.

     5.   As compensation to the Operating Company for the allocation of
assets to the Assumption Party, and notwithstanding the sole liability of the
Operating Company on the Outstanding Debt resulting from the Division, the
Assumption Party wishes to assume certain liabilities of the Operating Company
on Outstanding Debt.

     6.   The Operating Company and the Assumption Party have entered into
the Debt Assumption Agreement, dated as of       , 200  (as amended or
                                           ------     -
supplemented from time to time, the "Debt Assumption Agreement"), pursuant to
which, among other things, the Assumption Party agreed to assume certain
obligations of the Operating Company on the Outstanding Debt and agreed to
execute and deliver to the Operating Company and the Trustee this Instrument of
Assumption as evidence of the assumption of certain of such obligations;

     NOW, THEREFOR, BE IT KNOWN that, in consideration of the premises and of
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Assumption Party DOES HEREBY ASSUME:

          all of the obligations of the Operating Company to pay for each series
          of Outstanding Debt the aggregate principal amount of Outstanding Debt
          listed on Schedule A hereto as having been assumed (such portion of


                                      A-1



          the Outstanding Debt so assumed, the "Assumed Debt") and the premium,
          if any, and interest on the Assumed Debt, such amounts to be paid on
          the dates, in the amounts and in the manner provided for in the
          Outstanding Debt and in the Indenture, whether at maturity, upon
          redemption or otherwise; provided, however, that, so long as no Event
          of Default, as defined in and under the Debt Assumption Agreement,
          shall have occurred and be continuing, the Assumption Party shall not
          have assumed the obligation to make voluntary redemptions of
          Outstanding Debt except for redemption directed by the Assumed Party
          in accordance with Section 3 of the Debt Assumption Agreement; and
          provided, further, that the redemption of Outstanding Debt of any
          series or the purchase and cancellation of Outstanding Debt of any
          series at the direction of, and with funds provided by, the Assumption
          Party in accordance with Section 3 of the Debt Assumption Agreement
          shall reduce the amount of Assumed Debt of such series by the
          principal amount of Outstanding Debt so redeemed or purchased.

          all of such obligations assumed by the Assumption Party being
          hereinafter called the "Assumed Obligations."

     The Assumption Party hereby agrees to pay the Assumed Obligations when due
and without demand, and acknowledges that the Trustee may enforce against the
Assumption Party the obligations of the Operating Company assumed hereunder by
the Assumption Party, in accordance with their respective claims, whether or not
demand for payment thereof shall theretofore have been made upon the Operating
Company; provided, however, that the enforcement of the Assumed Obligations
against the Assumption Party by such parties may be effected only in accordance
with the terms of this Instrument of Assumption and that this Instrument of
Assumption is not intended to confirm or create any additional rights in such
parties as against the Assumption Party other than those contained herein.

     No provision of this Instrument of Assumption shall be waived, amended or
supplemented except by a written instrument executed by the Operating Company,
the Assumption Party and the Trustee. This Instrument of Assumption shall be
governed by and be construed and interpreted in accordance with the laws of the
State of New York. This Instrument of Assumption shall first become effective as
of              , New York time, on                 .
   -------------                    ----------------


                                      A-2



     IN WITNESS WHEREOF, the Assumption Party has caused this Instrument to be
executed as of the day and year first above written.

                                             [ASSUMPTION PARTY]


                                             By
                                               --------------------------------
                                               Title:
                                               Address:


[Name and address of Trustee]

[Name and address of the Operating Company]


                                      A-3



                                   Schedule A

     Name of Series      Outstanding Amount  Assumed Amount      Redemption Date
     --------------      ------------------  --------------      ---------------
     a)
     b)
     c)
     d)


                                      A-4

EX-99

							Exhibit D-1



                            UNITED STATES OF AMERICA
                                   BEFORE THE
                      FEDERAL ENERGY REGULATORY COMMISSION

                                             )
Entergy Services, Inc.,                      )
                                             )
on behalf of the Entergy Operating           )    Docket No. RT01-
Companies: Entergy Arkansas, Inc., Entergy   )                    ------
Gulf States, Inc., Entergy Louisiana, Inc.,  )
Entergy Mississippi, Inc., and Entergy       )
New Orleans, Inc.                            )


              APPLICATION OF ENTERGY SERVICES, INC. FOR APPROVAL OF
            A REGIONAL TRANSMISSION ORGANIZATION AND APPROVAL OF THE
                 TRANSFER OF TRANSMISSION ASSETS TO A REGIONAL
                            TRANSMISSION ORGANIZATION

Kent R. Foster                               William S. Scherman
Vice President, Regulatory Affairs           Gerard A. Clark
Kimberly H. Despeaux                         W. Mason Emnett
Director, Federal Regulatory Affairs         Skadden, Arps, Slate,
Entergy Services, Inc.                         Meagher & Flom LLP
639 Loyola Avenue                            1440 New York Avenue, N.W.
New Orleans, Louisiana  70113                Washington, D.C. 20005
(504) 576-4867                               (202) 371-7060
(504) 576-3989 (fax)                         (202) 371-7897 (fax)

                                             Floyd L. Norton, IV
                                             Morgan, Lewis & Bockius LLP
                                             1800 M Street, N.W.
                                             Washington, D.C.  20036-5869
                                             (202) 467-7620
                                             (202) 467-7176 (fax)


Dated: October 16, 2000





                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

I.   EXECUTIVE SUMMARY........................................................4
II.  BACKGROUND..............................................................10
     A.   Entergy and the SPP................................................10
     B.   Development of the SPP Partnership RTO.............................12
          1.   Entergy's Plan To Create a Transco............................12
          2.   Creation of the SPP Partnership RTO...........................15
     C.   Description of the SPP Partnership RTO Proposal....................19
          1.   Overview......................................................19
          2.   The Transco's Structure.......................................21
          3.   The SPP Partnership RTO MOU...................................26
          4.   Status of the Congestion Management Regime....................29
     D.   Future Filings Regarding the SPP Partnership RTO...................31
          1.   December 2000 Rate Filing.....................................32
          2.   SPP Tariff Filing and Entergy Conforming Filing...............33
III. REQUEST FOR APPROVAL OF THE
     SPP PARTNERSHIP RTO UNDER ORDER NO. 2000................................35
     A.   The Structure of the SPP Partnership RTO is Consistent
          With Order No. 2000 and Otherwise Just and Reasonable..............35
     B.   The SPP Partnership RTO Meets the Minimum Characteristics..........39
          1.   The RTO Complies With the Independence Principle
               (Characteristic No. 1)........................................39
               a.   The RTO Has No Financial Interest
                    in Any Market Participant................................40
               b.   The RTO Has a Decision-Making Process
                    Independent of any Market Participant or
                    Class of Market Participants.............................42


                                       i



               c.   The RTO Has Exclusive and Independent
                    Authority to Propose Rates, Terms and
                    Conditions under FPA Section 205.........................46
               d.   The RTO Complies with the
                    Independence Audit Requirement...........................47
          2.   The RTO Is Of Sufficient Scope and Configuration
               (Characteristic No. 2)........................................48
          3.   The RTO Has Sufficient Operating Authority Over the
               Transmission Facilities Under its Control
               (Characteristic No. 3)........................................52
          4.   The RTO Has Exclusive Authority for Maintaining Short-Term
               Reliability of the Grid (Characteristic No. 4)................54
     C.   The SPP Partnership RTO Satisfies the
          Eight Minimum Functions............................................56
          1.   The RTO Is the Sole Administrator of its Own Tariff
               (Function No. 1)..............................................56
          2.   The RTO Will Develop and Operate Market Mechanisms
               to Manage Congestion (Function No. 2).........................59
          3.   The RTO Will Develop and Implement Procedures
               to Address Parallel Path Flow Issues Within Its Region
               and Other Regions (Function No. 3)............................61
          4.   The RTO Will Serve As Provider of Last Resort for
               Ancillary Services (Function No. 4)...........................62
          5.   The RTO Will Be the OASIS Administrator for All
               Transmission Facilities Under Its Control
               (Function No. 5)..............................................64
          6.   The RTO Will Perform a Market-Monitoring Function (Function
               No. 6)........................................................65


                                       ii



          7.   The RTO Will Comply With the Planning
               and Expansion Function  (Function No. 7)......................65
          8.   The RTO Will Ensure Interregional Coordination
               (Function No. 8)..............................................65
     D.   The RTO Meets The Other Requirements of Order No. 2000.............65
          1.   Entergy and SPP Partnership RTO Have Engaged in an
               Extensive Stakeholder Process.................................65
          2.   The SPP Partnership RTO Complies With the Open Architecture
               Requirement...................................................65
          3.   The SPP Partnership RTO Has Made An Effort to
               Include Public Power..........................................65
IV.  REQUEST FOR APPROVAL OF THE TRANSFER OF
     TRANSMISSION ASSETS UNDER FPA SECTION 203...............................65
     A.   Overview of the Transfer of Transmission Facilities................65
     B.   Description of the Transferred Facilities..........................65
     C.   The Transfer of Facilities is Consistent with the Public Interest..65
          1.   Effect on Competition.........................................65
          2.   Effect on Rates...............................................65
          3.   Effect on Regulation..........................................65
     D.   Information Required by Section 33.2 of the Commission's
          Regulations........................................................65
     E.   Exhibits Required Pursuant to Section 33.3 of the
          Commission's Regulations...........................................65
V.   NOTICES AND COMMUNICATIONS..............................................65
VI.  CONCLUSION..............................................................65


                                      iii



                                   ATTACHMENTS
                                   -----------

Attachment A             Transco LLC Agreement

Attachment B             Managing Member By-Laws

Attachment C             Certificate of Incorporation of Managing Member

Attachment D             Transco Implementation Plan

Attachment E             Pro Forma Operating Agreement

Attachment F             Pro Forma Agency Agreement

Attachment G             SPP Partnership RTO Memorandum of Understanding

Attachment H             Board Minutes approving SPP Partnership RTO Memorandum
                         of Understanding and Board Minutes approving Congestion
                         Management Agreement in Principle

Attachment I             Gallaher Testimony

Attachment J             Owens Testimony

Attachment K             Bartlett Testimony

Attachment L             Williford Testimony

Attachment M             Langston Testimony

Attachment N             Schnitzer Testimony


Appendix 1               List of Territories Served by Applicant
Appendix 2               Notice
Exhibit I                Map of Entergy Transmission System


                                       iv



                            UNITED STATES OF AMERICA
                                   BEFORE THE
                      FEDERAL ENERGY REGULATORY COMMISSION

                                                   )
Entergy Services, Inc.,                            )
                                                   )
        on behalf of the Entergy Operating         )  Docket No. RT01-
        Companies: Entergy Arkansas, Inc., Entergy )                  ------
        Gulf States, Inc., Entergy Louisiana, Inc.,)
        Entergy Mississippi, Inc., and Entergy     )
        New Orleans, Inc.                          )

             APPLICATION OF ENTERGY SERVICES, INC. FOR APPROVAL OF A
             REGIONAL TRANSMISSION ORGANIZATION AND APPROVAL OF THE
                 TRANSFER OF TRANSMISSION ASSETS TO A REGIONAL
                            TRANSMISSION ORGANIZATION

          Pursuant to Order Nos. 2000 and 2000-A,1 Sections 203 and 205 of the
Federal Power Act ("FPA"), 16 U.S.C. ss. ss. 824b & 824d, and Section 35.34 and
Part 33 of the Commission's Regulations, 18 C.F.R. ss. 35.34 & Part 33 (2000),
Entergy Services, Inc., on behalf of the Entergy Operating Companies, Entergy
Arkansas, Inc., Entergy Gulf States, Inc., Entergy Louisiana, Inc., Entergy
Mississippi, Inc., and Entergy New Orleans, Inc. (collectively "Entergy"),
submits this Application ("the Application") for Approval of a Regional
Transmission Organization ("RTO") and the Transfer of Transmission Assets to an
RTO. In the Application, Entergy details the "SPP Partnership RTO" proposal,
under which Entergy will create an independent, incentive-driven transmission
company ("Transco") to operate under the oversight, and within the umbrella, of


- ------------------------
1    Regional Transmission Organizations, Order No. 2000, FERC Stats. & Regs.
P. 31,089 (1999), order on reh'g, Order No. 2000-A, FERC Stats. & Regs. P.
31,092 (2000).


                                       1



the RTO created by the Southwest Power Pool ("SPP RTO"). Entergy seeks approval
of the SPP Partnership RTO as an RTO under Order No. 2000. Entergy also seeks
approval under Section 203 of the FPA to transfer the transmission assets of the
Entergy Operating Companies to the Transco that will operate as part of the SPP
Partnership RTO. As discussed below, the approvals sought here are conditioned
on the outcome of future filings needed for Entergy to participate in an SPP
Partnership RTO Partnership arrangement.

          As discussed further below, the Application is the first phase of
Entergy's plan to obtain the regulatory approvals necessary to have the Transco
and the SPP Partnership RTO operational no later than December 15, 2001, as
required by Order No. 2000. Entergy and the SPP have reached agreement on the
general principles governing the SPP Partnership RTO, including an agreement in
principle on a congestion management framework. However, the details
implementing those principles - most importantly, the final details needed to
implement the congestion management approach to be used over the entire RTO -
have not been finally worked out. As a result, in addition to this filing,
Entergy and the SPP will make the following future filings in compliance with
Order No. 2000.

          First, in December 2000, Entergy will file the Transco rate schedules
that will be included as part of the SPP Partnership RTO's tariff. In addition,
as part of the December filing, Entergy will seek to terminate service schedule
MSS-2 of its System Agreement, as discussed more fully in the testimony of Mr.


                                       2



Gallaher. Second, Entergy understands that the SPP plans to file the single
tariff for the SPP Partnership RTO, that incorporate the details of a congestion
management approach, during the first half of 2001. Finally, Entergy may make a
filing at or near the time of the SPP's filing to conform the Transco rate
schedules to the SPP tariff and the congestion management approach.

          This Application describes certain aspects of the SPP Partnership RTO
that will be included in these future filings in order to demonstrate that the
SPP Partnership RTO will comply with the minimum characteristics and functions
of Order No. 2000. The approvals sought in the Application are conditioned on
final development of an acceptable congestion management approach, and on the
future filings discussed herein to implement the Transco's rates and the details
of the SPP Partnership RTO. As a result, Entergy is requesting approval of the
SPP Partnership RTO, and the transfer of transmission assets to the Transco
which will operate as part of the SPP Partnership RTO, subject to the outcome of
these future filings.

          In order to enable the Transco to be operational no later than
December 15, 2001, as required by Order No. 2000, Entergy respectfully requests
that the Commission act on this and the subsequent RTO related filings by July
31, 2001. Moreover, to allow Entergy to initiate the process of selecting the
independent board of the Managing Member that would manage the Transco, Entergy
respectfully requests that the Commission issue a ruling on the proposed board
selection process by March 1, 2001.


                                       3



I.   EXECUTIVE SUMMARY

          In this Application, Entergy is seeking approval of the SPP
Partnership RTO under Order No. 2000 and approval under FPA Section 203 of the
transfer of transmission assets of the Entergy Operating Companies to the
Transco, which will operate as part of the SPP Partnership RTO. This Application
is the first phase of Entergy's plan to obtain Commission approval of the SPP
Partnership RTO. Entergy and the SPP will make future filings submitting further
details of the rates, terms and conditions of the SPP Partnership RTO.

          The development of the SPP Partnership RTO is conditioned on the
implementation of the general principles of the RTO which have been agreed to
between Entergy and the SPP. In particular, Entergy and the SPP have not yet
developed the details of the congestion management approach that would apply
across the SPP Partnership RTO. Entergy and SPP have reached an agreement in
principle on a "hybrid" congestion management approach that would use locational
marginal pricing for the real-time balancing energy market and that would
provide tradable transmission rights for the forward markets. A working group is
currently developing the significant details of that approach and has made
substantial progress. Entergy expects the details of a congestion management
approach to be worked out before the end of the year. If the parties cannot
reach agreement on final details, Entergy reserves the right to pursue other
avenues for complying with Order No. 2000.


                                       4



          In order to obtain the approvals sought in this filing, Entergy is
submitting with this Application the agreements forming the Transco and
testimony describing the structure of the Transco, the operation of the SPP
Partnership RTO, and the details of the transfer of transmission assets of the
Entergy Operating Companies to the Transco.

          With respect to the agreements, Entergy is submitting the agreements
governing the SPP Partnership RTO and creating the corporate and governance
structure of the Transco, which entity will operate as part of the SPP
Partnership RTO. These agreements include:

o    THE TRANSCO LLC OPERATING AGREEMENT (ATTACHMENT A). This agreement creates
     the Transco as a limited liability company ("LLC") under Delaware law. The
     agreement contemplates that transmission owners will transfer their
     transmission facilities to the Transco in return for passive (non-voting)
     ownership interests in the Transco and provides that all the voting rights
     of the LLC will be held by the Managing Member.

o    THE MANAGING MEMBER'S CERTIFICATE OF INCORPORATION AND BY-LAWS (ATTACHMENTS
     C & B). These documents describe the structure of the Managing Member,
     which will be a corporation governed by Delaware law.

o    THE TRANSCO IMPLEMENTATION PLAN (ATTACHMENT D). This plan governs the
     interim period prior to the date of the Transco's initial operations. It
     describes the process for selecting the initial board of the Managing


                                       5



     Member of the Transco and for selecting new members to the board. The
     Implementation Plan includes as Exhibits a Member and Shareholder
     Agreement, a Subscription Agreement, and a Voting Trust Agreement.

o    THE PRO FORMA OPERATING AGREEMENT (ATTACHMENT E). This is the agreement by
     which the Transco obtains control over transmission facilities that are not
     contributed to the LLC. Under this agreement, transmission owners turn
     Functional Control of their transmission facilities to the Transco.

o    THE PRO FORMA AGENCY AGREEMENT (ATTACHMENT F). This is the agreement under
     which the Transco will provide service over non-transferred distribution
     facilities, and possibly a discrete amount of non-transferred transmission
     facilities, for certain wholesale transactions.

o    SPP PARTNERSHIP RTO MEMORANDUM OF UNDERSTANDING ("MOU") (ATTACHMENT G).
     This MOU, which was approved by the SPP board on July 20, 2000, describes
     the allocation of responsibilities between the Transco and the SPP under
     the SPP Partnership RTO. The MOU provides the general principles that will
     govern the SPP Partnership RTO.

          In addition, Entergy is submitting the testimony that will describe
the structure of the Transco, explain the development and details of the SPP
Partnership RTO, describe how the transmission assets of the Entergy Operating
Companies will be transferred to the Transco, and demonstrate that the SPP


                                       6



Partnership RTO complies with the minimum characteristics and functions for RTOs
contained in Order No. 2000. This testimony includes:

O    TESTIMONY OF FRANK GALLAHER (ATTACHMENT I). Mr. Gallaher describes the
     Transco's corporate and governance structure and the Transco implementation
     time-line and the collaborative process pursuant to which the Transco was
     formed. Mr. Gallaher further explains how the SPP Partnership RTO complies
     with the minimum characteristics required by Order No. 2000.

O    TESTIMONY OF STEVE OWENS (ATTACHMENT J). Mr. Owens describes the process by
     which the SPP Partnership RTO was formed, the features of the SPP
     Partnership RTO and the allocation of responsibilities between the Transco
     and the SPP under the SPP Partnership RTO. Mr. Owens further explains how
     the SPP Partnership RTO meets the minimum functions required by Order No.
     2000.

O    TESTIMONY OF GEORGE BARTLETT (ATTACHMENT K). Mr. Bartlett describes the
     transmission assets of the Entergy Operating Companies that will be
     transferred to the Transco, including the split between Entergy's
     transmission and distribution assets and between Entergy's transmission and
     generation assets. Mr. Bartlett also describes the Transco's regional
     planning process.

O    TESTIMONY OF FRANK WILLIFORD (ATTACHMENT L). Mr. Williford describes the
     financial capital implications of the transfer of the transmission, and


                                       7



     related, assets of the Entergy Operating Companies to the Transco and a
     representative initial capital structure of the Transco.

O    TESTIMONY OF NATHAN LANGSTON (ATTACHMENT M). Mr. Langston describes the
     accounting treatment for the transfer of the transmission assets and
     liabilities of the Entergy Operating Companies to the Transco.

O    TESTIMONY OF MICHAEL SCHNITZER (ATTACHMENT N). Mr. Schnitzer outlines the
     Company's objectives for market design and congestion management, describes
     its preferred structure, and discusses the "hybrid" model currently under
     development in the SPP Collaborative process.

          Based on these agreements, documents and testimony, this Application
explains why the approvals sought in the Application are appropriate. First, the
Application explains why the SPP Partnership RTO is a proper structure for an
RTO. The Application explains that a "binary" RTO structure offers a number of
advantages and has been expressly approved by the Commission in Order No. 2000
and in other orders interpreting Order No. 2000.

          Second, the Application explains how the SPP Partnership RTO meets all
four minimum criteria, all eight minimum functions, and all other requirements
for RTO's contained in Order No. 2000. The Application summarizes the testimony
of Frank Gallaher, who explains why the SPP Partnership RTO complies with the
minimum characteristics contained in Order No. 2000, and the testimony of Steve
Owens, who explains why the SPP Partnership RTO complies with Order No. 2000's
minimum functions.


                                       8



          Finally, the Application explains why the transfer of the transmission
facilities of the Entergy Operating Companies to the Transco is consistent with
the public interest as required by Section 203 of the FPA.


                                       9



II.  BACKGROUND

     A.   ENTERGY AND THE SPP

          Entergy Corporation is a public utility holding company and the
corporate parent of the Entergy Operating Companies.2  Entergy Services, Inc. is
a service company that provides general executive, advisory, administrative,
accounting, legal, engineering and other services to the Entergy Operating
Companies and makes certain filings with the Commission as an agent for the
Entergy Operating Companies.

          The Entergy Operating Companies own and operate generation,
transmission, and distribution facilities in four states - Arkansas, Louisiana,
Mississippi, and Texas. The Operating Companies provide electric service to
retail customers subject to state and local regulation and transmit and sell
power at wholesale, subject to regulation by this Commission. The Entergy
transmission system is comprised of approximately 15,000 miles of transmission
lines and extends from the southeastern portion of Missouri to the southern-most
part of Louisiana and includes the western portion of Mississippi and the
southeastern portion of Texas.

          Two of the states in which Entergy operates - Arkansas and Texas -
have enacted electric restructuring initiatives. On April 15, 1999, Arkansas
enacted the Electric Consumer Choice Act of 1999, which established retail


- ------------------------
2    On July 30, 2000, Entergy Corporation and FPL Group announced a merger of
equals which would combine the two companies. Consummation of the merger,
including receiving required regulatory approvals, is expected to occur prior to
the end of 2001. This proposed merger has not changed Entergy's plans as to how
it will comply with Order No. 2000.


                                       10



choice for Arkansas effective January 1, 2002. In addition, in June 1999, Texas
enacted electric restructuring legislation which established retail choice in
Texas by January 1, 2002. The Texas and Arkansas legislation require Entergy to
place its transmission facilities under a FERC-approved independent
organization. Entergy has submitted business separation plan filings, including
unbundled cost of service analyses, in both Arkansas and Texas. The other
jurisdictions in which Entergy operates are studying retail choice legislation,
but have not yet taken any binding steps to initiate retail choice or electric
unbundling.

          The Southwest Power Pool ("SPP") is an Arkansas non-profit corporation
with its principal place of business in Little Rock, Arkansas. SPP was formed in
1941 by a voluntary, intercompany agreement between eleven utilities. In 1968,
the SPP became a regional Reliability Council, joining with several other such
organizations to form the predecessor to the North American Electric Reliability
Council. The SPP currently has more than four million customers in a 288,000
square-mile area covering all or part of the states of Arkansas, Kansas,
Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, and Texas. Entergy was
formerly an SPP member, but withdrew from membership in 1997.

          On December 30, 1999, the SPP filed a proposal with the Commission
seeking formal recognition as an independent system operator ("ISO") that


                                       11



satisfies the Commission's ISO principles and an RTO that satisfies the
requirements of Order No. 2000. On May 17, 2000, the Commission denied the SPP's
proposal, without prejudice, and provided guidance to the SPP on its proposal.
See Southwest Power Pool, Inc., 91 FERC P. 61,137 (2000) ("the SPP Order"). In
the SPP Order, the Commission ruled that it could not accept the SPP's proposal
at that time, but encouraged the SPP to more fully develop its proposal in a
collaborative process and to refile it no later than October 15, 2000, as
required by Order No. 2000. The SPP Order specifically suggested that the SPP
consider the possibility of including former SPP members (e.g., Entergy) in its
new RTO proposal. See SPP Order, 91 FERC at 61,530.

     B.   DEVELOPMENT OF THE SPP PARTNERSHIP RTO

          1.   ENTERGY'S PLAN TO CREATE A TRANSCO

          Entergy has long been an advocate of the formation of efficient and
competitive bulk power markets. Entergy was among the first companies to file an
open access transmission tariff. Entergy supported both the Energy Policy Act of
1992 and the Commission's restructuring initiatives in Order Nos. 888 3  and
889.4  Entergy was among the first companies to declare its intent to create a


- ------------------------
3    See Promoting Wholesale Competition Through Open Access
Non-discriminatory Transmission Services by Public Utilities and Recovery of
Stranded Costs by Public Utilities and Transmitting Utilities, 61 Fed. Reg.
21,540, FERC Stats. & Regs. P. 31,036 (1996), order on reh'g, Order No. 888-A,
62 Fed. Reg. 12,274, FERC Stats. & Regs. P. 31,048 (1997), order on reh'g, Order
No. 888-B, 62 Fed. Reg. 64,688, 81 FERC P. 61,248 (1997), order on reh'g, Order
No. 888-C, 82 FERC P. 61,046 (1998), aff'd, Transmission Access Policy Study
Group, et al. v. FERC, 2000 U.S. App. LEXIS 15362 (D.C. Cir. 2000).

4    See Open Access Same-Time Information System and Standards of Conduct,
Order No. 889, 61 FR 21721 (May 10, 1996), FERC Stats. & Regs.P. 31,035 (April
24, 1996), order on reh'g, Order No. 889-A, 62 FR 12484 (March 14, 1997), FERC
Stats. & Regs P. 31,049 (1997), order on reh'g, Order No. 889-B, 81 FERC P.
61,253 (1997), order on reh'g, Order No. 889-C, 82 FERC P. 61,046 (1998).


                                       12



transco, an independent, incentive-driven transmission company that would own
and operate the transmission system in its region. Entergy announced its
preliminary plan to create a Transco in April 1998 during the Conference for the
Commission's Inquiry Concerning the Commission's Policy on Independent System
Operators, Docket No. PL98-5-000. See Prepared Statement of Mr. Andrew Vesey,
Vice President, Transmission, Entergy Services, Inc. (April 16, 1998).

          On April 5, 1999, Entergy filed with this Commission a Petition for
Declaratory Order. The Petition described features of Entergy's Transco Proposal
and asked the Commission to declare that the Entergy proposal complied with
Order No. 888's ISO Principles regarding independence and conflicts of interest.
See Petition of Entergy Services Inc. for Declaratory Order, Docket No.
EL99-57-000. On July 30, 1999, the Commission granted the requested Declaratory
Order and declared that passive ownership of a Transco could comply with the
independence requirement contained in ISO Principle No. 1, provided that the
Transco is otherwise properly structured to achieve independence. See Entergy
Service, Inc., 88 FERC P. 61,149 (1999). The Commission subsequently affirmed
this decision on rehearing. See Entergy Services, Inc., 90 FERC P. 61,191
(2000).


                                       13



          Entergy also supported the Commission's efforts to promote the
formation of RTOs. Entergy submitted initial and reply comments to the
Commission's Notice of Proposed Rulemaking on Regional Transmission
Organizations, 87 FERC P. 61,173 (1999) ("RTO NOPR"). Entergy's comments to the
RTO NOPR supported the Commission's initiative in promoting RTOs as well as the
majority of the positions taken by the Commission in the NOPR.5  Entergy
strongly supported the Commission's flexibility in the structuring of RTOs and
its recognition that independent transmission companies with passive ownership
by market participants would satisfy the Commission's requirements.

          After announcing its plans to create a Transco, Entergy began engaging
in discussions with both potential partners and stakeholders, including retail
regulators, regarding its Transco plans. Entergy met with neighboring utilities
and transmission entities to discuss the possibility of combining their
facilities with Entergy's in a Transco. Entergy also met with its retail
regulators, and certain other stakeholders, to explain its Transco plans and to
hear any concerns or suggestions that the regulators and stakeholders had
regarding the Transco.

          As demonstrated in Entergy's description of its Transco proposal
during the April 1998 ISO Conference and in Entergy's April 1999 Petition for
Declaratory Order, Entergy's initial plan was to create an independent Transco
that would operate the transmission facilities of Entergy and other transmission


- ------------------------
5    See Initial Comments of Entergy Services, Inc., RM99-2-000 (Aug. 23,
1999); Reply Comments of Entergy Services, Inc., RM99-2-000 (Oct. 6, 1999).


                                       14



owners who wanted to contribute their transmission assets to the Transco.
However, discussions with state commissions and potential partners led Entergy
to begin exploring other alternatives for the Transco.

          First, some parties questioned the sufficiency of the size and scope
of an Entergy-only Transco and expressed a desire for a larger RTO. Although
Entergy expects other transmission owners to join in the future, it wanted to
address this concern from the start. Second, others expressed concern about
independence and wanted Entergy to explore possibilities for providing
additional protections to ensure the Transco's independence. Finally, some
parties wanted Entergy to participate in the SPP RTO in order to increase the
efficiency of the electric markets in the region.

          2.   CREATION OF THE SPP PARTNERSHIP RTO

          As a result of these discussions with the staff/advisors to the retail
regulators, as well as potential partners, Entergy, in early 2000, began
exploring the possibility of operating the Transco within the umbrella of the
SPP, which had filed for approval as an RTO in December 1999. This idea of
combining the Transco with the SPP's RTO originated from filings made in
late-1999 by the Midwest ISO and Commonwealth Edison Co. On November 1, 1999 and
December 13, 1999, respectively, the Midwest ISO and Commonwealth Edison
presented to the Commission proposals for the creation of a "binary RTO" which
would allow an independent transmission company to operate under the umbrella of
the Midwest ISO. See Midwest ISO, Docket No. ER00-448-000 (filed Nov. 1, 1999);
Commonwealth Edison Co., Docket No. EL00-25-000 (filed Dec. 13, 1999). On


                                       15



February 24, 2000, the Commission expressed preliminary support for the binary
RTO proposal and welcomed it as an "innovative RTO structure" that may be "an
attractive alternative to the ISO model." See Commonwealth Edison Co., 90 FERC
P. 61,192, at 61,613 & 61,627 (2000).

          Entergy, after consultation with its retail regulators and others,
concluded that combining the Transco with the SPP, in a manner similar to the
Commonwealth/Midwest ISO binary RTO proposal, could improve Entergy's RTO
proposal in many ways and might remove many of the concerns that had been
expressed about an Entergy-only Transco. First, combining with the SPP would
significantly increase the scope of the RTO by including transmission facilities
covering 400,000 square miles in eight states. This would help eliminate
concerns about the adequacy of the size and scope of the RTO. Second, allowing
the Transco to operate under the oversight of the SPP would provide an
additional layer of independence and an additional protection against the
possibility that Entergy, or other Market Participants, might exercise control
over the Transco's operations. This would help eliminate concerns expressed
about the independence of Transco. Third, participating in the SPP RTO would
fulfill the desires of many stakeholders and state commissions who argued that
pancaking of rates on Entergy's and the SPP's systems harmed regional electric
markets.6


- ------------------------
6    For example, in a protest to the SPP's filing for approval as an RTO in
Docket No. EL00-79, the State Commissions of Arkansas, Kansas, and Missouri had
argued that the pancaking of rates over Entergy's OATT and the SPP's OATT would
be unjust and unreasonable. See Motion for Leave to File Supplement, and
Supplement filed by the Arkansas Public Service Commission, Kansas Corporation
Commission and the Missouri Public Service Commission, at 14.


                                       16



          Entergy's efforts to combine with the SPP and form the SPP Partnership
RTO are detailed in the attached Testimony of Steve Owens. As discussed in that
testimony, Entergy began evaluating the binary RTO model and began initial
discussions with the SPP in February 2000. Entergy presented the SPP Partnership
RTO model at the regional workshops in Kansas City on March 29-30, 2000 and in
Atlanta on April 6-7, 2000. On May 11, 2000, Entergy presented the SPP
Partnership RTO proposal to the SPP's board of directors. The proposal contained
23 specific terms that allocated operational responsibilities between the SPP
and the Transco. At the meeting, the SPP board expressed interest in the
proposal and agreed to form a working group - the RTO Partnership Working Group
- - to evaluate the proposal.

          The RTO Partnership Working Group was formed under standard SPP
practice that ensured representation from a cross-section of electric
stakeholders. The Working Group was chaired by an employee of Oklahoma Municipal
Power Authority and included members representing cooperatives, power marketers,
investor-owned utilities, federal agencies, state agencies, and municipals. The
Working Group held numerous meetings that were open to all SPP members and other
interested parties. Approximately 20 to 25 individuals attended these meetings,
including representatives of retail regulators and the Commission Staff. The
Working Group engaged in open and collaborative discussions of the SPP


                                       17



Partnership RTO proposal and negotiated a number of alterations and improvements
to the original proposal.

          At the last meeting of the RTO Partnership Working Group, there were
two remaining issues that had not been resolved: (1) who (i.e., SPP or the
Transco) would calculate ATC/TTC; and (2) whether the Transco and SPP would have
their own tariffs or operate under a single tariff. At the meeting, the Working
Group decided that, subject to the condition that Entergy and SPP agree on a
single congestion management regime for the entire RTO, SPP would be responsible
for calculating ATC/TTC and that the SPP Partnership RTO would operate under a
single tariff. The RTO Partnership Working Group then voted to recommend the RTO
Partnership proposal to the RTO Working Group.

          The RTO Working Group, to which the RTO Partnership Working Group
reported, was a working group created by the SPP to respond to the SPP Order and
to prepare the SPP's RTO filing required by Order No. 2000. This group consisted
of sixteen members - eight representatives of transmission owners and eight
representatives of transmission users - and was co-chaired by a representative
of a municipal utility and a representative of an investor-owned utility. The
SPP Partnership RTO proposal was thoroughly reviewed by the RTO Working Group
and approved for recommendation to the SPP Board.

          The SPP board approved the SPP Partnership RTO proposal at its July
20, 2000 meeting. The board also agreed at that meeting that the proposal would
be set forth by a contract that adopts all 23 terms. The MOU describing the 23


                                       18



terms of the SPP Partnership RTO proposal and a copy of the SPP board minutes
approving the SPP Partnership RTO are attached to this Application as
Attachments G and H.

     C.   DESCRIPTION OF THE SPP PARTNERSHIP RTO PROPOSAL

          1.   OVERVIEW

          Under the SPP Partnership RTO proposal, an independent Transco owning
or controlling the transmission assets of the Entergy Operating Companies and
other transmission owners, will operate under the oversight, and within the
umbrella, of the SPP. Some of the SPP Partnership RTO's functions will be
performed by the SPP and some will be performed by the Transco. This "binary"
structure is similar (although not identical) to the RTO proposal presented by
Commonwealth Edison and the Midwest ISO and preliminarily approved by the
Commission earlier this year. See Commonwealth Edison Co., 90 FERC P. 61,192
(2000).

          The organizational structure of the Transco is described in the
Limited Liability Company ("LLC") Operating Agreement (the "LLC Agreement"),
which is attached to this Application as Attachment A. The Transco will be an
LLC under Delaware law that is managed by the Managing Member. The Entergy
Operating Companies, and other transmission owners, will contribute their
transmission assets to the Transco in return for passive ownership interests in
the Transco. The Transco may also obtain operational control over other


                                       19



transmission assets under an Operating Agreement or a Lease Agreement. A pro
forma draft of an Operating Agreement is attached to this Application as
Attachment E.7

          The allocation of functions between the Transco and the SPP is
described in the SPP Partnership RTO MOU and in the Testimony of Steve Owens.
Under this MOU, the SPP RTO is responsible for (1) acting as the regional
Security Coordinator for the SPP and Transco systems; (2) performing ATC/TTC
calculations; (3) fostering input by Market Participants into the Transco
policies; (4) overseeing the regional transmission expansion planning process;
and (5) providing a forum for market monitoring and dispute resolution. As
described more fully in the testimony of Messrs. Gallaher and Owens, the
Transco, on the other hand, will have control over the portions of the tariff
that affect the commercial terms and conditions of the Transco's facilities and
other commercial responsibilities.

          2.   THE TRANSCO'S STRUCTURE

          The structure of the Transco is created in the following four
documents, drafts of which are attached to this Application: (1) the Transco LLC
Agreement (Attachment A); (2) the Certificate of Incorporation of Managing


- ------------------------
7    At this time, Entergy is not attaching a pro forma draft of a Lease
Agreement. The Entergy Operating Companies do not plan to transfer operational
control of their transmission facilities to the Transco through a Lease
Agreement. Moreover, no other transmission owner has expressed an interest in
using a Lease Agreement to transfer their assets to the Transco. If a
transmission owner chooses to transfer control through a Lease Agreement, the
Transco, and/or the transmission owner, will, of course, submit the Lease
Agreement to the Commission when seeking approval of the transfer under FPA
Section 203.


                                       20



Member (Attachment C); (3) the By-laws of Managing Member (Attachment B); and
(4) the Transco Implementation Plan (Attachment D). The LLC Agreement creates
the Transco and establishes its structure. The structure of the LLC, and the
reasons for adopting that structure, are discussed in the attached testimony of
Frank Gallaher. As discussed in the Gallaher testimony, the Transco will be an
LLC governed by Delaware law. The Transco will be engaged in the business of
providing non-discriminatory, open access transmission service over
FERC-regulated transmission facilities. The Transco will acquire ownership of,
or control over, transmission facilities either through contribution of those
facilities to the LLC or through operating agreements. Transmission owners that
contribute their assets to the LLC will receive passive ownership interests in
the Transco that entitles them to a share of the Transco's profits or losses.
Transmission owners that transfer control of their assets to the Transco under
an Operating Agreement will receive payment from the Transco under the Operating
Agreement.

          The business affairs of the Transco will be conducted by the Managing
Member. The Managing Member will have all the voting rights of the LLC, except
for certain limited rights, discussed below, which will be subject to the vote
of all of the members of the LLC. The Managing Member will be a Delaware
corporation.


                                       21



          The By-laws of the Managing Member will ensure that the Managing
Member will be independent of all Market Participants.8  The Managing Member
will be run by an independent board. The board will consist of seven members
serving three-year, staggered terms. The directors will be independent of any
Market Participant and will have neither financial interest in, nor affiliation
with, any Market Participant. The directors must also comply with the Transco's
Code of Conduct.

          The selection process for the Managing Member's board is designed to
ensure that the board is independent of all Market Participants, including
Entergy and other transmission owners. The process under which the initial board
will be selected is described in the Transco Implementation Plan (Attachment D),
which prescribes the following process. First, the transmission owners who agree
to form the Transco will choose a nationally-recognized search firm from a list
of the following three search firms: Korn Ferry International, Heidrick &
Struggles International, and Russell Reynolds.

          Second, the search firm will select a pool of fourteen qualified
candidates for consideration as directors. The fourteen candidates chosen by the
search firm must meet the following requirements: (1) they should have
qualifications equivalent to those directors of public corporations with
revenues equivalent to or larger than the Transco is expected to have; (2) at
least eight of the candidates must be or have been either a president, chief
executive officer, chief operating officer, or director of at least one other


- ------------------------
8    Market Participants are defined in the same way that the term is defined
in the regulations implementing Order No. 2000. See 18 C.F.R.ss. 35.34(b)(2).


                                       22



publicly traded corporation; and (3) at least four of the candidates must have
had meaningful experience in the electric utility industry.

          Third, the Board Selection Committee, which consists of a balanced
group of stakeholders (including transmission owners) in the region, will choose
seven directors from the pool selected by the search firm. Of the seven
candidates, at least four must be or have been either a president, chief
executive officer, chief operating officer, or director of at least one other
publicly traded corporation and at least two must have experience in the
electric industry.

          Once the initial board is selected, the board will initially be
self-perpetuating - that is, the existing directors fill all vacancies when a
director's term expires or the seat otherwise becomes vacant. This will be
accomplished through a Voting Trust Agreement. Under the Voting Trust Agreement
(which is an exhibit to the Transco Implementation Plan), each Director must
vote the shares of the Managing Member in accordance with the decisions of the
majority of the Directors. However, once the Managing Member issues voting stock
to outside investors, directors will be elected by all voting shareholders in
accordance with the Transco Implementation Plan. There is no limit to the number
of terms that a director may serve, although a director may not be selected
after the age of seventy-two (72).9


- ------------------------
9    As noted above, Entergy is seeking Commission approval of this board
selection process by March 1, 2001 so that the process of selecting the initial
board can begin.


                                       23



          The Transco officers and employees must also be independent of any
Market Participant and must have no affiliation with, nor financial interest in,
any Market Participant. Former officers or employees of a Market Participant may
become officers or employees of the Transco. However, consistent with FERC
precedent,10  they must divest all stock ownership in their former employer
within six months of employment with the Transco, and they must sever all
financial interest in their former employers, except benefit plans that do not
vary with the performance of the former employer. The Transco's officers and
employees must also comply with the Transco's Code of Conduct, which is attached
to the LLC Agreement. The transmission owners forming the Transco will initially
appoint, subject to ratification and approval by the board, the Transco's chief
executive and senior officers.

          Market Participants may not own voting securities of the Managing
Member. In addition, Market Participants will have no active ownership of the
Transco. The ownership rights of the transmission-owning members of the Transco
will be "passive" as that term is used in Order No. 2000. That is, the
transmission owners will have a right to share in the profits and losses of the
Transco, but no right to vote on the business affairs of the Transco, expect
with respect to certain fundamental rights affecting the value of their passive
interests. In order to protect the integrity of the capital assets controlled by
the Transco, and to protect the value of the passive ownership interests of the
Transco, the transmission owners who contribute their transmission assets to the


- ------------------------
10   See Midwest Independent Transmission System Operator, 84 FERC P. 61,231,
reconsideration granted, 85 FERC P. 61,250 (1998).


                                       24



Transco in return for passive ownership interests will retain the right to vote
on certain fundamental corporate actions which are described in Section 8.5 of
the LLC Agreement. These actions include the merger or sale of all or
substantially all of the assets of the Transco, the dissolution of the Transco,
or initiation of bankruptcy proceedings.

          The Managing Member's board will owe the passive owners fiduciary
duties of loyalty and care similar to the fiduciary duties owed by directors and
officers of business corporations under Delaware law. In addition, the board
will owe the members a fiduciary duty to maximize the value of the Transco, and
the assets controlled by the Transco, and to protect the integrity of the
passive owner's capital investment. However, the board is prohibited from
considering the interests of the passive owners outside the Transco's business.

          It should be noted that the Transco's structure differs from the
structure that was described in Entergy's Petition in Docket No. EL99-57. The
primary difference is the use of a Managing Member, rather than a Transco LLC
Board, to control the business affairs of the Transco. Entergy adopted this
change because of comments it received from retail regulators, stakeholders, and
potential partners. After Entergy filed its Petition for Declaratory Order in
Docket No. EL99-57, other transmission owners filed proposals to form transcos
using a Managing Member, rather than an independent LLC board, to run the
Transco.11  During Entergy's discussions with retail regulators, stakeholders,


- ------------------------
11   For example, the Alliance Transco proposed a managing member, rather
than an independent board, approach.


                                       25



and potential partners, some parties expressed a preference for the Managing
Member approach. Those parties expressed the views, inter alia, that a Managing
Member would increase the independence of the Transco and provide a more
flexible means to access the equity markets. Based upon its consideration of
these comments, Entergy decided to change the structure of the proposed Transco
from an LLC run by an independent board to an LLC managed by an independent
managing member.

          3.   THE SPP PARTNERSHIP RTO MOU

          After extensive negotiations with the RTO Partnership Working Group
and the RTO Working Group, Entergy and the SPP reached conditional agreement on
the division of functional responsibility between the Transco and the SPP under
the SPP Partnership RTO. This agreement is contained in the SPP Partnership RTO
MOU (Attachment G).

          As discussed in the Owens Testimony, the MOU outlines the functional
responsibilities of the SPP and the Transco and describes how the Transco would
operate within the structure and under the oversight of the SPP. The MOU
contains twenty-three specific terms that describe the allocation of
responsibilities between the Transco and the SPP.

          Under the MOU, the SPP shall be responsible for (1) acting as regional
Security Coordinator for the SPP and Transco systems; (2) performing ATC and TTC
calculations under a mutually-agreeable methodology determined by the SPP and
the Transco; (3) fostering full and complete input by Market Participants into


                                       26



the Transco's policies; (4) overseeing a regional transmission expansion
planning process which incorporates and reviews the Transco's expansion plan;12
and (5) providing a forum for market monitoring and dispute resolution.

          The MOU provides that the SPP and the RTO will administer a single
tariff and a joint OASIS site. The Transco will have control over those portions
of the tariff that affect the commercial terms and conditions of transmission
service over the Transco's facilities. The Transco will have the right to make
filings at FERC proposing rate or rate structure changes involving transmission
charges to load within the Transco's facilities and proposing new transmission
services not contained in the RTO's tariff. The Transco shall provide the SPP
with thirty days prior notice of any such filing.

          In designing transmission rates, the MOU provides that there will be
no pancaked rates for transmission service using both the SPP and Transco
systems. To implement this, there will be a reciprocal waiver of access charges
for transactions using both systems that terminate within one of the systems and
a single, joint rate for through and out transactions that use both systems but
terminate outside the RTO's grid. Also, the Transco will be responsible for
losses within its system, but will work with the SPP to develop a proposal to
calculate losses for transactions that cross both SPP and the Transco. The
Transco and SPP will be responsible for billing for transactions that terminate
on their respective systems. For transactions that do not terminate within the


- ------------------------
12   A description of the Transco's regional transmission expansion process
is contained in the Testimony of George Bartlett.


                                       27



RTO, the billing will be handled by the system on which the power exits the
combined region.

          The MOU further provides that the Transco will be responsible for the
operation of the Transco system, including the responsibility to establish
ratings and operating procedures and to develop transmission and generation
outage schedules, provided that these outages shall be coordinated with the SPP.
Also, the Transco will be responsible for evaluating and implementing requests
for new generator interconnections on its system. The Transco and the SPP will
work together to develop a single procedure for new generator interconnections
within the RTO. Under the MOU, the SPP and the Transco agree to work together to
jointly support any multi-state transmission planning compact that is developed
in the region and to work together to develop procedures and protocols to allow
the Transco to operate within the structure of the SPP.

          The MOU also requires that the Transco be structured to reasonably
accommodate other SPP members and non-Members who elect to join the Transco. The
Transco will have the same rights to withdraw from the SPP as other SPP members
under the SPP Membership Agreement. The SPP Partnership RTO MOU will remain
binding in the event the SPP merges or combines with another regional
transmission entity.

          4.   STATUS OF THE CONGESTION MANAGEMENT REGIME

          As discussed above, the SPP Partnership RTO Agreement is conditioned
upon the development of a single congestion management regime for the entire RTO


                                       28



that is consistent with the agreement in principle that was agreed to by the
SPP, its members, and Entergy and that was approved by the SPP board. Entergy
believes that it is critical for the SPP Partnership RTO to develop a single
congestion management regime. There is significant congestion today on the
transmission grid in Entergy's region. Moreover, because the region offers
access to significant natural gas supplies, the development of new generating
facilities in the region, and requests to interconnect those new facilities to
Entergy's transmission system, have been skyrocketing.13  The adoption of an
appropriate congestion management regime to provide the proper price signals for
the construction of transmission and generation is therefore essential in this
region. In addition, a single congestion management regime for the RTO would
minimize the seams issues between control areas within the RTO.

          Entergy and the SPP have made substantial progress on the development
of a single congestion management regime. On July 31 and August 1, 2000, the SPP
conducted a two-day collaborative workshop to discuss congestion management
approaches for the SPP Partnership RTO. At the workshop, Entergy presented a
congestion management proposal that included the use of locational marginal
pricing and financial transmission rights similar (but not identical) to
congestion management regimes the Commission has previously approved. A


- ------------------------
13   At this time, there is more than 69,650 MW of new generation in the
queue for interconnection studies in Entergy's region.


                                       29



competing model was also presented that outlined a proposal for implementing a
"flow-gates" rights model, that would identify "commercially significant"
flow-gates and establish a forward market to trade rights to these flow-gates.

          As a result of this workshop, an agreement in principle was reached on
a compromise model that would use locational marginal pricing for the real-time
balancing energy market, including nodal pricing for generators and zonal
pricing for loads, and would include tradable transmission rights for the
forward markets. The SPP formed a Congestion Management Systems Working Group
("CMSWG") to develop and implement this market structure. The CMSWG is currently
working to develop appropriate rules for this market structure, and Entergy is
optimistic that a single congestion management regime consistent with the
agreement in principle will be developed by the CMSWG. However, final agreement
of an acceptable regional congestion management plan is a condition precedent to
Entergy joining the SPP.14


- ------------------------
14   If the final significant details of the congestion management approach
can not be worked out with the SPP, Entergy will alert the Commission as soon as
practicable.


                                       30



     D.   FUTURE FILINGS REGARDING THE SPP PARTNERSHIP RTO

          As stated above, this filing is the first phase of Entergy's efforts
to obtain approval of the SPP Partnership RTO Proposal to allow for operation of
the RTO by December 15, 2001 as required by Order No. 2000. In addition to this
filing, Entergy commits to file during December 2000 a request for approval of
the Transco rate schedules under section 205 of the FPA. Entergy understands
that the SPP plans to file a SPP Partnership RTO tariff incorporating the
details of the congestion management regime during the first half of 2001.
Entergy would then file concurrently with, or near the time of, the SPP's filing
any changes to the Transco rate schedules made necessary by the SPP's tariff
filing, including changes to implement the single congestion management regime.
These future filings are described more fully below.15

          Because the development of the SPP Partnership RTO is ongoing at this
time, it is not possible today to make a filing for all approvals that will be
required under both Section 203 and section 205. Additional discussions and
coordination - including the development of an appropriate congestion management
regime - are necessary before Entergy and the SPP can develop and file the SPP's
revised RTO OATT, the Transco's rate schedules under that OATT, and other
details necessary to complete the SPP Partnership RTO structure. However, the


- ------------------------
15   In addition to these filings with the Commission, Entergy will also make
appropriate filings with its retail regulators to obtain approval of the
transfer of transmission facilities to the Transco.


                                       31



additional negotiations and levels of coordination engendered by the effort to
develop the SPP Partnership RTO have substantially improved the RTO picture for
the region as a whole.

          1.   DECEMBER 2000 RATE FILING

          During December 2000, Entergy will file the Transco's rate schedules
for approval under Section 205 of the FPA. This rate filing will include the
Transco rate schedules that will become part of the SPP RTO Tariff and that will
establish the access fee for obtaining transmission service within the Transco
service territory ("Transco Rate Schedules"). This rate filing will include
testimony and other supporting data on the following issues:

o    Projected costs of service for the Transco;

o    Projected costs of establishing the Transco;

o    Projected capital structure;

o    Justification of the appropriate return on equity for the Transco;

o    The mechanics of the access fee tariff;

o    The proposed treatment of new capital expenditures; and

o    An explanation and justification of any incentives related to the Transco
     rate schedule.

          Entergy plans to file the Transco Rate Schedules during December 2000
because it is optimistic that Entergy and the SPP will have developed


                                       32



substantially all of the details of the agreement in principle on a single
congestion management regime. However, because it is anticipated that the SPP
RTO Tariff will not have been finalized, Entergy reserves the right to modify
the rate schedules once the SPP RTO Tariff has been finalized.

          2.   SPP TARIFF FILING AND ENTERGY CONFORMING FILING

          Entergy anticipates that the SPP will file the revised SPP Tariff
incorporating an appropriate and mutually-agreeable congestion management model
during the first half of 2001. At that juncture, Entergy will be in a position
to assess whether it needs to file changes to the Transco Rate Schedules that
are necessitated by the SPP Filing of the SPP Partnership RTO tariff and will
file such changes contemporaneously with the SPP filing. Entergy is optimistic
that the SPP will make that filing during the first quarter of 2001.

          However, in the unlikely event that Entergy and the SPP are unable to
develop an acceptable congestion management approach, then Entergy would need to
file (1) a new arrangement that satisfies the requirements of Order No. 2000;
and (2) a separate market structure for the Transco and an explanation of how
that revised market structure meets the requirements of Order No. 2000.

          In addition, if Entergy and the SPP fail to implement the other
details of the MOU in the SPP Partnership RTO tariff (e.g., revenue/cost
allocation, operating principles, planning process, etc.) then Entergy would
have to evaluate whether the SPP Partnership RTO would continue to be valid,


                                       33



whether it could be modified to adequately address the failure to agree on
terms, and whether the parties could defer to FERC on the issue subject to the
disagreement.


                                       34



III. REQUEST FOR APPROVAL OF THE SPP PARTNERSHIP RTO UNDER ORDER NO. 2000

          In Order Nos. 2000 and 2000-A, the Commission identified four minimum
characteristics that a transmission entity must meet and eight minimum functions
that a transmission entity must perform to qualify as an RTO. See Order No.
2000, FERC Stats. & Regs.,P. 31,089 at 30,993-94. The Commission emphasized that
a transmission entity had substantial flexibility in satisfying the minimum
characteristics and functions and in selecting the organizational form for the
entity, see id. at 30,994.

          As discussed below, the SPP Partnership RTO complies with the
requirements of Order No. 2000 and should be approved as an RTO.16  The
structure of the SPP Partnership RTO is consistent with Order No. 2000 and
otherwise just and reasonable. Also, the SPP Partnership RTO meets the four
minimum characteristics and will perform the eight minimum functions mandated
by Order No. 2000.

     A.   THE STRUCTURE OF THE SPP PARTNERSHIP RTO IS CONSISTENT WITH ORDER NO.
          2000 AND OTHERWISE JUST AND REASONABLE .

          The SPP Partnership RTO has an organizational form consisting of an
independent for-profit transco (the Transco) operating within the oversight of
an independent not-for-profit regional entity (the SPP). Under the SPP


- ------------------------
16   At this juncture, Entergy is not seeking a Commission ruling that the
Transco would meet the Order No. 2000 requirements absent the SPP Partnership.
Entergy reserves its rights to seek such a Commission ruling depending on the
outcome of future events.


                                       35



Partnership RTO, certain of the RTO's functions will be performed by the Transco
and certain functions will be performed by the SPP. The allocation of functions
between the Transco and the SPP is explained in the testimony of Steve Owens,
and further summarized in Section II.C.3, supra.

          In Order No. 2000, the Commission emphasized that the minimum
characteristics and functions could be satisfied by several different
organizational forms, such as ISOs, transcos, or a combination of the two. The
Commission stated:

          We will not limit the flexibility of proposed structures or forms of
          organizations for RTOs. We are prepared to accept a transco, ISO,
          hybrid form, or other form so long as the RTO meets our minimum
          characteristics and other functions and other requirements.

Order No. 2000 at 31,036-37; see also id., at 30,994.  Indeed, the Commission
specifically welcomed "innovative" and "tiered" RTO structures similar to the
SPP Partnership RTO:

               This Rule does not necessarily require that a single organization
          perform all of the functions itself. ... We will entertain appropriate
          tiered or other structures. We require only that the RTO be
          responsible for ensuring that the requirements are met in a way that
          satisfies our Rule.

               Because of the differing conditions facing various regions, we
          offer flexibility in the form of organization. We welcome innovative
          structures and forms that meet the needs of the Market Participants
          while satisfying the minimum requirements of this Rule.


                                       36



Id., at 31,037.  Subsequently, the Commission recognized a "binary RTO" which
combines a transco within a larger organization as an "innovative" structure
that could comply with Order No. 2000's minimum characteristics and functions.
See Commonwealth Edison Co., 90 FERC P. 61,192 (2000).

          Here, the SPP Partnership RTO has a "binary RTO" structure similar
(but not identical) to the RTO proposed by Commonwealth Edison and the Midwest
ISO. This type of structure was expressly encouraged by the Commission in Order
No. 2000 and in the Commonwealth decision. Moreover, the binary RTO structure
furthers the goals of Order No. 2000 in at least four specific ways.

          First, the structure provides additional independence. The operation
of the Transco under SPP oversight provides an additional level of independence
for the Transco beyond what is required under Order No. 2000. For example, the
structure allows the SPP to perform certain essential functions such as the
calculation of ATC and TTC. This makes these important calculations an
additional step removed from any possible control by Entergy or other Market
Participants in Entergy's region. In addition, the SPP provides additional
oversight for the functions that are actually performed by the Transco. That is,
the SPP Partnership RTO is responsible for monitoring the markets. This
eliminates complaints - raised, inter alia, by certain parties in opposition to
Entergy's Petition for Declaratory Order - that a Transco should not be allowed
to act as a market monitor. Also, the SPP provides a neutral forum for resolving
disputes involving the Transco.


                                       37



          Second, the binary RTO structure increases the size of the RTO. This
structure allows the creation of an RTO that is larger than an Entergy-only or
an SPP-only RTO. As a result, a larger regional electricity market can be
formed.

          Third, the binary RTO structure should increase the efficient
operation of the RTO. Under this structure, the Transco performs many of the
commercial functions involved in operating its grid. By placing these commercial
functions in the hands of a business entity that has the incentive to develop
efficient and cost-effective solutions, it is more likely that the RTO will find
innovative solutions.

          Fourth, the binary RTO structure offers an organizational structure
that may be attractive to certain utilities. See Commonwealth, 90 FERC at 61,627
("some utilities may find the ITC/transco form an attractive alternative to the
ISO model"). By permitting a structure that may be appealing to transmission
owners, the Commission will promote the voluntary formation of large, regional
transmission organizations, which is the overriding goal of Order No. 2000.

          Finally, the Transco structure itself furthers the goals of Order
2000. It eliminates vertical integration for purposes of transmission and
eliminates the distinction between bundled native load and customers taking
unbundled interstate transmission service. The Transco will operate its system
independently of its predecessor utilities, and will not make bundled retail
sales. All load-serving entities will take service under the Transco rate


                                       38



schedules.17  This will render moot the current debate about whether
transmission owners can favor bundled retail sales customers at the expense of
unbundled wholesale or retail sales customers.

          Therefore, the Commission should approve the structure and
organizational form of the SPP Partnership RTO as consistent with Order No.
2000, subject to the outcome of additional filings described above.

     B.   THE SPP PARTNERSHIP RTO MEETS THE MINIMUM CHARACTERISTICS.

          In Order No. 2000, the Commission ruled that an RTO must satisfy four
minimum characteristics: (1) independence; (2) scope and configuration; (3)
operational authority; and (4) short-term reliability. See 18 C.F.R. ss.
35.34(j). These characteristics must be met when the RTO commences operations.
As discussed below, and in the testimony of Frank Gallaher, the SPP Partnership
RTO will comply with these minimum characteristics on the date the RTO commences
operation.


          1.   THE RTO COMPLIES WITH THE INDEPENDENCE PRINCIPLE (CHARACTERISTIC
               NO. 1) .

          Order No. 2000 requires that the RTO be independent of any Market
Participant. The principle of independence is the "bedrock upon which the [RTO]
must be built." Order No. 2000 at 31,061; Atlantic City Electric Co., 77 FERC P.
61,148, at 61,574 (1996). To satisfy the independence principle, the RTO must


- ------------------------
17   Entergy fully recognizes the need for an equitable conversion plan for
existing firm customers, including bundled native load and retail access
customers. This must be addressed in the context of the development of the
regional congestion management plan. See Schnitzer testimony.


                                       39



meet the following four requirements: (1) the RTO must not have financial
interests in any Market Participant; (2) the RTO must have a decision making
process that is independent of control by any Market Participant or class of
Market Participants; (3) the RTO must have exclusive authority to propose rates,
terms, and conditions of transmission service provided over the facilities it
operates; and (4) the RTO must provide for certain compliance audits to be
performed. See Order No. 2000 at 31,046-47; 18 C.F.R.ss. 35.34(j)(1). As
discussed below, the SPP Partnership RTO, which combines an independent Transco
operating under the oversight and within the umbrella of the independent SPP
RTO, fully complies with the independence principle.

               a.   THE RTO HAS NO FINANCIAL INTEREST IN ANY MARKET
                    PARTICIPANT.

          Order No. 2000 requires that an RTO, its employees and non-stakeholder
directors have no financial interests in any Market Participant. See 18
C.F.R.ss. 35.34(j)(1). The SPP Partnership RTO satisfies this requirement.

          All employees, officers, and directors are employees, officers and
directors of the Transco and the Managing Member cannot have any current
affiliation with any Market Participant.18  Moreover, all employees, officers,
and directors must also comply with the Transco's Code of Conduct which, inter
alia, prohibits any financial interest in any Market Participant. For directors
and officers, the LLC Agreement and the Code of Conduct impose an additional


- ------------------------
18   In the agreements forming the Transco, "Market Participant" is defined
the same as it is defined in Order No. 2000. See 18 C.F.R. ss. 35.34(b)(2).


                                       40



requirement that none of their immediate family members have a financial
interest in any Market Participant.

          Consistent with Order No. 2000, and the Commission's precedents in the
context of Order No. 888's ISO Principles, the SPP Partnership RTO prohibits
only "current" financial interests in a Market Participant. See Order No. 2000
at 31,063. There is no prohibition against the RTO hiring former employees. When
former employees of a Market Participant are hired, they must divest any stock
ownership in their former employers within six (6) months. Also, a beneficial
ownership in stock as part of a diversified mutual fund is not prohibited, nor
is ownership in an approved pension plan. See Midwest ISO, 85 FERC at 62,036.

          Further, the Transco is not dependent 19 on the former transmission
owners, or any Market Participants for funding. The Transco will recover its
start-up costs, and its ongoing administrative costs, as part of a schedule
under the OATT. Thus, while Entergy will initially incur costs to start-up the
Transco, the Transco will recover these costs from its transmission customers.
The LLC Agreement also specifically provides that any goods or services obtained


- ------------------------
19   The Transco may, however, seek FERC approval to allow for innovative
funding of new transmission expansion projects from certain Market Participants.
This is described in the Testimony of Michael Schnitzer.


                                       41



by the Transco from Entergy (except certain limited tax and accounting services)
must be subject to a competitive bidding process.20

          Finally, as required by Order No. 2000, the SPP Partnership RTO's
monitoring plan will ensure that the Transco does not favor its own interests
when it participates in these markets (e.g., for purchasing ancillary services).

               b.   THE RTO HAS A DECISION-MAKING PROCESS INDEPENDENT OF
                    ANY MARKET PARTICIPANT OR CLASS OF MARKET PARTICIPANTS.

          Order No. 2000 requires the RTO to have a decision-making process that
is independent of control by any Market Participant or class of Market
Participants. The SPP Partnership RTO satisfies this requirement.

          As discussed in the testimony of Frank Gallaher, and in Section
II.C.2, supra, all business affairs of the Transco are to be conducted by the
Managing Member. The initial board of the Managing Member will be an independent
board selected by stakeholders, including transmission owners. The independent
board approach has been approved many times by the Commission in the context of
ISOs. See, e.g., Midwest ISO, 84 FERC P. 61,231 (1998); Central Hudson Gas &


- ------------------------
20   Entergy would ask the Commission to keep in mind that as RTO policies
evolve the Commission may want to allow RTOs to have as much flexibility as
possible in how they obtain certain products or services that were formally
provided within the vertically integrated utility. For instance, if Transco can
arrange with other Transcos (or even another Entergy entity) to leverage their
buying power for certain products and services (for instance cable or steel)
then it would seem to make sense to customers to do so if such activities do not
compromise Transco's independence and the prices are competitive. While it is
premature to ask permission on specific items, Entergy would ask the Commission
to keep this door open in the future for the Transco to make such requests.


                                       42



Elec. Co., 83 FERC P. 61,352 (1998); PJM Interconnection, 81 FERC P. 61,257
(1997); New England Power Pool, 79 FERC P. 61,374 (1997). Subsequent boards will
be self-perpetuating - that is, board members will be elected or selected by the
existing Board of Directors. However, when the Managing Member sells voting
stock to the public or to private investors, subsequent directors will be
selected by the voting shareholders.

          In addition, neither Entergy nor any other Market Participant will
have any active ownership of the Transco. Rather, as discussed in the testimony
of Frank Gallaher, Entergy, and other transmission owners, will be passive
owners in the Transco and will have no rights to vote in the business affairs of
the Transco, except with respect to certain extraordinary decisions (e.g.,
mergers and bankruptcies). These limited voting rights are intended to protect
the integrity of a member's capital investment in its transmission assets, as
allowed by the Commission in Order No. 2000 and the Alliance II Order. See Order
No. 2000 at 31,066; Alliance Cos., 91 FERC P. 61,152 at 61,581 (2000). Under
corporate law, the existence of these rights does not transform passive owners
into active owners. See generally Cox, Corporations, ss. 13.31 ("notwithstanding
their denomination as non-voting, holders of preferred as well as nonvoting
common shares are entitled under most modern corporation statutes to vote for
organic changes that directly affect their ownership status").

          The Commission has recognized that passive ownership proposals can be
allowed under Order No. 2000. See Order No. 2000 at 31,065; Order No. 2000-A at


                                       43



31,365; Entergy Services, Inc., 88 FERC P. 61,149 (1999), reh'g denied, 90
FERC P. 61,191 (2000); Alliance Cos., 91 FERC at 61,581. In Order No. 2000, the
Commission required RTO proposals to provide specific information so that the
Commission could judge the lawfulness of a passive ownership proposal. See Order
No. 2000 at 31,067. The Commission required the following information, which
supports Entergy's passive ownership proposal:

O    FIDUCIARY RESPONSIBILITIES. The Managing Member will have a fiduciary
     responsibility to maximize the value of a member's transmission assets, but
     no obligation to favor any other interests of a member, including its
     generation interests. A duty to favor a member's other interests is not
     created under Delaware law and, in any event, is expressly prohibited by
     the LLC Agreement, as is allowed by Delaware law. See, e.g., Sonet v.
     Timber Co., LP, 722 A.2d 319, 322 (Del. Ch. 1998).21  Also, in Order No.
     2000-A, the Commission stated that the fiduciary duty to maximize the value
     of the transmission assets would not create problems with respect to the
     RTO's independence. See Order No. 2000-A at 31,366.

O    ABILITY TO RAISE CAPITAL. The Transco has the ability to borrow funds and
     to raise capital, e.g., by issuing additional interests in the RTO. The
     only limitation on the Managing Member's ability to do this is its
     fiduciary obligation to protect the integrity of a member's capital
     investment.


- ------------------------
21   For a complete discussion of this issue, see Memorandum of Edward P.
Welch, Esq., et al., Appendix H1 to the Comments of Edison Electric Institute
filed in Docket No. RM99-2-000 (Aug. 23, 1999).


                                       44



O    CONTROL OVER BOARD SELECTION. As discussed above, the passive owners have
     no control over board selection.

O    CONTROL OVER TRANSMISSION RATES, TERMS, AND CONDITIONS. As discussed in the
     next section, the Transco will have authority to make rate filings. If the
     Transco acquires control of transmission assets through an Operating
     Agreement, the transmission owners subject to the Operating Agreement will
     have the right to file for changes to their revenue requirements to be
     recovered under that Agreement.

O    CONTROL OVER ISSUANCE OF EQUITY. See above on ability to raise capital.

O    SERVICES PROVIDED BY PASSIVE OWNERS. All services provided by passive
     owners will be subject to competitive bidding, except certain accounting
     and tax services.

O    ACCESS TO INFORMATION. The Transco's Code of Conduct prevents all Market
     Participants from having any preferential access to transmission
     information held by the Transco.

          To enhance the independence of the Transco, the SPP will have a
Stakeholder Advisory Committee which will allow Transco stakeholders to convey
their concerns to the board. Also, as discussed above, the oversight of the SPP
provides additional independence and an additional layer of protection against


                                       45



control by Market Participants. Many important functions, including market
monitoring, ATC/TTC calculation, and security coordination will be performed by
SPP, not the Transco. The SPP's oversight role will supplement and provide an
additional check on the independence of the Transco.

               c.   THE RTO HAS EXCLUSIVE AND INDEPENDENT AUTHORITY TO
                    PROPOSE RATES, TERMS AND CONDITIONS UNDER FPA SECTION 205.

          Order No. 2000 also requires that the RTO have exclusive and
independent authority to propose rates, terms, and conditions for transmission
service under Section 205 of the FPA. See Order No. 2000 at 31,075; 18 C.F.R.
ss. 35.34(j)(1)(iii). The SPP Partnership RTO complies with this requirement.

          The SPP and the Transco will share the right to propose rates, terms
and conditions under Section 205 for transmission service on the Transco's and
SPP's systems. Under the SPP Partnership RTO MOU, the Transco will have the
right (subject to notice to the SPP) to propose rate or rate structure changes
for transmission charges to load within the Transco grid and to make filings at
FERC to implement new transmission services that are not contained in the SPP
tariff. A list of all the tariff provisions that the Transco will have the right
to change will be developed and attached to Entergy's December rate filing. The


                                       46



SPP will have the right to propose other changes to the rates, terms and
conditions for transmission service on the SPP's and Transco's systems.22

          In the case of transmission owners who turn operational control, but
not ownership, of their transmission assets to the Transco under the Operating
Agreement, the Transco will have the sole right to amend its rate schedule under
the SPP RTO Tariff, but the transmission owners will have the right under
Section 205 of the FPA to file for rate changes to ensure the recovery of their
revenue requirement for use of the transmission assets.

               d.   THE RTO COMPLIES WITH THE INDEPENDENCE AUDIT REQUIREMENT.

          Order No. 2000 also contains an audit requirement for RTO proposals in
which Market Participants are allowed to have ownership interests. See 18
C.F.R.ss. 35.34(j)(1)(iv). The SPP Partnership RTO complies with this
requirement.

          Because the LLC Agreement contemplates that Entergy, and other
transmission owners, may have passive ownership of the Transco, the Transco
Implementation Plan and the Managing Member's By-laws provide that an
independent auditor shall monitor and prepare a report on the Transco's
compliance with the independence requirement. See 18 C.F.R. ss.


- ------------------------
22   The only limitation on the Managing Member/Transco's ability to propose
changes in the rates, terms and conditions for which the Transco has unilateral
Section 205 rights are the fiduciary duties owed by the Managing Member to the
passive owners, including the duty to preserve the integrity of the investor's
capital investment and to maximize the value of the transmission assets.


                                       47



35.34(j)(1)(iv)(A)(1). The auditor shall be independent from the SPP, the
Transco, and any transmission owner who is a member of the SPP or Transco. See
18 C.F.R. ss. 35.3(j)(1)(iv)(B).

          2.   THE RTO IS OF SUFFICIENT SCOPE AND CONFIGURATION
               (CHARACTERISTIC NO. 2).

          Order No. 2000 requires the RTO to be of sufficient scope and
configuration to permit the RTO to maintain reliability, effectively perform its
required functions, and support efficient and non-discriminatory power markets.
See Order No. 2000 at 31,079; 18 C.F.R.ss. 35.34(j)(2). The Commission made
clear that it was not prescribing boundaries and that there was no one "right"
configuration. Rather, the Commission concluded that transmission owners,
regulators, and Market Participants in the region were in a better position to
propose and determine, at least initially, the RTO's scope and configuration.
See Order No. 2000 at 31,079.

          In determining whether the RTO is of sufficient scope and
configuration, the Commission identified nine specific factors that should be
evaluated. The Commission also indicated that the overall size of the RTO was an
important consideration that runs across many of the factors. Finally, the
Commission required that the RTO control a large majority of the transmission
facilities in the region.

          An examination of the considerations identified by the Commission in
Order No. 2000 for determining the adequacy of the RTO's scope demonstrates that
the SPP Partnership RTO is of sufficient scope and configuration.


                                       48



          First, the most important single factor in determining the appropriate
scope and configuration of the RTO is the RTO's size. As the Commission noted,
RTOs should be "as large as possible." Order No. 2000 at 31,082 n.367 (quoting
Order No. 888). Here, the Transco itself consists of Entergy's transmission
facilities which cover approximately 15,000 miles, serve a peak load of 22,052
MW, and extend to four states. This is comparable in size to the New York, New
England, and PJM ISOs. Moreover, when combined with the SPP, the total RTO is
far larger. It has 52,300 transmission miles, serves a peak load of 60,661 MW,
and extends to eight states.

The following table compares the transmission systems of Entergy, Entergy
combined with the SPP, the PJM ISO, the New York ISO, and the New England ISO:

- ---------------------- --------------------- -------------------- --------------
SYSTEM                 TOTAL AREA            TRANS. MILES         PEAK LOAD (MW)
- ---------------------- --------------------- -------------------- --------------
Entergy                 112,000               15,000               22,052
- ---------------------- --------------------- -------------------- --------------
Entergy/SPP             400,000               52,300               60,661
- ---------------------- --------------------- -------------------- --------------
PJM ISO                 50,000                8,000                51,700
- ---------------------- --------------------- -------------------- --------------
New York ISO            48,000                11,000               30,300
- ---------------------- --------------------- -------------------- --------------
New England ISO         66,000                8,100                22,500
- ---------------------- --------------------- -------------------- --------------


                                       49



          In determining the sufficiency of the size of the RTO, the Commission
should consider the combined facilities of both the Transco and the SPP. In
Order No. 2000, the Commission stated that it would be receptive to "flexible
and innovative" ways to achieve a sufficient scope and configuration. See Order
No. 2000 at 31,083. Moreover, in the SPP Order, the Commission recognized that
Entergy combined with the SPP could comprise an appropriate scope and
configuration. See SPP Order, 91 FERC at 61,530.

          Second, the Commission also identified nine specific factors to be
considered in evaluating the sufficiency of an RTO's scope and configuration.
See Order No. 2000 at 31,083-85. These factors support the conclusion that the
SPP Partnership RTO is of appropriate scope and configuration. For example:

O    FACILITATE PERFORMING ESSENTIAL RTO FUNCTIONS AND ACHIEVING RTO GOALS. The
     lack of pancaking in the entire region will help create a larger market.
     The "seams" issues will be reduced by coordinating and standardizing, to
     the extent practicable, the rules between Entergy and SPP.

O    ENCOMPASS ONE CONTIGUOUS GEOGRAPHIC REGION. As demonstrated by the map of
     the SPP and the Transco (attached as Exhibit FFG-1 to the Gallaher
     testimony), the transmission system to be controlled by the SPP Partnership
     RTO encompasses a contiguous geographic region, and there are few "holes"
     in the RTO.


                                       50



O    ENCOMPASS A HIGHLY INTERCONNECTED PORTION OF THE GRID. Entergy and SPP
     systems are highly interconnected.

O    DETER THE EXERCISE OF MARKET POWER. The competitive market in the region is
     growing, as evidenced by the huge growth in new merchant plants. The
     interconnection procedures developed by Entergy and the SPP should assist
     in this growth.

O    RECOGNIZE TRADING PATTERNS. There has historically been significant
     transactions that have crossed both the SPP and the Transco's systems.

O    TAKE INTO ACCOUNT EXISTING REGIONAL BOUNDARIES. The RTO configuration takes
     into account the SPP's existing boundaries and combines them with Entergy,
     a former SPP member.

O    ENCOMPASS EXISTING REGIONAL TRANSMISSION ENTITIES AND EXISTING CONTROL
     AREAS. The RTO encompasses both Entergy and SPP, and includes a number of
     existing control areas.

          Finally, in determining the sufficiency of the RTO's scope and
configuration, the Commission should consider whether the RTO has control over a
large majority of transmission facilities in the region. The Transco will have
control over the vast majority of transmission facilities in the region. The few
small "holes" in the RTO represent facilities of municipalities and other
utilities not regulated by the Commission. Entergy and the SPP have invited
these entities to join the SPP Partnership RTO, and Entergy has drafted the


                                       51



Operating Agreement to allow them to commit their assets to the Transco and to
make it easier for them to join the RTO.

          3.   THE RTO HAS SUFFICIENT OPERATING AUTHORITY OVER THE
               TRANSMISSION FACILITIES UNDER ITS CONTROL (CHARACTERISTIC NO. 3).

          Order No. 2000 requires the RTO to have operational authority for all
transmission facilities under its control and to be the security coordinator for
the facilities it controls. See Order No. 2000 at 31,090; 18 C.F.R. ss.
35.34(j)(3). Certain of the RTO's operational functions may be shared with
entities other than the RTO, but, in that event, the RTO must (1) ensure that
this sharing of operational authority will not adversely affect reliability or
provide any market participant with an unfair competitive advantage and (2)
within two years after initial operations, prepare a public report that assesses
whether any division of operational authority hinders the RTO in providing
reliable, non-discriminatory and efficiently-priced transmission service.

          The SPP Partnership RTO satisfies this minimum characteristic. Both
the Transco and the SPP will have full operational authority over their
respective transmission facilities. The Transco's operational authority over its
transmission facilities will include (1) switching transmission elements into
and out of operation in the transmission system; (2) monitoring and controlling
real and reactive power flows; (3) monitoring and controlling voltage levels;
and (4) scheduling and operating reactive resources. In addition, the Transco
will operate its own control area, as will the individual transmission owners


                                       52



that are members of the SPP. The Commission expressly held that an RTO did not
need to operate a single control area. See Order No. 2000 at 31,091.

          The SPP will be the security coordinator for the entire RTO, including
the Transco. The Commission recognized that an RTO can contractually delegate
the security coordinator function and that more than one RTO can share a single
security coordinator. See id. Indeed, having the SPP act as the security
coordinator for the Transco is beneficial because (1) it further eliminates any
concerns that the passive members may exercise control and cause the RTO to make
operating decisions that favor their interests and (2) it allows the security
coordinator to find solutions to congestion over a larger region. The SPP's
duties as security coordinator include (1) performing load-flow and stability
studies to anticipate, identify and address security problems; (2) exchanging
security information with local and regional entities; (3) monitoring real-time
operating characteristics such as the availability of reserves, actual power
flows, interchange schedules, system frequency and generation adequacy; and (4)
directing actions to maintain reliability, including shedding firm load.

          The Transco will exercise its operating authority in two ways. For
transmission facilities that are contributed to the Transco in return for
passive ownership interests under the LLC Agreement, the Transco will directly
control those facilities. For other transmission facilities - i.e., transmission
facilities that are turned over to the Transco's operational control under the
Operating Agreement, the Transco will exercise functional control over those
facilities by directing the transmission owners to take actions. In Order No.


                                       53



2000, the Commission expressly recognized that the RTO has flexibility in
determining how to exercise operational control over its transmission
facilities. The Commission stated that it will leave it to the region to
determine what works best, and it will approve the selected approach provided
that it ensures reliable operation of and non-discriminatory access to the grid.
See Order No. 2000 at 31,091.

          Finally, because some operational authority is shared between the
Transco and the SPP, the Transco will, within two years of operation, prepare a
public report that assesses the efficacy of its operational arrangements. See
Order No. 2000 at 31,092; 18 C.F.R.ss. 35.34(j)(3)(i); see also Commonwealth
Edison Co., 90 FERC at 61,619.

          4.   THE RTO HAS EXCLUSIVE AUTHORITY FOR MAINTAINING SHORT-TERM
               RELIABILITY OF THE GRID (CHARACTERISTIC NO. 4) .

          Order No. 2000 also requires that the RTO have exclusive authority for
maintaining the short-term reliability 23  of the grid that it operates. See
Order No. 2000 at 31,103; 18 C.F.R.ss. 35.34(j)(4). This means that the RTO must
(1) have exclusive authority for receiving, confirming and implementing all
interchange schedules; (2) have the right to order redispatch of any generator
connected to transmission facilities it operates if necessary for the reliable
operation of these facilities; (3) have authority to approve or disapprove all


- ------------------------
23   Short term reliability includes all responsibilities short of grid
enhancement and covers the time period from real-time to the planning horizon.
See Order No. 2000 at 31,103.


                                       54



requests for scheduled outages of transmission facilities to ensure that the
outages can be accommodated within established reliability standards; and (4)
report to the Commission if reliability standards established by another entity
hinder it from providing reliable, non-discriminatory and efficiently-priced
transmission service.

          The SPP Partnership RTO satisfies this minimum characteristic. The
Transco will have exclusive authority for receiving, confirming, and
implementing the Transco's interchange schedules. Also, the Transco has the
right to order redispatch of any generator connected to the transmission
facilities it operates if necessary for the reliable operation of these
facilities - i.e., necessary in emergency situations. To implement this right,
all generators who are currently interconnected, and all generators who
subsequently interconnect, must sign agreements allowing the Transco to
redispatch them in emergencies.

          For facilities over which the Transco does not have transmission
maintenance responsibilities (e.g., facilities subject to the Transco's
functional control under the Operating Agreement), the Transco will have the
authority to approve or disapprove transmission maintenance outages. Also, the
Transco will require generators to submit generation maintenance schedules to
the Transco. Finally, the SPP Partnership RTO will exercise its responsibilities
consistent with NERC (and other reliability) standards. The RTO will report to
the Commission if implementation of any of these standards will prevent it from
meeting its obligation to provide reliable, non-discriminatory transmission
service.


                                       55



C.   THE SPP PARTNERSHIP RTO SATISFIES THE EIGHT MINIMUM FUNCTIONS

          In addition to the four minimum characteristics, which must be
complied with on the operational date, Order No. 2000 also requires that an RTO
perform eight minimum functions. See Order No. 2000 at 31,106. Not all of the
minimum functions need to be performed on the operational date. That is, the
Commission will allow RTOs additional time to comply with certain of the
functions. As discussed below, and in the testimony of Steve Owens, the SPP
Partnership RTO satisfies these minimum functions.

          1.   THE RTO IS THE SOLE ADMINISTRATOR OF ITS OWN TARIFF
               (FUNCTION NO. 1) .

          Order No. 2000, and its implementing regulations, require the RTO to
be the sole administrator of its own transmission tariff and employ a pricing
system that will promote efficient use and expansion of transmission and
generation facilities. See Order No. 2000 at 31,108; 18 C.F.R. ss. 35.34(k)(1).
To comply with this requirement, the RTO must be the provider of transmission
service over the transmission facilities under its control and must be the sole
administrator of its tariff. The RTO must have the sole authority to receive,
evaluate, and approve or deny all requests for transmission service and must
have the authority to review and approve new generation connections. Finally,
the RTO must not charge pancaked rates for service over the transmission
facilities it controls.

          The SPP Partnership RTO complies with the first minimum function.
Under the SPP Partnership RTO MOU, if Entergy and the SPP agree on the details


                                       56



of the congestion management approach that those parties agreed to in principle,
then the SPP Partnership RTO will administer a single tariff for transmission
service within the SPP and the Transco systems. The Transco will have control
over those portions that affect the commercial terms and conditions of
transmission service over the Transco's facilities. Transco will have the
unilateral right to propose rate changes for load within the Transco service
territory and to make filings at FERC to implement new transmission services.24
A detailed list of the tariff provisions that Transco will have the unilateral
right to change through FERC filings will be completed and filed with Entergy's
December 2000 filing. The Transco will be responsible for conducting studies and
scheduling transactions on the Transco's system and shall be the provider of
last resort for ancillary services in accordance with Order No. 888.

          With respect to new generator interconnections, the SPP and the
Transco will be responsible for generation interconnection requests on their
respective systems. Both the SPP and Entergy have filed with the Commission
interconnection procedures to govern generation interconnection requests. See
Entergy Services, Inc., Docket No. ER00-1743; Southwest Power Pool, Inc., Docket
No. ER00-2713. These procedures are compatible, and there are no major
differences between them. The Transco will initially adopt Entergy's


- ------------------------
24   The MOU provides that the Transco will provide the SPP with a copy of
any such filings 30 days prior to filing them with FERC and will make reasonable
efforts to resolve any issues regarding the new service prior to filing at FERC.


                                       57



interconnection procedures which have been approved by the Commission.25  Soon
after the Transco becomes operational, the Transco and the SPP will work
together to develop a single set of procedures for interconnections on both
systems.

          In addition, there will be no pancaking of rates in the SPP's and the
Transco's region. To ensure this, the SPP Partnership RTO MOU (P. 5) provides
that the SPP and Transco agree to a reciprocal waiver of access charges for
transactions scheduled on one system that terminate on the other system. Also,
for transmission service on both the Transco's and the SPP's systems to load
outside the system (i.e., for wheeling through and wheeling out transactions),
the Transco and the SPP will develop and file with the Commission a joint rate
that includes a rate formula that compensates both the Transco and the SPP for
their proportionate contribution to the transaction.

          Finally, the Transco will employ a transmission pricing system that
promotes efficient use and expansion of transmission and generation facilities.
In addition to creating a pricing system that does not allow pancaked rates
across the Transco and SPP systems, the MOU gives the Transco the right to
propose rates and rate structures (including innovative rate making proposals)
for transmission service over the Transco's transmission facilities. The Transco
plans to propose an incentive rate design that will promote efficient and
reliable operation and expansion of the grid. The incentive measures will be
focused on reliability, maximizing the utilization of the grid, minimizing


- ------------------------
25   See Entergy Services, Inc., 91 FERC P. 61,149 (2000).


                                       58



congestion, and efficiently expanding the grid where it is in the economic
interest of the market.

          2.   THE RTO WILL DEVELOP AND OPERATE MARKET MECHANISMS TO MANAGE
               CONGESTION (FUNCTION NO. 2) .

          Order No. 2000 requires that the RTO ensure the development and
operation of market mechanisms to manage transmission congestion. See Order No.
2000 at 31,126; 18 C.F.R.ss. 35.34(k)(2). The market mechanisms must accommodate
broad participation by all Market Participants and must provide all transmission
customers with efficient price signals that show the consequences of their
transmission usage decisions. According to Order No. 2000, these market
mechanisms do not have to be in place when the RTO commences initial operations,
but they must be in place one year after initial operations.26  The Commission
emphasized that there was substantial flexibility in developing mechanisms for
congestion management and that it did not intend to mandate any single method.
See Order No. 2000 at 31,127.

          Here, as described in the Testimony of Steve Owens, Entergy is
optimistic that the SPP and Transco will be able to reach agreement on the
details for the congestion management system to manage congestion over the
entire RTO region. Entergy and the SPP have agreed in principle on a congestion
management model that uses locational marginal pricing ("LMP") with financial


- ------------------------
26   If the market mechanisms are not in place at the time of initial
operations, the RTO must have in place an effective protocol for managing
congestion at that time. See 18 C.F.R.ss. 35.34(k)(2)(ii).


                                       59



rights for the real-time balancing energy market and that would provide nodal
pricing for generators and zonal pricing for loads and tradable transmission
rights for forward markets. The SPP's CMSWG is currently developing and
implementing this market structure, and the SPP Partnership RTO Agreement is
conditional upon CMSWG implementing this approach in a mutually agreeable
manner.

          This hybrid approach should satisfy the requirement for efficient
market mechanisms to manage congestion. The approach is similar to the approach
used by the PJM and New York ISOs, and approved by the Commission. See, e.g.,
PJM Interconnection, 81 FERC P. 61,257 (1997); PJM Interconnection, 87 FERC P.
61,054 (1999); Central Hudson Gas & Electric Corp., 86 FERC P. 61,062 (1999),
reh'g granted in part, denied in part, 88 FERC P. 61,138 (1999). Also, this
congestion management approach should ensure that (1) least cost generators are
dispatched in constraints; and (2) limited transmission capacity is used by
those who value it most highly. This approach should also accommodate broad
participation by all Market Participants and provide all transmission customers
with efficient pricing signals that show the consequences of their transmission
usage. 27

          As stated above, Entergy's intent is to reach agreement on a
congestion management approach before the RTO commences initial operations.
However, if the CMSWG is unable to develop and implement a mutually-agreeable
approach to congestion management in time for the commencement of initial


- ------------------------
27   In Order No. 2000, the Commission expressed strong support for the LMP
approach to congestion management. The Commission stated that LMP provides "a
sound framework for efficient congestion management." Order No. 2000 at 31,127
(citing PJM).


                                       60



operations, then the Transco and the SPP may adopt an interim mechanism to be in
place immediately. In that event, the interim method will be filed with the
Commission in time to allow the Commission an opportunity to review and approve
the interim method before it takes effect.

          3.   THE RTO WILL DEVELOP AND IMPLEMENT PROCEDURES TO ADDRESS PARALLEL
               PATH FLOW ISSUES WITHIN ITS REGION AND OTHER REGIONS (FUNCTION
               NO. 3) .

          Order No. 2000 requires the RTO to develop and implement procedures to
address parallel path flow issues within its region and with other regions. See
Order No. 2000 at 31,129-30; 18 C.F.R.ss. 35.34(k)(3). The RTO has up to three
years after it commences initial operations to satisfy this function. Id.

          To comply with this function, the SPP has formed a Seams Issues
Working Group that is studying various methods to deal with loop flows with
neighboring reliability regions, and Entergy is (and the Transco will be) an
active participant in that process. As required by Order No. 2000, the SPP and
the Transco will jointly file their plan to resolve parallel flow and other
seams issues no later than three years after the RTO commences initial
operations. In addition, as stated in paragraph 14 of the SPP Partnership RTO
MOU, the SPP and Transco will work together to jointly support any multi-state
transmission planning compact that is developed in the SPP Partnership RTO's
region. Further, the Transco intends to remain a member in the Southeast
Regional Reliability Council ("SERC") and continue working actively with SERC


                                       61



member companies, in concert with the SPP, to address parallel flow issues as
well as other regional planning issues.

          4.   THE RTO WILL SERVE AS PROVIDER OF LAST RESORT FOR ANCILLARY
               SERVICES (FUNCTION NO. 4) .

          Order No. 2000 requires the RTO to serve as the provider of last
resort for the ancillary services required by Order No. 888. See Order No. 2000
at 31,140; 18 C.F.R. ss. 35.34(k)(4). The RTO must allow all Market Participants
the option of self-supplying ancillary services or acquiring those services from
third parties. In addition, the RTO must have the authority to decide the
minimum amounts required and locations of ancillary services, must have direct
or indirect operational control of all ancillary services, and must promote the
development of competitive markets for ancillary services whenever feasible.
Finally, the RTO must ensure that its transmission customers have access to a
real-time balancing market.

          Here, the SPP Partnership RTO will perform these minimum functions as
required by Order No. 2000. Under the joint tariff, the Transco will be the
provider of last resort for the ancillary services required by Order No. 888 for
its transmission customers - i.e., for the transmission customers with load in
the Transco's control area. In addition, the Transco will coordinate with the
SPP in the provision of ancillary services to ensure that location-specific
ancillary services, such as voltage support, are adequately provided.


                                       62



          All providers of ancillary services within the Transco area will be
subject to direct and operational control of the Transco. Although the
development of the RTO market is just beginning, it is anticipated that the
Transco will procure some ancillary services through the regional market
structure that it anticipates will develop at SPP. However, there may be
circumstances in which either the Transco or the SPP enter into bilateral
arrangements for ancillary services to ensure reliability. Also, both the
Transco and the SPP will afford Market Participants the option of self-supplying
or obtaining ancillary services from third parties. The Transco and the SPP will
have the authority to determine both the quantities of and locations for
ancillary services. The SPP and the Transco will also promote the development of
competitive markets for ancillary services wherever feasible. Indeed, the LMP
congestion management system that the CMSWG is currently developing should allow
efficient markets to develop for ancillary services.

          With respect to the real-time balancing market, SPP and Entergy have
tentatively agreed on a real-time balancing market that would operate as part of
the LMP-based congestion management system that the CMSWG is currently devising.
As described in the Schnitzer Testimony, Entergy believes that this system will
create a real-time balancing market that will encourage proper scheduling
practices and provide efficient pricing signals for the siting of new
transmission and generation facilities.

          5.   THE RTO WILL BE THE OASIS ADMINISTRATOR FOR ALL TRANSMISSION
               FACILITIES UNDER ITS CONTROL (FUNCTION NO. 5) .


                                       63



          Order No. 2000 requires an RTO to be the single OASIS site
administrator for all transmission facilities under its control and to
independently calculate ATC and TTC. See Order No. 2000 at 31,144-45; 18 C.F.R.
ss. 35.34(k)(5).

          The SPP Partnership RTO complies with this minimum function. Under the
SPP Partnership RTO Agreement, the SPP and Transco will jointly administer a
single OASIS site. The Transco and the SPP are committed to developing true
one-stop shopping for their customers. In Order No. 2000, the Commission
expressly recognized that an RTO may provide for a "super OASIS" site that is
operated by more than one RTO. See Order No. 2000 at 31,145.

          With respect to ATC and TTC calculations, the SPP will be responsible
for all ATC and TTC calculations for the grid controlled by the SPP Partnership
RTO. Under the SPP Partnership RTO MOU, the SPP and the Transco have agreed to
use a single model for calculating ATC/TTC that incorporates the VST model
(Vacar, Southern, and TVA). If the SPP and the Transco agree on a single
congestion management regime, the SPP will perform all ATC/TTC calculations
using a methodology that is mutually agreeable to the SPP and the Transco. The
Transco will be responsible for determining the ratings for its transmission
facilities and will provide that information to the SPP to support its ATC/TTC
calculations. The Transco will have real-time access to the SPP's ATC/TTC
calculations. Also, if the Transco and the SPP cannot resolve a disagreement


                                       64



over the calculation of ATC or TTC, the Transco can submit that disagreement to
the SPP Partnership RTO's dispute resolution process.28

          6.   THE RTO WILL PERFORM A MARKET-MONITORING FUNCTION (FUNCTION
               NO. 6) .

          In order to ensure that the RTO will provide reliable, efficient, and
not unduly discriminatory transmission service, Order No. 2000 requires that the
RTO provide for objective monitoring of markets it operates or administers. The
RTO's market monitoring plan should identify market design flaws, market power
abuses, and opportunities for efficient improvements and propose appropriate
actions. See Order No. 2000 at 31,155-56; 18 C.F.R. ss. 35.34(k)(6). Order No.
2000 further provides that the market monitor (1) monitor behavior of Market
Participants in the region, including transmission owners, to determine if their
actions hinder the RTO's ability to provide reliable, efficient, and not unduly
discriminatory transmission service; (2) periodically assess how behavior in
markets operated by others affects the RTO's operations and how markets operated
by the RTO affects behavior in those other markets; and (3) file reports on
opportunities for efficiency improvements, market power abuses, and market
design flaws with the Commission and other affected regulatory authorities. The
Commission emphasized that an RTO has "flexibility" in developing a market
monitoring plan that satisfies this minimum function. See Order No. 2000 at
31,156.


- ------------------------
28   See all P.4 of Attachment G.


                                       65



          The SPP Partnership RTO satisfies this minimum function. Under the SPP
Partnership RTO Agreement, market monitoring for the markets operated by the
Transco will be conducted by the SPP Partnership RTO. The SPP's market
monitoring plan will provide for objective monitoring of markets in order to
identify market design flaws, market power abuses, and opportunities for
efficiency improvements and propose appropriate actions. The monitoring plan
will also monitor the behavior of Market Participants, including Entergy, to
determine if their actions hinder the RTO's ability to provide reliable,
efficient and non-discriminatory service.

          The monitoring plan will monitor the transmission market and assess
how behavior affects the RTO's operations. The market monitor will also develop
reports and file them with the Commission and the state regulators affected by
the markets operated by the Transco. However, in acquiring the information
necessary to prepare those reports, the monitoring plan will not require the
collection of data outside the ordinary course of business. Also, the market
monitor will not have the authority to sanction Market Participants. In Order
No. 2000, the Commission stated that the market monitoring function did not
mandate the authority to impose sanctions, but that RTOs have flexibility in
framing monitoring plans that do not give the monitor the authority to impose
sanctions. Here, the market monitor will have the authority to effectively
monitor and report to the Commission any abuses, but it will not share with the
Commission the authority to sanction any alleged violators. Finally, the market


                                       66



monitor will oversee SPP in its role as Security Coordinator under P. 16 of the
MOU (See Attachment F, P. 16).

          7.   THE RTO WILL COMPLY WITH THE PLANNING AND EXPANSION FUNCTION
               (FUNCTION NO. 7) .

          Order No. 2000 requires the RTO to be responsible for planning and
directing, or arranging, necessary transmission expansions, additions, and
upgrades that will enable it to provide efficient, reliable and
non-discriminatory transmission service and coordinate these efforts with the
appropriate state authorities. See Order No. 2000 at 31,163; 18 C.F.R. ss.
35.34(k)(7). In performing this function, the RTO's planning and expansion
process must (1) encourage market-driven operating and investment actions for
preventing and relieving congestion; and (2) accommodate efforts by state
regulatory commissions to create multi-state agreements to review and approve
new transmission facilities. If the RTO is unable to satisfy this requirement
when it commences operations, it must file with the Commission a plan, with
specified milestones, that will ensure that it will meet this requirement within
three years after initial operations. In Order No. 2000, the Commission noted
that RTOs have "considerable flexibility" in designing transmission expansion
plans that work best for their regions. See Order No. 2000 at 31,164.

          The SPP Partnership RTO satisfies this minimum function. As stated in
paragraph 13 of the SPP Partnership RTO MOU, the Transco will develop the
transmission expansion plan for its region. The plan will include both
market-funded and rate-funded projects. The Transco's plan will be submitted to
the SPP for review and inclusion in an RTO-wide plan that will be prepared by
the SPP. The SPP will review all rate-funded projects contained in Transco's


                                       67



plan for reliability considerations and the appropriateness of cost recovery in
Transco rates. The SPP will review market-funded projects for reliability
considerations only. In addition, the SPP and the Transco will develop a formula
to apportion responsibility among all RTO transmission owners for the funding of
projects that were not included in the Transco's plans, but that the RTO found
to be necessary for reliability reasons.

          This expansion and planning process is described further in the
testimony of George Bartlett. As demonstrated in that testimony, the planning
and expansion process will encourage market-driven operating and investment
actions for preventing and relieving congestion and will be compatible with
pricing signals for congestion management. Also, the planning and expansion
process will accommodate multi-state agreements to review and approve new
transmission facilities and to coordinate with existing neighboring transmission
entities.

          8.   THE RTO WILL ENSURE INTERREGIONAL COORDINATION (FUNCTION NO. 8).

          Order No. 2000 requires the RTO to ensure the integration of
reliability practices within an interconnection and market interface practices
among regions. See Order No. 2000 at 31,167; 18 C.F.R.ss. 35.34(k)(8).

          The SPP Partnership RTO satisfies this minimum function. As discussed
in Section II.C.3, supra, the SPP has already formed a Seams Issues Working
Group that is focused on promoting the development of interregional solutions to


                                       68



such issues as loop flows, efficient rate design, and other regional issues. The
Transco will be a full participant in this SPP process and will also continue to
actively work with SERC members on similar issues, in concert with the SPP.
Additionally, the SPP and the Transco have agreed to jointly work together to
support any multi-state transmission planning compact that is developed in their
region.

     D.   THE RTO MEETS THE OTHER REQUIREMENTS OF ORDER NO. 2000 .

          In addition to satisfying the four minimum characteristics and eight
minimum functions necessary for a transmission entity to qualify as an RTO under
Order No. 2000, the SPP Partnership RTO also is consistent with the other
requirements contained in Order No. 2000.

          1.   ENTERGY AND SPP PARTNERSHIP RTO HAVE ENGAGED IN AN EXTENSIVE
               STAKEHOLDER PROCESS .

          In Order No. 2000, the Commission stated that it expected RTOs to
engage in a collaborative process with stakeholders in the region in designing
the RTO. See Order No. 2000 at 31,167-68. As discussed in the attached testimony
of Steve Owens and Frank Gallaher, Entergy and the SPP have engaged in an
extensive dialogue with stakeholders in developing the Transco and forming the
SPP Partnership RTO.

          As discussed in the Gallaher testimony, Entergy submitted its Transco
proposal for public input in April 1999 when it filed its Petition for
Declaratory Order in Docket No. EL99-57. During this proceeding, Entergy
received input and comments from numerous stakeholders. Also, Entergy discussed


                                       69



its Transco proposal with stakeholders during the Order No. 2000 regional
collaboratives and during separate meetings. Entergy made changes to its
proposal as a result of comments from its retail regulators and stakeholders.
Indeed, the decision to form the SPP Partnership RTO was motivated, in part, by
discussions with regulators and stakeholders.

          Moreover, as discussed in the testimony of Steve Owens, the process by
which the SPP Partnership RTO MOU and the agreement in principle on congestion
management involved extensive stakeholder input. The SPP decisional process
ensures that stakeholders are involved in the SPP's decisions. The meetings and
working groups that developed the MOU and the agreement in principle on
congestion management were open to the public and were attended by a broad
cross-section of stakeholders. Under the SPP decisional process, stakeholders
will continue to be involved in the implementation of the details of the SPP
Partnership RTO.

          2.   THE SPP PARTNERSHIP RTO COMPLIES WITH THE OPEN ARCHITECTURE
               REQUIREMENT.

          Order No. 2000 requires that the RTO be designed in accordance with
the "open architecture" principle - that is, it must be designed so that it can
evolve over time. See Order No. 2000 at 31,170; 18 C.F.R. ss. 35.34(l). The SPP
Partnership RTO fully satisfies this principle. For example, there are no
provisions in either the SPP's or the Transco's forming documents that would


                                       70



limit the capability of the RTO to evolve in ways that would improve its
efficiency, consistent with the minimum characteristics and functions. Also,
there are no restrictions in those documents that would prevent new
transmission-owning members from joining the RTO. Furthermore, the SPP
Partnership RTO MOU expressly provides that the Transco will be structured to
reasonably accommodate other SPP members and non-members who elect to join (see
MOU, P. 21) and that Agreement shall remain binding and shall be accommodated in
the event that the SPP merges or combines with another regional transmission
entity (see id., P. 22).

          3.   THE SPP PARTNERSHIP RTO HAS MADE AN EFFORT TO INCLUDE PUBLIC
               POWER.

          Order No. 2000 also requires an RTO to accommodate public power and to
report on its efforts to include public power in the RTO. See Order No. 2000 at
31,201. The SPP has made a significant effort to include public power within its
RTO. In fact, the SPP includes numerous public power entities as members. Public
power entities participated in the working groups that developed the MOU and the
agreement in principle on congestion management and were an integral part of the
SPP decisional process. In addition, Entergy has met with public power entities
in its service territory to discuss the possibility of joining the Transco.
Entergy is aware that public power entities, for tax reasons and for other
considerations (including legislative restrictions on the use of their
transmission assets) may be reluctant to contribute their transmission assets to
the Transco. Entergy has therefore drafted the Operating Agreement to allow


                                       71



public power entities to turn functional control of their transmission assets to
the Transco. This may allow certain public power entities to join the Transco
without experiencing adverse tax consequences or violating other statutory
restrictions that may exist.

IV.  REQUEST FOR APPROVAL OF THE TRANSFER OF TRANSMISSION ASSETS UNDER FPA
     SECTION 203

     A.   OVERVIEW OF THE TRANSFER OF TRANSMISSION FACILITIES

          In this Application, Entergy is seeking approval to transfer its
transmission and transmission related assets to the Transco which will operate
as part of the SPP Partnership RTO. The details of this transfer of assets are
described in the attached testimony of Frank Williford (Attachment L), Nathan
Langston (Attachment M), and George Bartlett (Attachment K).

          As described in the Williford testimony, Entergy intends to transfer
the transmission assets of the Entergy Operating Companies to the Transco in
return for passive ownership interests in the LLC.29  Through a series of
transactions including the transfer of legal title, the Operating Companies will
transfer their transmission assets to the Transco. Ultimately, Entergy will
receive as a dividend the Operating Companies' indirect passive ownership
interest in the Transco. In addition, through various intermediate entities,
Transco will repay the Operating Company debt allocable to those transmission
assets. In order to further ensure the independence of the Transco, the existing
mortgage and other long-term debt of the Operating Companies will not be assumed


- ------------------------
29   The nature of Entergy's passive ownership interests are governed by the
LLC Agreement. This is explained in the testimony of Frank Gallaher (Attachment
I).


                                       72



by Transco. Instead, there will be interim internal debt assumption agreements
between the Operating Companies and an intermediate entity.30  The intermediate
entity will obtain independent financing, the proceeds of which will be used to
repay of the debt of the Operating Companies allocable to their transmission
assets. The debt issued by the intermediate entity will become the
responsibility of the Transco upon completion of the transfer of transmission
assets to the Transco.

          However, as explained in the Williford and Langston testimony, it may
not be possible to transfer ownership of all of an Operating Company's
transmission assets at the time of the Transco's start-up. For example, three of
the Entergy Operating Companies - Entergy Louisiana, Inc., Entergy New Orleans,
Inc., and Entergy Mississippi, Inc. - operate in states that have not yet
decided to adopt retail access. Thus, for those Operating Companies, to unbundle
those transmission assets is a significant undertaking. In addition, even in
jurisdictions where unbundling efforts have begun, there remain a number of
corporate steps that must be taken before the Operating Companies can transfer
their assets to the Transco. In the event that an Operating Company cannot
contribute its transmission assets to the LLC in time for the Transco's
start-up, the Operating Company will transfer Functional Control of those assets


- ------------------------
30   The intermediate entity, which will be indirectly owned by Entergy and
the Operating Companies, will aggregate the transmission assets of the Operating
Companies prior to their transfer to Transco.


                                       73



to the Transco under the Operating Agreement, which is attached to this
Application as Attachment E.31

          Under the Operating Agreement, the Operating Companies will agree to
transfer Functional Control of their transmission assets to the Transco in
return for a fee based on the Operating Companies' revenue requirements for
those assets. A Pro Forma Operating Agreement is attached to this Application.
This Pro Forma Operating Agreement is similar to the Operating Agreement used by
the Alliance Companies, which Agreement has been preliminarily approved by the
Commission.32  The Operating Agreement will contain an Operating Protocol that
governs how the Transco must operate those assets, and a Revenue and Pricing
Distribution Protocol, which governs the Operating Companies rights to payment
for its agreement to transfer functional control to the Transco. The Operating
Protocol and the Revenue and Pricing Distribution Protocol have not yet been
finalized, as they are contingent on the development of the Transco's rates,
terms and conditions, which will be contained in the December 2000 rate filing.
Entergy will submit the completed versions of the Operating Agreement, including
those Protocols, when it makes those future filings.

     B.   DESCRIPTION OF THE TRANSFERRED FACILITIES.


- ------------------------
31   Attachment F contains a pro forma Agency Agreement to obtain functional
control over discrete facilities. The Transco may also obtain control over some
of the Operating Companies' facilities or other entities facilities under this
Agency Agreement.

32   See Alliance Companies, 89 FERC P. 61,298 (1999), order on compliance
filing, 91 FERC P. 61,152 (2000).

                                       74



          The transmission facilities to be transferred to Transco are described
in the attached testimony of George Bartlett and Nathan Langston. Mr. Bartlett
describes the transmission assets that will be transferred, including the
division between the transmission and distribution assets and the generation and
transmission asset. Mr. Langston's testimony describes the accounting treatment
for the transfer of assets and liabilities to the Transco.

          As discussed in the Bartlett testimony, the Entergy Operating
Companies will transfer to the Transco all facilities at or above 69 kV. These
facilities include:

o    transmission lines (including towers, poles, and conductors) and
     transmission substations;

o    transformers providing transformation within the bulk power system;

o    system control center and operating facilities;

o    lines providing connections to generation sources and step-up (plant)
     substations;

o    radial taps from the transmission system up to, but not including, the
     facilities that establish the final connection to distribution facilities
     or retail customers;

o    common facilities in substations that provide primarily a transmission
     function; and

o    voltage control devices and power flow control devices directly connected
     to the transmission system.


                                       75



These facilities being transferred are listed in Exhibit NEL-1 to the testimony
of Nathan Langston.

          With respect to the split between transmission and distribution
assets, the transmission assets transferred to the Transco include equipment and
devices that operate at 69 kV and above and function as part of the integrated
transmission system to deliver bulk power to transmission customers. Thus,
transmission lines and the switching stations and substations which serve to
interconnect only transmission lines are considered transmission facilities.
Similarly, distribution assets include equipment and devices that operate below
69 kV or function as part of the distribution delivery system. Thus,
distribution lines, and the switching stations and substations which serve to
interconnect only distribution lines, are considered distribution facilities.

          As described more fully in Mr. Bartlett's testimony, Entergy has a
number of dual function substations that contain transmission elements (i.e.,
facilities operating at 69 kV and above) and distribution elements (i.e.,
facilities operating below 69 kV). For these dual function substations, the
dividing line between transmission and distribution is at the high voltage side
of the disconnect switch of the distribution transformer. For the common use
assets (i.e., land, structures, and equipment used to support both transmission
and distribution functions) located at dual function substations, these assets
will be considered transmission facilities for substations that are connected to
three or more transmission lines and distribution facilities for substations
that are connected to one or two transmission lines.


                                       76



          As Mr. Bartlett further explains, with respect to the split between
generation and transmission assets, generator step-up transformers and
generation leads are classified as generation assets. The dividing line between
the generation assets and the transmission assets is defined to be at the
high-voltage bushing of the generator step-up transformer. All common use assets
within a generation switchyard will be classified as transmission assets and
assigned to the Transco because of their effect on the integrated transmission
system.

     C.   THE TRANSFER OF FACILITIES IS CONSISTENT WITH THE PUBLIC INTEREST.

          The Commission must approve the transfer of facilities to Transco if
it finds that the transaction "will be consistent with the public interest."
FPA, ss. 203. Under the Merger Policy Statement, the Commission examines three
factors to determine whether a proposed transaction is in the public interest:
the effect on competition, the effect on rates, and the effect on regulation.
Given that the Transco's acquisition of Entergy's transmission facilities is a
fundamental requirement for the creation of the Transco - the cornerstone of
Entergy's proposal to comply with Orders Nos. 2000 and 2000-A - the proposed
transfer clearly is consistent with the public interest. The transfer of
facilities is pro-competitive and will result in no adverse effect on
regulation. The transfer also will have no adverse impact on rates, which will
be demonstrated when Entergy makes the December 2000 filing of the Transco's
rate schedules.

          1.   EFFECT ON COMPETITION


                                       77



          The proposed consolidation of Entergy's transmission systems into a
single regional transmission organization, as required by Order Nos. 2000 and
2000-A, is pro-competitive and fully consistent with Commission precedent. See
DTE Energy Co., 91 FERC P. 61,317 (2000) (approving formation of independent
transmission company to facilitate RTO creation); FirstEnergy Operating
Companies, 89 FERC P. 61,090 (1999) (same). The consolidation of transmission
facilities will have no effect on generation market concentration given that no
generation assets are implicated in the formation of Transco. Instead, the
formation of Transco will facilitate competition in wholesale power markets.

          2.   EFFECT ON RATES

          Entergy will address the effect on rates when it makes its December
2000 rate filing of the Transco's rate schedules.

          3.   EFFECT ON REGULATION

          Finally, the Transaction creates no adverse effect on regulation.
There will be no lapse in the Commission's jurisdictional authority over the
facilities being transferred, and state commissions will continue to have full
authority under applicable law to regulate the Entergy Operating Companies,
including regulation of retail markets and distribution facilities, after the
transfer of facilities.

     D.   INFORMATION REQUIRED BY SECTION 33.2 OF THE COMMISSION'S REGULATIONS

          In support of this Application, the Applicants submit the following
information required by Section 33.2 of the Commission's regulations. This


                                       78



information is arranged in alphabetized sections corresponding to the
subsections in Section 33.2

     a.   NAME AND ADDRESSES OF PRINCIPAL BUSINESS OFFICES

          The following are the names and principal business offices of the
Applicants:

          Entergy Services, Inc.
          639 Loyola Avenue
          New Orleans, LA 70113

     b.   NAMES AND ADDRESSES OF THE PERSONS AUTHORIZED TO RECEIVE NOTICES AND
          COMMUNICATIONS WITH RESPECT TO THIS APPLICATION

          The persons listed Section V, infra, are authorized to receive notices
and communications with respect to this Application.

     c.   DESIGNATION OF THE TERRITORIES SERVED, BY COUNTIES AND STATES.

          The territories served by each of the Applicants are set forth in
Appendix 1 to this Application.

     d.   A GENERAL STATEMENT BRIEFLY DESCRIBING THE FACILITIES OWNED OR
          OPERATED FOR TRANSMISSION OF ELECTRICITY IN INTERSTATE COMMERCE OR THE
          SALE OF ELECTRIC ENERGY AT WHOLESALE IN INTERSTATE COMMERCE.

          The facilities owned or operated by the Applicants are described in
exhibit NEL-1 to the testimony of Nathan Langston.

     e.   WHETHER THE APPLICATION IS FOR DISPOSITION OF FACILITIES BY SALE,
          LEASE, OR OTHERWISE, A MERGER OR CONSOLIDATION OF FACILITIES, OR FOR
          PURCHASE OR ACQUISITION OF SECURITIES OF A PUBLIC UTILITY, ALSO A
          DESCRIPTION OF THE CONSIDERATION, IF ANY, AND THE METHOD AT ARRIVING
          AT THE AMOUNT THEREOF.

          See Section IV.A. above.


                                       79



     f.   A STATEMENT OF FACILITIES TO BE DISPOSED OF, CONSOLIDATED, OR MERGED,
          GIVING A DESCRIPTION OF THEIR PRESENT USE AND OF THEIR PROPOSED USE
          AND OF THEIR PROPOSED USE AFTER DISPOSITION, CONSOLIDATION, OR MERGER.
          STATE WHETHER THE PROPOSED DISPOSITION OF FACILITIES OR PLAN FOR
          CONSOLIDATION OR MERGER INCLUDES ALL OF THE OPERATING FACILITIES OF
          THE PARTIES TO THE TRANSACTION.

          See Section IV.A. above.

     g.   A STATEMENT (IN THE FORM PRESCRIBED BY THE COMMISSION'S UNIFORM SYSTEM
          OF ACCOUNTS FOR PUBLIC UTILITIES AND LICENSEES) OF THE COST OF THE
          FACILITIES INVOLVED IN THE SALE, LEASE, OR OTHER DISPOSITION OR MERGER
          OR CONSOLIDATION. IF ORIGINAL COST IS NOT KNOWN, AN ESTIMATE OF
          ORIGINAL COST BASED INSOFAR AS POSSIBLE, UPON RECORDS OR DATA OF THE
          APPLICANT OR ITS PREDECESSORS MUST BE FURNISHED, TOGETHER WITH A FULL
          EXPLANATION OF THE MANNER IN WHICH SUCH ESTIMATE HAS BEEN MADE, AND A
          DESCRIPTION AND STATEMENT OF THE PRESENT CUSTODY OF ALL EXISTING
          PERTINENT DATA AND RECORDS.

          The transfer of assets to the Transco will involve Entergy's
jurisdictional transmission facilities. These facilities are accounted for
pursuant to the Commission's Uniform System of Accounts and will continued to be
accounted for in this manner when controlled or owned by the Transco. Original
cost is the basis for the valuation of Entergy's utility plant in service.
Entergy has filed with the Commission statements of the utility plant in service
and the costs thereof for each of the Operating Companies as part of their Form
1 data, and Entergy requests a waiver of the requirement that this data be filed
again as part of this Application.


                                       80



     h.   A STATEMENT AS TO THE EFFECT OF THE PROPOSED TRANSACTION UPON ANY
          CONTRACT FOR THE PURCHASE, SALE, OR INTERCHANGE OF ELECTRICITY.

          The transfer of assets to the Transco is expected to have no direct
impact on any contract for the purchase, sale, or interchange of electric
energy.

     i.   A STATEMENT AS TO WHETHER OR NOT ANY APPLICATION WITH RESPECT TO THE
          TRANSACTION OR ANY PART THEREOF IS REQUIRED TO BE FILED WITH ANY OTHER
          FEDERAL OR STATE REGULATORY BODY.

          In addition to the approvals required from this Commission, the
transfer of facilities to the Transco will require: (i) the approval of the
Securities and Exchange Commission; (ii) the approval of the Arkansas Public
Service Commission; (iii) the approval of the Louisiana Public Service
Commission; (iv) the approval of the Mississippi Public Service Commission; and
(v) the approval of the New Orleans City Council. Entergy will also make any
additional filing with the Public Utility Commission of Texas that are necessary
to establish the Transco.

     j.   THE FACTS RELIED UPON BY APPLICANTS TO SHOW THAT THE PROPOSED
          DISPOSITION, MERGER, OR CONSOLIDATION OF FACILITIES OR ACQUISITION OF
          SECURITIES WILL BE CONSISTENT WITH THE PUBLIC INTEREST.

          See Section IV.C. above and the testimony that is being filed in
conjunction with this Application.

     k.   A BRIEF STATEMENT OF THE FRANCHISES HELD, SHOWING DATE OF EXPIRATION
          IF NOT PERPETUAL.

          Because this information is not necessary for the approvals requested
in this Application, Entergy respectfully requests waiver of the requirement to
provide this information.


                                       81



     l.   A FORM OF NOTICE SUITABLE FOR PUBLICATION IN THE FEDERAL REGISTER,
                                                           ----------------
          WHICH WILL BRIEFLY SUMMARIZE THE FACTS CONTAINED IN THE APPLICATION IN
          SUCH WAY AS TO ACQUAINT THE PUBLIC WITH ITS SCOPE AND PURPOSE.

          A form of notice suitable for publication in the Federal Register is
attached to this Application at Appendix 2 and on a computer disk.

     E.   EXHIBITS REQUIRED PURSUANT TO SECTION 33.3 OF THE COMMISSION'S
          REGULATIONS

          Copies of the Exhibits required pursuant to Section 33.3 of the
Commission's regulations are provided as described below:

          EXHIBIT A. COPIES OF ALL RESOLUTIONS OF DIRECTORS AUTHORIZING THE
          ---------
PROPOSED DISPOSITION, MERGER, OR CONSOLIDATION OF FACILITIES, OR ACQUISITION OF
SECURITIES, IN RESPECT TO WHICH THE APPLICATION IS MADE, AND, IF APPROVAL OF
STOCKHOLDERS HAS BEEN OBTAINED, COPIES OF THE RESOLUTIONS OF THE STOCKHOLDERS
SHOULD ALSO BE FURNISHED SECURING ANY OBLIGATION OF EACH PARTY TO THE
TRANSACTION.

          Entergy respectfully requests a waiver of the requirement to file the
corporate resolutions called for by Exhibit A of the Commission's regulations.
18 C.F.R. ss. 33.3 (1999). Such resolutions would not be required by the Merger
NOPR. Proposed Section 33.5, IV FERC Stats. and Regs. P. 32,528 at 33,364.

          EXHIBIT B. A STATEMENT OF THE MEASURE OF CONTROL OR OWNERSHIP
          ---------
EXERCISED BY OR OVER EACH PARTY TO THE TRANSACTION AS TO ANY PUBLIC UTILITY, OR
BANK, TRUST COMPANY, BANKING ASSOCIATION, OR FIRM THAT IS AUTHORIZED BY LAW TO
UNDERWRITE OR PARTICIPATE IN THE MARKETING OF SECURITIES OF A PUBLIC UTILITY, OR
ANY COMPANY SUPPLYING ELECTRIC EQUIPMENT TO SUCH PARTY. WHERE THERE ARE ANY
INTERCORPORATE RELATIONSHIPS THROUGH HOLDING COMPANIES, OWNERSHIP OF SECURITIES
OR OTHERWISE, THE NATURE AND EXTENT OF SUCH RELATIONSHIP; ALSO STATE WHETHER ANY
OF THE PARTIES TO THE TRANSACTION HAVE OFFICERS OR DIRECTORS IN COMMON. IF NOT A
MEMBER OF ANY HOLDING COMPANY SYSTEM, INCLUDE A STATEMENT TO THAT EFFECT.


                                       82



          Because this information is not necessary for the approvals requested
in this Application, Entergy respectfully requests waiver of the requirement to
provide this information.

          EXHIBIT C. BALANCE SHEETS AND SUPPORTING PLANT SCHEDULES FOR THE MOST
          ---------
RECENT 12 MONTH PERIOD ONLY, ON AN ACTUAL BASIS AND ON A PRO FORMA BASIS IN THE
FORM PRESCRIBED FOR STATEMENT A AND B OF THE FPC ANNUAL REPORT FORM NO. 1,
PRESCRIBED BY SS. 141.1 OF THIS CHAPTER. THE ADJUSTMENTS NECESSARY TO ARRIVE AT
THE PRO FORMA STATEMENTS SHOULD BE CLEARLY IDENTIFIED.

          In the Merger NOPR, the Commission proposed to limit the accounting
data to be supplied with an application to:

          proposed accounting entries showing the effect of the transaction with
          sufficient detail to indicate the effects on all account balances
          (including amounts transferred on an interim basis), the effect on the
          income statement, and the effects on other relevant financial
          statements.

IV FERC Stats. and Regs. P. 32,528 at 33,398. Consistent with this requirement,
Entergy is submitting as exhibits to the testimony of Nathan Langston
(Attachment M) the pro forma balance sheet effect of the accounting entries for
the proposed transaction. Entergy requests that the Commission waive the filing
of any other information that may be required by the existing merger
regulations. Most of such information was filed by Entergy with the Commission
as part of their Form 1 and is available both to the Commission and the general
public.


                                       83



          EXHIBIT D. A STATEMENT OF ALL KNOWN CONTINGENT LIABILITIES EXCEPT
          ---------
MINOR ITEMS SUCH AS DAMAGE CLAIMS AND SIMILAR ITEMS INVOLVING RELATIVELY SMALL
AMOUNTS, AS OF THE DATE OF THE APPLICATION.

          Because this information is not necessary for the approvals requested
in this Application, Entergy respectfully requests waiver of the requirement to
provide this information.

          EXHIBIT E. INCOME STATEMENT FOR THE MOST RECENT 12 MONTH PERIOD ONLY,
          ---------
ON AN ACTUAL BASIS AND ON A PRO FORMA BASIS IN THE FORM PRESCRIBED FOR STATEMENT
C OF THE FPC ANNUAL REPORT FORM NO. 1 PRESCRIBED BY SS. 141.1 OF THIS CHAPTER.
THE ADJUSTMENTS NECESSARY TO ARRIVE AT THE PRO FORMA STATEMENTS SHOULD BE
CLEARLY IDENTIFIED.

          For the reasons described above, Entergy requests waiver of the
requirement to file any information other than what has been provided as part of
Exhibit C.

          EXHIBIT F. AN ANALYSIS OF RETAINED EARNINGS FOR THE PERIOD COVERED BY
          ---------
THE INCOME STATEMENTS REFERRED TO IN EXHIBIT E.

          For the reasons described above, Entergy requests waiver of the
requirement to file any information other than what has been provided as part of
Exhibit C.

          EXHIBIT G. A COPY OF EACH APPLICATION AND EXHIBIT FILED WITH ANY OTHER
          ---------
FEDERAL OR STATE REGULATORY BODY IN CONNECTION WITH THE PROPOSED TRANSACTION,
AND IF ACTION HAS BEEN TAKEN THEREON, A CERTIFIED COPY OF EACH ORDER RELATING
THERETO.

          In its Merger NOPR, the Commission suggested that it would not be
necessary for applicants to submit copies of their applications filed with other
regulatory agencies -- which "largely duplicates the information required in our
Part 33 regulations" -- provided that copies of the orders in response to the


                                       84



applications are filed when received. IV FERC Stats. and Regs. P. 32,528 at
33,364. Because the provisions of the Merger NOPR are not yet implemented,
Entergy requests a waiver of the requirement that they file a copy of the
voluminous applications that have been and will be filed before other agencies.
Entergy will, consistent with the Merger NOPR, provide the Commission with
copies of other regulatory approvals as those approvals are obtained.

          EXHIBIT H. A COPY OF ALL CONTRACTS IN RESPECT TO THE SALE, LEASE, OR
          ---------
OTHER PROPOSED DISPOSITION, MERGER OR CONSOLIDATION OF FACILITIES, OR PURCHASE
OF SECURITIES, AS THE CASE MAY BE, TOGETHER WITH COPIES OF ALL OTHER WRITTEN
INSTRUMENTS ENTERED INTO OR PROPOSED TO BE ENTERED INTO BY THE PARTIES TO THE
TRANSACTION PERTAINING THERETO.

          The LLC Agreement and the Operating Agreement are attached hereto at
Attachments A and E, respectively.

          EXHIBIT I. A GENERAL OR KEY MAP ON A SCALE OF NOT MORE THAN 20 MILES
          ---------
TO THE INCH SHOWING IN SEPARATE COLORS THE PROPERTIES OF EACH PARTY TO THE
TRANSACTION, AND DISTINGUISHING SUCH PARTS OF THEM AS ARE INCLUDED IN THE
PROPOSED DISPOSITION, CONSOLIDATION OR MERGER. THE MAP SHOULD ALSO CLEARLY
INDICATE ALL INTERCONNECTIONS AND THE PRINCIPAL CITIES OF THE AREA SERVED.
WHENEVER POSSIBLE, THE MAP SHOULD NOT BE OVER 30 INCHES IN ITS LARGEST
DIMENSION.

          A map of the combined transmission system owned or controlled by the
Transco is provided at Exhibit I.


                                       85



V.   NOTICES AND COMMUNICATIONS

     Communications regarding this Application should be sent to:

William S. Scherman                         Kent R. Foster
Gerard A. Clark                             Vice President, Regulatory Affairs
Skadden, Arps, Slate, Meagher               Kimberly H. Despeaux
  & Flom LLP                                Director, Federal Regulatory Affairs
1440 New York Avenue, N.W.                  Entergy Services, Inc.
Washington, D.C.  20005                     639 Loyola Avenue
                                            New Orleans, Louisiana 70113

Floyd L. Norton, IV
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036-5869


                                       86



VI.  CONCLUSION

          WHEREFORE, for the foregoing reasons, Entergy respectfully requests
that the Commission approve the SPP Partnership RTO under Order No. 2000 and
authorize under FPA Section 203 the transfer of transmission assets from the
Entergy Operating Companies to the Transco as requested herein. In addition, in
order to enable the Transco to be operational by December 15, 2001, as required
by Order No. 2000, Entergy respectfully requests that the Commission act on
Entergy's filings by July 31, 2001. Moreover, to allow Entergy to initiate the
process of selecting the independent board of the Managing Member that would
manage the Transco, Entergy respectfully requests that the Commission issue a
ruling on the proposed board selection process by March 1, 2001.

                                                   Respectfully submitted,


                                                   --------------------------
                                                   William S. Scherman
                                                   Gerard A. Clark
Kent R. Foster                                     W. Mason Emnett
Vice President, Regulatory Affairs                 Skadden, Arps, Slate,
Kimberly H. Despeaux                                 Meagher & Flom LLP
Director, Federal Regulatory Affairs               1440 New York Avenue, N.W.
Entergy Services, Inc.                             Washington, D.C. 20005
639 Loyola Avenue                                  (202) 371-7060
New Orleans, Louisiana  70113                      (202) 371-7176 (fax)
(504) 576-4867
(504) 576-3989 (fax)                               Floyd L. Norton, IV
                                                   Morgan, Lewis & Bockius LLP
                                                   1800 M Street, N.W.
                                                   Washington, D.C.  20036-5869
                                                   (202) 467-7620
Dated: October 16, 2000                            (202) 467-7629 (fax)


                                       87



                             CERTIFICATE OF SERVICE
                             ----------------------

          I hereby certify that I have this day caused the foregoing Application
for Approval of a Regional Transmission Organization and approval of the
Transfer of Transmission Assets to be served by first-class mail upon the
following entities listed on the attached Service List.

          Dated at Washington, D.C. this 16th day of October, 2000.


                                                       ---------------------
                                                        Gerard A. Clark


                                       88



                                  SERVICE LIST



                                                   
AIG Trading Corporation                               Allegheny Energy Supply Company, LLC
1 Greenwich Plaza                                     Roseytown Road, RR 12, Box 1000
Greenwich, CT 06830                                   Greensburg, PA 15601

Ameren Services Company                               American Electric Power Service Corporation
Attn:  Deron Harrington                               Attn:  Jeff Salway
400 S. Fourth Street                                  One Riverside Plaza
St. Louis, MO 63102-1826                              Columbus, OH 43215

American Energy Solutions, Inc.                       Amoco Energy Trading Corporation
1280 Eaton Avenue                                     Attn:  Contracts, Accounting and Admin.
Hamilton, OH 45013                                    P. O. Box 3092
                                                      Houston, TX 77253-3092

Aquila Power Corporation                              Arkansas Electric Cooperative Corporation
Director, Power Marketing                             Mr. Ricky Bittle, Vice President
10700 East Highway 350                                8000 Scott Hamilton Drive, P. O. Box 194208
Kansas City, MO 64138                                 Little Rock, AR 72219-4208

Associated Electric Cooperative, Inc.                 Avista Energy, Inc.
Director, Engineering & Operations                    Attn: Manager, Contracts
2814 S. Golden                                        Three Riverway, Suite 300
Springfield, MO 65801-0754                            Houston, TX 77056

Board of Municipal Utilities of Sikeston, Missouri    British Columbia Power Exchange Corporation
Attn:  Director of Utilities                          Attn: Contracts Manager
138 North Prairie                                     666 Burrard St., Suite 1400
Sikeston, MO 63801                                    Vancouver, BC, Canada V6C2X8

Cargill-Alliant, LLC                                  Carolina Power & Light Company
Attn:  Rick Davenport                                 411 Fayetteville Street Mall
6000 Clearwater Drive                                 Raleigh, NC 27602
Minnetonka, MN 55343

Central and South West Services, Inc.                 Central and South West Services, Inc.
Attn: Manager, SPP/WSCC Transmission Planning         Manager, Transmission Access
P. O. Box 21928                                       P. O. Box 21928
Tulsa, OK 74121-1928                                  Tulsa, OK 74121-1928

Central Louisiana Electric Company, Inc.              Cinergy Services, Inc.
Wholesale Merchant Operations                         Supervisor, Bulk Power - Billing and Accounting
2005 Vandevelde Avenue                                1000 East Main Street
Alexandria, LA 71303                                  Plainfield, IN 46168


                                      SL-1



Cinergy Services, Inc.                                City Water and Light
Vice President Power Marketing & Trading              Manager
139 East Fourth Street                                P. O. Box 1289
Cincinnati, OH 45202                                  Jonesboro, AR 72403-1289

CLECO                                                 CMS Marketing, Services and Trading Company
Director, Contracts & Business Development            Director, Power Trading & Operations
2005 Vandevelde Avenue                                One Jackson Square, Suite 1060
Alexandria, LA  71303                                 Jackson, MI 49201

CNG Power Services Corporation                        Columbia Power Marketing Corporation
Director, Power Marketing                             1330 Post Oak Blvd., 20th Floor
One Park Ridge Center, P. O. Box 15746                Houston, TX 77056
Pittsburgh, PA 15244-0746

Commonwealth Edison Company                           ConAgra Energy Services, Inc.
Attn:  Steven T. Naumann, T&D Regulatory              Purchasing/Risk Manager - Electricity
          Services Manager                            P. O. Box 2533, Dept. CIG-155
10 South Dearborn Street, 35 FNE                      Omaha, NE 68103-2533
Chicago, IL 60603

Conective Energy Supply, Inc.                         Conoco Power Marketing, Inc.
Attn:  Contracts/Enabling:  Paul Saponaro             600 North Diary Ashford
P. O. Box 6066                                        Houston, TX 77079-1175
Newark, DE 19714-6066

Constellation Power Source, Inc.                      Continental Energy Services, L.L.C.
Attn:  Stuart Rubenstein                              Attn:  Charles Davies
39 W. Lexington Street, Suite 1120                    1437 S. Boulder, Suite 1250
Baltimore, MD 21201                                   Tulsa, OK 74119-3620

Coral Power, L.L.C.                                   DePere Energy Marketing, Inc.
Attn:  Power Contract Manager                         c/o Polsky Energy Corp. - Edens Corporate Center
909 Fannin, Suite 700                                 650 Dundee Road, Suite 350
Houston, TX 77010                                     Northbrook, IL 60062

DTE Energy Trading, Inc.                              Duke Energy Power Services, Inc.
Attn:  Allen T. Schneider                             Manager, Corporate Business Development
101 North Main, Suite 300                             5400 Westheimer Court
Ann Arbor, MI 48104                                   Houston, TX 77256-5310

Duke Energy Trading and Marketing, L.L.C.             Duke Power, a division of Duke Energy Corp.
Attn:  Contract Administrator                         Attn:  Bulk Power Contracts Manager, EC03U
10777 Westheimer, 650                                 526 South Church Street
Houston, TX 77042                                     Charlotte, NC 28202-1802


                                      SL-2



Duke/Louis Dreyfus L.L.C.                             e prime, Inc.
Contract Administrator                                Attn:  Nancy Courtright
10777 Westheimer, Suite 650                           1099 18th Street, Suite 3000
Houston, TX 77042                                     Denver, CO 80202

Edison Source                                         Electric Clearinghouse, Inc.
13191 Crossroad Parkway North, Suite 405              Vice President, Trading & Operations
City of Industry, CA 91746                            1000 Louisiana Street, Suite 5800
                                                      Houston, TX 77002

Engage Energy US, L.P.                                Enron Power Marketing, Inc.
Manager, Contract Administration                      Attn:  Power Contract Documentation
Five Greenway Plaza, Suite 1200                       P. O. Box 4428
Houston, TX 77046-0502                                Houston, TX 77251-4420

Enserch Energy Services, Inc.                         Entergy Power Marketing, Inc.
Attn:  Contracts Administration                       Manager, Business Development
1301 Fannin, Suite 2300                               10055 Grogan's Mill Road, Suite 500
Houston, TX 77002                                     The Woodlands, TX 77380

Entergy Power, Inc.                                   Entergy Services, Inc.
Attn:  Legal Department                               Director, Wholesale Transactions
10055 Grogan's Mill Road, Suite 500                   10055 Grogans Mill Road, Suite 300
The Woodlands, TX 77380                               The Woodlands, TX 77380

Equitable Power Services Company                      Florida Power & Light Company
2000 Cliff Mine Road                                  Manager, Transmission Services
Pittsburgh, PA 15275                                  9250 West Flagler Street
                                                      Miami, FL 33174

Florida Power Corporation                             Illinois Power Company
6565 38th Avenue, North                               Electric Arrangements Manager, H25
St. Petersburg, FL 33710                              2701 North Martin Luther King Drive
                                                      Decatur, IL 62526

InterCoast Power Marketing Company                    Kansas City Power & Light Company
Contract Administrator                                P. O. Box 418679
666 Grand Avenue                                      Kansas City, MO 64141-9679
Des Moines, IOWA 50303-0657

Koch Energy Trading, Inc.                             LG&E Power Marketing Inc.
Legal Department                                      12500 Fair Lake Circle, Suite 350
20 Greenway Plaza                                     Fairfax, VA 22033-3804
Houston, TX 77046


                                      SL-3



Merchant Energy Group of the Americas, Inc.           Merrill Lynch Capital Services, Inc.
Attn:  Contract Administration                        Attn:  Craig Gontkovic
275 West Street, Suite 320                            250 Vesey Street - 7th Floor
Annapolis, MD 21401                                   New York, NY 10281-1307

MidAmerican Energy Company                            MidCon Power Services Corp.
Bulk Power Services                                   701 East 22nd Street
P. O. Box 657                                         Lombard, IL 60148-5072
Des Moines, IOWA 50303

Minnesota Power & Light Company                       Municipal Energy Agency of Mississippi
Contract Manager, Inter-Utility Marketing             General Manager
30 West Superior Street                               6000 Lakeover Road
Duluth, MN 55802                                      Jackson, MS 39213

NESI Power Marketing, Inc.                            NorAm Energy Services, Inc.
801 East 86th Avenue                                  Attn:  Contract Administration, 8th Floor
Merrillville, IN 46410                                P. O. Box 4455
                                                      Houston, TX 77210-4455

Northern States Power Company                         Duke Energy Trading & Marketing
Bill Raihala                                          (formerly NP Energy, Inc.)
414 Nicollet Mall                                     10777 Westheimer, Suite 650
Minneapolis, MN 55401                                 Houston, TX  77042


OGE Electric Service                                  OGE Energy Resources, Inc.
Manager, Power Contracts CB/58                        Managing Director
P. O. Box 321                                         P. O. Box 24300
Oklahoma City, OK 73071                               Oklahoma City, OK 73124

Oglethorpe Power Corporation                          Omaha Public Power District
2100 East Exchange Place                              4325 Jones Plaza, ECC-1
Tucker, GA 30085                                      Omaha, NE 68105-1062

Oneok Power Marketing Company                         PacifiCorp Power Marketing, Inc.
100 West Fifth Street                                 Attn:  Elisa Larson: Sr. Contract Administrator
Tulsa, OK 74103                                       700 North East Multnomah, Suite 500
                                                      Portland, OR 97732

PanCanadian Energy Services Inc.                      PEC Energy Marketing, Inc.
Attn:  Contract Administration                        Attn:  Energy Marketing
1200 Smith Street, Suite 900                          650 Dundee Road, Suite 350
Houston, TX 77002                                     Northbrook, IL 60062


                                      SL-4



PECO Energy Company - Power Team                      PG&E Energy Trading - Power L.P.
Attn:  Lin Johnson                                    Attn:  Senior Vice President
2004 Penaissance Blvd.                                7500 Old Georgetown Road
King of Prussia, PA 19406                             Bethesda, MD 20814

PP&L, Inc.                                            Progress Power Marketing, Inc.
Energy Marketing Center, GENTW15                      P. O. Box 14042, MAC: K1B
Two North Ninth Street                                St. Petersburg, FL 33733
Allentown, PA 18101-1179

ProLiance Energy, LLC                                 Public Service Company of Colorado
Manager, Power Trading                                Manager Energy Trading Purchased Power &
135 N. Pennsylvania St., Suite 800                                   Energy Trading
Indianapolis, IN 46204                                P. O. Box 1078
                                                      Golden, CO 80402-1078

Public Service Electric and Gas Company               Reliant Energy Services, Inc.
Attn:  Robert F. Valiga, Manager - Transmission       Attn:  Contracts Administrator
          Service Policy                              P. O. Box 4455
80 Park Plaza, 14A                                    Houston, TX 77210
Newark, NJ 07102

Sam Rayburn G&T Electric Cooperative, Inc.            Scana Energy Marketing, Inc.
President                                             Contract Administrator
P. O. Box 631623                                      110 Gateway Corporate Blvd., Suite 200
Nacogdoches, TX 75963-1623                            Columbia, SC 29203

Sempra Energy Trading Corporation                     Skygen Energy Marketing, LLC
Attn:  VP Short Term Power Trading                    Attn:  Energy Marketing
58 Commerce Road                                      650 Dundee Road, Suite 350
Stamford, CT 06902                                    Northbrook, IL 60062

South Mississippi Electric Power Association          Southern Company Services, Inc.
Manager, Corporate Planning & Operations              Director, Wholesale Power Marketing
P. O. Box 15849                                       P. O. Box 2625
Hattiesburg, MS 39404-5849                            Birmingham, AL 35202-2625

Southern Energy Trading and Marketing, Inc.           Southwestern Electric Power Company
900 Ashwood Parkway                                   Attn:  Mgr., SPP/WSCC Transmission Planning
Suite 310                                             P. O. Box 21106
Atlanta, GA 30338                                     Shreveport, LA  71156


                                      SL-5



Southwestern Public Service Company                   Southwestern Public Service Company
Attn:  Todd Hegwer                                    Director, Bulk Power Sales
P. O. Box 1261                                        P. O. Box 1261
Amarillo, TX 79170                                    Amarillo, TX 79170

Statoil Energy Trading, Inc.                          Tenaska Power Services Co.
Attn:  Transmission Analyst                           1044 North 115th Street, Suite 400
2800 Eisenhower Avenue                                Omaha, NE 68154-4446
Alexandria, VA 22314

Tennessee Valley Authority                            The Dayton Power and Light Company
Manager, Electric System Operations                   Power Services
1101 Market Street, MR BA                             P. O. Box 1807
Chattanooga, TN 37402-2801                            Dayton, OH 45401

The Empire District Electric Company                  The Energy Authority, Inc.
P. O. Box 127                                         Attn:  Director, Supply Logistics and Trading
Joplin, MO 64802                                      76 South Laura Street, Suite 1500
                                                      Jacksonville, FL 32202

Tractebel Energy Marketing, Inc.                      Union Electric Company
Attn:  Ms. Amanda Hanges                              General Manager Corporate Planning
1177 West Loop South, Suite 800                       1901 Chouteau Avenue, P. O. Box 66149
Houston, TX 77027                                     St. Louis, MO 63166

UtiliCorp United, Inc.                                Vastar Power Marketing, Inc.
Administrator, Regulated Power                        Attn:  Ms. Norma J. Rosner
10700 East 350 Highway                                200 Westlake Park Boulevard, Suite 200
Kansas City, MO 64138                                 Houston, TX 77079-2648

Virginia Electric and Power Company                   Virginia Electric and Power Company
Attn: Manager, The Wholesale Power Group              Attn:  Contract Administrator
One James River Plaza                                 5000 Dominion Blvd
701 East Cary Street                                  Glen Allen, VA 23060
Richmond, VA 23219

 Vitol Gas & Electric LLC                             West Penn Power Company dba Allegheny Energy
 Attn:  Mr. Ken Stambler, Director                    Attn:  John F. Hose
 470 Atlantic Avenue                                  Roseytown Road, RR12, Box 1000
Boston, MA  02270-2208                                Greensburg, PA 15601

Western Farmers Electric Cooperative                  Western Resources, Inc.
P. O. Box 429                                         P. O. Box 889
Anadarko, OK 73005                                    Topeka, Kansas 66601


                                      SL-6



Williams Energy Services Company                      Wisconsin Electric Power Company
Senior Contract Administrator - Power                 Manager - Power Marketing, Room A214
P. O. Box 2848                                        P. O. Box 2046
Tulsa, OK 74101-9567                                  Milwaukee, WI 53201-2046

WPS Energy Services, Inc.                             PCA Liquidating Trust
Director, Power Marketing                             1 Barker Avenue, 4th Floor
677 Beaten Road                                       White Plains, NY  10601
Green Bay, WI 54304

J. Q. Delap, Jr.                                      Valero Power Services Co.
Eclipse Energy, Inc.                                  1200 Smith Street, Suite 900
P. O. Box 6690                                        Houston, TX  77002-4309
Kingswood, TX  77325-6690

Mr. Lawrence F. Acker, Esq.                           Dr. John Anderson
Leboeuf, Lamb, Greene & MacRae, LLP                   The Electricity Consumers Resource Council
Suite 1200                                            1333 H Street, N. W.
1875 Connecticut Ave., N. W.                          West Tower, 8th Floor
Washington, DC  20009-5728                            Washington, DC  20005-4707

Mr. Richie Arnold, CEO                                Mr. John J. Bartus, Esq.
Conway Corporation                                    Federal Energy Regulatory Commission
P. O. Box 99                                          888 First Street, N. E.
Conway, AR  72033-0099                                Washington, DC  20426-0001

Mr. Sean T. Beeny, Esq.                               Mr. Kirk H. Betts, Esq.
Miller, Balis & O'Neil, P.C.                          Betts & Holt
Suite 700                                             West Tower, 10th Floor
1140 19th Street, N. W.                               1333 H Street, N. W.
Washington, DC  20036-6607                            Washington, DC  20005-4707

Ms. Bonnie S. Blair, Esq.                             Mr. Richard D. Bousfield, Director
Thompson Coburn LLP                                   Western Power Services, Inc.
Suite 600                                             12200 Pecos Street
1909 K Street, N. W.                                  Suite 230
Washington, DC  20006-1167                            Denver, CO  80234-3424

Mr. R. Allen Bradley, Sr. V. P.                       Mr. Wallace E. Brand, Esq.
Engage Energy US, L.P.                                1730 K Street, N. W.
5 Greenway Plaza                                      Suite 1000
Coastal Tower                                         Washington, DC  20006-3868
Houston, TX  77046-0500


                                      SL-7



Mr. David Carne                                       Ms. Mary W. Cochran, Esq.
AJ Rowe & Associates                                  Arkansas Public Service Commission
5105 Backlick Rd.                                     1000 Center Street
Annadale, VA  22003-6005                              P. O. Box 400
                                                      Little Rock, AR  72203-0400

Mr. Jerry F. Coffey                                   Mr. James N. Compton, Esq.
Aquila Power Corporation                              Compton, Crowell and Hewitt
2533 N. 117th Street                                  146 Porter Avenue
Suite 200                                             P. O. Drawer 1937
Omaha, NE  68164-3679                                 Biloxi, MS  39533-1937

Mr. Terry S. Cowan                                    Mr. Stephen Page Daniel
Manager, Corporate Energy                             GDS Associates, Inc.
Occidental Chemical Corporation                       Suite 720
P. O. Box 809050                                      1850 Parkway Place SE
Dallas, TX  75380-9050                                Marietta, GA  30067-4439

Mr. Clark Evans Downs, Esq.                           Mr. Victor J. Elmer, Vice President
Mr. Martin V. Kirkwood, Esq.                          Louisiana Generating, LLC
Jones, Day, Reavis & Pogue                            P.O. Box 15540
1450 G Street, N. W.                                  Baton Rouge, LA  70895-5540
Washington, DC  20005-2088

Mr. Peter Esposito, Vice President.                   Mr. David T. Field
Dynegy Power Marketing, Inc.                          Koch Energy Trading , Inc.
805 - 15th Street, N. W.                              P. O. Box 3327
Suite 510-A                                           Houston, TX  77253-3327
Washington, DC  20005-2207

Mr. George M. Fleming, Esq.                           Mr. Michael R. Fontham, Esq.
General Counsel                                       Mr. Noel J. Darcy, Esq.
Public Utilities Staff                                Mr. Paul L. Zimmering, Esq.
Mississippi Public Service Commission                 Stone, Pigman, Walther, Wittman & Hutchinson
P. O. Box 174                                         546 Carondolet Street
Jackson, MS  39215-1174                               New Orleans, LA  70130-3588

Ms. Jacqueline M. Frick, Director                     Mr. Jeffry A. Froeschle
Council Utilities Regulatory Office                   Florida Power Corporation
Room 6E07 - City Hall                                 P. O. Box 14042
1300 Perdido Street                                   St. Petersburg, FL  33733-4042
New Orleans, LA  70112-2125


                                      SL-8



Mr. Ralph J. Gillis, Esq.                             Ms. Susan W. Ginsberg, Esq.
Mr. Edward T. Angley, Esq.                            Coastal Corporation
Gillis & Angley                                       2000 M Street, N. W.
160 Old Derby Street, Suite 227                       Suite 300
Hingham, MA  02043-4045                               Washington, DC  20036-3307

Mr. Ramon Gunter, Mayor                               Mr. Robert J. Haggerty, Esq.
City of Campbell                                      5505 Connecticut Avenue, N. W.
600 N. Main Street                                    Washington, DC  20015-2601
Campbell, MO  63933-1118

Mr. Joseph R. Hartsee, Director                       Mayor Patrick H. Hays
Enron Corporation                                     City of North Little Rock
1775 I Street, N. W.                                  P. O. Box 5757
Suite 800                                             North Little Rock, AR  72119-5757
Washington, DC  20006-2402

Mr. Mitchell F. Hertz, Esq.                           Ms. Judith K. Hicks, Director
Kirkland & Ellis                                      American Forest & Paper Association
655 - 15th Street, N. W.                              1111 - 19th Street, N. W.
Suite 1200                                            Suite 800
Washington, DC  20005-5701                            Washington, DC  20036-3603

Mr. Paul R. Hightower, Esq.                           Mr. George E. Johnson, Esq.
Arkansas Public Service Commission                    Dickstein, Shapiro, Morin & Oshinsky, LLP
1000 Center Street                                    2101 L Street, N. W.
P. O. Box 400                                         Washington, DC  20037-1526
Little Rock. AR  72203-0400

Mr. Steven J. Kean, Sr. Vice President                Mayor C. R. Kennemore
Enron Power Marketing, Inc.                           City of Osceola
1400 Smith Street                                     P. O. Box 443
Houston, TX  77002-7327                               316 West Hale Avenue
                                                      Osceola, AR  72370-0443

Mr. James Kirchhoff                                   Mr. Frank D. Ledoux. P. E.
Hope Water & Light                                    Engineering Manager
P.O. Box 2020                                         Lafayette Utilities System
Hope, AR  71802-2020                                  705 West University
                                                      P. O. Box 4017-C
                                                      Lafayette, LA  70502-4017


                                      SL-9



Ms. Linda Lee, Esq.                                   Legal Department
Federal Energy Regulatory Commission                  Chemical Manufacturers Association
888 First Street, N. E.                               1300 Wilson Boulevard
Washington, DC  20426-0001                            Arlington, VA  22209

Ms. Nancy A. Manning, Esq.                            Mr. Robert C. McDiarmid, Esq.
Dewey Ballantine                                      Ms. Lisa G. Dowden, Esq.
7500 Old Georgetown Road                              Spiegel & McDiarmid
Suite 1300                                            1350 New York Avenue, N. W.
Bethesda, MD  20814-6133                              Suite 1100
                                                      Washington, DC  20005-4709

Mr. Michael J. McGill                                 Mr. Wm. Bruce McKinley
TPC Corp                                              Mississippi Public Service Commission
200 Westlake Boulevard                                P. O. Box 1174
Suite 1000                                            Jackson, MS  39215-1174
Houston, TX  77079-2663

A. Kell McKinnis                                      Mr. John Stanley Miller
Louisiana Generating, LLC                             Mr. Stephen G. Kozey
10719 Airline Highway                                 AES Power, Inc.
P. O. Box 15540                                       1001 North 19th Street
Baton Rouge, LA  70895-5540                           Suite 2000
                                                      Arlington, VA  22209-1722

Mayor Lynne Moore                                     Mr. Ted Myers
City Hall                                             R. W. Beck & Associates
P. O. Drawer 607                                      Bank One Building, Suite 1900
Benton, AR  72015-0607                                1125 - 17th Street
                                                      Denver, CO  80202-2025

Mr. Ron Nefsky                                        Mr. Floyd L. Norton, IV
Central Louisiana Electric Company                    Mr. Gregory Camet
2030 Donahue Ferry Road                               Morgan, Lewis & Bockius
P. O. Box 5000                                        Suite 500
Pineville, LA  71361-5000                             1800 M Street, N. W.
                                                      Washington, DC  20036-5802

Mr. N. M. Norton, Jr.                                 Mr. Lawrence Nydes
Wright Lindsey & Jennings                             Equitable Power Services Company
200 West Capitol Avenue                               5555 San Felipe Street, Suite 2100
Suite 2200                                            Houston. TX  77056-2732
Little Rock, AR  72201-3605


                                     SL-10



Mr. Earle H. O'Donnell, Esq.                          Mr. Robert A. O'Neil, Esq.
Mr. James F. Bowe, Jr., Esq.                          Miller, Balis & O'Neil, P. C.
Dewey Ballentine                                      1140 - 19th Street, N. W.
1775 Pennsylvania Avenue, N. W.                       Suite 700
Washington, DC  20006-4605                            Washington, DC  20036-6607

Mr. Glen L. Ortman, Esq.                              Pan Energy Power Services, Inc.
Verner, Liipfert, Bernard, McPherson & Hand           Manager, Corporate Business Development
901 - 15th Street, N. W.                              5400 Westheimer Court
Suite 700                                             Houston, TX  77056-5310
Washington, DC 20005-2327

Ms. Kathryn L. Patton, Sr. Director                   Mr. William C. Randolph, President
Dynegy Power Marketing, Inc.                          Utility Management Corp.
1000 Louisiana                                        188 E. Capitol Street, Suite 350
Suite 5800                                            Jackson, MS  39201-2100
Houston, TX  77002-0050

Mr. Kenneth E. Randolph, Sr. V. P.                    Ms. MaryJane Reynolds, Esq.
Dynegy Power Marketing, Inc.                          Morrison & Reynolds
1000 Louisiana                                        1100 Vermont Street, N. W.
Suite 5800                                            Suite 405
Houston, TX  77002-0050                               Washington, DC  20005-3504

Mr. Fred Ritts, Esq.                                  Mr. Thomas L. Rudebusch, Esq.
Mr. William H. Burchette, Esq.                        Mr. Robert Weinberg, Esq.
Brickfield, Burchette & Ritts, PC                     Duncan, Weinberg, Genzer & Pembroke
1025 Thomas Jefferson Street, N. W.                   1615 M Street, N. W.
Washington, DC  20007-5201                            Suite 800
                                                      Washington, DC  20036-3219

Mr. John B. Rudolph, Esq.                             Mr. Michael Sarafolen
Hall, Estill, Hardwick, Gable                         North Star Steel Company
Suite 750, South Building                             1380 Corporate Circle
1120 - 20th Street, N. W.                             Eagan, MN  55121
Washington, DC  20036-3406

Ms. Sara D. Schotland, Esq.                           Ms. Susan B. Schultz, Esq.
Cleary, Gottleib, Steen & Hamilton                    Office of the Attorney General
2000 Pennsylvania Avenue, N. W.                       Natural Resources Division
Suite 9000                                            P. O. Box 12548, Capitol Station
Washington, DC  20006-1812                            Austin, TX  78701-2548


                                     SL-11



Mr. Robert F. Shapiro, Esq.                           Mr. D. David Slaton
Ms. Lynn N. Hargis, Esq.                              Chief Administrative Law Judge
Chadbourne & Parke                                    Arkansas Public Service Commission
Suite 300                                             1000 Center Street
1200 New Hampshire Avenue, N. W.                      P. O. Box 400
Washington, DC  20036-6802                            Little Rock, AR  72203-0400

Mr. William C. Slusser, Director                      Mr. Gordon J. Smith, Esq.
Florida Power Corporation                             John & Hengrer
P. O. Box 14042                                       1200 - 17th Street, N. W.
St. Petersburg, FL  33733-4042                        Suite 600
                                                      Washington, DC  20036-3013

Mr. Frank Spann                                       Mr. Bill Spears
Gulfstream Energy, LLC                                Central & South West Services, Inc.
2930 Revere Street                                    P. O. Box 660164
Suite 202                                             Dallas, TX  75266-0164
Houston, TX  77098-5633

Mr. Fred Stelly                                       Mr. Larry Stockton
Louisiana Energy and Power Authority                  City of Prescott
210 Venture Way                                       P. O. Box 676
Lafayette, LA  70507-5319                             Prescott, AR  71857-0676

Mr. John T. Stough, Jr., Esq.                         Mr. Carl N. Stover, Jr.
Hogan & Hartson, LLP                                  C. H. Guernsey & Company
555 - 19th Street, N. W.                              5555 North Grand Boulevard
Washington, DC  20004-1109                            Oklahoma City, OK  73112-5507

Mr. Gene Sweat                                        Mayor Howard Taylor
Farmers Electric Cooperative Corporation              City of Prescott
U. S. Highway 67 North                                P. O. Box 676
P. O. Box 400                                         Prescott, AR  71857-0676
Newport, AR  72112-0400

Mr. Jess Totten                                       USGen Power Services, L.P.
Electric Division                                     7500 Old Georgetown Road
Public Utility Commission of Texas                    Bethesda, MD  20814-6161
1701 N. Congress, Suite 700
P. O. Box 13326
Austin, TX  78711-3326


                                     SL-12



Mr. Joseph A. Vumbaco                                 Ms. Nan Wagoner
Legend Consulting Group                               Duke Energy Trading & Marketing, LLC
4643 South Ulster Street                              P. O. Box 1642
Suite 1485                                            Houston, TX  77251-1642
Regency Plaza One Building
Denver, CO  80237-2869

Mr. Michael L. Wallace, Esq.                          Mr. Jeffery D. Watkiss, Esq.
Reliant Energy Services                               Bracewell & Patterson, L.L.P.
P. O. Box 4455                                        2000 K Street, N. W.
Houston, TX  77210-4455                               Suite 500
                                                      Washington, DC  20006-1872

Mr. Charles F. Wheatley, Jr., Esq.                    Mayor Nova Wilcox
Mr. Timothy P. Ingram, Esq.                           City of Thayer
Wheatley & Ranquist                                   P. O. Box 76
34 Defense Street                                     Thayer, MO  65791-0076
Annapolis, MD  21401-3103

Mr. George H. Williams, Esq.                          Mr. Zachary D. Wilson, Esq.
Cameron McKenzie                                      321 North Maple Street
2175 K Street, N. W.                                  P. O. Box 5578
Suite 500                                             North Little Rock, AR  72119-5578
Washington, DC  20037-1831

Mr. Ward Wimbish                                      Ms. Connie Woodard
West Memphis Utility Commission                       City of North Little Rock
P. O. Box 1868                                        800 East Main Street
West Memphis, AR  72303-1868                          P. O. Box 159
                                                      North Little Rock, AR  72115-0159


                                     SL-13

EX-99

							Exhibit D-3


                                   BEFORE THE
                       ARKANSAS PUBLIC SERVICE COMMISSION


IN THE MATTER OF THE APPLICATION   )
OF ENTERGY ARKANSAS, INC. FOR      )         DOCKET NO. 00-     -U
APPROVAL TO TRANSFER               )                       -----
TRANSMISSION ASSETS                )

                            APPLICATION FOR APPROVAL
                         TO TRANSFER TRANSMISSION ASSETS
                         -------------------------------

     COMES NOW Entergy Arkansas, Inc. ("EAI" or the "Company") and for its
Application for Approval to Transfer Transmission Assets, states as follows:

I.   THE PARTIES AND APPLICABLE LAW
     ------------------------------

     1.   This Application is filed pursuant to Ark. Code Ann. ss. ss. 23-3-101,
23-3-102, 23-3-103 et seq., and 23-19-502(d) and Rules 5 and 6 of the Rules of
                   ------
Practice and Procedure ("RPP") of the Arkansas Public Service Commission ("APSC"
or the "Commission").

     2.   The Company is a corporation organized and operating under the laws
of the State of Arkansas, and is a public utility as defined by Ark. Code Ann.
ss. 23-1-101 et seq. The Company's principal office is located at the TCBY
Building, 425 West Capitol Avenue, Little Rock, Arkansas 72201. A copy of the
Company's Agreement of Consolidation of Merger (Articles of Incorporation) is on
file with the APSC and is hereby incorporated by reference.





     3.   The Company owns a complete electric system, more specific
descriptions of which, including the costs thereof, are already on file with the
Commission in various certification dockets and in annual reports filed by the
Company with the Commission. The Company's books and records are kept in
accordance with the Uniform System of Accounts, pursuant to the rules and
regulations of the Commission and of the Federal Energy Regulatory Commission
("FERC"). All utility plant accounts are stated at original cost.

     4.   The Company is engaged in the business of generating, transmitting,
and distributing electrical power and energy in Arkansas. As of December 31,
1999, the Company provided electrical service at retail, subject to the
jurisdiction of the Commission, to a total of approximately 640,000 customers.

     5.   Section 103(g) of the Electric Consumer Choice Act of 1999 ("Act
1556") requires public utilities owning transmission facilities to transfer
control of those facilities to a FERC-approved, independent transmission
provider prior to retail open access. FERC Order No. 2000 established the
criteria for the creation of such an entity and set December 15, 2001 as the
date by which utilities should be operating under a functioning independent
transmission provider. EAI's plan to comply with Act 1556 and FERC Order No.
2000, which is set out more fully below, will require certain approvals from the
Commission. Those approvals are the subject of this Application.


                                       2



     6.   EAI is, by this Application, requesting APSC approval to transfer
its transmission facilities and related assets and liabilities to an independent
transmission company ("Transco"). The Transco will be a limited liability
company organized under Delaware law to engage in the business of providing
non-discriminatory, open access transmission service, as required by the FERC,
over FERC-regulated transmission facilities. The Transco will also be a public
utility as defined by Ark. Code Ann. ss. 23-1-101 et seq. The Entergy
                                                  ------
Corporation Operating Companies ("Operating Companies"), including EAI, intend
to contribute their transmission assets to the Transco in return for passive
ownership interests in the Transco. The Transco Limited Liability Company
Agreement, which will create the Transco, is attached hereto as EAI Application
                                                                ---------------
Exhibit A. The Transco plans to operate as part of the proposed new Southwest
- ---------
Power Pool ("SPP") Partnership Regional Transmission Organization ("RTO").

     7.   EAI is also requesting APSC approval to transfer to Transco all
Certificates of Convenience and Necessity ("CCN") and Certificates of
Environmental Compatibility and Public Need ("CECPN") that the Commission has
issued to EAI authorizing the Company to construct and operate the assets and
facilities being conveyed to Transco. EAI is further requesting approval of
certain intermediate steps and financing transactions that will be necessary to
create the Transco.


                                       3



     8.   Ark. Code Ann. ss. 23-3-101 provides that the organization and
reorganization of public utilities are subject to the jurisdiction of the
Commission and shall be approved if "consistent with the public interest." The
creation of the Transco appears to be a reorganization within the meaning of
Section 101. Ark. Code Ann. ss. 23-3-102 provides that the sale of any public
utility plant constituting an operating unit or system is subject to the
jurisdiction of the Commission and shall also be approved if "consistent with
the public interest." Ark. Code Ann. ss. 23-19-502(d) expressly requires APSC
approval for the transfer of control of transmission assets, to the extent such
transactions are not subject to the exclusive jurisdiction of the FERC or
another federal agency. The transfer of EAI's transmission assets is subject to
APSC jurisdiction under these statutes. Ark. Code Ann. ss. 23-3-103 et seq.
                                                                    ------
provides that a public utility may not issue evidences of indebtedness
that create liens on utility property within Arkansas without the approval of
the APSC. The Transco proposes to issue secured debt that EAI believes will
require APSC approval pursuant to Section 103 et seq.
                                              ------

     9.   EAI does not believe the Intermediate Transmission Entity which is
described in Section VI below, and which will be a vehicle for the transfer of
assets, is a public utility under Arkansas law, in which case APSC approval is
not required for the execution of the Assumption Agreement by which the
Intermediate Transmission Entity will assume debt now held by EAI and associated
with its transmission assets and facilities. However, in the event the
Commission finds that the Intermediate Transmission Entity is a public utility,


                                       4



EAI would request approval of the Assumption Agreement. A draft Assumption
Agreement is being filed with this Application as EAI Exhibit SCM-3.
                                                  -----------------

     10.  The Transco proposal contained herein will permit EAI to comply
with the requirements of Act 1556 and FERC Order No. 2000, will have no material
impact on existing rates and service, and is, therefore, consistent with the
public interest.

II.  RELATED REGULATORY FILINGS
     --------------------------

     11.  This Application is one of a series of filings EAI, either
individually or in concert with the other Operating Companies, must make in
order to transfer its transmission assets and facilities to the Transco. On
October 16, 2000, Entergy Services, Inc. ("ESI") filed with the FERC, on behalf
of EAI and the other Operating Companies, an application pursuant to FERC Order
Nos. 2000 and 2000-A and Sections 203 and 205 of the Federal Power Act ("FPA")
for a determination that the proposed SPP Partnership RTO satisfies the
requirements of Order No. 2000. ESI also sought approval under Section 203 of
the FPA for the transfer of the transmission assets of the Operating Companies
to the Transco. The FERC will determine, inter alia, whether the proposed SPP
                                         ----- ----
Partnership RTO will satisfy the four minimum characteristics of FERC Order No.
2000: (a) independence; (2) adequate scope and configuration; (3) operational
authority; and (4) short-term reliability. The FERC will also decide whether the
SPP Partnership RTO will be able to provide the eight minimum functions required


                                       5



of an RTO by FERC Order No. 2000: (1) sole administration of its own tariff; (2)
congestion management; (3) resolution of parallel path flow issues; (4) provider
of last resort ancillary services; (5) Open Access Same-Time Information System
tariff administration of all transmission facilities under its control; (6)
market monitoring; (7) planning and expansion; and (8) interregional
coordination.

     12.  As soon after this filing as possible, ESI will file with the FERC
the Transco Rate Schedules that will be included as part of the SPP Partnership
RTO's tariff. In addition, as part of the rate filing, ESI will seek to
terminate FERC Service Schedule MSS-2, Transmission Equalization, of the Entergy
System Agreement. Further, it is anticipated that the SPP will file with the
FERC, during the first half of 2001, a single tariff for the SPP Partnership RTO
that incorporates the details of a congestion management plan. Finally, ESI, on
behalf of the Operating Companies, may make another filing with the FERC at or
near the time of the SPP's filing to conform the Transco Rate Schedules to the
SPP tariff and the congestion management requirements.

     13.  In order to enable the Transco to be operational no later than
December 15, 2001, as required by FERC Order No. 2000, ESI has asked the FERC to
act on its application and the subsequent RTO-related filings by July 31, 2001.
Moreover, to allow ESI to initiate the process of selecting the independent
board of the Managing Member that would manage the Transco and which is


                                       6



described below, ESI also requested that the FERC issue a ruling on the proposed
board selection process by March 1, 2001. The approvals sought from the APSC in
the present Application are contingent upon EAI securing the relief requested
from the FERC in the proceedings described above.

III. THE TRANSCO PROPOSAL
     --------------------

     14.  Under the SPP Partnership RTO proposal, an independent Transco
owning or controlling the transmission assets of the Operating Companies and
potentially other transmission owners will operate under the oversight, and
within the umbrella, of the SPP Partnership RTO. The SPP is an Arkansas
non-profit corporation with its principal place of business in Little Rock,
Arkansas. SPP was formed in 1941 by a voluntary, intercompany agreement between
eleven utilities. In 1968, the SPP became a regional Reliability Council,
joining with several other such organizations to form the predecessor to the
North American Electric Reliability Council. The member utilities of the SPP
currently serve more than 4 million customers in a 288,000 square-mile area
covering all or part of the states of Arkansas, Kansas, Louisiana, Mississippi,
Missouri, New Mexico, Oklahoma, and Texas. Some of the SPP Partnership RTO's
functions will be performed by the SPP and some will be performed by the
Transco. As noted above, the Operating Companies, and perhaps other owners of
transmission assets, will contribute their transmission assets to the Transco in
return for passive ownership interests in the Transco.


                                       7



     15.  The allocation of functions between the Transco and the SPP is set
forth in a Memorandum of Understanding ("MOU"), which is attached hereto as
EAI Application Exhibit B. The MOU describes the responsibilities of the SPP
- -------------------------
Partnership RTO, which include (1) acting as regional security coordinator for
the SPP and Transco system; (2) performing Available Transfer Capability
("ATC")/Total Transfer Capability ("TTC") calculations; (3) fostering input by
market participants into the Transco's policies; (4) overseeing the regional
transmission system expansion process; and (5) providing a forum for market
monitoring and dispute resolution. The Transco will have control over the
portions of its transmission tariff that affect the commercial terms and
conditions of the Transco's facilities and other commercial responsibilities.
EAI is, by this Application, requesting authorization to participate in the SSP
Partnership RTO, through the Transco, in accordance with the MOU.

     16.  The MOU, which was approved by the SPP board on July 20, 2000,
describes the allocation of responsibilities between the Transco and the SPP
Partnership RTO. The MOU provides the general principles that will govern the
SPP Partnership RTO. The development of the SPP Partnership RTO is conditioned
on the implementation of these principles. The details of the congestion
management plan that will apply across the SPP Partnership RTO have not yet been
developed. Entergy Corporation and SPP have reached agreement in principle on a
"hybrid" congestion management approach that would use locational marginal
pricing for the real-time balancing energy market and that would provide


                                       8



tradable transmission rights for the forward markets. A working group is
currently developing details to implement this approach. EAI expects the details
of a congestion management approach to be completed in the near future.

     17.  EAI will contribute transmission assets to the Transco and will be
entitled to share in the Transco's profits or losses, but the Company will hold
only a passive ownership interest. The business affairs of the Transco will be
conducted by the Managing Member, a separate Delaware corporation. The Managing
Member, in turn, will be governed by an independent, seven-member board of
directors. The Managing Member board will be selected by a Board Selection
Committee, composed of representatives of various market participants, from a
pool of qualified candidates identified by a nationally recognized search firm.
The Managing Member's Certificate of Incorporation, By-laws, and the Transco
Implementation Plan by which the Managing Member's board will be selected, are
attached hereto as EAI Application Exhibits C, D, and E, respectively.
                   -----------------------------      -

     18.  The Managing Member board is structured to ensure the independence
of the Transco from the Operating Companies, any other Entergy Corporation
affiliate, any entity owning a passive interest in the Transco, or any other
participant in the wholesale market. The Managing Member board will owe the
Transco members a fiduciary duty to maximize the value of the Transco and the
assets controlled by the Transco and to protect the integrity of the passive


                                       9



owners' capital investments. However, the board is prohibited from considering
the interests of the passive owners outside the Transco's business.

     19.  EAI believes the transfer of the transmission facilities to the
Transco is consistent with the public interest for several reasons. The proposal
satisfies the requirement of FERC Order No. 2000 that EAI's transmission network
be placed under independent management, and the requirement of Act 1556 that EAI
submit control of its facilities to a FERC-approved entity prior to retail open
access. EAI believes that the Transco, under the oversight of the SPP, will
receive FERC approval as an independent RTO. The partnership structure allows
for the creation of an RTO which will cover the entire state of Arkansas and
which will be substantially larger than a Transco-only or SPP-only RTO.
Moreover, the binary RTO structure compares favorably to an independent system
operator and should permit the voluntary formation of an even larger RTO. EAI's
proposal also eliminates vertical integration for transmission purposes and
eliminates the distinction between bundled native load and customers taking
unbundled interstate transmission service.

     20.  The establishment of the Transco should facilitate the grid
expansion that will be important in creating a robust wholesale power market for
both energy service providers and wholesale and retail customers. The Transco
will be a regulated, for-profit entity that will have an incentive to ensure


                                       10



superior grid performance and high-quality service and that can be held
accountable for its commercial actions and business decisions. The transfer of
EAI's transmission assets to Transco will satisfy the requirements of both
federal and Arkansas law and will have no material impact on retail rates or
service in Arkansas.

IV.  FACILITIES AND ASSETS TO BE TRANSFERRED
     ---------------------------------------

     21.  EAI is proposing to transfer to the Transco all transmission
assets and facilities operating at or above 69 kV. These facilities include:

     a)   transmission lines (including towers, poles, and conductors) and
          transmission substations, and related easements and land rights;

     b)   transformers providing transformation within the bulk power
          transmission system;

     c)   transmission system control centers and operating facilities;

     d)   transmission lines providing connections to generation sources and
          step-up (plant) substations;

     e)   radial taps from the transmission system up to, but not including, the
          facilities that establish the final connection to distribution
          facilities or retail customers;

     f)   common facilities in substations that provide primarily a transmission
          function; and

     g)   voltage control devices and power flow control devices directly
          connected to the transmission system.


                                       11



     22.  With respect to the split between transmission and distribution
assets, the transmission assets transferred to the Transco include equipment and
devices that operate at 69 kV and above and function as part of the integrated
transmission system to deliver bulk power to transmission customers.
Transmission lines, and the switching stations and substations that serve to
interconnect only transmission lines, are considered transmission facilities.
Similarly, distribution assets include equipment and devices that operate below
69 kV or function as part of the distribution delivery system. Distribution
lines, and the switching stations and substations that serve to interconnect
only distribution lines, are considered distribution facilities.

     23.  EAI has a number of dual function substations that contain
transmission elements (i.e., facilities operating at 69 kV and above) and
distribution elements (i.e., facilities operating below 69 kV). For these dual
function substations, the dividing line between transmission and distribution is
at the high voltage side of the disconnect switch of the distribution
transformer. For the common use assets (i.e., land, structures, and equipment
used to support both transmission and distribution functions) located at dual
function substations, these assets will be considered transmission facilities
for substations that are connected to three or more transmission lines and
distribution facilities for substations that are connected to one or two
transmission lines.


                                       12



     24.  With respect to the split between generation and transmission
assets, generator step-up transformers and generator leads are classified as
generation assets. The dividing line between the generation assets and
transmission assets is defined to be at the high-voltage bushing of the
generator step-up transformer. All common use assets within a generation
switchyard will be classified as transmission assets and assigned to the Transco
because of their effect on the integrated transmission system.

     25.  The transmission facilities to be transferred to the Transco are
described in the Direct Testimonies and Exhibits of Company witnesses George
Bartlett and J. David Wright. Mr. Bartlett describes the transmission assets
that will be transferred, including the division between the transmission and
distribution assets and the generation and transmission assets. Mr. Wright
identifies the assets to be transferred and describes the accounting treatment
for the transfer of assets and liabilities to the Transco. The forms of the
instruments to be used to effectuate the transfer of the assets will describe
the assets sufficiently to put third parties on notice of the transfer and to
permit filing in the appropriate real estate recording offices.

V.   THE CCNS AND CECPNS
     -------------------

     26.  The Commission has, over the years, issued numerous CCNs, pursuant
to Ark. Code Ann. ss. 23-3-201, et seq., and numerous CECPNs, pursuant to Ark.
                                ------
Code Ann. ss. 23-18-501, et seq., authorizing EAI to construct and operate
                         ------


                                       13



transmission lines and related facilities. EAI is asking the Commission, by this
Application, to authorize the transfer to the Transco of all CCNs and CECPNs
issued by the Commission to EAI for any of the physical transmission assets and
facilities transferred to Transco, so as, inter alia, to eliminate a possible
                                          ----- ----
challenge to Transco's right to own and operate such facilities and to occupy
the real property upon which they are located.

VI.  FINANCING THE TRANSCO
     ---------------------

     27.  As noted above, EAI intends to transfer its transmission assets to
the Transco in return for a passive ownership interest. Through a series of
transactions, including the transfer of legal title, EAI will transfer its
transmission assets to the Transco. These transactions are designed to allow EAI
to minimize tax impacts associated with the asset transfers. EAI will initially
transfer its transmission assets and facilities to an Intermediate Transmission
Entity, which will be owned by EAI and the other Operating Companies. The
Intermediate Transmission Entity will aggregate the transmission assets and
facilities of all the Operating Companies for the ultimate transfer of legal
title to the Transco.

     28.  The Intermediate Transmission Entity will transfer the
transmission assets and facilities of EAI and the other Operating Companies to
the Transco through limited liability companies. The Operating Companies,
including EAI, will own the limited liability companies and Entergy Corporation
will own one percent of two of the limited liability companies, thereby owning a


                                       14



one percent interest in Transco. The Operating Companies, including EAI, will
hold an indirect, passive interest in the Transco through the limited liability
companies. The purpose of these transactions is to minimize the tax impacts of
the asset transfers.

     29.  After EAI and the other Operating Companies transfer their assets
to the Intermediate Transmission Entity and to Transco, and before any
distributions are made from Transco to the Operating Companies, each Operating
Company will form a transmission holding company subsidiary, ("HOLDCO"), and
will transfer its ownership interest in the Intermediate Transmission Entity to
its HOLDCO. The formation of HOLDCO by EAI and each of the Operating Companies
and the transfer by each of them of their ownership interest in the Intermediate
Transmission Entity is for the purpose of minimizing the tax impacts. The HOLDCO
will have no effect on the operations or control of Transco.

     30.  In order to further ensure the independence of the Transco, the
existing mortgage and other long-term debt of EAI will not be assumed by the
Transco. Instead, there will be interim internal debt assumption agreements
between EAI and the Intermediate Transmission Entity. The Intermediate
Transmission Entity will obtain independent financing, the proceeds of which
will be used to repay of the assumed debt of EAI and the Operating Companies
allocable to their transmission assets. The debt issued by the Intermediate
Transmission Entity will become the responsibility of the Transco upon


                                       15



completion of the transfer of transmission assets to the Transco. This process
is explained in more detail in the Direct Testimony of Mr. McNeal. As noted
above, EAI does not believe the Assumption Agreement requires APSC approval
because it is not an evidence of indebtedness of a public utility, but if the
Commission concludes otherwise, EAI requests approval of the agreement.

     31.  In order to refinance the assumption debt, the Transco requests
approval from the APSC to issue and sell from time to time, through December 31,
2005, either individually or collectively with the Intermediate Transmission
Entity, secured long-term indebtedness having maturities up to 50 years in an
aggregate amount not to exceed $1.2 billion. The Intermediate Transmission
Entity requests similar authorization if it is determined to be a public
utility. Neither the Intermediate Transmission Entity nor the Transco will be an
Arkansas corporation and they are not proposing at present to engage in any
other financing that would encumber utility assets in Arkansas. No other
financing proposals associated with the transfer of EAI's transmission assets
and facilities would require Commission approval.

VII. THE WITNESSES
     -------------

     32.  EAI is submitting in support of its Application the Direct
Testimonies and Exhibits of Messrs. Hugh T. McDonald, Frank F. Gallaher,
Bartlett, Wright, and McNeal. The substance of each witness's testimony may be
briefly summarized as follows:


                                       16



          a)   Mr. McDonald will outline the Company's proposal in more detail,
     introduce the other witnesses, and explain why the proposed transfer is
     consistent with public interest.

          b)   Mr. Gallaher will discuss the process by which the Transco
     proposal was developed, summarize the relevant FERC filings and
     requirements, explain the structure of the SPP Partnership RTO, and
     describe EAI's proposed timeline for the implementation of its Transco
     proposal.

          c)   Mr. Bartlett will describe the physical assets that must be
     separated and transferred and the transmission planning process under the
     SPP Partnership RTO.

          d)   Mr. Wright will describe the assets to be transferred by property
     unit, the accounting adjustments for removal of transmission
     plant-in-service, transfer pricing methodology, and the income tax
     implications of the transfer.

          e)   Mr. McNeal will discuss the financial issues related to the
     formation of the Transco, its initial capital structure, and the impact of
     the transfer of transmission assets and facilities on EAI's financial
     structure.


                                       17



IX.  THE SERVICE LIST
     ----------------

     33.  EAI requests that the following individuals be included on the
service list in this proceeding:

               Steven K. Strickland, Director
               Regulatory Affairs - Arkansas
               Entergy Arkansas, Inc.
               P. O. Box 551
               Little Rock, Arkansas  72203
               Telephone:  (501) 377-4457

               Jeff Broadwater
               Senior Counsel
               Entergy Services, Inc.
               P. O. Box 551
               Little Rock, Arkansas  72203
               Telephone:  (501) 377-4372

     WHEREFORE, EAI prays that the Commission approve the transfer of EAI's
jurisdictional transmission assets and facilities and all associated easements,
land rights, CCNs and CECPNs to Transco; authorize EAI to participate in the SSP
Partnership RTO, through the Transco, in accordance with the Memorandum of
Understanding; authorize the creation of the new legal entities described
herein, including the Intermediate Transmission Entity and an EAI Transmission
Holding Company; authorize the Intermediate Transmission Entity if it is
determined to be a public utility, and the Transco to issue and sell from time
to time secured long-term indebtedness having maturities up to 50 years in an
aggregate amount not to exceed $1.2 billion; all such approvals being contingent
upon obtaining all necessary FERC approvals; and grant the Company all other
necessary and proper relief.


                                       18



                                        Respectively submitted,

                                        ENTERGY ARKANSAS, INC.


                                        By:
                                           ------------------------------------
                                           Steven K. Strickland, Director
                                           Regulatory Affairs - Arkansas
                                           Entergy Arkansas, Inc.
                                           P. O. Box 551
                                           Little Rock, Arkansas  72203
                                           Telephone:  (501) 377-4457


     DATED this 20th day of December, 2000.


                                       19

EX-99

								Exhibit D-7



                                   BEFORE THE

                       LOUISIANA PUBLIC SERVICE COMMISSION




IN RE: JOINT APPLICATION OF        )
ENTERGY GULF STATES, INC. AND      )    DOCKET NO. U-
ENTERGY LOUISIANA, INC.  FOR       )                 -----------
OFFICIAL ACTION OF APPROVAL OF OR  )
NON-OPPOSITION TO A TRANSFER OF    )
OWNERSHIP AND/OR CONTROL OF        )
CERTAIN TRANSMISSION ASSETS        )


                         JOINT APPLICATION ON BEHALF OF
                          ENTERGY GULF STATES, INC. AND
                           ENTERGY LOUISIANA, INC. FOR
                        OFFICIAL ACTION OF APPROVAL OF OR
                               NON-OPPOSITION TO A
                          TRANSFER OF OWNERSHIP AND/OR
                     CONTROL OF CERTAIN TRANSMISSION ASSETS
                     --------------------------------------

          NOW BEFORE THIS COMMISSION, through their undersigned counsel, come
Entergy Gulf States, Inc. ("EGS") and Entergy Louisiana, Inc. ("ELI")
(collectively, the "Applicants") for this, their Joint Application
("Application") for, among other things, official action of approval or official
action of non-opposition by the Louisiana Public Service Commission (the "LPSC"





or "Commission") to a transfer of ownership and/or control 1 of certain electric
transmission assets of the Applicants to another entity and in support of this
Application, the Applicants respectfully show as follows:

                         THE APPLICANTS AND THEIR SYSTEM

                                       I.

          The Applicants are public utility operating company subsidiaries of
Entergy Corporation ("Entergy Corp."). Entergy Corp. is a public utility holding
company organized pursuant to the Public Utility Holding Company Act of 1935
("Holding Company Act"), created and existing pursuant to the laws of the State
of Delaware, with its general offices and principal place of business at 639
Loyola Avenue, New Orleans, Louisiana 70113. Entergy Corp. owns all of the
outstanding shares of common stock of its five public utility operating company
subsidiaries: Entergy Arkansas, Inc. ("EAI"), EGS, ELI, Entergy Mississippi,
Inc. ("EMI"), and Entergy New Orleans, Inc. ("ENO") (collectively, the
"Operating Companies").

                                      II.

          The Operating Companies engage in the manufacture, generation,
transmission, distribution, and sale of electricity to approximately 2.5 million
retail customers throughout 84,000 square miles of Arkansas, Louisiana,
Mississippi, and Texas. Pursuant to the Entergy System Agreement, which has been
approved by the Federal Energy Regulatory Commission ("FERC"), the Operating
Companies jointly plan and operate their electric generating facilities and bulk


- ------------------------
1    The term " transfer of ownership and/or control" as used in this
Application shall mean a transfer of all substantive indicia of ownership but
actual transfer of title. Such indicia include, but are not limited to, rights
and obligations relating to the maintenance, operation, repair, and replacement
of certain transmission assets.


                                      -2-



electric transmission facilities as a single, integrated electric system (the
"Entergy System"). At the present time, The Operating Companies are subject to
regulation by their respective state and/or local retail regulators: this
Commission as to ELI and EGS's operations within Louisiana; the Arkansas Public
Service Commission ("APSC") as to EAI; the Mississippi Public Service Commission
("MPSC") as to EMI; the Public Utility Commission of Texas ("PUCT") as to EGS's
operations within Texas; and the Council of the City of New Orleans ("CNO") as
to ENO and ELI's operations within the Fifteenth Ward of the City of New Orleans
(Algiers).

                                      III.

          The Operating Companies also are subject to regulation by, among
others, the FERC, which regulates the acquisition and disposition of facilities,
interchange and transmission services, and wholesale purchases and sales of
electric power and energy; the Securities and Exchange Commission ("SEC"), which
regulates Entergy Corp. and its affiliates pursuant to, among others, the
Holding Company Act; and, the Nuclear Regulatory Commission ("NRC"), which
regulates nuclear operations at the Entergy System's five (5) nuclear-fueled
electric generating units.

                      INDEPENDENT TRANSMISSION ORGANIZATION

                                       IV.

          The FERC has imposed a deadline of December 15, 2001, by which
FERC-jurisidictional transmission facilities must be committed to an independent


                                      -3-



Regional Transmission Organization ("RTO").2  Such transmission facilities are
to operated independently of the generation and merchant function of the
utility, its affiliates and other market participants. The Entergy System has
proposed that its FERC-jurisdictional transmission facilities be operated by a
for-profit company ("Transco") that would be independent of Entergy Corp. and
any of its other utility operations ,which Transco would be a participant in the
Southwest Power Pool's Partnership Regional Transmission Organization ("SPP
Partnership RTO").

                                 THE APPLICATION

                                       V.

          The Applicants hereby request Commission official action of approval
or of non-opposition to a transfer ownership and/or control of certain of their
electric transmission facilities and related assets to the independent
transmission company. The Transco will be a limited liability company organized
under Delaware law and authorized to engage in the business of providing
non-discriminatory, open access transmission service, as required by the FERC,
over FERC-regulated transmission facilities.3  The Transco will operate as a
public utility. The Operating Companies, including the Applicants, intend to
contribute ownership and/or control of their transmission assets to the Transco
in return for passive ownership interests in the Transco. Other
transmission-owning entities likewise could contribute their transmission assets


- ------------------------
2    See Regional Transmission Organizations, Docket No. RM99-2-000, Order No.
2000, 89 F.E.R.C. P. 61,285 (1999) ("FERC Order No. 2000").

3    The FERC has required all public utilities that own, control, or operate
facilities used for transmitting electric energy in interstate commerce to file
open access, non-discriminatory transmission tariffs that contain minimum terms
and conditions of non-discriminatory service. See Promoting Wholesale
Competition Through Open Access Non-discriminatory Transmission Services by
Public Utilities, Recovery of Stranded Costs by Public Utilities and
Transmitting Utilities, Docket Nos. RM95-8-000 and RM94-7-001, Order No. 888, 75
F.E.R.C. P. 61,080 (1996) ("FERC Order No. 888").


                                      -4-



to the Transco in return for passive ownership interests in the Transco. The
Transco LLC Agreement that will create the Transco is attached hereto as Joint
Exhibit 1.

                                       VI.

          The Applicants are seeking the Commission's approval of or
non-opposition to the transfer of ownership and/or control of certain of the
Applicants' transmission assets and facilities (including, as may be necessary
or required, any related rights that may be subject to LPSC jurisdiction) to the
Transco in order that those assets and facilities may be operated and managed by
an independent transmission organization, consistent with FERC Order No. 2000.

                                      VII.

          This Application is one of a series of filings that the Applicants,
either jointly or in concert with the other Operating Companies, must make in
order to transfer ownership and/or control of their transmission assets and
facilities to the Transco, which will participate in the proposed new SPP
Partnership RTO, of which the Transco will be a part. The SPP is a regional
electricity reliability council. On October 16 and December 29, 2000, Entergy
Services, Inc. ("ESI") filed with the FERC, on behalf of the Applicants and the
other Operating Companies, applications pursuant to FERC Order Nos. 2000 and
2000-A, and Sections 203 and 205 of the Federal Power Act ("FPA") for approval
of the creation of an RTO, approval of the transfer of transmission assets to
the RTO and approval of a Transco rate structure. ESI, on behalf of the
Operating Companies, sought approval of the SPP Partnership RTO under Order No.


                                      -5-



2000 and approval under Section 203 of the FPA of the transfer of certain of the
transmission assets of the Operating Companies to the Transco.

                                      VIII.

          ESI's December 29 filing on behalf of the Operating Companies contains
the Transco rate schedules that will be included as part of the SPP Partnership
RTO's transmission tariff. In addition, as part of that filing, ESI seeks to
terminate FERC Schedule MSS-2 of the System Agreement, effective upon
implementation of the Transco rate schedules. The Applicants understand that the
SPP plans to file a single tariff for the SPP Partnership RTO that incorporates
the details of a congestion management methodology during the first half of
2001. ESI may make another filing with the FERC at or near the time of the SPP's
filing, in order to conform the Transco rate schedules to the SPP tariff and the
congestion management requirements.

                                       IX.

          In order to enable the Transco to be operational no later than
December 15, 2001, pursuant to FERC Order No. 2000, ESI has asked the FERC to
act on its application and the subsequent RTO-related filings by July 31, 2001.
Moreover, to allow ESI to initiate the process of selecting the independent
board of the Managing Member that would manage the Transco, ESI also requested
that the FERC issue a ruling on the proposed board selection process by March 1,
2001. The approval sought from this Commission in the present Application is
contingent upon the Applicants securing the relief requested from the FERC in
the proceedings described above.


                                      -6-



                                  JURISDICTION

                                       X.

          The LPSC has jurisdiction over this matter by virtue of La. Const.
art. IV, section 21(B), LSA-R.S. 45:1176, and LPSC General Orders dated June 16,
1953, October 28, 1968, and March 18, 1994.

                              THE TRANSCO PROPOSAL

                                       XI.

          Pursuant to the SPP Partnership RTO proposal, an independent Transco
(owning or controlling the transmission assets of the Operating Companies and
similar transmission assets of other transmission owners) will operate under the
oversight, and within the umbrella, of the SPP. The SPP was formed in 1941 by a
voluntary, intercompany agreement among eleven utilities. In 1968, the SPP
became a regional reliability council, joining with several other such
organizations to form the predecessor to the North American Electric Reliability
Council ("NERC"). Members of the SPP currently have more than four million
customers in a 288,000 square-mile area, including all or part of the states of
Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, and
Texas. Some of the SPP Partnership RTO's functions will be performed by the SPP
and some will be performed by the Transco.

                                      XII.

          The allocation of functions between the Transco and the SPP is set
forth in a Memorandum of Understanding ("MOU"), which is attached hereto as
Joint Exhibit 2. The SPP Partnership RTO will be responsible for (1) acting as


                                      -7-



regional security coordinator for the SPP and Transco system; (2) performing
Available Transfer Capability ("ATC")/Total Transfer Capability ("TTC")
calculations; (3) fostering input by market participants into the Transco's
policies; (4) overseeing the regional transmission system expansion process; and
(5) providing a forum for market monitoring and dispute resolution. The Transco
will have control over the portions of its transmission tariff which affect the
commercial terms and conditions of the Transco's facilities and other commercial
responsibilities.

                                      XIII.

          Although Transco participants, such as the Applicants, which
contribute assets to the Transco will be entitled to share in the Transco's
profits or losses, such participants will hold only passive ownership interests
in the Transco. The business affairs of the Transco will be conducted by its
Managing Member, which will be a separate Delaware corporation. The Managing
Member, in turn, will be governed by an independent, seven-member board. This
Managing Member Board will be selected by a Board Selection Committee,
consisting of representatives of various market participants, from a pool of
qualified candidates identified by a nationally recognized search firm. The
Transco Implementation Plan by which the Managing Member Board will be selected
is attached hereto as Joint Exhibit 3. The structure of the Managing Member
Board will ensure the independence of the Transco from the Operating Companies,
any other Entergy Corporation affiliate, any entity owning a passive interest in
the Transco, or any other entity that participates in the wholesale electricity
market.


                                      -8-



                                      XIV.

          As is the case for boards of directors in general, the Managing Member
Board will owe, to those who elect it, a fiduciary duty to maximize the value of
the Transco and the assets controlled by the Transco and to protect the
integrity of the passive owners' capital investments. However, the Managing
Member Board is prohibited from considering any interests of the passive owners
other than their interests in the Transco's business pursuant to the Transco LLC
Agreement.4

                                       XV.

          The MOU, which was approved by the SPP board on July 20, 2000,
describes the allocation of responsibilities between the Transco and the SPP
Partnership RTO. The MOU provides the general principles that will govern the
SPP Partnership RTO. The development of the SPP Partnership RTO is conditioned
upon the implementation of said principles. All of the details of the congestion
management approach that will apply across the SPP Partnership RTO have not yet
been developed. Entergy Corp. and the SPP have reached agreement in principle on
a "hybrid" congestion management approach that would use locational marginal
pricing for the real-time balancing energy market and that would provide
tradable transmission rights for the forward markets. A working group of the SPP
currently is developing details to implement this approach. The Applicants
expect the details of a congestion management approach to be completed in the
near future and filed with the FERC.


- ------------------------
4    Entergy will revise section 9.1(b) of the Transco LLC Agreement (Joint
Exhibit 1) to clarify that the fiduciary duties owed by the Managing Member to
the Transco members prohibit the Managing Member from considering the interests
of those members outside the Transco's business. This will be accomplished by
changing the word "require" in the last sentence of section 9.1(b) to "allow."
With this clarification, the Transco's governance structure complies with the
independence principles set forth in FERC Order No. 2000. [


                                      -9-



                                      XVI.

          The Applicants believe that the proposed SPP Partnership RTO is in the
public interest as it satisfies the requirement of FERC Order No. 2000 that the
Applicants' transmission network be placed under independent management. The
binary RTO structure (the Transco as a member of the SPP Partnership RTO) allows
for the creation of an RTO substantially larger than a Transco-only or SPP-only
RTO. Moreover, the binary RTO structure may be more attractive to other
utilities than an independent system operator, a possible alternative, and
should permit the voluntary formation of an even larger RTO.

                                      XVII.

          The Applicants believe that the Transco is an appropriate vehicle to
facilitate the expansion of the transmission grid, which will be important in
creating a robust wholesale power market for wholesale and retail customers. The
Transco will be a regulated, for-profit entity that will be responsive to
incentives for superior grid performance and high-quality service and can be
held accountable for its commercial actions and business decisions. The transfer
of ownership and/or control of the Applicants' transmission assets to the
Transco satisfies the requirements of both federal and Louisiana law.


                                      -10-



                     FACILITIES AND ASSETS TO BE TRANSFERRED

                                     XVIII.

          The Applicants propose to transfer to the Transco all facilities
related to the transmission of electric energy that operate at a voltage of 69
kilovolts ("kV") or above (the "bulk power system"). These facilities include:

     a)   transmission lines (including towers, poles, and conductors) and
          transmission substations;

     b)   transformers providing transformation within the bulk power system;

     c)   system control centers and operating facilities;

     d)   lines providing connections to generation sources and step-up
          (generating plant) substations;

     e)   radial taps from the transmission system up to, but not including, the
          facilities that establish the final connection to distribution
          facilities or retail customers;

     f)   common facilities in substations that provide primarily a transmission
          function; and

     g)   voltage control devices and power flow control devices directly
          connected to the transmission system.

                                      XIX.

          With respect to the split between transmission and distribution
assets, the transmission assets transferred to the Transco include equipment and
devices that operate at 69 kV and above and function as part of the integrated
transmission system to deliver bulk power to transmission customers. Thus,
transmission lines and the switching stations and substations that serve to


                                      -11-



interconnect only transmission lines are considered transmission facilities.
Similarly, distribution assets include equipment and devices that operate below
69 kV or function as a part of the distribution delivery system. Thus,
distribution lines, and the switching stations and substations that serve to
interconnect only distribution lines, are considered distribution facilities.

                                       XX.

          The Applicants have a number of dual function substations that contain
transmission elements (i.e., facilities operating at 69 kV or above) and
distribution elements (i.e., facilities operating below 69 kV). For these dual
function substations, the dividing line between transmission and distribution is
the high voltage side of the disconnect switch of the distribution transformer.
For the common use assets (i.e., land, structures, and equipment used to support
both transmission and distribution functions) located at dual function
substations, these assets will be considered transmission facilities for
substations that are connected to three or more transmission lines and
distribution facilities for substations that are connected to one or two
transmission lines.

                                      XXI.

          With respect to the split between generation and transmission assets,
generator step-up transformers and generator leads are classified as generation
assets. The dividing line between the generation assets and transmission assets
is defined to be at the high-voltage bushing of the generator step-up
transformer. All common use assets within a generation switchyard will be
classified as transmission assets and assigned to the Transco because of their
effect on the integrated transmission system.


                                      -12-



                                      XXII.

          The transmission facilities to be transferred to the Transco are
described in the Direct Testimony and Exhibits of Applicants' witnesses George
R. Bartlett and J. David Wright. Mr. Bartlett describes the transmission assets
that will be transferred, including the division between the transmission and
distribution assets and the generation and transmission assets. Mr. Wright
identifies and describes the accounting treatment for the transfer of assets and
liabilities to the Transco.

                        COMPLIANCE WITH LOUISIANA PUBLIC
                        SERVICE COMMISSION GENERAL ORDERS

                                     XXIII.

          The proposed transfer of transmission assets satisfies all of the
factors set forth in this Commission's General Order of March 18, 1994, as well
as other applicable orders of this Commission.

                                 PUBLIC INTEREST

                                      XXIV.

          The proposed transfer of transmission assets is consistent with orders
of the FERC and, is in the public interest.


                                      -13-



                              FINANCING THE TRANSCO

                                      XXV.

          As noted above, the Applicants intend to transfer ownership and/or
control of their transmission assets to the Transco in return for a passive
ownership interest. Through a series of transactions that may include the
transfer of legal title, the Applicants will transfer ownership and/or control
of their transmission assets to the Transco. These transactions are designed to
allow the Applicants to minimize tax effects associated with the transfer of
assets. The Applicants initially will transfer ownership and/or control of their
transmission assets and facilities to an intermediate transmission entity
("ITE"), which will be owned by the Applicants and the other Operating
Companies.

                                      XXVI.

          The ITE will aggregate the transmission assets and facilities of all
the Operating Companies for the ultimate transfer of ownership and/or control to
the Transco through three limited liability companies. In addition, Entergy
Corp. will own a one percent interest in two of these three limited liability
companies, which will hold the passive ownership interest in Transco.

                                     XXVII.

          After the Applicants and the other Operating Companies transfer their
assets to the ITE and to Transco, and before any distributions are made from
Transco to the Operating Companies, each Operating Company will form a
transmission holding company subsidiary ("HOLDCO"), and will transfer its
ownership interest in the ITE to its HOLDCO. The formation of HOLDCO by the
Applicants and each of the Operating Companies and the transfer by each of them


                                      -14-



of their ownership interest in the ITE is for the purpose of minimizing tax
effects.

                                     XXVIII.

          In order to further ensure the independence of the Transco, the
existing mortgage and other long-term debt of the Applicants will not be assumed
by the Transco. Instead, there will be interim internal debt assumption
agreements between the Applicants and the ITE. The ITE will obtain independent
financing, the proceeds of which will be used to repay the debt of the
Applicants and the other Operating Companies allocable to their transmission
assets. The debt issued by the ITE will become the responsibility of the Transco
upon completion of the transfer of transmission assets to the Transco. This
process is explained in more detail in the Direct Testimony of Applicants'
witness Steven C. McNeal. Because these entities will be members of a system
that is subject to Holding Company Act, the SEC will have oversight of the
financing and refinancing of the debt instruments required to accomplish this
transaction.

                                  THE WITNESSES

                                      XXIX.

          The Applicants are submitting in support of their Application the
Direct Testimony and Exhibits of Frank F. Gallaher, George R. Bartlett, J. David
Wright, Steven C. McNeal, and Bruce M. Louiselle. The substance of the
witnesses' testimony may be briefly summarized as follows:


                                      -15-



          a) Mr. Gallaher will outline the Company's proposal in more detail,
     introduce the other witnesses, discuss the process by which the Transco
     proposal was developed, summarize the relevant FERC filings and
     requirements, and explain the advantages of the Transco and the SPP
     partnership RTO structure to Louisiana retail ratepayers. Mr. Gallaher's
     testimony also will address, in whole or in part, the following factors set
     forth in the second numbered paragraph of the Commission's General Order of
     March 18, 1994: no. 2 ("Whether the purchaser is ready, willing and able to
     continue providing safe, reliable and adequate service to the utility's
     ratepayers"); no. 3 ("Whether the transfer will maintain or improve the
     financial condition of the resulting public utility or common carrier");
     no. 4 ("Whether the proposed transfer will maintain or improve the quality
     of service to public utility or common carrier ratepayers"); no. 5
     ("Whether the transfer will provide net benefits to ratepayers in both the
     short term and the long term and provide a ratemaking method that will
     ensure, to the fullest extent possible, that ratepayers will receive the
     forecasted short and long term benefit"; no. 6 ("Whether the transfer will
     adversely affect competition"); no. 7 ("Whether the transfer will maintain
     or improve the quality of management of the resulting public utility or
     common carrier doing business in the State"); no. 8 ("Whether the transfer
     will be fair and reasonable to the affected public utility or common
     carrier employees"); no. 9 ("Whether the transfer would be fair and
     reasonable to the majority of all affected public utility or common carrier
     shareholders"); and no. 10 ("Whether the transfer will be beneficial on an


                                      -16-



     overall basis to State and local economics and to the communities in the
     area served by the public utility or common carrier").

          b) Mr. Bartlett will describe the physical assets which must be
     separated and transferred, transmission planning under the SPP Partnership
     RTO, and will address service reliability issues related to the transfer of
     transmission assets. Mr. Bartlett's testimony also will address factor nos.
     4 and 15 ("Whether any repairs and/or improvements are required, and the
     ability of the acquiring entity to make those repairs and/or improvements")
     of the March 18, 1994 LPSC General Order.

          c) Mr. Wright will discuss the accounting for the proposed transfer,
     and will present a pro forma balance sheet for the Transco. Mr. Wright's
     testimony will address the regulatory accounting portion of factor no. 17
     ("The manner of financing the transfer and any impact that may have on
     encumbering the assets of the entity and the potential impact on rates") of
     the March 18, 1994 LPSC General Order.

          d) Mr. McNeal will discuss the financial process by which the Transco
     will be formed, its initial capital structure, and the effect of the
     transfer of transmission assets and facilities on the Applicants' financial
     structure. Mr. McNeal's testimony also will address portions of factor nos.
     3, 9, and 14 ("Whether the acquiring entity, persons, or corporations have
     the financial ability to operate the public utility or common carrier
     system and maintain or upgrade the quality of the physical system") of the
     March 18, 1994 LPSC General Order.

          e) Mr. Louiselle will discuss the proposed Transmission Rate Rider
     ("TRR") and explain why the proposed transfer is in the public interest.
     Mr. Louiselle's testimony will address the following factors set forth in


                                      -17-



     the second numbered paragraph of the Commission's General Order of March
     18, 1994: no. 1 ("Whether the transfer is in the public interest"); no. 11
     ("Whether the transfer will preserve the jurisdiction of the Commission and
     the ability of the Commission to effectively regulate and audit public
     utility's or common carrier's operations in the State"), no. 12 ("Whether
     conditions are necessary to prevent adverse consequences which may result
     from the transfer"); no. 13 ("The history of compliance or noncompliance of
     the [sic] proposed acquiring entity or principals or affiliates have had
     with regulatory authorities in this State or other jurisdictions"); and no.
     18 ("Whether there are any conditions which should be attached to the
     proposed acquisition").

                             CONTINUING JURISDICTION

                                      XXX.

          Because ELI and EGS will retain their independent corporate forms, the
transfer of transmission assets will not result in the loss by this Commission
of jurisdiction over the retail rates of ELI and EGS in Louisiana, or the terms
and conditions of retail service rendered by them. Hence, this Commission will
maintain its power to regulate the Louisiana retail rates of ELI and EGS.


                                      -18-



                      TIMELINESS OF HEARINGS AND APPROVALS

                                      XXXI.

          In view of the transaction's being required pursuant to applicable
FERC Orders, and the relatively large number of regulatory approvals that will
be required in order for the transaction to be consummated, the Applicants
respectfully request that this Commission promptly address this Application, so
that this Commission may issue an order on this matter by July 31, 2001. The
transfer of transmission assets is expressly contingent upon its approval by the
appropriate regulatory agencies, including this Commission and the FERC.

                                     XXXII.

          For purposes of this proceeding, Applicants' representatives are as
follows:

                                 E. Renae Conley
                      Chief Executive Officer and President
                             Entergy Louisiana, Inc.
                      Entergy Gulf States, Inc. - Louisiana
                             4809 Jefferson Highway
                               Jefferson, LA 70121
                        Telephone: (504) 840-2732 (voice)
                           (504) 840-2738 (facsimile)

                             J. Wayne Anderson, Esq.
                             Entergy Services, Inc.
                                   26th Floor
                                639 Loyola Avenue
                              New Orleans, LA 70113
                        Telephone: (504) 576-4377 (voice)
                           (504) 576-5579 (facsimile)


                                      -19-



          WHEREFORE, the Applicants pray as follows:

     A.   That this Application be filed in the above entitled and numbered
          docket;

     B.   That, after due and lawful proceedings are had, this Commission:

          1.   Find that the transfer of ownership and/or control of certain
               transmission assets described herein, but more particularly and
               specifically described in the testimony and exhibits of the
               witnesses attached hereto and made part hereof, is in the public
               interest, and, subject to the terms and conditions to be
               established hereby, fully complies with Louisiana law and the
               orders of this Commission;

          2.   Take official action to grant approval of or express
               non-opposition to a transfer of ownership and/or control of
               certain of the transmission assets of ELI and EGS as a result of
               the transfers of such assets to the Transco;

     C.   Grant all general and equitable relief that the law and the nature of
          the case may permit.


                                      -20-



                                             Respectively submitted,

                                             J. Wayne Anderson, Bar No. 2466
                                             Margot G. Augustin, Bar No. 20087
                                             J. Christopher Neel, Bar No. 25804


                                             By:
                                                -------------------------------

                                             ATTORNEYS FOR
                                             ENTERGY GULF STATES, INC. AND
                                             ENTERGY LOUISIANA, INC.


                                      -21-

EX-99

							Exhibit D-9



                      BEFORE THE PUBLIC SERVICE COMMISSION
                           OF THE STATE OF MISSISSIPPI

ENTERGY MISSISSIPPI, INC.               IN RE:    PETITION OF ENTERGY
EC123-0082-00                                     MISSISSIPPI, INC., FOR
                                                  APPROVAL OF THE TRANSFER OF
                                                  ELECTRIC TRANSMISSION
                                                  ASSETS AND RELATED
                                                  CERTIFICATE RIGHTS TO AN
                                                  INDEPENDENT ELECTRIC
                                                  TRANSMISSION COMPANY


               PETITION OF ENTERGY MISSISSIPPI, INC., FOR APPROVAL
                    OF THE TRANSFER OF ELECTRIC TRANSMISSION
                   ASSETS AND RELATED CERTIFICATE RIGHTS TO AN
                    INDEPENDENT ELECTRIC TRANSMISSION COMPANY


     COMES NOW Entergy Mississippi, Inc. ("Entergy Mississippi" or the
"Company"), pursuant to Section 77-3-23 of the Mississippi Code of 1972, as
amended, and Rule 8 of the Public Utilities Rules of Practice and Procedure
("Procedural Rules") of the Mississippi Public Service Commission
("Commission"), and hereby petitions the Commission to approve and authorize the
transfer by Entergy Mississippi of all of its electric transmission facilities
and assets, including (i) all physical electric transmission equipment and
facilities and (ii) those portions of all easements, rights-of-way, land rights,
related property and property rights, certificates of public convenience and
necessity, operating rights, and any and all other rights, privileges, and
licenses of every type, kind, or character, from whatever source obtained,
including statutory and legal rights, that may be reasonably necessary,
appropriate, or useful for the ownership, operation, maintenance, construction,
extension, or acquisition of electric transmission facilities and assets (all
such electric transmission facilities and assets hereinafter referred to
collectively as "Transmission Assets") to an independent electric transmission
company (the "Transco") as detailed and set out herein, and would show in
support of this Petition as follows:





                                 I. INTRODUCTION
                                    ------------

                                       1.

     Entergy Mississippi, a Mississippi corporation, is an electric public
utility subject to the jurisdiction of the Commission pursuant to the
Mississippi Public Utilities Act of 1956, as amended (the "Act"). Entergy
Mississippi provides electric utility service to approximately 380,000 retail
customers in 45 counties in western Mississippi pursuant to Certificates of
Public Convenience and Necessity ("Certificates") issued by the Commission and
applicable legal rights. As an electric public utility, Entergy Mississippi owns
electric equipment, facilities, property, and other assets used and useful in
the performance of its duties to the public, including the Transmission Assets.

                                       2.

     Entergy Corporation, a Delaware corporation, is a registered holding
company pursuant to the provisions of the Public Utility Holding Company Act of
1935, as amended ("Holding Company Act"). Entergy Corporation owns all of the
common stock of a number of subsidiaries, including five operating companies,
Entergy Mississippi, Entergy Arkansas, Inc. ("Entergy Arkansas"), Entergy
Louisiana, Inc. ("Entergy Louisiana"), Entergy New Orleans, Inc. ("Entergy New
Orleans"), and Entergy Gulf States, Inc. ("Entergy Gulf States"). The five
operating companies (the "Operating Companies") are primarily engaged in the
generation, transmission, distribution, and sale of electricity to customers in
Arkansas, Louisiana, Mississippi, and Texas. The Entergy Corporation companies,
which operate as an integrated interstate electric utility system, are referred
to herein as the "Entergy System" or, collectively, "Entergy." The Entergy
System has generating capacity of nearly 30,000 megawatts and serves
approximately 2.5 million customer accounts.

                                       3.

     Entergy Mississippi hereby petitions the Commission for approval and
authorization to transfer the Company's Transmission Assets to the Transco. The
Transco will be a limited liability company organized under Delaware law to
engage in the business of providing non-discriminatory, open-access electric
transmission service, as directed by the Federal Energy Regulatory Commission
(the "FERC"), over electric transmission facilities. The Transco will be a
public utility as defined by Section 77-3-3 of the Mississippi Code of 1972, as
amended. The Operating Companies, including Entergy Mississippi, intend to
transfer their transmission assets to the Transco in return for passive
ownership interests in the Transco. A copy of the form of the Transco Limited
Liability Company Agreement is attached hereto as ENTERGY MISSISSIPPI EXHIBIT A.
                                                  -----------------------------
Under the proposals that have been filed by Entergy with the FERC, the Transco
will operate as part of the Southwest Power Pool (the "SPP") under a proposed
new Partnership Regional Transmission Organization (the "SPP Partnership RTO").

                                       4.

     The SPP is an Arkansas non-profit corporation with its principal place of
business in Little Rock, Arkansas. The SPP was formed in 1941 by a voluntary,
intercompany agreement among eleven utilities. In 1968, the SPP became a
regional Reliability Council, joining with several other such organizations to
form the predecessor to the North American Electric Reliability Council. The
member utilities of the SPP currently serve more than four million customers in
a 288,000 square-mile area covering all or part of the states of Arkansas,
Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, and Texas.

                                       5.

     Entergy Mississippi hereby is seeking the approval of the Commission to
transfer, as fully described herein, Entergy Mississippi's Transmission Assets
to the Transco in order that the Transmission Assets will be owned, operated,
maintained, and managed by the Transco, which will be an independent
transmission provider pursuant to the provisions of FERC Order No. 2000.

                  II. PHYSICAL ELECTRIC TRANSMISSION EQUIPMENT
                      ----------------------------------------
                        AND FACILITIES TO BE TRANSFERRED
                        --------------------------------

                                       6.

     Entergy Mississippi is proposing to transfer to the Transco all physical
electric transmission equipment and facilities operating at voltage levels at or
above 69 kV. These facilities include:

     a) transmission lines (including towers, poles, and conductors),
     transmission substations, transmission switching stations, and related
     easements and land rights;

     b) transformers providing transformation within the bulk power transmission
     system;

     c) the transmission system control center and operating facilities;

     d) transmission lines providing connections to generation sources and
     step-up (plant) substations;

     e) radial taps from the transmission system up to, but not including, the
     facilities that establish a connection to electric distribution facilities
     or retail customers;

     f) common facilities in substations that provide primarily a transmission
     function; and

     g) voltage control devices and power flow control devices directly
     connected to the transmission system.

                                       7.

     With respect to establishing the dividing line between transmission and
distribution assets, the Transmission Assets transferred to the Transco include
equipment and facilities that operate at or above 69 kV. Such equipment and
facilities function as part of the integrated transmission system to deliver
bulk power to transmission customers. Transmission lines and the switching
stations and substations that serve to interconnect only transmission lines are
considered transmission facilities. Similarly, distribution assets include
equipment and facilities that operate below 69 kV. Such equipment and facilities
function as part of the distribution delivery system. Distribution lines, and
the switching stations and substations that serve to interconnect only
distribution lines, are considered distribution facilities.

                                       8.

     Entergy Mississippi has a number of dual-function substations that contain
transmission elements (i.e., facilities operating at or above 69 kV) and
distribution elements (i.e., facilities operating below 69 kV). For these
dual-function substations, the dividing line between transmission and
distribution is at the high voltage side of the disconnect switch of the
distribution transformer. For the common use assets (i.e., land, structures,
equipment, facilities, and other assets used to support both transmission and
distribution functions) located at dual-function substations, these assets will
be considered to be transmission facilities for substations that are connected
to three or more transmission lines and will be considered to be distribution
facilities for substations that are connected to one or two transmission lines.

                                       9.

     With respect to the dividing line between generation and transmission
assets, generator step-up transformers and generation leads are classified as
generation assets. The dividing line between the generation assets and
transmission assets is defined to be at the high-voltage bushing of the
generator step-up transformer. All common use assets within a generation
switchyard will be classified as transmission assets and assigned to the Transco
because of their effect on the integrated transmission system.

                                       10.

     The Company's books and records are kept in accordance with the Uniform
System of Accounts, pursuant to the rules and regulations of the Commission and
of the FERC. All utility plant accounts are stated at original cost.

                                       11.

     The transmission facilities to be transferred to the Transco are described
in the Direct Testimonies and Exhibits of Company witnesses George R. Bartlett
and J. David Wright. Mr. Bartlett describes the transmission facilities that
will be transferred, including the division between the transmission and
distribution facilities and between the generation and transmission facilities.
Mr. Wright describes the accounting treatment for the transfer of assets and
liabilities to the Transco.

              III. CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY
                   ------------------------------------------------
                       AND OTHER ASSETS TO BE TRANSFERRED
                       ----------------------------------

                                       12.

     The Commission has, over the years, issued numerous Certificates pursuant
to the Act (Section 77-3-1, et seq., of the Mississippi Code of 1972) as
amended, authorizing Entergy Mississippi to construct, acquire, own, extend,
operate, and maintain transmission lines and related facilities. Entergy
Mississippi has constructed, acquired, owned, extended, operated, and maintained
transmission equipment and facilities pursuant to those Certificates and
pursuant to statutory rights, Commission rules, and other rights, privileges,
and licenses, which equipment and facilities have been used and useful in
providing service to the public and subject to the jurisdiction of the
Commission.

                                       13.

     Entergy Mississippi is proposing to transfer to the Transco those portions
of all certificates and of all easements, rights-of-way, land rights, related
property and property rights, operating rights, and any and all other rights,
privileges, and licenses of every type, kind, or character, from whatever source
obtained, including statutory and legal rights, that may be reasonably
necessary, appropriate, or useful for the ownership, operation, maintenance,
construction, extension, or acquisition of electric transmission facilities and
assets. It is the intent and purpose of the proposed transaction that upon the
transfer by Entergy Mississippi to the Transco of the Transmission Assets as
described in this Petition, the Transco will be a public utility under Section
77-3-3 of Mississippi Code of 1972, as amended. As an electric transmission
public utility owning and operating the existing transmission facilities being
acquired from Entergy Mississippi, the Transco, as a part of the SPP Partnership
RTO, will construct and acquire such transmission facilities and assets in the
future as may be required to discharge its responsibilities under its regional
transmission system expansion process and applicable Mississippi law. By this
Petition Entergy Mississippi seeks approval to transfer to the Transco Entergy
Mississippi's rights and authority under its existing certificates, applicable
Mississippi law and the Commission's rules so as to allow and provide for the
Transco to make the aforesaid construction and acquisition in the future.

                         IV. RELATED REGULATORY FILINGS
                             --------------------------

                                       14.

     This Petition is one of a series of filings Entergy Mississippi, either
individually or in concert with the other Operating Companies, is making in
order to transfer its Transmission Assets to the Transco, and to provide for the
operation of such Transmission Assets as a part of the SPP Partnership RTO. On
October 16, 2000, Entergy Services, Inc. ("ESI"), the service company of the
Entergy System, filed with the FERC, on behalf of Entergy Mississippi and the
other Operating Companies, an Application pursuant to FERC Order Nos. 2000 and
2000-A and Sections 203 and 205 of the Federal Power Act ("FPA") for a
determination that the proposed Transco and the proposed SPP Partnership RTO
satisfy the requirements of those Orders. ESI is seeking approval under Section
203 of the FPA for the transfer of the transmission assets of the Operating
Companies to the Transco. The FERC will determine, among other things, whether
the proposed Transco and the proposed SPP Partnership RTO will satisfy the four
minimum requirements of FERC Order No. 2000: (1) independence; (2) adequate
scope and configuration; (3) operational authority; and (4) short-term
reliability. The FERC will also decide whether the proposed Transco and the
proposed SPP Partnership RTO will be able to provide the eight minimum functions
required of an RTO by Order No. 2000: (1) sole administration of its own tariff;
(2) congestion management; (3) resolution of parallel-path flow issues; (4)
provider of last resort ancillary services; (5) Open Access Same-Time
Information System ("OASIS") administration of all transmission facilities under
its control; (6) market monitoring; (7) planning and expansion; and (8)
interregional coordination.

                                       15.

     On December 29, 2000, ESI filed with the FERC the Transco Rate Schedules
that will be included as part of the SPP Partnership RTO's tariff. As part of
such rate filing, ESI seeks to terminate FERC Service Schedule MSS-2,
Transmission Equalization, of the Entergy System Agreement. Entergy further
understands that the SPP plans to file during the first half of 2001 a single
tariff for the SPP Partnership RTO that incorporates the details of a congestion
management plan. Finally, ESI, on behalf of the Operating Companies, may make
another filing with the FERC at or near the time of such SPP filing, to conform
the Transco Rate Schedules to the SPP tariff and the congestion management
requirements.

                                       16.

        In order to enable the Transco to be operational no later than December
15, 2001, as directed by FERC Order No. 2000, ESI has asked the FERC to act on
ESI's Application and the subsequent RTO-related filings by July 31, 2001.
Moreover, to allow ESI to initiate the process of selecting the independent
board of the Managing Member that would manage the Transco, ESI also has
requested that the FERC issue a ruling on the proposed board selection process
by March 1, 2001. The Managing Member is described in paragraphs 20 and 21
hereinbelow.

                               V. TRANSCO PROPOSAL
                                  ----------------

                                       17.

     Under the SPP Partnership RTO proposal, an independent Transco owning or
controlling the transmission assets of the Operating Companies, and potentially
of other transmission owners, will operate under the oversight, and within the
umbrella, of the SPP Partnership RTO. Some of the SPP Partnership RTO's
functions will be performed by the SPP, and some will be performed by the
Transco. As noted above, the Operating Companies, and perhaps other owners of
transmission assets, will transfer their transmission assets to the Transco in
return for passive ownership interests in the Transco.

                                       18.

     The allocation of functions between the Transco and the SPP is set forth in
a Memorandum of Understanding ("MOU"), which is attached hereto as ENTERGY
                                                                   -------
MISSISSIPPI EXHIBIT B. The MOU describes the responsibilities of the SPP
- ---------------------
Partnership RTO, which include (1) acting as regional security coordinator for
the SPP and the Transco system; (2) performing Available Transmission Capacity
("ATC")/Total Transfer Capacity ("TTC") calculations; (3) fostering input by
market participants into the Transco's policies; (4) overseeing the regional
transmission system expansion process; and (5) providing a forum for market
monitoring and dispute resolution. The Transco will have control over the
portions of its transmission tariff that affect the commercial terms and
conditions of the Transco's facilities and other commercial responsibilities.

                                       19.

     The MOU, which was approved by the SPP board on July 20, 2000, describes
the allocation of responsibilities between the Transco and the SPP Partnership
RTO. The MOU provides the general principles that will govern the SPP
Partnership RTO. The development of the SPP Partnership RTO is conditioned on
the implementation of these principles. The details of the congestion management
plan that will apply across the SPP Partnership RTO have not yet been developed.
Entergy and the SPP have reached agreement in principle on a "hybrid" congestion
management approach that would use locational marginal pricing for the real-time
balancing energy market and that would provide tradable transmission rights for
the forward markets. A working group is currently developing details to
implement this approach. Entergy Mississippi expects the details of a congestion
management approach to be completed in the near future for filing with the FERC.

                                       20.

     Transmission owners, such as Entergy Mississippi, that contribute assets to
the Transco will be entitled to share in the Transco's profits or losses but
will hold only passive ownership interests. The business affairs of the Transco
will be conducted by the Managing Member, which will be a corporation that will
be established under the laws of Delaware. The Managing Member, in turn, will be
governed by an independent, seven-member Board of Directors. The Managing Member
Board of Directors will be selected by a Board Selection Committee, composed of
representatives of various market participants, from a pool of qualified
candidates identified by a nationally-recognized search firm. The Transco
Implementation Plan by which the Managing Member's Board will be selected, is
attached hereto as ENTERGY MISSISSIPPI EXHIBIT C.
                   -----------------------------

                                       21.

     The Managing Member's Board will be structured to ensure the independence
of the Transco from the Operating Companies, any other Entergy Corporation
affiliate, or any entity owning a passive interest in the Transco. The Managing
Member's Board will owe the members of the Transco a fiduciary duty to maximize
the value of the members' passive ownership interests in the Transco and to
protect the integrity of the passive owners' capital investments. However, the
Board is prohibited from considering the interests of the passive owners outside
the Transco's business.

                                       22.

     Entergy Mississippi believes the transfer of the Transmission Assets to the
Transco under the circumstances described above is in the public interest for
several reasons. The proposal satisfies the provisions of FERC Order No. 2000
that Entergy Mississippi's transmission network be placed under independent
management. Entergy Mississippi believes that the Transco, under the oversight
of the SPP, will receive FERC approval as an independent RTO. The partnership
structure allows for the creation of an RTO substantially larger than an
Entergy-only or SPP-only RTO. Moreover, the binary RTO structure may be more
attractive to other utilities than an independent system operator, a possible
alternative, and should permit the voluntary formation of an even larger RTO.

                                       23.

     The establishment of the Transco is the best vehicle to facilitate the grid
expansion that will be important in creating a robust wholesale power market.
The Transco will be a regulated, for-profit entity that will be responsive to
incentives for superior grid performance and high-quality service and can be
held accountable for its commercial actions and business decisions.

                      VI. STRUCTURE OF TRANSFER TRANSACTION
                          ---------------------------------

                                       24.

     As noted above, Entergy Mississippi intends to transfer its Transmission
Assets to the Transco in return for a passive ownership interest. Through a
series of transactions, including the transfer of legal title, Entergy
Mississippi will transfer its Transmission Assets to the Transco. Entergy
Mississippi will transfer its Transmission Assets to an intermediate
transmission entity ("Intermediate Transmission Entity") and then to the Transco
in exchange for a passive ownership interest in the Transco. Each Operating
Company will form a transmission holding company subsidiary ("Holdco") and will
transfer its ownership interest in the Intermediate Transmission Entity to its
Holdco. In order to further ensure the independence of the Transco, the existing
indenture and other long-term debt of Entergy Mississippi allocated to the
Transmission Assets will not be assumed by the Transco. Instead, there will be
an interim internal debt assumption agreement between Entergy Mississippi and
the Intermediate Transmission Entity. The Intermediate Transmission Entity,
which will be indirectly owned by Entergy Corporation and the Operating
Companies, will aggregate the transmission assets of the Operating Companies
prior to their transfer to the Transco. The Intermediate Transmission Entity
will obtain independent financing, the proceeds of which will be used to repay
the assumed debt of Entergy Mississippi and the other Operating Companies
allocable to their transmission assets. The debt issued by the Intermediate
Transmission Entity will become the responsibility of the Transco upon
completion of the transfer of transmission assets to the Transco. This process
is explained in more detail in the Direct Testimony of Mr. Steven C. McNeal.

                               VIII. THE WITNESSES
                                     -------------

                                       25.

     Entergy Mississippi is submitting in support of its Petition the Direct
Testimonies and Exhibits of Carolyn C. Shanks, ENTERGY MISSISSIPPI EXHIBIT D,
                                               -----------------------------
Frank F. Gallaher, ENTERGY MISSISSIPPI EXHIBIT E, George R. Bartlett, ENTERGY
                   -----------------------------                      -------
MISSISSIPPI EXHIBIT F, J. David Wright, ENTERGY MISSISSIPPI EXHIBIT G, Steven C.
- ---------------------                   -----------------------------
McNeal, ENTERGY MISSISSIPPI EXHIBIT H, and Robert M. Hawkins, ENTERGY
        -----------------------------                         -------
MISSISSIPPI EXHIBIT I. The substance of each witness's testimony may be briefly
- ---------------------
summarized as follows:

     a) Ms. Shanks outlines the Company's proposal in more detail, introduces
the other witnesses, and explains why the proposed transfer is consistent with
public interest.

     b) Mr. Gallaher discusses the process by which the Transco proposal was
developed, summarizes the relevant FERC filings and requirements, explains the
structure of the SPP Partnership RTO, and describes Entergy Mississippi's
proposed timeline for the implementation of the Transco proposal.

     c) Mr. Bartlett describes the physical electric transmission facilities
that must be separated and transferred and the transmission planning process
under the SPP Partnership RTO.

     d) Mr. Wright describes the assets to be transferred by asset location, the
accounting adjustments for removal of transmission plant-in-service, transfer
pricing methodology, and the income tax implications of the transfer.

     e) Mr. McNeal discusses the financial issues related to the formation of
the Transco, its initial capital structure, and the impact of the transfer of
transmission assets and facilities on Entergy Mississippi's financial structure.

     f) Mr. Hawkins discusses how costs and savings resulting from the proposed
transfer are treated under Entergy Mississippi's Formula Rate Plan Rider
Schedule FRP-2.

                       IX. APPENDIX B FILING REQUIREMENTS
                           ------------------------------

                                       26.

     Pursuant to the provisions of Appendix "B", Schedule 1, of the Procedural
Rules, Entergy Mississippi attaches, incorporates by reference, or seeks
particularly-specified Commission disposition with respect to the following
items:

     1.   (For each party to the transaction, a copy of its corporate charter or
articles of incorporation or, if a partnership, a copy of any written
partnership agreement.) See the Joint Petition filed November 9, 2000, in
Commission Docket No. 2000-UA-925.

     2.   (If a party to the transaction is a foreign corporation, a copy of its
authority to do business in the State of Mississippi.) Not applicable.

     3.   (For each party to the transaction, the names and addresses of its
board of directors, officers and any person owning fifteen percent (15%) or more
of its stock. If not a corporation, the names and addresses of all owners or
partners.)

     See the Joint Petition filed November 9, 2000, in Commission Docket No.
2000-UA-925.

     4.   (A copy of any and all written agreements concerning the proposed sale
or transfer.) See ENTERGY MISSISSIPPI EXHIBITS A and B to this Petition.
                  ------------------------------------

     5.   (If any acquisition adjustment to rate base or expenses is sought, a
summary of the justifications therefor together with the details of all
accounting adjustments proposed to be made.) None.

     6.   (A list of any other Mississippi utility operations owned, directly or
indirectly, by either party.) None.

     7.   (For each party to the transaction, a balance sheet for the most
recent month available which shall be not less than nine months prior to the
filing date.) See the Joint Petition filed November 9, 2000, in Commission
Docket No. 2000-UA-925.

     8.   (For each party to the transaction, an operating statement of revenues
and expenses for the twelve months ending as of the date of the balance sheet.)
See the Joint Petition filed November 9, 2000, in Commission Docket No.
2000-UA-925.

     9.   (An exhibit listing the names and addresses of all interested persons
as defined in Rule 2K all of the Commission's Rules of Practice and Procedure
together with a certificate that the filing utility has served a notice of the
filing upon each.)

     See ENTERGY MISSISSIPPI EXHIBIT J to this Petition.
         -----------------------------

     10.  (In the case of a partial transfer or sale, the legal description of
the certificated area being transferred and a reference to the orders or
certificates granting said area to the transferring utility.) None.

     11. (All testimony to be relied upon at hearing.) See ENTERGY MISSISSIPPI
                                                           -------------------
EXHIBITS D, E, F, G, H, and I to this Petition.
- -----------------------------


                                  X. CONCLUSION

                                       27.

     To the extent, if any, that this filing does not meet all of the technical
requirements of the Commission's Procedural Rules, the Petitioners hereby
respectfully move and request, pursuant to Procedural Rule 23, that compliance
with such technical requirements be waived by the Commission as unnecessary,
unreasonably burdensome, impossible, impractical, or not in the public interest.

                                       28.

     Entergy Mississippi respectfully submits that the transfer petitioned for
in this Petition is in good faith; that the Transco will in the course of this
proceeding be shown to be fit and able to perform properly the public utility
services authorized by the portions being transferred of the Certificates of
Public Convenience and Necessity, and to comply with the lawful rules,
regulations, and requirements of the Commission; and that the transfer is and
will be otherwise consistent with the public interest.

                                       29.

     Entergy Mississippi hereby further expressly reserves all of its rights
insofar as any order of the Commission or any court, or action by any
governmental entity, may result in confiscatory rates that constitute
deprivation of property without due process of law, or in the impairment,
abrogation, or breach of contracts with governmental or other entities under the
contract clause or otherwise; insofar as matters in this proceeding are within
the jurisdiction of the FERC the Securities and Exchange Commission ("SEC"), or
any other federal or state agency; and insofar as such orders or other actions
may be otherwise unlawful. Entergy Mississippi's reservation of rights is based




on all applicable constitutional provisions, statutes, and rules of law,
including, but not limited to, the following:

     (1)  THE SUPREMACY CLAUSE OF THE UNITED STATES CONSTITUTION, ARTICLE VI,
          CLAUSE 2;

     (2)  THE PREEMPTION DOCTRINE UNDER THE LAWS AND CONSTITUTION OF THE UNITED
          STATES;

     (3)  THE COMMERCE CLAUSE OF THE UNITED STATES CONSTITUTION, ARTICLE 1,
          SECTION 8, CLAUSE 3;

     (4)  THE CONTRACT CLAUSE OF THE UNITED STATES CONSTITUTION, ARTICLE 1,
          SECTION 10;

     (5)  THE DUE PROCESS AND EQUAL PROTECTION CLAUSES OF THE UNITED STATES
          CONSTITUTION, AMENDMENT XIV, SECTION 1;

     (6)  THE DUE PROCESS AND EQUAL PROTECTION CLAUSES OF THE MISSISSIPPI
          CONSTITUTION, ARTICLE 3, SECTION 14;

     (7)  THE CONTRACT CLAUSE OF THE MISSISSIPPI CONSTITUTION, ARTICLE 3,
          SECTION 16;

     (8)  THE FEDERAL POWER ACT AND STATUTES RELATING THERETO, 16 U.S.C. SECTION
          791(A), ET SEQ., AND 42 U.S.C. SECTION 7171, ET SEQ., AND REGULATIONS
          ADOPTED BY THE FERC;

     (9)  THE PUBLIC UTILITIES HOLDING COMPANY ACT OF 1935, 15 U.S.C. SECTION
          79, ET SEQ., AND STATUTES RELATED THERETO AND REGULATIONS ADOPTED BY
          THE SEC;

     (10) THE ATOMIC ENERGY ACT OF 1954, 42 U.S.C. SECTION 2011, ET SEQ., AND
          REGULATIONS ADOPTED BY THE NUCLEAR REGULATORY COMMISSION;

     (11) OTHER APPLICABLE FEDERAL LAW; AND

     (12) THE MISSISSIPPI PUBLIC UTILITIES ACT, SECTION 77-3-1 ET SEQ. (2000)
          AND OTHER APPLICABLE MISSISSIPPI LAW.

     WHEREFORE, PREMISES CONSIDERED, Entergy Mississippi prays that the
Commission will set this matter for hearing at an early date and particularly
prays that this Commission shall find that the public convenience and necessity
require such hearing to be held at the earliest date available; and that process
be issued by this Commission in the manner provided by law and by the Procedural
Rules giving reasonable notice of the hearing hereof to all interested and other
persons as in the Commission's judgment may be necessary, including the time and
place of such hearing and the purpose thereof. Entergy Mississippi further prays
that, upon a hearing hereof, the Commission shall find that, to the extent, if
any, that this filing does not meet all of the technical requirements of the
Commission's Procedural Rules, the Petitioners compliance with such technical
requirements is unnecessary, unreasonably burdensome, impossible, impractical,
or not in the public interest and that the Commission therefore shall order such
requirements waived pursuant to its rules.

     Entergy Mississippi further prays that, upon a hearing hereof, the
Commission shall find that the transfer is and will be in good faith; that the
Transco is and will be fit and able to perform public utility services
authorized by the portions being transferred of the Certificates of Public
Convenience and Necessity, and to comply with all lawful rules, regulations, and
requirements of the Commission; and that the transfer is and will be otherwise
consistent with the public interest; and that, upon such finding, the Commission
shall approve the transfer petitioned for in this Petition.

     Entergy Mississippi further prays that the Commission (A) approve the
transfer of Entergy Mississippi's electric transmission facilities and assets,
including (i) all physical electric transmission equipment and facilities and
(ii) those portions of all easements, rights-of-way, land rights, related
property and property rights, Certificates of Public Convenience and Necessity,
operating rights, and any and all other rights, privileges, and licenses of
every type, kind, or character, from whatever source obtained, including
statutory and legal rights, that may be reasonably necessary, appropriate, or
useful for the ownership, operation, maintenance, construction, extension, or
acquisition of electric transmission facilities and assets, referred to
collectively in this Petition as Transmission Assets, to an independent electric
transmission company, referred to in this Petition as the Transco, all as fully
set out in and described in this Petition and the supporting testimony and
exhibits, and (B) grant the Company all other necessary and proper relief.

     Entergy Mississippi prays for such other, further, and general relief as
may be necessary, beneficial, or required.

     This the      day of January 2001.
              ----

                                        Respectfully submitted,

                                        ENTERGY MISSISSIPPI, INC.


                                        By:
                                           ------------------------------------
                                         ROBERT C. GRENFELL
                                         DIRECTOR, REGULATORY AFFAIRS DEPARTMENT
                                         ENTERGY MISSISSIPPI, INC.


WISE CARTER CHILD & CARAWAY
Professional Association
401 East Capitol Street
Suite 600
Post Office Box 651
Jackson, Mississippi   39205
(601) 968-5500





STATE OF MISSISSIPPI

COUNTY OF HINDS


     Personally appeared before me, the undersigned authority in and for the
jurisdiction aforesaid, Robert C. Grenfell, who after being by me first duly
sworn, stated that he is Director of Regulatory Affairs Department of Entergy
Mississippi, Inc. and that as such is fully authorized to make this affidavit;
and further stated that the matters and things contained in the foregoing
Petition are true, accurate, and correct as therein set forth to the best of his
knowledge, information, and belief.


                                        ---------------------------------------
                                        Robert C. Grenfell
                                        Director, Regulatory Affairs Department
                                        Entergy Mississippi, Inc.


     SWORN TO AND SUBSCRIBED before me, this the                day of January
                                                 --------------
2001.


- ----------------------------------           ----------------------------------
                                             NOTARY PUBLIC


My Commission Expires:


- ----------------------------------





                        RULE 6L(3) CERTIFICATE OF SERVICE

     I, HENDERSON S. HALL, JR., one of the attorneys for Entergy Mississippi,
Inc., hereby certify that on this day I have had hand-delivered fourteen (14)
copies of the above and foregoing Petition to:

                    Brian U. Ray
                    Executive Secretary
                    Mississippi Public Service Commission
                    19th Floor
                    Walter Sillers State Office Building
                    Jackson, Mississippi 39201

and that on this day I have had hand-delivered one (1) copy of the Petition to:

                    Robert G. Waites
                    Executive Director
                    Mississippi Public Utilities Staff
                    17th Floor
                    Walter Sillers State Office Building
                    Jackson, Mississippi 39201

                    George Fleming
                    General Counsel
                    Mississippi Public Utilities Staff
                    17th Floor
                    Walter Sillers State Office Building
                    Jackson, Mississippi  39201

and that, in the filing of the Petition, I have complied with Rule 6L of the
Commission's Public Utilities Rules of Practice and Procedure.

     I further certify that I have provided a copy of the Petition to:

                    Wm. Bruce McKinley
                    Attorney, Commission Staff
                    Mississippi Public Service Commission
                    19th Floor
                    Walter Sillers State Office Building
                    Jackson, Mississippi  39201


     This the     day of January 2001.
              ----


                                        ---------------------------------------
                                        HENDERSON S. HALL, JR.
                                        MSB No. 2797
                                        ATTORNEY FOR ENTERGY MISSISSIPPI, INC.


WISE CARTER CHILD & CARAWAY
Professional Association
401 East Capitol Street
Suite 600
Post Office Box 651
Jackson, Mississippi   39205
(601) 968-5500

EX-99

								Exhibit D-11



                                   BEFORE THE

                       COUNCIL OF THE CITY OF NEW ORLEANS


IN THE MATTER OF AN INVESTIGATION  )
INTO ENTERGY CORPORATION'S         )
TRANSCO PROPOSAL AND               )         DOCKET NO. UD-99-1
JURISDICTION ISSUES RELATIVE TO    )
ENTERGY NEW ORLEANS, INC. AND      )
ENTERGY LOUISIANA, INC.            )


                              JOINT APPLICATION OF
                          ENTERGY NEW ORLEANS, INC. AND
                           ENTERGY LOUISIANA, INC. FOR
                        OFFICIAL ACTION OF APPROVAL OF OR
                               NON-OPPOSITION TO A
                          TRANSFER OF OWNERSHIP AND/OR
                     CONTROL OF CERTAIN TRANSMISSION ASSETS
                     --------------------------------------

          NOW BEFORE THIS COUNCIL, through their undersigned counsel, come
Entergy New Orleans, Inc. ("Entergy New Orleans" or "ENO") and Entergy
Louisiana, Inc. ("Entergy Louisiana" or "ELI") (collectively the "Applicants")
for this, their Joint Application (the "Application") for, among other things,
official action of approval of or official action of non-opposition to a
transfer of ownership and/or control 1  of certain electric transmission assets


- ------------------------
1    The term " transfer of ownership and/or control" as used in this
Application shall mean a transfer of all substantive indicia of ownership but
actual transfer of title. Such indicia include, but are not limited to, rights
and obligations relating to the maintenance, operation, repair, and replacement
of certain transmission assets.





of the Applicants and in support of this Application, the Applicants
respectfully show as follows:

                         THE APPLICANTS AND THEIR SYSTEM

                                       I.

          The Applicants are public utility operating company subsidiaries of
Entergy Corporation ("Entergy Corp."). Entergy Corp. is a public utility holding
company organized pursuant to the Public Utility Holding Company Act of 1935
("Holding Company Act"), created and existing pursuant to the laws of the State
of Delaware, with its general offices and principal place of business at 639
Loyola Avenue, New Orleans, Louisiana 70113. Entergy Corp. owns all of the
outstanding shares of common stock of its five public utility operating company
subsidiaries: ENO, ELI, Entergy Arkansas, Inc. ("EAI"), Entergy Gulf States,
Inc. ("EGS"), and Entergy Mississippi, Inc. ("EMI") (collectively, the
"Operating Companies").

                                       II.

          The Operating Companies engage in the manufacture, generation,
transmission, distribution, and sale of electricity to approximately 2.5 million
retail customers throughout 84,000 square miles of Arkansas, Louisiana,
Mississippi, and Texas. Pursuant to the Entergy System Agreement, which has been
approved by the Federal Energy Regulatory Commission ("FERC"), the Operating
Companies jointly plan and operate their electric generating facilities and bulk
electric transmission facilities as a single, integrated electric system (the
"Entergy System"). In addition, Entergy New Orleans provides retail gas service


                                      -2-



to approximately 150,000 retail customers in New Orleans, Louisiana. At the
present time, the Operating Companies are subject to regulation by their
respective state and/or local retail regulators: The Council of the City of New
Orleans ("CNO" or "Council") as to ENO and as to ELI's operations within the
Fifteenth Ward of the City of New Orleans (Algiers); the Louisiana Public
Service Commission (the "LPSC" or "Commission") as to ELI and EGS's operations
within Louisiana; the Arkansas Public Service Commission ("APSC") as to EAI; the
Mississippi Public Service Commission ("MPSC") as to EMI; and the Public Utility
Commission of Texas ("PUCT") as to EGS's operations within Texas.

                                      III.

          The Operating Companies also are subject to regulation by, among
others, the FERC, which regulates the acquisition and disposition of facilities,
interchange and transmission services, and wholesale purchases and sales of
electric power and energy; the Securities and Exchange Commission ("SEC"), which
regulates Entergy Corp. and its affiliates pursuant to, among others, the
Holding Company Act; and the Nuclear Regulatory Commission ("NRC"), which
regulates nuclear operations at the Entergy System's five (5) nuclear-fueled
electric generating units.


                                      -3-



                      INDEPENDENT TRANSMISSION ORGANIZATION

                                       IV.

          The FERC has imposed a deadline of December 15, 2001, by which
FERC-jurisidictional transmission facilities must be committed to an independent
Regional Transmission Organization ("RTO").2  Such transmission facilities are
to operated independently of the generation and merchant function of the
utility, its affiliates and other market participants. The Entergy System has
proposed that its FERC-jurisdictional transmission facilities be operated by a
for-profit company ("Transco") that would be independent of Entergy Corp. and
any of its other utility operations, which Transco would be a participant in the
Southwest Power Pool's Partnership Regional Transmission Organization ("SPP
Partnership RTO").

                                 THE APPLICATION

                                       V.

          The Applicants hereby request Council official action of approval of
or non-opposition to a transfer ownership and/or control of certain of their
transmission facilities and related assets to the independent transmission
company. The Transco will be a limited liability company organized under
Delaware law and authorized to engage in the business of providing
non-discriminatory, open access transmission service, as required by the FERC,


- ------------------------
2    See Regional Transmission Organizations, Docket No. RM99-2-000, Order No.
2000, 89 F.E.R.C. P. 61,285 (1999) ("FERC Order No. 2000").


                                      -4-



over FERC-regulated transmission facilities.3  The Transco will operate as a
public utility. The Operating Companies, including the Applicants, intend to
contribute ownership and/or control of their transmission assets to the Transco
in return for passive ownership interests in the Transco. Other
transmission-owning entities likewise could contribute ownership and/or control
of their transmission assets to the Transco in return for passive ownership
interests in the Transco. The Transco LLC Agreement that will create the Transco
is attached hereto as Joint Exhibit 1.

                                       VI.

          The Applicants are seeking the Council's approval of or non-opposition
to the transfer of ownership and/or control of certain of the Applicants'
electric transmission assets and facilities (including, as may be necessary or
required, any related rights that may be subject to the Council's jurisdiction)
to the Transco in order that those assets and facilities may be operated and
managed by an independent transmission organization, consistent with FERC Order
No. 2000, as well as requesting the approval of any and all financing
transactions that will be necessary to create the Transco.


- ------------------------
3    The FERC has required all public utilities that own, control, or operate
facilities used for transmitting electric energy in interstate commerce to file
open access, non-discriminatory transmission tariffs that contain minimum terms
and conditions of non-discriminatory service. See Promoting Wholesale
Competition Through Open Access Non-discriminatory Transmission Services by
Public Utilities, Recovery of Stranded Costs by Public Utilities and
Transmitting Utilities, Docket Nos. RM95-8-000 and RM94-7-001, Order No. 888, 75
F.E.R.C. P. 61,080 (1996) ("FERC Order No. 888").


                                      -5-



                                      VII.

          This Application is one of a series of filings that the Applicants,
either jointly or in concert with the other Operating Companies, must make in
order to transfer ownership and/or control of their transmission assets and
facilities to the Transco, which will participate in the proposed new SPP
Partnership RTO, of which the Transco will be a part. The SPP is a regional
electricity reliability council. On October 16 and December 29, 2000, Entergy
Services, Inc. ("ESI") filed with the FERC, on behalf of the Applicants and the
other Operating Companies, applications pursuant to FERC Order Nos. 2000 and
2000-A and Section 203 and 205 of the Federal Power Act ("FPA") for approval of
the creation of an RTO, approval of the transfer of transmission assets to the
RTO, and approval of a Transco rate structure. ESI, on behalf of the Operating
Companies, sought approval of the SPP Partnership RTO under Order No. 2000 and
approval under Section 203 of the FPA of the transfer of the transmission assets
of the Operating Companies to the Transco.

                                      VIII.

          ELI's December 29 filing on behalf of the Operating Companies contains
the Transco rate schedules that will be included as part of the SPP Partnership
RTO's transmission tariff. In addition, as part of that filing, ESI, on behalf
of the Operating Companies, seeks to terminate FERC rate schedule MSS-2 of its
System Agreement, effective upon implementation of the Transco rate schedules.
The Applicants understand that the SPP plans to file a single tariff for the SPP
Partnership RTO that incorporates the details of a congestion management
approach during the first half of 2001. ESI may make another filing on behalf of
the Operating Companies with the FERC at or near the time of the SPP's filing,


                                      -6-



in order to conform the Transco rate schedules to the SPP tariff and the
congestion management requirements.

                                       IX.

          In order to enable the Transco to be operational no later than
December 15, 2001, pursuant to FERC Order No. 2000, ESI has asked the FERC to
act on its application and the subsequent RTO-related filings by July 31, 2001.
Moreover, to allow ESI to initiate the process of selecting the independent
board of the Managing Member that would manage the Transco, ESI also requested
that the FERC issue a ruling on the proposed board selection process by March 1,
2001. The approval sought from this Council in the present Application is
contingent upon the Applicants securing the relief requested from the FERC in
the proceedings described above.

                             REVIEW BY THIS COUNCIL

                                       X.

          The Council of the City of New Orleans is reviewing the proposed
transfer of transmission assets pursuant to the Council's authority set forth in
the Home Rule Charter of the City of New Orleans.

                              THE TRANSCO PROPOSAL

                                       XI.

          Pursuant to the SPP Partnership RTO proposal, an independent Transco
(owning or controlling the transmission assets of the Operating Companies and
similar transmission assets of other transmission owners) will operate under the


                                      -7-



oversight, and within the umbrella, of the SPP. The SPP was formed in 1941 by a
voluntary, intercompany agreement among eleven utilities. In 1968, the SPP
became a regional reliability council, joining with several other such
organizations to form the predecessor to the North American Electric Reliability
Council ("NERC"). Members of the SPP currently have more than four million
customers in a 288,000 square-mile area, including all or part of the states of
Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, and
Texas. Some of the SPP Partnership RTO's functions will be performed by the SPP
and some will be performed by the Transco.

                                      XII.

          The allocation of functions between the Transco and the SPP is set
forth in a Memorandum of Understanding, which is attached hereto as Joint
Exhibit 2. The SPP Partnership RTO will be responsible for (1) acting as
regional security coordinator for the SPP and Transco system; (2) performing
Available Transmission Capacity ("ATC")/Total Transmission Capacity ("TTC")
calculations; (3) fostering input by market participants into the Transco's
policies; (4) overseeing the regional transmission system expansion process; and
(5) providing a forum for market monitoring and dispute resolution. The Transco
will have control over the portions of its transmission tariff which affect the
commercial terms and conditions of the Transco's facilities and other commercial
responsibilities.

                                      XIII.

          Although Transco participants, such as the Applicants, which
contribute assets to the Transco will be entitled to share in the Transco's
profits or losses, such participants will hold only passive ownership interests


                                      -8-



in the Transco. The business affairs of the Transco will be conducted by the
Managing Member, a separate Delaware corporation. The Managing Member, in turn,
will be governed by an independent, seven-member board. This Managing Member
Board will be selected by a Board Selection Committee, constituted of
representatives of various market participants, from a pool of qualified
candidates identified by a nationally recognized search firm. The Transco
Implementation Plan by which the Managing Member's board will be selected is
attached hereto as Joint Exhibit 3. The structure of the Managing Member Board
will ensure the independence of the Transco from the Operating Companies, any
other Entergy Corporation affiliate, or any entity owning a passive interest in
the Transco, or any other entity that participates in the wholesale electricity
market.

                                      XIV.

          As is the case for boards of directors in general, the Managing Member
Board will owe, to those who elect it, a fiduciary duty to maximize the value of
the Transco and the assets controlled by the Transco and to protect the
integrity of the passive owners' capital investments. However, the Managing
Member Board is prohibited from considering any interests of the passive owners
other than their interests in the Transco's business pursuant to the Transco LLC
Agreement.4


- ------------------------
4    Entergy will revise section 9.1(b) of the Transco LLC Agreement (Joint
Exhibit 1) to clarify that the fiduciary duties owed by the Managing Member to
the Transco members prohibit the Managing Member from considering the interests
of those members outside the Transco's business. This will be accomplished by
changing the word "require" in the last sentence of section 9.1(b) to "allow."
With this clarification, the Transco's governance structure complies with the
independence principles set forth in FERC Order No. 2000.


                                      -9-



                                       XV.

          The MOU, which was approved by the SPP board on July 20, 2000,
describes the allocation of responsibilities between the Transco and the SPP
Partnership RTO. The MOU provides the general principles that will govern the
SPP Partnership RTO. The development of the SPP Partnership RTO is conditioned
on the implementation of these principles. All of the details of the congestion
management approach that will apply across the SPP Partnership RTO have not yet
been developed. Entergy Corp. and SPP have reached agreement in principle on a
"hybrid" congestion management approach that would use locational marginal
pricing for the real-time balancing energy market and that would provide
tradable transmission rights for the forward markets. A working group of the SPP
currently is developing details to implement this approach. The Applicants
expect the details of a congestion management approach to be completed in the
near future and filed with the FERC.

                                      XVI.

          The Applicants believe the proposed SPP Partnership RTO is in the
public interest: The proposal satisfies the requirement of FERC Order No. 2000
that the Applicants' transmission network be placed under independent
management. The binary RTO structure (the Transco as a member of the SPP
Partnership RTO) allows for the creation of an RTO substantially larger than an
Transco-only or SPP-only RTO. Moreover, the binary RTO structure may be more
attractive to other utilities than an independent system operator, a possible
alternative, and should permit the voluntary formation of an even larger RTO.


                                      -10-



                                      XVII.

          The Applicants believes that the Transco is an appropriate vehicle to
facilitate the expansion of the transmission grid, which will be important in
creating a robust wholesale power market for both wholesale and retail
customers. The Transco will be a regulated, for-profit entity that will be
responsive to incentives for superior grid performance and high-quality service
and can be held accountable for its commercial actions and business decisions.
The transfer of ownership and/or control of the Applicants' transmission assets
to the Transco satisfies the requirements of both federal and Louisiana law.

                     FACILITIES AND ASSETS TO BE TRANSFERRED

                                     XVIII.

          The Applicants propose to transfer to the Transco all facilities
related to the transmission of electric energy that operate at a voltage of 69
kilovolts ("kV") or above (the "bulk power system"). These facilities include:

     a)   transmission lines (including towers, poles, and conductors) and
          transmission substations;

     b)   transformers providing transformation within the bulk power system;

     c)   system control centers and operating facilities;

     d)   lines providing connections to generation sources and step-up
          (generating plant) substations;

     e)   radial taps from the transmission system up to, but not including, the
          facilities that establish the final connection to distribution
          facilities or retail customers;


                                      -11-



     f)   common facilities in substations that provide primarily a transmission
          function; and

     g)   voltage control devices and power flow control devices directly
          connected to the transmission system.

                                      XIX.

          With respect to the split between transmission and distribution
assets, the transmission assets transferred to the Transco include equipment and
devices that operate at 69 kV or above and function as part of the integrated
transmission system to deliver bulk power to transmission customers. Thus,
transmission lines and the switching stations and substations which serve to
interconnect only transmission lines are considered transmission facilities.
Similarly, distribution assets include equipment and devices that operate below
69 kV or function a part of the distribution delivery system. Thus, distribution
lines, and the switching stations and substations which serve to interconnect
only distribution lines, are considered distribution facilities.

                                       XX.

          The Applicants have a number of dual function substations that contain
transmission elements (i.e., facilities operating at 69 kV or above) and
distribution elements (i.e., facilities operating below 69 kV). For these dual
function substations, the dividing line between transmission and distribution is
at the high voltage side of the disconnect switch of the distribution
transformer. For the common use assets (i.e., land, structures, and equipment
used to support both transmission and distribution functions) located at dual
function substations, these assets will be considered transmission facilities


                                      -12-



for substations that are connected to three or more transmission lines and
distribution facilities for substations that are connected to one or two
transmission lines.

                                      XXI.

          With respect to the split between generation and transmission assets,
generator step-up transformers and generator leads are classified as generation
assets. The dividing line between the generation assets and transmission assets
is defined to be at the high-voltage bushing of the generator step-up
transformer. All common use assets within a generation switchyard will be
classified as transmission assets and assigned to the Transco because of their
effect on the integrated transmission system.

                                      XXII.

          The transmission facilities to be transferred to the Transco are
described in the Direct Testimony and Exhibits of Company witnesses George R.
Bartlett and J. David Wright. Mr. Bartlett describes the transmission assets
that will be transferred, including the division between the transmission and
distribution assets and the generation and transmission asset. Mr. Wright
identifies and describes the accounting treatment for the transfer of assets and
liabilities to the Transco.

                                 PUBLIC INTEREST

                                     XXIII.

          The proposed transfer of transmission assets is consistent with orders
of the FERC and is in the public interest.


                                      -13-



                              FINANCING THE TRANSCO

                                      XXIV.

          As noted above, the Applicants intend to transfer their transmission
assets to the Transco in return for a passive ownership interest. Through a
series of transactions that mayinclude the transfer of legal title, the
Applicants will transfer ownership and/or control of their transmission assets
to the Transco. These transactions are designed to allow the Applicants to
minimize tax effects associated with the transfer of assets. The Applicants
initially will transfer ownership and/or control of their transmission assets
and facilities to an intermediate transmission entity ("ITE"), which will be
owned by the Applicants and the other Operating Companies.

                                      XXV.

          The ITE will aggregate the transmission assets and facilities of all
the Operating Companies for the ultimate transfer of ownership and/or control to
the Transco through three limited liability companies. In addition, Entergy
Corp. will own a one percent interest in two of these three limited liability
companies, which will hold the passive ownership interest in Transco.

                                      XXVI.

          After the Applicants and the other Operating Companies transfer their
assets to the ITE and to Transco, and before any distributions are made from
Transco to the Operating Companies, each Operating Company will form a
transmission holding company subsidiary ("HOLDCO"), and will transfer its
ownership interest in the ITE to its HOLDCO. The formation of HOLDCO by the
Applicants and each of the Operating Companies and the transfer by each of them


                                      -14-



of their ownership interest in the ITE is for the purpose of minimizing tax
effects. The HOLDCO will have no effect on the operations or control of Transco.

                                     XXVII.

          In order to further ensure the independence of the Transco, the
existing mortgage and other long-term debt of the Applicants will not be assumed
by the Transco. Instead, there will be interim internal debt assumption
agreements between the Applicants and the ITE. The ITE will obtain independent
financing, the proceeds of which will be used to repay of the debt of the
Applicants and the other Operating Companies allocable to their transmission
assets. The debt issued by the ITE will become the responsibility of the Transco
upon completion of the transfer of transmission assets to the Transco. This
process is explained in more detail in the Direct Testimony of Applicants'
witness Steven C. McNeal.

                                  THE WITNESSES

                                     XXVIII.

          The Applicants are submitting in support of their Application the
Direct Testimony and Exhibits of Frank F. Gallaher, George R. Bartlett, J. David
Wright, Steven C. McNeal, and Bruce M. Louiselle. The substance of the
witnesses' testimony may be briefly summarized as follows:

          a) Mr. Gallaher will outline the Company's proposal in more detail,
introduce the other witnesses, discuss the process by which the Transco proposal
was developed, summarize the relevant FERC filings and requirements, and explain


                                      -15-



the advantages of the Transco and the SPP Partnership RTO structure to New
Orleans and Algiers retail ratepayers.

          b) Mr. Bartlett will describe the physical assets which must be
separated and transferred and transmission planning under the SPP Partnership
RTO.

          c) Mr. Wright will discuss the accounting for the proposed transfer,
and will present a pro forma balance sheet for the Transco.

          d) Mr. McNeal will discuss the financial process by which the Transco
will be formed, its initial capital structure, and the impact of the transfer of
transmission assets and facilities on the Applicants' financial structure.

          e) Mr. Louiselle will discuss the proposed Transmission Rate Rider
("TRR") and explain why the proposed transfer is in the public interest.

                             CONTINUING JURISDICTION

                                      XXIX.

          Because ENO and ELI will retain their independent corporate forms, the
transfer of transmission assets will not result in the loss by this Council of
jurisdiction over the retail rates of ENO and ELI in Algiers.

                      TIMELINESS OF HEARINGS AND APPROVALS

                                      XXX.

          Because the transaction is required pursuant to applicable FERC
Orders, and because of the relatively large number of regulatory approvals that
will be required in order for the transaction to be consummated, the Applicants


                                      -16-



respectfully request that this Council promptly address this Application, so
that this Council may issue an appropriate ordinance, if any, on this matter by
July 31, 2001. The transfer of transmission assets is expressly contingent upon
its approval by the appropriate regulatory agencies, including this Council and
the FERC.

                                      XXXI.

          For purposes of this proceeding, Applicants' representatives are as
follows:

                                Daniel F. Packer
                      President and Chief Executive Officer
                            Entergy New Orleans, Inc.
                               1600 Perdido Street
                              New Orleans, LA 70112
                        Telephone (504) 670-3620 (voice)
                                 (504) 670-3619

                             J. Wayne Anderson, Esq.
                             Entergy Services, Inc.
                                   26th Floor
                                639 Loyola Avenue
                              New Orleans, LA 70113
                        Telephone: (504) 576-4377 (voice)
                           (504) 576-5579 (facsimile)


          WHEREFORE, the Applicants pray as follows:

     A.   That this Application be filed in the above entitled and numbered
          docket;

     B.   That, after due and lawful proceedings are had, this Council:


                                      -17-



          1.   Find that the transfer of ownership and/or control of certain of
               the Applicants' electric transmission assets described herein,
               but more particularly and specifically described in the testimony
               and exhibits of the witnesses attached hereto and made part
               hereof, is in the public interest, and, subject to the terms and
               conditions to be established hereby, fully complies with
               Louisiana law and the ordinances of this Council;

          2.   Take official action to grant approval of or express
               non-opposition to a transfer of the transmission assets of ENO
               and ELI as a result of the transfers of such assets to the
               Transco;

     C.   Grant all general and equitable relief that the law and the nature of
          the case may permit.

                                             Respectively submitted,

                                             J. Wayne Anderson, Bar No. 2466
                                             Margot G. Augustin, Bar No. 20087
                                             J. Christopher Neel, Bar No. 25804


                                             By:
                                                -------------------------------


                                             ATTORNEYS FOR
                                             ENTERGY NEW ORLEANS, INC. AND
                                             ENTERGY LOUISIANA, INC.


                                      -18-



                             CERTIFICATE OF SERVICE

          I, the undersigned counsel, hereby certify that a copy of the above
and foregoing Application has been served on the persons listed below by
facsimile, hand delivery or by mailing said copy through the United States
Postal Service, postage prepaid, and addressed as follows:

Jacquelyn Frick - Director                   Mavis S. Early, Esq.
City Council Utilities Regulatory Office     City Attorney - Law Department
City Hall - Room 6E07                        City Hall - 5th Floor
1300 Perdido Street                          New Orleans, LA  70112
New Orleans, LA   70112                      Office:      (504) 565-6200
Office:      (504) 565-6355                  Facsimile:   (504) 565-7691
Facsimile:   (504) 565-6361                  Service of Discovery not required

Lilliam Zayas - Director                     Glen Ortman, Esq.
Utilities Department                         Paul Nordstrom, Esq.
City Hall - Room 2W14                        Verner, Liipfert, Bernhard,
1300 Perdido Street                          McPherson and Hand
New Orleans, LA  70112                       901-15th Street, N.W. - Suite 700
Office:      (504) 565-6260                  Washington, D.C.  20005
Facsimile:   (504) 565-6449                  Office:      (202) 371-6000
                                             Facsimile:   (202) 371-6279

Kenneth M. Carter, Esq.                      Walter J. Wilkerson, Esq.
Kathryn Washington, Esq.                     Wilkerson and Henry
Carter & Cates                               650 Poydras Street, Suite 1913
1100 Poydras Street, Suite 1230              New Orleans, LA  70130
New Orleans, LA  70163                       Office:      (504) 522-4572
Office:      (504) 569-2005                  Facsimile:   (504) 522-0728
Facsimile:   (504) 569-2008

Joseph A. Vumbaco                            Michael Carey
Legend Consulting Group                      Legend Consulting Group
4643 South Ulster Street, Suite 1485         650 Poydras Street, Suite 2315
Denver, CO  80237-2869                       New Orleans, LA  70130
Office:      (303) 843-0351                  Office:      (504) 568-1800
Facsimile:   (303) 843-0529                  Facsimile:   (504) 568-1804


                                      -19-



Errol Smith                                  Frank Uddo, Esq.
Bruno and Tervalon                           Uddo & Milazzo
4298 Elysian Fields Avenue                   Two Lakeway Center, Suite 1510
New Orleans, LA  70122                       3850 N. Causeway Boulevard
Office:      (504) 284-8733                  Metairie, LA  70002
Facsimile:   (504) 284-8296                  Office:      (504) 832-7204
                                             Facsimile:   (504) 832-7208

John H. Chavanne                             John S. Keller, Esq.
Chavanne Enterprises                         P.O. Box 56367
P.O. Box 807                                 New Orleans, LA  70156-6367
New Roads, LA  70760-0807                    Office:      (504) 588-9173
Office:      (225) 638-8922                  Facsimile:   (504) 588-9972
Facsimile:   (225) 638-8933

Albert D. Eiffert                            Dale M. Crawford
Entergy New Orleans, Inc.                    Entergy Services, Inc.
Mail Unit L-ENT-15A                          CNG Tower - Suite 1370
639 Loyola Avenue                            1450 Poydras Street
New Orleans, LA  70113                       New Orleans, LA  70112
Office:      (504) 576-4673                  Office:      (504) 576-6280
Facsimile:   (504) 576-5921                  Facsimile:   (504) 576-6200

Gary L. Groesch
Alliance for Affordable Energy               Emma Williams, Director
604 Julia Street                             Clerk of Council
New Orleans, LA  70130                       City Hall - Room 1E04
Office:      (504) 525-0778                  1300 Perdido Street
Facsimile:   (504) 525-0779                  New Orleans, LA 70112
                                             Office: (504) 565-6393
                                             Facsimile: (504) 565-6387
                                             Service of Discovery not required

Ronald J. Pursell
Council Chief of Staff
City Hall - Room 1E06
1300 Perdido Street
New Orleans, LA 70112
Office: (504) 565-6362
Facsimile: (504) 565-7144


                                      -20-



             New Orleans, Louisiana, this     day of January, 2001.
                                          ---


                                             ----------------------------------


                                      -21-